On the morning of October 30th, Louisiana’s oil and gas industry woke up to promising news amongst the headlines of low rig counts and low global commodity pricing. The United State Supreme Court denied hearing the Southeast Louisiana Flood Protection Authority-East’s (SLFPA-E) appeal of the lower courts ruling.
This lawsuit, initially filed in 2013, has finally come to the end of its road. So who is the Southeast Louisiana Flood Protection Authority-East? On what grounds did SLFPA-E decide to sue oil and gas companies? How did this case get the all the way to United States Supreme Court? And what does this mean for the similar coastal lawsuits?
After Hurricane Katrina in 2005, the Louisiana State Legislature established the Southeast Louisiana Flood Protection Authorities to oversee flood protection in the Greater New Orleans area. This flood authority is separated into two groups: the Southeast Louisiana Flood Protection Authority-East, who oversees the east bank of the Mississippi and the Southeast Louisiana Flood Protection Authority-West who monitors the west bank. The Eastern Authority is made up of nine members – all appointed by the Governor, and all appointees must be recommended by universities, national professional associations, and local civic groups.
In July of 2013, SLFPA-E filed a lawsuit against 97 oil and gas companies, alleging that their activities had damaged coastal lands and “increased the risk of flooding due to storm surges and necessitated costly flood protection measures.” One of the trial lawyers for the Board said that the damages equaled “Many billions of dollars. Many, many billions of dollars,” claiming that it was time for oil and gas companies to “pay their fair share.” If the courts would have sided in favor of the flood authority, that lawyer would have profited greatly and received a percentage of the “many, many billions of dollars” claimed. Nonetheless, these trial lawyers will still receive a handsome reward in legal fees.
This lawsuit was initially filed in New Orleans Civil District Court, but just weeks after, one of the 97 companies filed a motion to transfer the suit to federal court. The company asserted that the flood authority’s claim "required the interpretation of federal law, and the plaintiff's right to relief under one or more causes of action asserted depends on resolution of a substantial question of federal law, and therefore federal question jurisdiction applies.” The motion was granted, and in 2015, the lawsuit was moved under United States District Court Judge, Nannette Jolivette Brown. She found that the board’s claims were not strong enough to justify a financial claim against the oil and gas companies and dismissed the lawsuit. The legal battle was just beginning.
After having their lawsuit dismissed in a federal district court, SLFPA-E took it to a three-judge panel at the 5th Circuit Court of Appeals, making the argument for the case to be returned to state court. In February of 2017, the group of federal judges upheld the decision of Judge Brown – which not only should the case remain in federal court – but that the claims of the board did not justify a financial claim against the oil and gas companies. The last leg of this lawsuit’s journey ended at the United States Supreme Court this week. The court denied hearing SLFPA-E’s appeal of the U.S. Court of Appeals’ ruling. The motion by the Supreme Court made the ruling by the Appellate Court the final decision.
The end of the SLFPA-E lawsuit is excellent news for Louisiana’s oil and gas sector, but the damage that has been done and is continuing by similar coastal suits are crippling our industry. As the 2017 LAGCOE Looey, I was able to talk face to face with companies from every aspect of the oil and gas industry. The frequent topic of discussion was the state of Louisiana’s legal environment. More than global pricing and geopolitical issues, coastal lawsuits pushed by trial lawyers and encouraged by our Governor is the greatest threat to our industry. The oil and gas sector has been an economic powerhouse and a significant contributor to environmental efforts, among other improvements. We must continue fighting to protect it.