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.”

 

By J. Eric Lockridge

Large and small offshore service companies are turning to the Bankruptcy Code for help with restructuring their balance sheet, and turning to Washington for help with generating more work.

One of the largest offshore service companies in the world, Tidewater, announced this week that it will file a Chapter 11 bankruptcy petition in Delaware on or before May 17, 2017. This is not a surprise to the markets. Tidewater received notice from the New York Stock Exchange in April that it is at risk of being delisted before the end of the year because its average stock price sat below $1.00 per share for too long. Tidewater’s press release announcing the upcoming bankruptcy says the company has secured broad support from secured creditors for a pre-packaged plan that will effectuate a form of debt-for-equity swap. The plan will also reject certain sale-lease back agreements for a portion of Tidewater’s fleet. Expect a fight over lease-rejection damages.

A smaller operator focused on the Gulf of Mexico, GulfMark Offshore, also announced this week that it is planning a Chapter 11 filing. Offshore Support Journal reported that GulfMark Offshore’s most recent SEC filing discloses the company will likely file a Chapter 11 bankruptcy petition on or before May 21, 2017. The company is working with advisors to secure support for a restructuring agreement that will include a backstop commitment from certain note holders and a debt-for-equity swap.

Some in the offshore industry are lobbying the White House and others to extend the “America First” agenda to the offshore-service industry in hopes that might provide a boost. For example, see Harvey Gulf’s recent open letter to President Donald Trump here. Many in the offshore service industry would like to see the current administration enforce regulations requiring proper plugging and abandonment (P&A) of many non-producing or low-producing wells in the Gulf of Mexico’s shallow water. They have to be careful about how loudly they push that agenda, however, or they may alienate the very exploration and production (E&P) companies that would hire them. Many E&P companies would like to see enforcement of those regulations delayed as long as possible, and at least until the price of oil is higher.

Enforcing P&A obligations would likely create thousands of jobs and boost the economy along the Gulf Coast, where President Trump received strong electoral support. The House Majority Whip, Rep. Steve Scalise (R-LA), represents a district along the Louisiana coast that is home to scores of offshore service companies and their vendors, which gives that industry some important clout on Capitol Hill. Delaying enforcement of P&A obligations and/or making them less onerous might be more consistent with a “regulation-roll-back” agenda and with the interests of many E&P companies, several of which have strong ties to the current administration and deep relationships in Congress.

Will Washington take any action to provide some relief for offshore service companies, their employees, vendors, and lenders? How will an increase in Chapter 11 cases for offshore service companies affect the industry and the companies that have (so far) avoided bankruptcy? Kean Miller and many of our clients will keep a close watch as events unfold.

 

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By Greg Anding

For years, plaintiffs in asbestos litigation have been filing suit in the plaintiff-friendly jurisdictions of St. Louis, Missouri and Madison County, Illinois.  Some estimate that more than half of all mesothelioma claims filed in the United States are filed in Illinois and Missouri.  Many of those claims arise out of alleged exposures completely outside of those two states: some sources cite as many as 72%.  Under guidance from the United States Supreme Court’s ruling in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), Missouri appears to be bringing that trend to an end, which will likely mean an increase in filings in states such as Louisiana where the alleged exposures actually occurred.  A similar issue is currently pending in Illinois, and a similar ruling would likely mean more filings in Louisiana as well.

On February 28, 2017, the Missouri Supreme Court, in State ex rel. Norfolk So. Ry. Co. v. Hon. Colleen Dolan, No. SC95514 (2/28/2017), applying the United States Supreme Court’s landmark ruling in Daimler, dismissed plaintiff’s suit for lack of personal jurisdiction.  Russel Parker, plaintiff, was an Indiana resident who was allegedly injured in Indiana while employed by Norfolk Southern Railway Company (“Norfolk”), a Virginia corporation with its principal place of business in Virginia.  The court found that although Norfolk owned and operated railroad tracks in Missouri, Mr. Parker’s suit did not arise out of or relate to Norfolk’s activities in Missouri, and therefore, Missouri had no specific jurisdiction.  More significant was the court’s finding of no general jurisdiction despite Norfolk’s “substantial and continuous business in Missouri” as demonstrated by its ownership of 400 miles of railroad tracks in Missouri, 590 employees in the state and generation of approximately $232 million in annual revenue from its Missouri operations.  Finding that Norfolk also conducted “substantial and continuous business in at least 21 other states,” and its Missouri business amounted to only 2 percent of its total business, the court held this was insufficient to establish general jurisdiction over Norfolk.  The court also noted that Norfolk did not consent to suit over activities unrelated to Missouri simply by complying with Missouri’s foreign corporation registration statute.

For more information, please contact any member of our Louisiana Asbestos Defense and Occupational Exposure team.

Norfolk Opinion.

 

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By Michael D. Lowe

Last week, thousands of employees throughout the county skipped work as part of “a day without immigrants” demonstration. The employees were protesting the Trump administration’s recent actions regarding immigration. The stated intent was to negatively impact the nation’s economy in an effort to highlight the contributions of immigrant labor. Restaurants were the primary target. Businesses from New York to San Francisco were forced to temporarily close as employees either failed to report to work or “walked out.” In many cases, the protesting employees included both immigrants and their co-workers.

Several employers embraced the protests and promised not to discipline the participating employees. However, many employers took the opposite approach. According to various media reports, hundreds of employees in a number of different cities were terminated after they refused to report to work. With reports that additional demonstrations are likely, employers should prepare for the possibility that one or more employees might choose to participate.

As an initial matter, an employer should communicate its expectations to its employees in advance of any demonstration. If possible, this communication should be documented by internal memo, email, or even text message. Employees should also be reminded of any applicable attendance policies.

While the refusal to report to work is a legitimate non-discriminatory basis to terminate an employee, an employer must be consistent in its response. An employer that terminates some employees, while excusing the absences of others, may face a claim of disparate treatment. Those employers with a unionized workforce should consult labor counsel with regard to any collectively bargained rights.

Finally, affected employers should prepare for media coverage and press inquiries. The demonstrations have already garnered international attention as the debate regarding the Trump administration’s immigration policies shows no signs of slowing down. Employers should clearly define who within its organization may respond to media inquiries and what information will be shared. Any comments made following an employee’s termination will almost certainly be used in any resulting legal action.

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By Jill Gautreaux

The City of New Orleans (“the City”) has amended and re-enacted a gallonage tax on alcoholic beverages of low and high alcoholic content. A “gallonage tax” is a tax on alcoholic beverages based upon the amount, calculated in gallons, of alcoholic beverages sold. The current ordinance became effective on January 1, 2017, but industry members have sought to enjoin the implementation of this “new” tax. The ordinance closely follows the wording of the State gallonage tax statutes, which causes the tax to apply to wholesalers or Louisiana manufacturers because they are the first parties to come into possession of the alcoholic beverages in the State of Louisiana. The City ordinance does not have the effect that it apparently intended, and is worded as follows:

Section 10-511 – Who is liable for tax.

The taxes levied in sections 10-501 and 10-502 of this division shall be collected, as far as practicable, from the dealer who first handles the alcoholic beverages in the city. If for any reason the dealer who first handled the taxable alcoholic beverages has escaped payment of the taxes, those taxes shall be collected from any dealer in whose hands the taxable beverages are found.

On February 9, 2017, the City Council introduced an ordinance to amend Section 10-511, which qualified the word “dealer” in the first sentence and the first phrase of the second sentence with “wholesale”. Nevertheless, according to the current wording of the ordinance, if the wholesale dealer has “escaped” the tax, the retailer will be responsible for paying the tax to the City.

There is a strong likelihood that New Orleans alcoholic beverage retailers will end up having to pay some of this tax if the ordinance is enacted and enforced as currently written. Several large wholesale companies, including Southern Glazers, Southern Eagle, and Republic, do not have any physical presence within the City of New Orleans, and therefore should not be subject to the tax.

A few trade organizations have challenged the enforceability of the ordinance in Orleans Parish Civil District Court. The plaintiffs were successful in obtaining a temporary restraining order, but were denied a preliminary injunction. The temporary restraining order has lapsed, but, as of this date, the City has indicated that it will not collect the tax until the litigation has concluded. One City official has suggested that if the City prevails, that the tax due will be retroactive to January 1, 2017.

 

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By Stephen C. Hanemann and Edward H. Warner

On Wednesday, February 24, 2016, President Obama signed H.R. 644, known as the Trade Facilitation and Trade Enforcement Act (“Customs Bill”). For Louisiana’s vast number of companies operating in the agribusiness, seafood processing, and related industries, the signing of the bill is a significant milestone. The Customs Bill sets forth principal objectives concerning: (1) general trade policy efficiency; (2) trade protection (leveling the playing field for local workers dealing with foreign competitors); and (3) strengthening of the Trade Promotion Authority Statute. The following represents Customs Bill considerations that Louisiana businesses will find pertinent.

What are the major components of the Customs Bill that Louisiana businesses must know?

The Customs Bill creates a coordinated effort for trade facilitation. The primary agency funded under the Customs Bill is the United States Customs and Border Protection (“CBP”). The bill modernizes the CBP’s Automated Commercial Environment (“ACE”) which will be used to track and process imports and exports.  The International Trade Data System (“ITDS”), also known as the “single window,” will eventually be used to submit all trade documentation. Cooperative efforts among trade enforcement agencies and the efficient-electronic filing of trade documents are both important goals of the Customs Bill.

The Customs Bill also strengthens the enforcement of U.S. international-trade laws. The bill expands requirements on imports to ensure health, safety, and the protection of intellectual property rights. The bill includes provisions, which prevent dumping and currency manipulation. The bill also includes “miscellaneous” provisions pertaining to expansions on the requirements for the United States Trade Representative to resolve foreign country practices that create barriers to U.S. goods and services. A portion of the bill also encourages more Americans to engage in global commerce through the internet by availing themselves of an internet tax moratorium.

How does the Customs Bill specifically help Louisiana’s local businesses?

The Customs Bill enforces U.S. trade laws which directly impact Louisiana’s local businesses. For example, “dumping,” a method of predatory pricing used by foreign companies to undercut local markets and drive away competition, has hurt critical Louisiana industries in the past. The Customs Bill requires CBP to investigate evasion of antidumping or countervailing duties. The bill also contains the legislative language of the PROTECT Act which would require annual reporting on CBP policies regarding antidumping evasion.  The Customs Bill’s antidumping provisions are particularly important for protecting Louisiana’s seafood, agriculture, and food-processing businesses.  Louisiana’s manufacturing sector also serves to benefit as that sector is often most impacted by unfair trade practices.

Louisiana’s seafood industry will also benefit from other measures in the bill.  The bill requires the CBP to train personnel for the detection and seizure of illicit fish and wildlife being imported into the U.S.

Finally, the Customs Bill should improve health and safety at Louisiana’s ports, and enhance port-related infrastructure.  Louisiana’s shallow-draft-inland ports are largely cargo and industrially focused, while the coastal ports serve as support sites for offshore-related industries. The Customs Bill requires CBP to coordinate federal responses to cargo entering the United States that pose a threat to the health and safety of U.S. consumers. CBP will also be required to provide effective training to its personnel assigned to U.S. ports of entry to ensure the safe and expeditious entry of merchandise into the United States. Each of these measures should ultimately help improve the safety of Louisiana ports, related-supporting businesses, and essential personnel.

What are the legal implications of the Customs Bill moving forward?

The Customs Bill is one of a number of bills which represents comprehensive U.S. trade reform in connection with the Trans-Pacific Partnership (“TPP”).[1]  The Customs Bill should improve the nation’s enforcement of trade laws which is integral to Congress passing the TPP.  The bill should also increase transparency, accountability, and coordination among U.S. agencies working in trade enforcement. The signing of the Customs Bill may be a step in the right direction in protecting certain of America’s target industries and ensuring the benefits of international trade in the 21st century.

[1] The Trans-Pacific Partnership (TPP) is a trade agreement involving twelve Pacific Rim countries signed on February 4, 2016 in Auckland, New Zealand after seven years of negotiations. It is not yet in effect.

Business Briefing Breakfast
Kean Miller partners Linda Perez Clark and Eric Lockridge will present our final Business Briefing Breakfast of 2015 on Friday, November 20th at Juban’s Restaurant in Baton Rouge.  Linda and Eric will provide tips and techniques for purchasing distressed businesses.   There is no fee to attend, and one hour of CPE credit is available.  RSVP to 225-389-3573 or rsvp@keanmiller.com

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By Jessica Engler 

On March 2, 2015, new federal regulations went into effect which seek to strengthen the protections against human trafficking. A large part of these new regulations, which are updates to the Federal Acquisition Regulation (“FAR”), provide a stronger framework to discourage federal contractor employers from trafficking workers into the country illegally. Since a significant number of federal government contracts are for construction projects, it is imperative that contractors who bid on and win federal contracts be aware of these new regulations.

The United States has long had policies prohibiting government employees and government contractors from engaging in trafficking of persons, and the recent Executive Order, titled “Strengthening Protections Against Trafficking in Persons in Federal Contracts”, and Title XVII of the National Defense Authorization Act for Fiscal Year 2013 have served to heighten the requirements on federal contractors to comply with federal rules against human trafficking. Prior to the implementation of these new rules, federal law prohibited government employees and contractors from participating in trafficking activities including “severe forms of trafficking in persons.” Severe forms of trafficking in persons is defined by section 103 of the Trafficking Victims Protection Act of 2000 to include the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude.

Under the new regulations, all contractors and subcontractors (not just those contracting with the federal government) are expressly prohibited from engaging in the following trafficking-related activities:

  • Destroying, concealing, removing, confiscating, or otherwise denying access to an employee’s identity or immigration documents;
  • Failing to provide return transportation for an employee from a foreign country to the country from which the employee was recruited, unless the contractor is exempted or the employee is a victim of trafficking that is seeking redress in his country of employment or is a witness to human trafficking;
  • Solicitation of a person for employment, or offering employment, through materially false or fraudulent pretenses, falsehoods, or promises about that employment. This includes misrepresentations concerning key aspects of employment such as wage payments, fringe benefits, location, and conditions of employment;
  • Use of recruiters who do not comply with local labor laws and charging “recruitment fees” to employees;
  • Providing or arranging housing that fails to meet applicable housing and safety standards; and
  • If required by law or contract, failing to provide an employment contract, recruitment contract, or other required paperwork in writing, in the employee’s native language, prior to departure from the employee’s country of origin.

The regulations impose several additional obligations on federal contractors. For example, these new regulations mandate that such contractors (1) inform their employees and agents of the federal government’s anti-trafficking policies and the penalties for non-compliance, which include removal from contract, reduction in benefits, and termination of employment; and (2) fully cooperate with the federal agencies that are responsible for audits, investigations, or corrective actions related to human trafficking.

Additional rules apply to contractors performing work outside of the United States under a contract valued over $500,000, who must:

  • Create and implement a compliance plan to prevent any prohibited trafficking in persons and implement procedures to prevent any such activities, which must be appropriately designed with regard to the size and complexity of the project, and submitted upon award of the contract and annually thereafter, and published at the contractor’s workplace and website by the start of the contract performance;
  • Certify that, after performing the appropriate due diligence, to the best of the contractor’s knowledge and belief: (1) none of the contractor’s agents, subcontractors, or their agents are engaged in trafficking activities; and (2) if abuses have been found, the contractor has taken the appropriate remedial and referral actions.

Should a violation occur, the contracting officer will consider the compliance plan as a mitigating factor when determining the penalties for the violation.

As stated above, these new requirements apply to all new bids, contracts, and solicitations for federal contracts dated March 2, 2015 onward. Given the heightened new requirements for federal contracts, contractors considering such projects may want to review their current policies and procedures to ensure compliance with the new requirements. Contractors may also consider revising their employee handbooks in light of the new requirements. Consulting a labor and employment or construction attorney may be beneficial in assessing changes to contract labor policies and compliance plans.

 

 

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By Edwin R. Noland, III

Each year, as the calendar changes, the tax collecting divisions of political subdivisions (Parish, City, etc.) gear up for the increased workload that comes along with preparing for tax sales.  In the State of Louisiana, owners of immovable property (real estate) are required to pay property taxes to the parish and/or the city.  In certain instances, some or all of the property tax may be exempt (either due to non-profit status or a homestead exemption).  However, for many residents, at least a portion of the property taxes remain due.  When the property taxes are not paid, the property is subject to a tax sale.

If property is sold at a tax sale, the former assessed owners (tax debtors) have a period of time when they may redeem the property from the tax sale purchaser by paying the delinquent amounts paid by the tax sale purchaser along with applicable penalties, fees, and interest.  Previously, that redemption period was three years for all properties (excluding property in New Orleans).  However, in 2014, Constitutional Amendment Number 10 (Act 436 – HB 256) was proposed to reduce the tax sale redemption period from three years to eighteen months on properties that were considered blighted, hazardous, uninhabitable, or abandoned.  On the November 4, 2014 ballot, the proposed Constitutional Amendment was approved by 54.32% of the voting public.[1]  Louisiana Constitution Article 7, Section 25 (B)(3) now states, in part, “…when such property sold is vacant residential or commercial property which has been declared blighted … or abandoned … it shall be redeemable for eighteen months after the date of recordation of the tax sale …”

The tax sale process involves multiple steps.  The procedure begins by the distribution of tax bills informing the landowner of all amounts due.  In most parishes, including East Baton Rouge Parish, tax bills are sent to homeowners starting in late November or early December and are delinquent by January 1st the following year.  Louisiana law provides that “the tax collector shall seize, advertise, and sell tax sale title to the property or an undivided interest therein upon which delinquent taxes are due, on or before May 1st of the year following the year in which the taxes were assessed, or as soon thereafter as possible.”  LSA R.S. 47:2154

The tax collector must comply with multiple requirements in the tax sale process.  First, the tax collector must provide a delinquency notice in January or February to the tax debtor (and any other party requesting notice) by certified mail informing them of amounts owed.  Thereafter, if the tax bill remains unpaid, there is a mortgage and conveyance record search performed, and an additional notice is sent out.  Finally, the tax collector will publish a notice in the official journal of the political subdivision twice within thirty days and advertise for sale properties with delinquent statutory amounts owed.

After the notice and advertising requirements are met, the tax sale title to the property is sold at a public auction (either in person or online).  At the tax sale, potential purchasers bid on percentage interests in the tax sale title.  The lowest percentage bid will purchase that interest in the tax sale title in exchange for paying 100% of the past-due amounts.

Once the tax title to the property is sold, the tax debtor has either a three year or eighteen month redemption period, depending on the condition of the property.  The property is redeemed by paying the price given, including the amount paid by the tax sale purchaser, five percent penalty thereon, and interest at the rate of one percent per month until redemption.  LSA Const. Art. 7, Section 25 (B)(1)

The above referenced constitutional amendment reducing the redemption period for tax sales of properties which are considered blighted or abandoned became effective January 1, 2015.  It is easy to forget about the amendments and laws passed during different elections when those changes do not necessarily affect our daily lives.  However, property owners should be cognizant of this change to the redemption period for abandoned or blighted properties to avoid their properties being placed in potential jeopardy.  This constitutional amendment may also provide opportunities for investors to focus the properties that they target due to the opportunities afforded by the shortened redemption period.

[1] http://staticresults.sos.la.gov/11042014/11042014_Statewide.html

 

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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.