Is Big Oil Secretly Negotiating A Settlement To Pay For Coastal Damages?

On April 25th, Louisiana Attorney General Buddy Caldwell was a guest on “The Jim Engster Show,” and General Caldwell spoke candidly about his recent dispute with State Senator Robert Adley (R- Big Oil) and the continuing controversy surrounding the Southeast Louisiana Flood Protection Authority-East’s (SLFPA-E) landmark lawsuit against 97 oil and gas companies. Quoting from the transcript (bold mine):

Caldwell: Well, Robert Adley is who you see is who you get. He’s just an everyday guy that is vehement about his own interests, and he represents the big oil interest. And I’m a lawyer, so whatever the law is, that’s what I want to comply with. And we had a little deal where the levee board down in New Orleans, whether or not they could let a contract, and of course they could. They’re a political subdivision, and in that case they get to hire their own attorney. So, I was right about that, the court upheld me on that. But Robert is not a lawyer, the people surrounding him are not lawyers, and the lawyers that he has advising him are not real lawyers, so he runs into a problem there.

Engster: Well, he was on the show, and I’d like to paraphrase him. He even talked about it being unchristian to go after these oil and gas people after the fact. He says that they thought they were complying with the law, and they were at the time that they were involved in drilling and ripping up the coast – I’m paraphrasing, then we should’ve had something in place then, and not go after them after the fact.

Caldwell: Well actually the oil and gas people are contractors, and they sign contracts with landowners, and they agreed when they signed their contracts and executed their leases that they would cleanup. And basically speaking, they never really did that. But there are some legitimate interests in the oil and gas company. What I have tried to do is put myself in the stated position to have them “let’s get this over with.” The oil and gas companies are actually listening to me now, and they want to get all this stuff off of their books. And I believe after this legislative session we’re going to see some big time movement in that. Of course the only reason that they would move is that you get sued, you get a trial date, and you have to do something about it. But I have faith in the oil and gas industry that they are going to finally do something because it is in their best economic interest to do so, and now.

Engster: Well the legislature of course is weighing bills that are being promoted by Senator Adley and others that would essentially do away with the current litigation – what do you think will happen?

Caldwell: Well, I believe the oil and gas industry is gonna do what’s best for its own economic interest, and I think that they see a value in getting rid of all the suits, cleaning up, doing what they should’ve done to begin with.

A few weeks ago, I spoke with John Barry, a former member of the SLFPA-E who is widely considered one of the world’s preeminent experts in the history and the causes of coastal erosion. While on the SLFPA-E, Mr. Barry, the author of the critically acclaimed bestseller Rising Tide: The Great Mississippi Flood of 1927 and How It Changed America, helped to spearhead the largest and most significant environmental lawsuit in Louisiana history, asking 97 different oil and gas companies to, in Mr. Barry’s words, “restore the part of the coast they damaged.” Make no mistake: No one can credibly deny that oil and gas companies are not, at least, partially responsible for the destruction and degradation of the Louisiana Gulf Coast, and no one, including Senator Robert Adley, can credibly assert that these companies were really “complying with the law.”

For decades, oil and gas companies have extracted trillions of dollars worth of natural resources from Louisiana’s coast, and Louisiana’s shared natural resources have helped a small handful of multinational corporations and out-of-state businessmen accumulate more wealth than anyone before in human history. It’s an astonishing arrangement: Foreign oil and gas companies have pillaged and polluted Louisiana’s coast; they’ve made the state’s already vulnerable ecosystem even more vulnerable by dredging canals wherever and whenever they see fit. The wealthiest industry in the world has convinced one of the poorest, sickest, and most uneducated states in America that they’re doing it a favor by extracting its natural resources, shipping off the profits, destroying its environment, buying off its state government, and hiring so-called academics to remind everyone how great the industry is for the state’s economy.

This, of course, is not to suggest, at all, that Louisiana’s oil and gas industry is inherently terrible; like most industries, it’s just inherently amoral. And for far too many years, the industry has been allowed to act with impunity. When John Barry and the SLFPA-E announced their historic lawsuit against Big Oil, both the state and national media praised their bold action. This was about Louisiana finally, seriously holding oil and gas companies accountable. This wasn’t about finding money for Governor Bobby Jindal to build more sand castles; it was about securing reasonable compensation from these companies to actually fix the damage they inflicted.

And while the media and almost anyone who has ever read about the urgency of coastal restoration praised the SLFPA-E’s landmark lawsuit, Governor Jindal decided to take the side of Big Oil and to blame, rather pathetically, the lawyers who signed on to the case. Given the size and scope of the case and the risks involved, the SLFPA-E’s lawyers were hired under a contingency fee agreement. In a case like this, such agreements are commonplace, and as both the Louisiana Attorney General and the courts have repeatedly held, these agreements are completely legal. But because Governor Jindal and his friends in Big Oil could not and cannot dispute the underlying merits of the SLFPA-E’s lawsuit, they were forced instead to trot out a hackneyed political attack against “greedy trial lawyers.”

To be sure, under the original contingency fee agreement, if the SLFPA-E was successful, their lawyers stood to make an enormous fortune, and I recognize how that possibility may offend people who believe the damages that Big Oil owes to Louisiana should be spent on restoring the coast, not paying lawyers. But either way, there is an underlying irony to Big Oil’s “trial lawyer” spin: It anticipates that the lawyers are right; it unwittingly acknowledges that, if the case ever made it to a courtroom, Big Oil would lose, epically. And it means that Governor Jindal’s opposition to the lawsuit, in particular, has nothing to do with ensuring real environmental justice for the people of Louisiana and everything to do with protecting the profits of Big Oil.

Almost immediately after the lawsuit was announced, Governor Jindal made it abundantly clear that John Barry would not be reappointed to the SLFPA-E, and during the last month, State Senator Robert Adley has carried a series of bills aimed at invalidating the lawsuit and restructuring the SLFPA-E.

*****

I asked John Barry if he was surprised by Governor Jindal’s reaction. He said he was. The Governor, he said, should have been aware of the lawsuit, well before it was even filed. His coastal advisor, Garret Graves, had been sitting in on SLFPA-E’s meetings for months. Although Mr. Graves never spoke out in favor of the litigation, according to Mr. Barry, he also, allegedly, never warned board members of the Governor’s apparent belief that the lawsuit was a usurpation of gubernatorial authority and allegedly never advised board members of the Governor’s vehement opposition to the lawsuit.

When the suit was finally filed, Mr. Barry claimed that he was also surprised that many of the companies listed in the indictment seemed to be totally unaware, until then, that the SLFPE-A had been preparing litigation. He had assumed Mr. Graves had been advising the Governor’s Office and that, in turn, the Governor’s Office would have been sharing information with their friends in the oil and gas industry. On February 4th, Mr. Graves resigned from his position in the Governor’s Office in order to launch a campaign for Louisiana’s Sixth Congressional District. In announcing his resignation, Mr. Graves said his decision had actually “been made months ago.”  It is unclear if his apparent lack of communication with the Governor’s Office concerning the imminence of the SLFPA-E’s lawsuit factored into his resignation.

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I also asked Mr. Barry if the authority had been pursuing settlement negotiations with the companies named in the suit. Rather than attempt to paraphrase his response, I think it’s equally instructive and revealing to read Mr. Barry’s comments concerning Attorney General Caldwell’s statement on “The Jim Engster Show.” Quoting (bold mine):

Last week, Louisiana’s Attorney General Buddy Caldwell made public something I’ve hinted at in my talks: there are on-going conversations about a statewide settlement. On the Jim Engster radio show last week, Caldwell announced that because of the SLFPA-E lawsuit, major oil companies have come to him seeking a statewide settlement. We’ve always hoped that the lawsuit would spark a statewide deal. Conversely, we’ve recognized that if the legislature kills the lawsuit, there’s no reason for the oil companies to compromise. There is a solution if the state would simply seal it. The governor has turned his back on that possibility. As citizens, lets make sure the legislature does not.

Put another way, for the first time in Louisiana history, oil companies are now sitting at the negotiating table, willing to discuss a statewide settlement deal. But remember, as General Caldwell stated, “Of course the only reason that they would move is that you get sued, you get a trial date, and you have to do something about it.” 

By attempting to retroactively invalidate this lawsuit (which I believe would be subject to more than a couple of Constitutional challenges), Bobby Jindal, Robert Adley, and all of the other Louisiana elected officials being paid to do the bidding of Big Oil are destroying this once-in-a-generation opportunity to reach a fair and equitable settlement agreement to restore and repair our coast in a large-scale, meaningful way. It may not work out, but it is worth a shot. And remember the whole “contingency fee” controversy? That’s already been resolved, and it destroys Governor Jindal’s central argument.

Quoting from an April 8, 2014 Press Release:

Attorneys Representing Southeast Louisiana Flood Protection Authority – East Put The Ball in Oil and Gas Companies’ Court – Offer To Tear Up Contract Under New Terms, Public Would Not Pay a Penny for Lawyers’ Fees (New Orleans, LA )

Today the attorneys representing the Southeast Louisiana Flood Protection Authority – East (“SLFPA-E”) formally extended an offer to restructure their fees if the 97 oil and gas companies named in the suit will come to the table and negotiate a fair and equitable settlement in the case to accelerate the important work that needs to be done to restore Louisiana’s Coast. “SLFPA-E filed this lawsuit in order to protect the lives, property, and culture of coastal Louisiana” said Gladstone Jones, lead attorney for SLFPAE.

“The oil and gas industry has used the rhetoric of ‘greedy trial lawyers’ to distract from the true facts of this case that show these companies played a role in the coastal erosion of South Louisiana.  This proposal puts an end to that distraction.”

The fee agreement between the firms and the SLFPA-E has been the subject of legislation that is currently moving through the Louisiana Legislature.  Governor Jindal, oil and gas lobbyists, and friendly legislators have used discussion of it to deflect attention from the core issue of the case – the land loss crisis facing coastal Louisiana. In order to get that issue out of the way, the lawyers have made the following proposal: The lawyers will agree to waive fees owed under the existing fee agreement with the SLFPAE with respect to any oil, gas or pipeline defendant named in the SLFPAE action that:

(1)     agrees within 6 months to enter into negotiations toward a compromise and

(2)     agrees to pay mutually agreeable attorneys’ fees in connection with such a compromise. In the event the parties cannot reach a mutual agreement, all parties agree to submit the question of the attorneys’ fee to arbitration.

Gladstone Jones went on to say “We are in this with the citizens and taxpayers of South Louisiana.  It’s time for South Louisiana to see some leadership from the Legislature and the Governor that demonstrates a commitment to protect the lives and property of the good people of South Louisiana.  If these companies aren’t forced to fix what they broke, then taxpayers will be on the hook for billions. The Legislature should leave the third branch of government to do its job because evidence, not influence, should decide this case.”

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So, right now, we’re negotiating statewide settlement offers; the controversial contingency fee agreements have been scrubbed, and maybe, just maybe, we are on the verge of a substantive breakthrough.

No, John Barry and members of the SLFPA-E refused to kiss the Governor’s ring; they’ve refused to kowtow to State Senator Robert Adley and the rest of his merry gang at the Louisiana Oil and Gas Association. And instead of preoccupying themselves with Timmy Teepell’s trial lawyer fantasies, they’ve managed to finally bring people to the table.

Mark my words: If Governor Jindal successfully neuters and invalidates this historic and important lawsuit, it may take Louisiana another thirty years to get back to the negotiating table, and by then, it may be too late.