In the summer of 2013, the Board of Commissioners of the Southeast Louisiana Flood Protection Authority – East (“the Board”) named 97 oil and gas exploration and production companies, pipeline owners and operators, and hydrocarbon industry services defendants in a sweeping lawsuit filed in Civil District Court for the Parish of Orleans alleging that their operations have “scarred Louisiana’s coast with an extensive network of thousands of miles of oil and gas access and pipeline canals.”
The Board alleged that both the canal network and the damage from the drilling of thousands of wells in the area have caused coastal land loss. This land loss led to “increased storm surge risk [and] attendant increased flood protection costs.” The Board sought damages as were just and reasonable, judicial interest, injunctive relief in the form of abatement and restoration of the coastal land loss, and costs, expenses, and attorneys’ fees. And just like that, the Board went from being a relatively obscure local entity unknown to anyone outside of Southern Louisiana to being discussed on national news networks and the pages of The New York Times, and the subject of charged political questions in the hotly contested 2014 race for the Louisiana U.S. Senate seat virtually overnight.
The suit alleged six causes of action for the Board’s claims: 1) negligence, 2) strict liability, 3) natural servitude of drain, 4) public nuisance, 5) private nuisance, and 6) breach of contract to which the Board is a third party beneficiary. If the Board was successful, its attorneys argued, it stood to collect billions of dollars to be used for coastal protection of the New Orleans metro area. It also could result in far-reaching consequences for the state’s economy, which is heavily dependent on the energy sector for jobs and revenue.
Defendants quickly removed the case to the U.S. District Court for the Eastern District of Louisiana. Judge Nannette Jolivette Brown denied remand based on federal question jurisdiction, primarily because the standard of care for the negligence and breach of contract claims would necessarily depend on federal environmental management laws, including the Rivers and Harbors Act and the Clean Water Act.
Between the Motion to Remand hearing in December 2013 and Judge Brown’s ruling in late June 2014, the Louisiana legislature passed Act 544. The bill amended the Coastal Zone Protection Act in Louisiana to specify that only certain actors and the Parishes and the State may bring actions regarding matters covered by coastal use permits (CUPs). Proponents of the bill intended this amendment to kill the Board’s suit as its causes of action all relate to areas covered by coastal permits. While elected officials took their sides in the legislature, citizens, industry associations, environmental advocates, and the Louisiana plaintiffs’ bar waged war in the press over whether the Board had a right to bring the suit in the first place and how such a suit would impact the Louisiana “Master Plan” to address coastal restoration. Shortly after the order keeping the case in federal court, the Board filed a motion to have Act 544 declared unconstitutional. Tensions were high leading into the fall of 2014 when defendants filed 12(b)(6) motions to dismiss the suit while a debate among candidates for the U.S. Senate were asked their official position on the propriety of the Board’s suit. Judge Brown heard oral arguments in November and December 2014 on both the Act 544 issue and the 12(b)(6) motions.
In February 2015, Judge Brown dismissed each of the Board’s six causes of action for failure to state a claim upon which relief can be granted. By doing so, she did not have to address the constitutionality of Act 544. In her ruling, Judge Brown held that the Board (created by the LA Legislature following Hurricane Katrina) has no right to sue under permits issued by the state or the federal government allowing the defendants varied oil and gas production and exploration activities. Further, Brown held that the Board could not prove their tort claims under Louisiana’s nuisance and natural servitude of drain claims because the Board cannot prove that it is a “neighbor” or that it owns a “servient estate” to the Defendants “dominant estate,” respectively. Finally, Judge Brown found that the Board’s strict liability and negligence claims failed because the federal statutes the Board cited as creating the standard of care for the Defendants’ conduct (namely the Rivers and Harbors Act, the Clean Water Act, and the Coastal Zone Management Act) did not create a specific duty to protect the Board from the results of coastal erosion it claimed in the case.
The attorneys for the Board vowed to appeal the decision to the U.S. Fifth Circuit Court of Appeals almost immediately and filed their notice on February 24, 2015. Briefing deadlines have been set and continue into June, setting up the next showdown to potentially take place this summer, nearly two years after the suit was first filed. Meanwhile, the State and attorneys for the Board continue to battle over the constitutionality of Act 544 in a pending suit in the 19th Judicial District Court for the Parish of East Baton Rouge, possibly teeing up another avenue to have the suit dismissed should the U.S. Fifth Circuit reverse Judge Brown’s decision. All eyes (both industry and enforcement) will be looking to Louisiana for the first indication of whether litigation is a viable avenue to address growing coastal erosion concerns of states across the Gulf Coast and the country.
Board of Commissioners of Southeast Louisiana Flood Protection Authority-East v. Tennessee Gas Pipeline Company, LLC, et al, ____ F.Supp.3d_____, 2015 WL 631348 (E.D.La. 2/13/2015).
Id. at *32