Coastal/Wetlands Issues

BSEE

By Michael J. O’Brien

Scott Angelle, a native of Breaux Bridge, Louisiana, has been appointed by the Trump Administration to head the Bureau of Safety and Environmental Enforcement (“BSEE”).  Mr. Angelle first held public office in the late 1980’s. He has since served as a Parish President, Secretary of Louisiana’s Department of Natural Resources, and, most recently, as Chairman of the Louisiana Public Service Commission. Under his leadership as Louisiana’s Secretary of the Department of Natural Resources, the state’s coastal permitting system was reformed, providing for efficient permitting while increasing drilling rig counts in Louisiana by more than 150 percent during his tenure. Mr. Angelle has also served as Chairman of the Louisiana State Mineral Board, and as a member of the Louisiana State University Board of Supervisors, Southern States Energy Board, and the Louisiana Coastal Port Advisory Authority.

Mr. Angelle will become BSEE’s fourth director since it was established six years ago. BSEE was formed after the Deepwater Horizon explosion to promote safety, protect the environment, and conserve resources offshore through “vigorous regulatory oversight and enforcement.”

BSEE is headquartered in Washington D.C. and supported by regional offices in New Orleans, Louisiana, Camarillo, California, and Anchorage, Alaska.  These regional offices review applications for permits to drill, ensure safety requirements are met, conduct inspections of drilling rigs and offshore production platforms, investigate offshore accidents, issue Incidents of Non-Compliance and have the authority to fine companies through civil penalties for regulatory infractions.

Mr. Angelle’s post does not require Senate confirmation; as such, he will start working as the head of BSEE Tuesday, May 23, 2017. Secretary of the Interior, Ryan Zinke, issued the following statement about Mr. Angelle: “Scott Angelle brings a wealth of experience to BSEE, having spent many years working for the safe and efficient energy production of both Louisiana’s and our country’s offshore resources. As we set our path towards energy dominance, I am confident that Scott has the expertise, vision, and the leadership necessary to effectively enhance our program, and to promote the safe and environmentally responsible exploration, development, and production of our country’s offshore oil and gas resources.”

 

fifth

By Chase Zachary

On April 18, 2017, the U.S. Court of Appeals for the Fifth Circuit released a published opinion in Guilbeau v. Hess Corp.[1] The court affirmed the application of Louisiana’s subsequent purchaser doctrine to claims for environmental damages allegedly caused by activities of a former mineral lessee prior to the date that the plaintiff owned the property. Although the Fifth Circuit previously reached a similar conclusion in an unpublished decision,[2] Guilbeau is the court’s first precedential opinion addressing the subsequent purchaser doctrine.

As discussed on Kean Miller’s Louisiana Law Blog, here[3] and here,[4] the subsequent purchaser doctrine bars a plaintiff’s claims for property damages that occur prior to the plaintiff’s ownership of the property. The Louisiana Supreme Court provided a “thorough analysis”[5] of the doctrine in Eagle Pipe & Supply, Inc. v. Amerada Hess Corp.[6] There, the court “clarified that damage to property creates a personal right to sue, which unlike a real right, does not transfer to a subsequent purchaser ‘[i]n the absence of an assignment or subrogation.’”[7] However, plaintiffs have argued that the Eagle Pipe opinion did not address whether the subsequent purchaser doctrine applies “to fact situations involving mineral leases or obligations arising out of the Mineral Code.”[8]

The facts of Guilbeau are straightforward. Defendant Hess Corporation’s (“Hess’s”) predecessors operated until 1971 on the property-in-suit under several mineral leases.[9] All of those leases expired in 1973.[10] The plaintiff purchased the property-in-suit in 2007.[11] The “sale did not include any assignment of rights to sue for pre-purchase damages.”[12] After the plaintiff sued Hess for alleged contamination to the property, the federal district court granted Hess’s motion for summary judgment and dismissed the plaintiff’s claims based on the subsequent purchaser doctrine.[13] The Fifth Circuit affirmed.[14]

Making an “Erie guess” of how the Louisiana Supreme Court would decide the issue,[15] the Fifth Circuit identified a “clear consensus . . . among all Louisiana appellate courts that have considered the issue . . . that the subsequent purchaser rule does apply to cases . . . involving expired mineral leases.”[16] After tracing those Louisiana appellate decisions,[17] the Court found “no occasion to depart from the above-described precedent” and held that the subsequent purchaser doctrine barred the plaintiff’s claims.[18] The Court also noted that “the Louisiana Supreme Court has had multiple opportunities to consider this issue and has repeatedly declined to do so.”[19] Notably, the Fifth Circuit declined to certify the subsequent purchaser issue to the Louisiana Supreme Court on the basis that “[w]hen, as here, the appellate decisions are in accord, the law is not unsettled, and certification is unwarranted.”[20]

The Fifth Circuit is simultaneously considering a companion case, Tureau v. Hess Corp.[21] That suit involves an identical issue—i.e., whether the district court correctly applied the subsequent purchaser doctrine to dismiss claims for alleged property damage against former mineral lessees. The Fifth Circuit previously held Tureau in abeyance pending its decision in Guilbeau, and a decision in Tureau is expected shortly.

The Fifth Circuit’s Guilbeau opinion affirmatively resolves, for Louisiana federal courts, whether the subsequent purchaser doctrine applies to property damage claims against current and former mineral lessees. The decision accordingly provides much-needed certainty to both property owners and oil and gas operators involved in “legacy” litigation.

_____________________________

[1] No. 16-30971, — F.3d –, 2017 WL 1393709 (5th Cir. Apr. 18, 2017), http://www.ca5.uscourts.gov/opinions/pub/16/16-30971-CV0.pdf

[2] See Broussard v. Dow Chem. Co., 550 F. App’x 241 (5th Cir. 2013).

[3] http://www.louisianalawblog.com/coastalwetlands-issues/louisiana-supreme-court-expands-judicial-limitations-on-landowner-tort-claims/.

[4] http://www.louisianalawblog.com/energy/louisiana-second-circuit-court-of-appeals-upholds-application-of-subsequent-purchaser-doctrine-in-oilfield-legacy-case/.

[5] Guilbeau, 2017 WL 1393709, at *2.

[6] 79 So. 3d 246 (La. 2011).

[7] Guilbeau, 2017 WL 1393709, at *2 (quoting Eagle Pipe, 79 So. 3d at 279) (emphasis in original).

[8] 79 So. 3d at 281 n.80.

[9] Guilbeau, 2017 WL 1393709, at *1.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id. at *2.

[17] Id. at *2-4.

[18] Id. at *4.

[19] Id.

[20] Id.

[21] No. 16-30970.

wet

By Trey S. McCowan, Claire E. Juneau, and Tyler Moore Kostal

On March 3, 2017, the United States Fifth Circuit Court of Appeals issued its long-awaited opinion in the matter of Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East, et al. vs. Tennessee Gas Pipeline Company, LLC, et al., No 15-30162, Slip Op. (5th Cir. 3/3/17). The Fifth Circuit’s decision affirmed the U.S. Eastern District Court of Louisiana’s decision to dismiss an action brought by the Flood Protection Authority against ninety-seven oil and gas and pipeline companies claiming that historic oil and gas exploration, production and transportation activities contributed to wetland loss in St. Bernard and Plaquemines Parishes.

The Flood Protection Authority’s lawsuit asserted claims for recovery based on theories of negligence, strict liability, violations of the natural servitude of drain, public and private nuisance and breach of contract. The Flood Protection Authority also asserted that it was a third-party beneficiary of various wetland permits issued to members of the oil and gas industry. The Flood Protection Authority sought damages and injunctive relief claiming that each canal dredged by defendants would have to be backfilled and revegetated. The Flood Protection Authority also claimed that the industry members were responsible for the costs of “wetlands creation, reef creations, land bridge construction, hydrologic restoration, shoreline protection, structural protection, bank stabilization and ridge restoration” throughout wetlands located in an area in St. Bernard and Plaquemines Parishes described as the “buffer zone.”

The complaint described “a longstanding and extensive regulatory frame work under both federal and state law” that protects against the effects of dredging activities. According to the Flood Protection Authority, these regulations imposed legal duties on defendants to remedy wetland loss caused both directly and indirectly by dredging activities. The complaint specifically enumerated four main components of this framework including the Rivers and Harbors Act of 1899;[1] the Clean Water Act of 1972;[2] “regulations related to rights-of-way granted across state-owned lands and water bottoms administered by the Louisiana Office of State Lands” and the Coastal Zone Management Act of 1972.[3] However, the Flood Protection Authority claimed that it was relying solely on state law for recovery.

The Flood Protection Authority’s lawsuit was removed to the U. S. District Court for the Eastern District of Louisiana on multiple jurisdictional grounds including federal question jurisdiction under a narrow exception to the well-pleaded complaint rule as set forth in Grable & Sons Metal Products, Inc. vs. Darue Engineering and Manufacturing, 545 U.S. 308, 125 S. Ct. 2363, 162 L. Ed. 2d 257 (2005) and Gunn v. Minton, ___U.S.____, 133 S. Ct. 1059, 185 L. Ed. 2d 72 (2013).

After the Flood Protection Authority’s motion to remand was denied, defendants filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) on the ground that the Flood Protection Authority’s complaint failed to state viable causes of action against defendants. The district court agreed with the defendants and dismissed all claims. The Flood Protection Authority appealed. After taking the matter under advisement for over a year, the Fifth Circuit issued its opinion affirming the district court’s decision finding federal jurisdiction and dismissing the case.

The Fifth Circuit first affirmed the district court’s decision finding federal jurisdiction. The Fifth Circuit held that the claims in the Flood Protection Authority’s suit, although couched in terms of state law, fell within the exception set forth in Grable and Gunn finding that three of the Flood Protection Authority’s claims necessarily raised federal issues: “the negligence claim, which purportedly draws its requisite standard of care from three federal statutes; the nuisance claims which rely on the same standard of care; and the third-party breach of contract claim, which purportedly is based on permits issued pursuant to federal law.”

Under the limited Grable/Gunn exception to the well-pleaded complaint rule, federal jurisdiction exists where “(1) resolving a federal issue is necessary to the resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities.”

In finding that the Flood Protection Authority’s claims relied solely on interpretations of federal law, the Fifth Circuit rejected the Authority’s claim that Louisiana’s coastal use regulation requiring restoration of mineral exploration and production sites “to the maximum extent practicable” imposed an obligation on the defendants. The Fifth Circuit held that “the ‘maximum extent practicable’ language is “a regulatory determination that entails ‘a systematic consideration of all pertinent information regarding the use, the site and the impacts of use… and a balancing of their relative significance.’” No Louisiana court has used this or any related provision as the basis for imposing state tort liability. The Fifth Circuit further stated that “the Louisiana Supreme Court has explicitly rejected the prospect that a statutory obligation of ‘reasonably prudent conduct’ could require oil and gas lessees to restore the surface of dredged land.”[4]

With respect to the second prong of the Grable test, the Fifth Circuit held that there were in fact, federal issues in dispute, i.e. the interpretation of the scope of obligations under the River and Harbors Act and the Clean Water Act. Consequently, this element of the Grable test was satisfied.

The Fifth Circuit next found that the federal issues were substantial noting the “importance of the issue to the federal system as a whole.”[5] Since the Levee Authority’s claims implicated “an entire industry” and conduct subject to an extensive federal permitting scheme that were issues of “national concern,” the Fifth Circuit affirmed the district court’s finding that the federal issues were substantial and that the third Grable factor was satisfied.

With respect to the final Grable factor, the Fifth Circuit affirmed the district court’s finding that the ruling would not cause and enormous shift of traditionally state cases into federal courts reasoning that the Flood Protection Authority was relying on federal law to establish liability and that resolution of its claims could affect coastal land management in multiple states as well as the national oil and gas market.

Finding that the district court had properly retained jurisdiction, the Fifth Circuit next addressed the substantive defenses raised by the defendants and affirmed the district court’s ruling dismissing the Flood Protection Authority’s claims.

First, the court found that the Flood Protection Authority failed to state claims based on negligence and strict liability because the defendants owed no duty to the Authority under federal or state law. Quite simply, the enunciated rules and principles of law cited by the Flood Protection Authority did not extend to and were not intended to “protect this plaintiff from this type of harm arising in this manner.” The Fifth Circuit affirmed the district court’s decision that the River and Harbors Act, the Clean Water Act, the Federal Coastal Zone Management Act and state law did not create a duty that bound defendants to protect the Flood Protection Authority from increased flood protection costs that arise out of coastal erosion allegedly caused by defendants’ dredging activities.

With respect to the Flood Protection Authority’s claims based on servitude of natural drain, the Fifth Circuit held that there is no basis in law for “finding that a natural servitude of drain may exist between non-adjacent estates with respect to coastal storm surge.” The court also noted that storm surge did not constitute “surface waters that flow naturally from an estate situated above” as specified in the Civil Code articles pertaining to the servitude of natural drain.

Finally, the Fifth Circuit affirmed the district court’s holding that the Flood Protection Authority failed to state a valid “nuisance” claim under Louisiana Civil Code article 667 because the Authority did not sufficiently allege in its complaint that it was a “neighbor” of any of defendant’s property. Although, the Flood Protection Authority was correct in its argument that there is no rule of law compelling “neighbor” to be interpreted as requiring certain “physical adjacency or proximity,” the Fifth Circuit has previously found that there must be “some degree of propinquity, so as to substantiate the allegation that activity on one property has caused damage on another.” Consequently, a nuisance claim under article 667 requires more than simply a “causal nexus,” and the Flood Protection Authority failed to set forth sufficient factual allegations mandating dismissal of the nuisance claims.

It remains to be seen if the Flood Protection Authority will pursue further review in its lawsuit against the oil and gas industry in either the Fifth Circuit or United States Supreme Court.

****************

[1] 33 U.S.C. §§ 401-467.

[2] 33 U.S.C. §§ 1251-1388.

[3] 16 U.S.C. §§ 1451-1466.

[4] Terrebonne Parish School Board vs. Castex Energy, Inc., 893 So. 2d 789, 801 (La. 2005)(“We hold that, in the absence of an express lease provision, Mineral Code article 122 does not impose an implied duty to restore the surface to its original, pre-lease condition absent proof that the lessee has exercised its rights under the lease unreasonably or excessively.”).

[5] Citing, Gunn v. Minton, 133 S. Ct. 1059, 1066 (2013) and Smith v. Kansas City Title and Trust Co., 255 U.S. 180, 198-202 (1921).

marsh-sunset1

By Claire Juneau

Governor John Bel Edwards has sued Louisiana Attorney General Jeff Landry over Mr. Landry’s refusal to approve certain private legal counsel contracts. Governor Edwards alleges that Mr. Landry is the “chief legal officer of the state,” is “charged with the assertion or protection of any right or interest of [Louisiana],” and “is ethically required by the Rules of Professional Conduct promulgated by the Louisiana Supreme Court to abide by [his] client’s decisions concerning the objective of representation and to consult with [his] client as to the means by which they are to be pursued.” Governor Edwards seeks the immediate issuance of an alternative writ of mandamus compelling Mr. Landry “to perform his statutory ministerial duty to give written approval of the choice of counsel of the executive branch entities…” Governor Edwards alleges that Mr. Landry has rejected most of the contracts “on the grounds that the contracting attorneys should not have agreed not to discriminate in employment and the rendering of services in accordance with Executive Order No. JBE 2016-11.”

Governor Edwards alleges that the procedures for retention and employment of private counsel for the State of Louisiana are found in Louisiana Revised Statute § 42:262 and Louisiana Revised Statute § 49:258. Specifically, Revised Statute § 42:262(F)(1) provides in pertinent part:

In the event it should be necessary to protect the public interest, for any state board or commission to retain or employ any special attorney or counsel to represent it in any special matter for which services any compensation is to be paid, the board or commission may retain or employ such special attorney or counsel solely on written approval of the governor and the attorney general and pay only such compensation as the governor and the attorney general may designate or approve in the written approval.

And Revised Statute § 49:258 provides in pertinent part:

Notwithstanding the provisions of any other law to the contrary and specifically the provisions of any law that authorizes the state or a state agency to appoint, employ, or contract for private legal counsel to represent the state or a state agency, including but not limited to the provisions of R.S. 42:261, 262, and 263, and R.S. 40:1299.39(E), any appointment of private legal counsel to represent the state or a state agency shall be made by the attorney general with the concurrence of the commissioner of administration.

Governor Edwards argues that Revised Statute § 42:262 cannot be read alone and the discretion set forth with respect to boards and commissions is superseded by Revised Statute 49:258, which sets forth a “ministerial process for approval of private counsel, by both the Division of Administration and the Attorney General, and appointment by the Attorney General.” Governor Edwards asserts that Mr. Landry “has refused to perform” this ministerial duty.

A copy of the Petition for Writ of Mandamus can be found here:  Edwards v Landry.

 

marsh

By Matthew B. Smith

The first of many coastal land loss lawsuits filed by Louisiana coastal parishes has proceeded to judgment, with the result being the dismissal of the case based on the failure to exhaust administrative remedies prior to filing suit.

Since the filing of the politically-charged Southeastern Louisiana Flood Protection Authority lawsuit, four parishes – Plaquemines, Jefferson, and more recently Cameron and Vermilion – have filed 40 similar lawsuits against oil and gas exploration and production companies, and pipeline companies, alleging that these companies violated the State and Local Coastal Resources Management Act of 1978 (“SLCRMA”) and, in doing so, caused or contributed to coastal land loss. The foundation of the parish plaintiffs’ claims is that the oil and gas companies performed certain activities in Louisiana’s coastal zone either (i) without the Coastal Use Permits required by the SLCRMA or (ii) or in violation of the Coastal Use Permits which were issued under the SLCRMA. Recently, the Louisiana Attorney General and the Louisiana Department of Natural Resources, Office of Coastal Management (the “Intervenors”) intervened in the lawsuits, joining with the parish plaintiffs in order to ensure the protection of the State’s interests.

The oil and gas company defendants have raised various exceptions to the claims of the parishes and Intervenors, including the defense that the lawsuits are premature because the plaintiffs failed to pursue the administrative remedies available under the SLCRMA and related regulations prior to filing suit. This argument was considered in the case of The Parish of Jefferson v. Atlantic Richfield Company, et al., No. 732-768, 24th Judicial District Court, Jefferson Parish, with Judge Stephen D. Enright, Jr. issuing a Judgment on August 1, 2016 (published on August 8, 2016) agreeing with the oil and gas company defendants and dismissing the claims of Jefferson Parish and the Intervenors as premature for failure to exhaust administrative remedies.

In his Judgment, Judge Enright found that a comprehensive administrative remedy exists under the SLCRMA and the Louisiana Administrative Code (particularly La. Admin. Code tit. 43, pt. I sec. 723(D)(1-4)) to address potential violations of Coastal Use Permits. Accordingly, the Court ordered that Jefferson Parish and the Intervenors must pursue and exhaust this administrative remedy process prior to bringing suit in court seeking civil damages. As the Court stated, “in the absence of an exhaustion of administrative remedies, it is yet to be determined whether civil damages exist.”

While Jefferson Parish has indicated that it will file a motion for a new trial and/or appeal to the Louisiana Fifth Circuit, the Louisiana Attorney General Jeff Landry issued a statement on August 10, 2016, indicating that he will not seek to challenge Judge Enright’s ruling because the ruling is protective of the State’s interest, in that it allows the Louisiana Department of Resources to determine whether any violations of Coastal Use Permits have occurred through the administrative process established by the SLCRMA and the Louisiana Administrative Code. As stated by Attorney General Landry:

addressing the issues associated with permit violations through the administrative process is a cost-effective, efficient way to resolve any violations. That was clearly the purpose of the Legislature creating this regulatory scheme. I believe the Secretary of the Department of Natural Resources has been given ample tools by the Legislature to address these issues.

Full Statement.

While a victory for the oil company defendants, it is still expected that additional parishes will file coastal land loss lawsuits. We will continue to report on key developments in these cases.

 

wet

By Sam O. Lumpkin

On May 31, 2016, the US Supreme Court ruled in United States Army Corps of Engineers v. Hawkes Co., Inc. that a jurisdictional determination issued by the Corps of Engineers under the Clean Water Act constitutes a final agency action that is judicially reviewable under the Administrative Procedure Act.  Justice Roberts wrote the decision of the Court, to which all other justices joined or concurred in the result.

The Clean Water Act prohibits the unpermitted discharge of any pollutant into “the waters of the United States,” including wetlands, without a permit.  However, only wetlands with a “significant nexus” to other waters of the United States are within Corps and EPA Clean Water Act jurisdiction.   Rapanos v. United States, 547 U.S. 715 (2006).  Dredging and filling activities are considered to be the discharge of a pollutant.   As a result, any dredging or filling activities involving a waters of the US within Corps jurisdiction must be approved beforehand by the US Army Corps of Engineers, which is responsible for issuing permits for discharges that would otherwise be forbidden by the Clean Water Act. The Clean Water Act allows imposition of potentially massive criminal or civil penalties for discharging any pollutant without a permit.

Determination of what constitutes a “wetland” or “other waters” of the US often involves expert determinations.  Further, the process for obtaining a Corps permit can itself be time-consuming and expensive – the Court noted that the average applicant for the type of permit at issue in Hawkes spends “788 days and $271,596 in completing the process,” and “[e]ven more readily available ‘general’ permits took applicants, on average, 313 days and $28,915 to complete.” To aid applicants, the Corps issues “jurisdictional determinations” (“JDs”) on a case-by-case basis. JDs are either “preliminary” – advising that there may be waters of the United States on a piece of land – or “approved,” which definitively states the presence or absence and extent of such waters.  The JDs provide some certainty for a landowner or developer as to whether they are required to endure the permitting process. The approved JDs are administratively appealable to the Corps; however, until the Hawkes decision, it was unclear as to whether judicial review of the Corp decision was available.

In Hawkes, the applicant sought a jurisdictional determination and was granted an approved JD stating that the property contained “water of the United States,”with a delineation of where those waters were located. Central to the case was whether the wetlands had a close enough nexus to a major river 120 miles away such that they were within the Corps’ jurisdiction. The applicants administratively appealed the JD under 33 C.F.R. Part 331, and the Corps reaffirmed its decision with revisions to the extent of the wetlands. Not satisfied, the applicants sought review of the JD in a federal district court under the Administrative Procedure Act (APA), which allows district courts to review “final agency actions.” 5 U.S.C.A. § 704. The Corps argued that judicial review was available only at the time of the final permitting decision or on an enforcement action commenced for dredge or fill activity without a permit. The district court agreed with the Corps and dismissed for lack of jurisdiction, holding that a JD is not a “final agency action.” 963 F.Supp.2d 868 (Minn. 2013). The applicants then appealed to the US Court of Appeals for the Eighth Circuit, which reversed. 782 F.3d 994 (2015).

The Supreme Court agreed with the Eight Circuit, holding not only that an “approved” JD is a final agency action, but also that there are no adequate alternatives to the APA for challenging a Corps JD in court. On the issue of finality, the Court noted that  JDs give rise to “direct and appreciable legal consequences,” and they are also binding on the Corps and the EPA for five years following the determination.[1] Unlike other possible agency actions which are merely advisory, such as informal advice from an agency or a preliminary JD, an approved JD follows extensive fact-finding, marks “the consummation of the agency’s decision-making process” and constitutes a final determination of rights and obligations “from which legal consequences will flow.” The Court further held that there are no adequate alternatives to an APA challenge to the Corps’ JD, noting that the only alternatives available were to forego a permit altogether or proceed with the permitting process. Without a permit, the applicant could either proceed with its proposed activity and be exposed to the civil and criminal penalties of the Clean Water Act, or abandon its proposed activity altogether. But the permitting process also poses a highly expensive, time-consuming, and uncertain proposition, for which judicial review would only be available when complete. As a result, the Court held that an approved JD is reviewable in federal district court under the APA.

The Hawkes ruling is a narrow one, and applies only to approved JDs. However, because JDs are literally determinations of the extent of the Corps’ jurisdiction, the scope of the Corps’ authority will likely be subjected to many more challenges than in the past, when such objections would have to wait until the permitting process was complete. As a result, in the future the Corps’ jurisdiction may face additional restraints imposed by federal courts.

Because an adverse ruling on an approved JD is appealable beyond the Corps after Hawkes, a thorough record in the initial JD proceeding is more important than ever. Ordinarily, a consultant will prepare a draft JD for submission to the Corps, which may or may not visit the site in question; the Corps then issues its decision on the record. This process, however, does not offer the applicant any further opportunity to develop the record. Any administrative appeal and subsequent judicial review is limited to the administrative record before the Corps, unless good cause is demonstrated as to why additional information should be admitted. As a result, applicants should ensure that their consultant’s initial submittal is thoroughly documented and, possibly, subjected to legal review prior to submission. Because federal district courts do not possess the same expertise as the Corps, a well-documented and clearly explained initial proposal will aid a district court with the information it needs to review the Corps’ decisions.

____________________________________________

[1]  There were three concurring opinions taking differing positions on whether a Memorandum of Agreement between the Corps and EPA makes the JDs binding on EPA. This aspect could bear further review.

picture-2

By Tyler Moore Kostal

A federal judge dismissed the lawsuit that the New York Times referred to as “The Most Ambitious Environmental Lawsuit Ever” on February 13, 2015, with a finding that the plaintiffs did not state a viable claim for relief.

The Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East (“SLFPA-E” or “Authority”) filed a lawsuit in the Civil District Court in Orleans Parish, Louisiana, against more than 90 oil and gas and pipeline companies on July 24, 2013.  The SLFPA-E filed the suit individually and as the Board governing the Orleans Levee District, the Lake Borgne Basin Levee District, and the East Jefferson Levee District, contending that it manages and is responsible for more than 150 miles of levees, 50 miles of floodwalls, and numerous drainage structures, pump stations, and floodgates in an area it described as the “Buffer Zone,” which includes coastal wetlands in eastern New Orleans, the Breton Sound Basin, and the Biloxi Marsh.  The SLFPA-E alleged that historical and current oil and gas and pipeline activities in the Buffer Zone, including the construction and use of oil and gas canals and pipeline canals, caused “direct land loss and increased erosion and submergence in the Buffer Zone, resulting in increased storm surge risk, attendant increased flood protection costs, and, thus, damages” to the Authority.

With this lawsuit, the SLFPA-E sought damages and injunctive relief “in the form of abatement and restoration of the coastal land loss” including backfilling and revegetating all canals, “wetlands creation, reef creation, land bridge construction, hydrologic restoration, shoreline protection, structural protection, bank stabilization, and ridge restoration.”

On August 13, 2013, the oil and gas defendants removed this case from state court to the United States District Court for the Eastern District of Louisiana.  On September 10, 2013, the SLFPA-E filed a motion to remand the matter to state court.  On June 27, 2014, the federal court denied the SLFPA-E’s motion to remand.  As a result, this matter continued in federal court, and the court considered a number of dispositive motions.

On February 13, 2015, the federal judge dismissed the wetlands damage lawsuit against 88 remaining oil and gas defendants.  At issue before the court was the defendants’ motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure.  Rule 12(b)(6) provides that an action may be dismissed “for failure to state a claim upon which relief can be granted.”  Therefore, for the Authority’s action to survive, its petition needed to contain sufficient factual matter to state a claim for relief that is plausible on its face.  A claim is considered facially plausible when the pleaded facts allow the court to draw a reasonable inference that the defendants are liable for the alleged misconduct.  All parties extensively briefed the issues, and the court heard oral argument.  The court then applied this legal standard to each of the causes of action brought by the SLFPA-E in its petition—(1) negligence, (2) strict liability, (3) natural servitude of drain, (4) public nuisance, (5) private nuisance, and (6) breach of contract as a third party beneficiary.

To state a claim for negligence, a plaintiff must establish five elements:  duty, breach, cause-in-fact, scope of liability, and damages.  The Authority failed to show the threshold element of a legal duty owed by defendants.  Finding no legal duty under state law, the court reiterated its prior finding that oil and gas companies do not have a duty under Louisiana law to protect members of the public from the results of coastal erosion allegedly caused by operators that were physically and proximately remote from the Authority or its property.  The court also found that the federal statutes on which the SLFPA-E relied to establish the requisite standard of care—namely the Rivers and Harbors Act, the Clean Water Act, and the Coastal Zone Management Act—were not intended to protect the Authority.  Because the Authority failed to demonstrate that defendants owe a specific duty to protect it from the results of coastal erosion allegedly caused by defendants’ oil and gas activities, the court concluded that the Authority did not state a viable claim for negligence.

A claim for strict liability also requires a showing of a legal duty owed to the plaintiff.  Because the court already determined that defendants do not owe a legal duty to the SLFPA-E to protect it from the results of coastal erosion, the court found that the Authority did not state a viable claim for strict liability.

A claim for natural servitude of drain involves the interference with the natural drainage of surface waters over property—i.e., from an estate situated above (dominant estate) to an estate situated below (servient estate).  The owner of the lower estate may not do anything to prevent the flow of the water, and the owner of the higher estate may not do anything to render the flow more burdensome.  The SLFPA-E alleged that defendants possessed temporary rights of ownership in the lands they dredged to create the canal network and that those lands constituted a dominant estate from which water flowed onto its servient estate.  However, the Authority failed to show that a natural servitude of drain may exist between nonadjacent estates with respect to coastal storm surge.  As such, the court concluded that the Authority did not state a viable claim for natural servitude of drain.

The parties and the court addressed the Authority’s public and private nuisance claims together.  The obligations of neighborhood are the source of nuisance actions in Louisiana.  Generally, the owner of immovable property has the right to use the property as he pleases, but the owner’s right may be limited if the use causes damage to neighbors.  A claim for nuisance requires a showing of (1) a landowner (2) who conducts work on his property (3) that causes damage to his neighbor.  The court determined that the Authority failed to show sufficiently that it is a “neighbor,” within any conventional sense of the word, to any property of defendants.  To recover, the SLFPA-E must have some interest in an immovable “near” the defendant landowners’ immovable property; yet, it did not allege physical proximity of the servient and dominant estates whatsoever.  Moreover, nuisance claims after 1996 require the additional showing of negligence, except for damages resulting from pile driving or blasting with explosives.  Because the Authority did not allege that defendants engaged in pile driving or blasting with explosives, and it failed to state a claim for negligence upon which relief may be granted, the court dismissed the Authority’s claims for public and private nuisance.

For its breach of contract claim, the SLFPA-E characterized some of the dredging permits at issue as “contracts” between defendants and the US Army Corps of Engineers to maintain and restore.  The Authority contended that it is a third party beneficiary of those contracts; however, the Authority failed to present any authority suggesting that a dredging permit issued by the federal government is a contract.  The court noted that neither a permit nor a license is a contract.  Therefore, the court concluded that because the dredging permits do not constitute contracts, the third party beneficiary doctrine is not applicable.  The court additionally found that even if the permits were construed as contracts, the Authority did not establish that it is an intended beneficiary under the terms of the permits.  To be a third party beneficiary to a government contract, a third party must be an intended, rather than an incidental, beneficiary.  As such, the court found that the Authority failed to state a claim upon which relief may be granted for breach of contract as a third party beneficiary.

Because the SLFPA-E did not state a viable claim for relief, the court granted defendants’ motion to dismiss and dismissed the Authority’s claims against all remaining defendants with prejudice.  The SLFPA-E filed an appeal from this ruling, and the court’s prior remand ruling, with the Fifth Circuit on February 20, 2015.

The dismissal of this lawsuit by the federal court may not be the final word on coastal erosion lawsuits in Louisiana.  As noted, the SLFPA-E has appealed the court’s dismissal to the U.S. Court of Appeals for the Fifth Circuit.  Further, local governmental bodies and private landowners have filed over 30 additional lawsuits against various oil and gas and pipeline entities for related claims.

 

By Claire Juneau

After the 2003 Corbello decision, the Louisiana legislature attempted to enact a workable procedure for recovering environmental damages arising from oil and gas operations known as Act 312. The main goal of Act 312 was to ensure that property contaminated by oilfield operations would be cleaned up to applicable regulatory standards. Since the enactment of Act 312, very few cases have made it through the Act 312 process. Thus, in an attempt to expedite the identification and remediation of contaminated property, the Louisiana legislature recently passed two new measures revising the Act 312 procedure.

Summary of the New Legislation

The first measure (a House bill enacted as Act 754) amends the Louisiana Code of Civil Procedure to provide for:

  • The issuance of an environmental management order (EMO) to expedite site inspections and sampling, and
  • A limited admission of environmental liability that allows defendants to begin to remediate property before trial (limited to the most feasible plan to remediate the property).

The second measure (a Senate bill enacted as Act 779) provides for a number of amendments to Act 312:

  • Allows a plaintiff to provide a notice of intent to investigate potential environmental damage that suspends prescription of the claim for one year upon the notice being provided to LDNR,
  • Requires the plaintiff to identify the alleged environmental damage and the results of any environmental testing if a lawsuit is filed after a notice of intent to investigate is filed,
  • Permits a defendant to request an early preliminary hearing to determine whether there is good cause for it to remain a defendant in the case,
  • Grants subpoena power over agency personnel involved in developing the feasible plan and allows for discovery regarding the development of the plan after a final plan has been submitted,
  • Prohibits ex parte communications with agencies, officials, and contractors who are involved in formulating the feasible plan,
  • Requires the Departments of Agriculture, Forestry, and Natural Resources, along with the Department of Environmental Quality (DEQ), to comment if LDNR approves or structures a preliminary plan that applies regulations other than those of LDNR, and
  • Provides for a waiver of indemnity rights against punitive damages caused by a party who admits limited liability.
     

Continue Reading Act 312 – Louisiana Legislature Passes New Measures to Speed Remediation Process

By Lou Grossman

The Subsequent Purchaser Doctrine is a judicially created limitation on the rights of a current landowner to sue for pre-acquisition damages. For over 160 years, Louisiana courts have held that a current landowner has no right of action to sue for damages to his/her property occurring prior to the date of sale in the absence of an express assignment of that right. In environmental contamination disputes, appellate courts were divided on whether the doctrine should apply to cases involving non-apparent or subsurface property damage.

In a recent 4/3 decision, a majority of the Justices of the Louisiana Supreme Court rejected the notion that property damage must be overt, and held that a landowner has no right to sue for non-apparent damages to land inflicted before the act of sale in the absence of an express assignment of, or subrogation to, that right. Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, 2010-2267 (La. 10/25/2011) –So.3d –. In reaching this decision, the majority acknowledged 160 years of jurisprudence constante regarding the subsequent purchaser rule and found that the rationale should also extend to the situation where damage to the property is not apparent.

In reaching this decision, the Louisiana Supreme Court also rejected various theories advanced by Eagle Pipe, most notably of which was Eagle Pipe’s continuing tort theory. According to the Court, the presence of alleged contamination on Eagle Pipe’s property was not caused by “overt, persistent and ongoing acts,” but was simply a continuing ill effect from the original tortious acts. As such, it was not a continuing tort and could not give rise to a separate tort claim under that theory.

This decision resolves any dispute among the appellate courts and explicitly limits the rights of current landowners to bring suit for environmental harm inflicted prior to the date they acquired the property, regardless of whether the purchaser could have known of the contamination. Such landowners may still seek claims against prior owners and are further permitted to seek environmental remediation, but private actions and damages have been severely abrogated by the Court’s ruling. Moreover, in rejecting the continuing tort theory, the Court refused to allow private claims for environmental harm to exist in perpetuity, providing greater certainty to industry with respect to tort liabilities.

Notably, the Court’s decision created a sharp divide among the justices which continues to persist. Justice Clark, who authored the majority opinion, and Justice Weimer, who authored the dissent have both provided additional written opinions, days after the original opinion was released. As this dispute continues, it is important to recognize a number of similar cases currently pending before the Court, including two arising from oil and gas exploration and production activities performed pursuant to mineral leases. The Court will continue to face such sharp divisions in ruling on these matters and the issue is far from final resolution.
 

By Lee Vail

On October 15, 2010, the former Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued new regulations, incorporating in its entirety and making mandatory the implementation of the American Petroleum Institute’s Recommended Practice 75 (API RP 75).  The rule requires development of Safety and Environmental Management Systems (SEMS) plans by “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a state lessee granted a right-of-use and easement.” 30 C.F.R § 250.105. According to BOEMRE, “the purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents.” This final rule applies to all Outer Continental Shelf oil and gas and sulphur operations and the facilities under BOEMRE jurisdiction including drilling, production, construction, well workover, well completion, well servicing, and DOI pipeline activities.

Responsibility for developing and implementing a SEMS program lies with the lessee (or owner or holder of an operating right), unless it delegates the responsibility to another (likely the operator). Contractors are not responsible for developing the plan; however if compliant, contractor procedures may be incorporated into the lessee’s/operator’s SEMS plan.
 

Continue Reading Outer Continental Shelf Safety and Environmental Management Systems: Imminent Deadlines, New Guidance and Proposed Rules