Parishes claim stake in oilfield company suits

Parishes claim stake in oilfield company suits

Credit: Benjamin Oliver Hicks / Houma Courier

John Carmouche shows oilfield damage to Point au Fer on Tuesday at his law office in Baton Rouge.

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Posted on April 7, 2014 at 1:03 PM

Xerxes Wilson / The Houma Courier

The Catholic Church is among more than a dozen local property owners who are seeking court action to force the oil and gas industry to clean up their wetlands.

They are part of the legacy lawsuit debate over the industry's responsibility to remove lingering pollution from properties that were leased years ago and to compensate the owners.

There have been nearly 300 such cases brought across the state. and 17 claim damages along the coasts of Lafourche and Terrebonne parishes, according to the state Department of Natural Resources.

The Archdiocese of New Orleans is suing for damages to land it claims in Point au Fer on the western coast of Terrebonne.

Other lawsuits include prominent local families and landowners as plaintiffs. The Caillouet Land Co. and Warren Harang have been involved in lawsuits in Lafourche Parish. The heirs of Henry Ellender have filed suit on leases in the Lirette Field in Terrebonne dating back to the '30s.

'GREEDY TRIAL LAWYERS' BLAMED
The decision by government bodies to make similar challenges last fall stoked an uproar among industry supporters, reaching to the highest powers in Baton Rouge.

Industry advocates and some local legislators have panned the challenges as the work of “greedy trial lawyers” hijacking the judiciary with frivolous claims to make money. They also claim such lawsuits are running the industry out of the state.

Environmental groups claim it's only fair that the industry pay to restore lingering damage and see such lawsuits as a possible piece to the state's coastal restoration financing puzzle.

When industry rails against the “greedy trail lawyer,” John Carmouche could be a face they see. He is an attorney at Talbot, Carmouche and Marcello law firm in Baton Rouge and represents the plaintiffs in all but a few of the local legacy lawsuits.

With an environmental nonprofit set up to counter a public outreach campaign by industry advocates, Carmouche fancies himself more of an environmental activist than greedy lawyer.

Carmouche estimates his firm has been involved in between 100 and 150 such challenges to the industry through the years.

Most cases have settled, and all settlements require some repair of the land, he said. He added his firm is paid only if the plaintiff is awarded damages or settles.

“I've never had a judge in the state of Louisiana rule that my lawsuit was frivolous. Every lawsuit that I file, they basically admit to it because they come up with a cleanup,” Carmouche said.

COMPANIES HAVE BEEN LIABLE
The lawsuits meticulously target each company involved in drilling on land that sometimes contains hundreds of wells dating back to the 1930s. The damages these lawsuits claim most often stem from brine pits, one of the nastier footprints of the industry in coastal marshes.

Oil and gas production inherently comes with toxic byproducts. Naturally radioactive-produced water and other sludge pulled from the earth were discharged into unlined earthen pits near well sites for decades. This created a toxic brew that often seeped into the ground and outside its containment into local waterways.

Carmouche and others have unearthed industry memos showing oil and gas operators suspected they'd be liable for leaking pits and pollutants migrating into nearby soil and water, using the memos to the argue companies were negligent.

In the late '80s, the state required companies end these waste discharge practices and clean up the existing pits. But many companies were derelict in that responsibility, leaving contamination to spread around the property through the years, Carmouche said.

When a geologist visited the site of leases held by the Harry Bourg Corp. just south of Falgout Canal Road in Terrebonne Parish in 2003, the remnants of years of industrial use remained.

“His keen eye spotted some problems. He found there were still pits containing hazardous material and there was definitely ground stuff, rusty flow pipes and battery tanks, still on the property,” said James Funderburk, an attorney who has been practicing in Houma for some 45 years.

Funderburk led one of the area's first legacy lawsuits for the land corporation and eventually settled with a number of oil and gas companies that had operated on the property.

The litigation is always highly complicated, involves state agencies and often drags on for years. But judges have found that laws tied to mineral leases in many cases dictate companies must restore the leased property minus “regular wear and tear,” Funderburk explained.

Damage awards are also derived from things like storage of pollution in the property's water and soil or for things like arsenic riddled crabs or sugarcane fields made barren by the industry's toxic footprint, Carmouche added.

“None of this would have happened, but they chose profit over the environment. They knew some day they would pay the consequence,” Carmouche said.

LEVEL OF CLEANUP IN DISPUTE
Another local lawsuit limited the extent of restoration required, Funderburk said, referring to a 2005 Louisiana Supreme Court decision in a case between the Terrebonne Parish School Board and oil and gas operators, which leased property from the board.

Funderburk said the decision limited landowners' demands that oilfield canals and other prominent sources of wetland erosion be restored.

“That decision said the lease was not strong enough and doesn't have the magic language we think it should,” Funderburk said. “Generally, the law is the lessee must return the property to the lessor in the condition it was received less normal wear and tear. You can interpret that how you want, but it's not usually to dig all these canals.”

Industry officials have argued the Department of Natural Resources should have ultimate responsibility to devise the cost of cleanup and industry shouldn't be liable for additional damage claims.

The Legislature has modified relevant laws in recent years and there are several items being debated by legislators to curtail the reach of these challenges.

PARISHES JOIN THE BATTLE
In the meantime, Carmouche said the leaders of Lafourche and Terrebonne have a duty to taxpayers to explore filing suit themselves.

Carmouche's firm has filed similar lawsuits for Plaquemines and Jefferson parishes through coastal zone management authority held by coastal governments. At least two more parishes are close to filing, he said.

“I think Terrebonne and Lafourche have some of the biggest claims,” Carmouche said, adding hundreds of millions of dollars could “easily” come from such lawsuits. “Look at flood insurance rates. All of the coastal erosion is now catching up to taxpayers.”

It is unclear how many acres of wetland losses can be attributed to industry activity. None argue it is the only source and none argue industry had no role. Some studies peg industry's contribution to around 35 percent of wetland loss; others go as high as 76 percent.

Carmouche and others have argued the fruits of such lawsuits could aid in coastal restoration and fill in a portion of the $50 billion needed to execute most of the state's coastal restoration master plan.

“I know it is hard to go against someone who has taken care of us for so long. But we have to look at the reality now,” Carmouche said.

He said taxpayers elsewhere will not been keen on helping pay for coastal restoration in Louisiana.

For now, Lafourche and Terrebonne officials are not getting involved.

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