Tainted Legacy: Wealthy and powerful vs. big oil

Tainted Legacy: Wealthy and powerful vs. big oil

wwltv.com

Posted on July 10, 2014 at 10:39 PM

Updated Thursday, Jul 17 at 10:27 PM

Mike Perlstein / Eyewitness News
Email: mperlstein@wwltv.com | Twitter: @mikeperlstein
 

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

Former Louisiana Gov. Mike Foster didn’t just support tort reform, he campaigned on the issue, promising to rein in plaintiff’s attorneys who made big bucks suing big companies for big damages.

And he delivered in a big way.

Shortly after his inauguration, he called a special session of the legislature and passed a package of bills to lessen liability exposure for businesses. He then ran campaign ads bragging that he had successfully stopped trial lawyers from filing frivolous, job-killing lawsuits.

That’s what makes the legacy lawsuit Maryland Co. vs. Exxon so surprising. The 2010 suit is just one of about 360 lawsuits by landowners claiming contamination by oil and gas companies – and asking for multimillion dollar judgments to compensate for environmental damages.

The owner of The Maryland Co.? Mike Foster.

“He’s the governor that took away punitive damages in April of 1996, soon after he got into office,” said Foster’s attorney, Glad Jones. “But on behalf of his family partnership, when he discovered the damage that had been done to his property as a result of 50 years of oil and gas activities, he was left in no other position really other than to bring a lawsuit asking the oil companies to clean up the property.”

Jones successfully represented the former governor in the lawsuit, winning a large settlement in 2012 that helped clean the property.

Even though Foster was the ultimate business-friendly governor, he got no cooperation from oil company officials when he first told them his land had been polluted.

“You think that maybe they would say to Mike Foster, ‘Look you worked with us back in 1996, we’re going to come in and get you cleaned up, Governor Foster’ ” Jones said. “We had no less than one hundred hearings over three years in a hard-fought litigation where we had to bring them to their knees to make them go do the right thing.”

State officials also dropped the ball, and they did so long before the suit was filed, according to Jones.

A state regulator flew over Foster’s property near Centreville in 1987 and reported pollution leaking from an unlined oil waste pit into 100 acres of freshwater marsh. The state kept aerial photographs, but Jones said nobody told Foster.

It took more than two decades for him to discover the damage in a remote section of his property. When he sued, the photographs came to light in pre-trial discovery. So did testimony that the oil companies had a release valve in the waste pit and let pollution out into the open marsh, rather than properly transport the waste, Jones said.

“It was just absolutely outrageous conduct,” he said.

Gov. Mike Foster

Jones said Foster was forced to take the same path as other Louisiana landowners to get oil companies to clean up decades of contamination.  Plaintiffs' attorneys say that by filing these so-called “legacy lawsuits,” private landowners are making Big Oil restore the environment, forcing a clean-up that state regulators aren’t forcing.

“They (the state) can’t look Big Oil in the eye and say, you’re violating the law, you’re violating the rules, you’re violating the regulations. Clean it up to state standards,” said attorney John Carmouche, whose firm handles about three-fourths of all legacy lawsuits. “The only hope the state has is to have landowners who are willing to stand up and fight.”

Powerful Plaintiffs vs. Powerful Industry

Despite an explosion of legacy lawsuits and the “clean-up or we’ll-make-you-clean-up” message that accompanies them, the reality is very different from the rhetoric.

As the WWL-TV series “Tainted Legacy” has documented, out of about 360 legacy lawsuits, only 137 oilfield sites have been verified as contaminated by state regulators. Of those, only 12 sites have been cleaned to state standards, despite hundreds of millions of dollars paid in legal damages.

Those damages have been collected by plaintiffs who are among the state’s wealthiest landowners. And some, like Foster, have been among the state’s strongest oil industry supporters.

Gifford Briggs, vice president of the powerful Louisiana Oil and Gas Association, said his industry has been unfairly portrayed as the bully in this fight.

“The portrayal of it being the little man versus Big Oil is strategic. Because everyone likes an underdog,” Briggs said.

Yet some plaintiffs come from within the upper ranks of the oil and gas industry.

Take William Doré, founder of the oil and gas company Doré Energy Corp. Doré took his fellow oil executives to court and won the largest remediation judgment to date, $57 million. Dore also is known for making the largest single donation – $1 million – to the pro-Rick Santorum Super-PAC during his 2012 Republican presidential bid.

Dore was a member of LOGA, and Jones said he met with LOGA President Don Briggs and oil company representatives in 2002 hoping to avoid the lawsuit.

It didn’t work.

Oliver Houck, a law professor at Tulane University has followed the issue closely, said legacy lawsuits have become landowners’ only recourse to protect the environment.

“It’s the only recourse that these landowners have,” Houck said. “Could Doré go to the Legislature? No. Could he go to the governor? No. He went to the oil industry, his buddies, and they turned him down. Where can he go? So, you know, that’s why we have three branches of government.”

Fighting on Both Sides

Even landowners from within the legislative branch have reached out to the courts for relief.

State Sen. Bret Allain, a Republican from St. Mary Parish, is well known for being the sponsor of the controversial bill to kill the levee board lawsuit against 97 oil and gas companies for damage to the state’s coastal marshlands. What’s not so well known is Allain’s 2007 lawsuit against a pipeline company using his family’s land.

Bret Allain

Allain said the suit was settled out of court. He said he received no money from the suit, just an agreement from the company to fix the property.

Jones, who represents the levee board in the lawsuit that Allain’s legislation seeks to destroy, offered this comment: “There’s some irony there. There’s a lot of irony there.”

The politically-involved plaintiffs don’t all come from the Republican side of the aisle.

Former state senator and Democratic Party Chairman Buddy Leach, from Lake Charles, admitted that he received a monetary settlement for his company, Sweet Lake Land and Oil Co. The company settled for $15 million, according to financial documents.

Aside from the payment of damages, Leach’s lawsuit shares another similarity to the majority of legacy lawsuits. Even after the large settlement, the property has not been cleaned up.

Not only has the cleanup on Leach’s property not been completed, legal documents show it was Leach who stalled a portion of a state clean-up plan because he wasn’t satisfied with it.

In an interview, Leach said he actually won two separate but similar lawsuits for damage to his property, one against Unocal and one against Exxon.

In the first suit against Unocal, he said that some initial damage payments were used to draw up a restoration plan, but the restoration itself was delayed by the U.S. Army Corps of Engineers.

Buddy Leach

The corps held up permits because some of Leach’s property was designated as protected wetlands. More than five years later, after Hurricane Rita in 2005, all of the Unocal-tainted land reverted to open water, making restoration impossible, Leach said.

“I couldn’t believe it was taking that long to get the permit, but the Corps deemed it would encroach on wetlands,” Leach said. “After Rita destroyed it, we can now use the money to replace lost property now that it is open water.”

In the Exxon case, Leach said he filed an injunction to stop a state cleanup plan that he deemed inadequate.

“The state order didn’t require Exxon to restore the property to its former condition,” Leach said. “When we found out that the plan was inadequate, that’s when we filed for an injunction.”

Leach said that after re-negotiating with the oil company, a more comprehensive cleanup is now underway. He said the litigation could have been avoided if the oil companies had just owned up to their contamination in the first place.

"I’m not advocating legacy lawsuits. We’re not lawsuit-happy at all here at Sweet Lake,” he said. “But any landowner who has a contract with a company should be able to enforce the terms of that contract.”

Big Settlements, Little Cleanup

While Leach said his settlement money eventually went back into his property, that’s not the case with some of the largest settlements.

“There are plenty of times when companies have gone out and wanted to do some cleanup, and the plaintiffs have blocked the cleanup,” Gifford Briggs said. “They say they want to use the money to restore the land, but they don’t use it to restore the land. That’s why this ends up being just a big money grab.”

As examples, Briggs refers to a large cluster of legacy lawsuits filed by the Cameron and Vermilion parish school boards. In those two adjoining parishes, Cameron has filed 11 lawsuits and Vermilion has filed 12.

There have been multi-million payments to settle parts of those lawsuits, but instead of multi-million dollar cleanups, those government agencies have enjoyed huge budget windfalls that have been used for other purposes.

Cameron Parish reported tax breaks and new schools with some of its $46 million partial settlement.

Documents show that in Vermilion, $2.5 million out of a $4 million settlement was split between health insurance and a paycheck bonus for all school board employees.

“There’s not really a lot of incentive there remediating the land, so everyone in Vermilion Parish can benefit from lower property taxes,” Briggs said, “They’re suing the oil and gas companies to pay for education.”

The Baton Rouge law firm Talbot Carmouche and Marcello represents the school boards, and is the uncontested leader in legacy lawsuits, acting as plaintiff’s attorneys in about 75 percent of all cases.

John Carmouche defended his school board clients, insisting that they will follow through with cleanups, but also insisting that the agencies are justified in collecting for damages.

“They deserve private damages,” he said. “What they do with their money after, I have no say so on that and I don’t know what they did with the money. It’s to benefit them. The school and the parish.”

Carmouche goes a step further. He characterizes his plaintiffs as heroic, cleaning up the environment after the oil companies contaminated it and the state turned a blind eye.

Case by case, he said he sees legacy lawsuits as the only way to remove the stigma of Louisiana as an oil industry dumping ground.

“Louisiana’s last, and for some reason, we’re always last. And I think that has to stop,” Carmouche said. “And I think what’s happing now is these landowners, these parishes, are standing up and saying, ‘We’re not going to be last. We’re going to stand up for our rights and stand up for future generations so they don’t have to deal with it.’"

 

 

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