Louisiana Levee Litigation Brings the Legal Significance of Wetland Loss to Light

Casey Pickell, 2015 J.D./C.L. Candidate, Louisiana State University Law Center, research time partially funded by the Louisiana Sea Grant Law & Policy Program.

On July 24, 2013, the state board that oversees flood protections for southeast Louisiana filed a monumental lawsuit against nearly 100 oil and gas companies. The suit seeks to recover for decades of damage to the coastal wetlands that serve as a buffer to the effects of hurricanes in the region.[1] The lawsuit, filed by the Southeast Louisiana Flood Protection Authority-East (SLFPA-E), alleges that the named companies failed to live up to stipulations in their federal and state coastal use permits that required them to “maintain and restore” wetlands damaged by their activities over the past few decades.[2]

SLFPA-E Claims

Specifically, the SLFPA-E argues that cutting vegetation across thousands of miles coastal wetlands in preparation for oil and gas pipelines and canals, violated the federal River and Harbors Act of 1899 by reducing the effectiveness of federal levees.[3] The crux of the case however is based on a centuries-old legal principle called “servitude of drainage,” which stipulates that someone is liable for damages if he does something to increase the flow of water onto another’s property.  In this case the other’s property includes the levees managed by the SLFPA-E. Servitude of drainage is an established principle of civil law going back to Roman times.[4] Louisiana, a civil law state tracing its legal history back to Rome rather than England like most states, has regularly recognized this issue in its courts since people first started clearing wetland areas for development.[5]

In demonstrating the oil companies’ liability, the suit claims that “oil and gas activities have transformed and continue to transform what was once a stable ecosystem of natural bayous, small canals and ditches into an extensive – and expanding – network of large and deep canals that continues to widen due to the Defendant’s ongoing failure to maintain this network or restore the ecosystem to its natural state.”[6]Further, the SLFPA-E claims that the oil and gas activities cause saltwater intrusion, which weakens the root systems of the vegetation that holds the wetlands together, resulting in the loss of wetlands during even minor storms.[7]

The suit seeks recovery from two alternative avenues. First, the SLFPA-E asks the companies to repair the damage by bringing the landscape back to its original condition if possible. Second, if the first option is not feasible, the companies are asked to offset the SLFPA-E’s rising costs associated with allegedly increased storm surge in the parishes under the levee board’s jurisdiction. Gladstone N. Jones III, a lawyer for the SLFPA-E, said it is seeking damages equal to “many, many billions of dollars.”[8]

Proving the Case

To win its case, attorneys for the SLFPA-E plan to use years of scientific research to prove that the oil industry impacted drainage in the wetlands. For decades, researchers in the area have documented the relationship between canal dredging and Louisiana’s loss of almost 2,000 square miles of coastal wetlands. The Louisiana Coastal Protection and Restoration Authority, using research from the U.S. Geological Survey, claim almost 10,000 miles of canals have been dredged for oil and gas. Many researchers believe the figure is considerably higher since the agency’s numbers rely mostly on permits, and there was not a reliable permitting system until passage of the federal Clean Water Act in 1972. Scientists estimate that anywhere from 35 to 50 percent in most areas and as high as 90 percent in some areas of the state’s catastrophic land loss can be traced to oil and gas canals.[9]Regardless of the percentage, scientists agree that there is an undeniable relationship between the number of canals in an area and the amount of land loss.

Another important scientific factor in the case deals with the relationship between rising storm surges and increased subsidence of the Louisiana coastal zone. Simply described, “subsidence” is the sinking of land to a lower level.[10] Research published by the Louisiana Universities Marine Consortium shows that the rate of subsidence in an area increased as the rate of oil and gas extraction rose, and fell when extraction stopped.[11] Alex Kolker, a professor and researcher in the study, described the increased rate of subsidence as “a pretty straight correlation” based on the fact that when companies remove gas and oil contained in rocks under pressure deep below earth’s surface, a vacuum is created that is eventually filled by surrounding materials, causing the ground above to sink.[12]

Conflicting Research

However, there has been some scientific research that points to other activities as the main source of increased subsidence rates.[13]Some scientists argue that subsidence in the area is more likely caused by pumping groundwater out of sandy aquifers for surface use, as opposed to the defendants pumping out oil and gas.[14]Additionally, they argue that the clear-cutting of cypress forests in the early 1900s that were once abundant in the area south of New Orleans started the process of weakening Louisiana’s coast, not the oil companies.[15] Other objections to the suit allege that the levees themselves are the biggest cause of wetland loss because they prevent the flooding that in the past naturally dumped sediment across thousands of square miles of southeast Louisiana.[16] In trial, the court will have to take all possible causes closely into account, especially since the suit only asks for the oil companies to pay for the damage that it can determine they specifically caused. Thus, the credibility of these scientists, who one can anticipate will serve as expert witnesses if the lawsuit proceeds to trial, will be a key determining factor in this case.

State Opposition

In an effort to put political pressure on the SLFPA to stop the case from proceeding before it gets to the merits, Louisiana Governor Bobby Jindal and administration officials have opposed the suit since it was filed.[17] Governor Jindal and these administration officials argue both that the SLFPA-E overstepped its authority and the contingency agreement for the attorneys working on the case is too generous.[18] The Jindal administration has additionally threatened to intervene in the suit based on a claim that the SLFPA-E needs permission from the Governor and Attorney General before it is allowed to hire special counsel to pursue such lawsuits, like typical state agencies.[19] However, the SLFPA-E argues that it is not a state agency but is an independent political subdivision set up in a way intended to shield itself from political influence.[20]  This feared political influence is thought by many to be the reason some of the local levee boards did such a poor job prior to Hurricane Katrina.[21] Prior to Katrina, smaller individual levee districts existed with boards entirely composed of political appointees.[22]As a result, these were seen as ineffective because they ultimately proved to be more focused on political patronage and money generation than actually improving flood protection.[23] While still indirectly appointed by the Governor, the board of the SLFPA-E is intended to be composed primarily of politically “disinterested” professionals, prospectively more apt in making highly technical decisions without any undue political influence.[24]Based on its subdivision status, the SLFPA-E argues it is bound by a different set of requirements than typical state agencies and is only required to obtain the attorney general’s authorization to file lawsuits; authorization it already obtained from Attorney General Buddy Caldwell prior to filing.[25]

Further, the Jindal administration has argued that the suit actually jeopardizes and undermines the state’s ability to implement its Master Plan for restoring the wetlands. The state’s $50 billion, 50-year coastal protection and restoration Master Plan outlines how the state and localities will restore wetlands and improve flood protection in the New Orleans area and elsewhere along the state’s coast.[26]Members of the SLFPA-E’s board said the lawsuit does not conflict with the state Master Plan, in fact, they see the suit as a means of trying to get the money to fund the plan.[27]The Jindal administration has also used this reasoning to justify its intentions to eject and replace four current members of the SLFPA-E’s board, including two leadership positions, when their reappointment terms come up later this month.[28] The Governor has already called for new applicants to apply for appointment to the board.[29] If Jindal is successful in appointing four more administration friendly members, the nine member board will possibly be within one vote of dropping the suit that it unanimously decided to bring just months prior.[30] Former Governor Kathleen Blanco, who oversaw the creation of the SLFPA-E, said that these efforts by Jindal would amount to an “unraveling” of the promise of a board that was intended to be free of political influence.[31]

Uncertain Future – Is this a State or Federal Issue?

“Arising Under” Federal Jurisdiction

On August 13, 2013, one the defendants in the suit, Chevron U.S.A., Inc., filed a notice removing the suit to federal court in New Orleans arguing that one or more of the SLFPA-E’s claims “arise under” federal law, and the SLFPA-E’s right to relief necessarily require the “resolution of a substantial question of federal law.”[32] Specifically, Chevron’s removal notice cites three federal statutes that the SLFPA-E uses in its claims, the Rivers and Harbors Act of 1899 (“RHA”), the Clean Water Act of 1972 (“CWA”), and the Coastal Zone Management Act of 1972 (“CZM”).[33] The removal notice alleges that the SLFPA-E’s assertion that defendants’ failed in their obligations to “maintain and restore” the wetlands under various permits issued to these companies by the U.S. Army Corps of Engineers depends on these three federal laws that articulate the “relevant components of [the] regulatory framework” at issue.[34] The notice further alleges that any state permits are merely secondary and are relevant only after obtaining the necessary federal permits.[35] Therefore, the removal notice alleges that the SLFPA-E’s claims are created by federal law, a fact that alone forms a sufficient basis for removal to federal court under 28 U.S.C. §§ 1331 and 1441(a).

In the alternative, Chevron’s removal notice states that under Grable & Sons Metal Products, Inc., v. Darue Eng’g & Mfg., even if the case has a state law cause of action, federal jurisdiction exists because the claim raises a federal issue that is actually disputed and substantial, and therefore must be heard by a federal court.[36] To find federal jurisdiction proper, courts have formulated the four part “Grable test” that considers whether (1) the case resolves a federal issue 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.[37] Chevron alleges that the SLFPA’s suit meets all of these requirements. First, Chevron avers that the SLFPA-E’s claim “necessarily raises” a federal law issue because the SLFPA-E cannot establish that the oil companies had the alleged statutory duty to restore the wetlands without the federal RHA.[38] Second, the federal issue is “actually disputed” because Chevron states that it strongly disputes the SLFPA-E’s reading of the RHA and CWA alleging that it is a proper third party beneficiary with standing to enforce the permits governing the defendants’ activities.[39]Third, Chevron argues that the federal issues are “substantial” because the federal regulatory framework from the RHA, CWA and CZM are pervasive and essential to each of the SLFPA-E’s claims, and that having a federal court resolve these issues is exactly why this kind of federal jurisdiction exists.[40] Fourth, Chevron states that federal court is the more suitable place for the case to be heard and the court will not significantly overburden the court’s caseload.[41]

Other Grounds for Federal Jurisdiction

Outside of “arising under” jurisdiction, Chevron also makes more specific claims that general maritime law, the Class Action Fairness Act (“CAFA”), Outer Continental Shelf Lands Act (“OCSLA”) and “federal enclave” jurisdiction each provide a unique basis for federal jurisdiction.

(1)   General Maritime Law

First of these, Chevron asserts federal jurisdiction over the case flows from federal judicial power extending to “all cases of admiralty and maritime” jurisdiction.[42]Chevron alleges that the SLFPA-E’s claims involve torts by the defendants that “satisfy conditions of both location and of connection with maritime activity” to the level that the activities have a “potentially disruptive impact on maritime commerce.”[43] Specifically, the allegations that the defendants’ cutting and dredging of the canal network described in the SLFPA-E’s petition caused damage to the wetlands, which occurred in navigable waters, are therefore subject to maritime jurisdiction.[44] Chevron says that this alleged failure by it and the other defendants to maintain these canals constitutes a tort with a “potentially disruptive impact on maritime activity,” thereby satisfying the conditions for federal maritime jurisdiction.[45] Chevron claims that this is all it needs to show to find federal maritime jurisdiction, as two Texas cases in 2012, Ryan v. Hercules Offshore, Inc.,[46] and Wells v. Abe’s Boat Rentals Inc.,[47] have interpreted recent changes in the law to no longer require any separate basis for federal jurisdiction.

(2)   Class Action Fairness Act

Adding a second specific basis for jurisdiction, Chevron claims that CAFA provides federal court jurisdiction.[48] Chevron asserts that the “mass action” facet of CAFA gives federal courts jurisdiction over “any civil action…in which monetary claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiff’s claims involve common questions of law or fact.”[49] While acknowledging that the SLFPA-E is the only named plaintiff in the suit, Chevron uses the logic that since it represents the Greater New Orleans area, and there are more than 100 residents and businesses in the area, the “mass action” CAFA requirement of 100 plaintiffs is satisfied.[50] Chevron backs up this logic by quoting an interview with the SLFPA-E’s Vice President and particularly the minutes from an SLFPA-E meeting where it was stated that the lawsuit is “on behalf of itself and the levee districts within its jurisdiction…and on behalf of residents within its jurisdiction.”[51]

(3)   Outer Continental Shelf Lands Act

Chevron further states that removal is proper under the OCSLA.[52] The OCSLA provides that “the subsoil and seabed of the Outer Continental Shelf appertaining to the United States” and all “installations and other devices…attached to the seabed for the purposes of exploring for, developing, or producing resources therefrom” are subject to the jurisdiction of the federal courts.[53]Chevron reasons that since some of the SLFPA-E’s claims were allegedly caused by  canals dredged to accommodate pipelines running through Louisiana’s coastline that connect onshore facilities to oil and gas rigs operating on the Outer Continental Shelf,[54] the OCSLA provisions for federal jurisdiction are satisfied.[55]

(4)   Federal Enclave Jurisdiction

Chevron rounds out its assertion of federal jurisdiction based on what is known as “federal enclave” jurisdiction, which is founded on the premise that because Congress is granted exclusive legislative power over federal enclaves, federal courts have subject matter jurisdiction over actions that arise on federal enclaves.[56] This has been interpreted by courts to be a part of a court’s federal question jurisdiction under 28 U.S.C. §1331 due to the United States having exclusive sovereignty over such premises.[57]

For this form of federal jurisdiction to apply, there are three requirements. First, the action must at least have some connection to a “federal enclave.” Federal enclaves are lands the United States acquired in a state for the purpose of erecting forts, magazines, arsenals, dockyards, or other needful buildings.[58] The second and third requirements are met when the particular state legislature has consented to the jurisdiction of the federal government on such enclaves and the United States has accepted that jurisdiction.[59] This acceptance is presumed if the United States acquired the land prior to 1940.[60]Chevron asserts that there are multiple federal enclaves acquired prior to 1940 in the New Orleans area ranging from the Breton National Wildlife Refuge to the Naval Air Station Joint Reserve Base in New Orleans, and even the federal levees and floodwalls themselves.[61]The notice alleges that jurisdiction over each of these enclaves has been consented to by the Louisiana legislature and each has been directly affected by the loss of coastal lands. Thus, the notice asserts, these enclaves have a sufficient connection with the case to satisfy the three jurisdiction requirements.[62]

SLFPA’s Response to Notice of Removal

When Chevron first removed the case, representatives from the SLFPA’s board responded that the effort to switch courts was not unexpected.[63] On September 10, 2013, attorneys for the SLFPA-E filed a motion to remand the case back to state court.[64] The SLFPA-E motion specifically asserts that the allegations in its original petition did not present a claim created by federal law, did not raise a substantial issue of federal law, and did not provide any other statutory, constitutional, or jurisprudential basis for federal court jurisdiction.[65] Instead, it asserts that it specifically brought its claims under state law to use state court to impel the defendants to provide a remedy for their exploration and production activities.[66] In turn, the SLFPA-E motion effectively provides a categorical rebuttal of each of Chevron’s affirmations of federal jurisdiction.

(1)   Categorical Rejection of Any Federal Cause of Action

In rebutting Chevron’s first claim, the SLFPA-E urges that while Chevron’s removal points to federal statutes and permits relevant in the original petition, these statutes and permits do not actually create any of its causes of action.[67] The SLFPA-E instead alleges that while it may have had federal claims to assert, as master of its complaint it exclusively only asserted state-law claims to avoid federal jurisdiction, which the “well pleaded complaint”[68] rule allows it to do.[69] To demonstrate this, the SLFPA-E shows that neither the Rivers and Harbors Act, the Clean Water Act, or the Coastal Zone Management Act cited by Chevron have ever been recognized by courts to provide a private right of action.[70]

(2)   Opposes Chevron’s Assertion Interpretation and Application of Grable

Second and crucial to the success of its remand motion, is that even if it is correct in showing that there were no federal causes of action alleged, the SLFPA-E must rebut Chevron’s argument that under Grable, federal jurisdiction is proper because its state law claims raise “substantial” questions of federal law.[71]Essentially, the SLFPA-E argues that Chevron’s view of Grable is incorrect. The SLFPA-E premises its rebuttal on the fact that the Grableexception is a very narrow one and the “mere need to apply federal law in a state law claim will not suffice” to make federal jurisdiction proper.[72] The SLFPA-E explains that its Petition merely referenced the federal statutes and permits in order to demonstrate that Chevron and its co-defendants failed to adhere to the proper standard of care under Louisiana law.[73] Essentially, the SLFPA-E says it cites the federal statutes simply to provide a basis in framing the disputed issues of fact as to whether or not the defendants’ conduct harmed the wetlands beyond what federal and state law considers acceptable.[74] It states that since it uses these statutes as applying to questions of fact, rather than questions of law, the Grableexception is not applicable.[75] Ultimately, the SLFPA-E urges that it is insufficient that federal issues be simply material to the litigation or important to the parties as Chevron alleges, but that Grable actually requires that the federal issue be important to the federal system as a whole.[76] Here, the SLFPA-E assures the court that since its claims are mainly scientific in nature, they will not require state courts to engage in any detailed analysis of federal law and any federal interest is not substantial enough to confer jurisdiction.[77]

(3)   Rejects Chevron’s Attempts to Distort the Claims Under the Four Other Alleged Basis for Federal Jurisdiction

Additionally, the SLFPA-E asserts that the four more specific grounds Chevron uses to assert federal jurisdiction, are merely an attempt by Chevron to “cramp and distort” its claims into something they are not.

(a)    General Maritime Law

Regarding the general maritime law issue, the SLFPA-E asserts that Chevron provides unsound reasoning and even if its claims were valid, such claims are not removable without some separate basis for federal court jurisdiction.[78] In its removal, Chevron asserted that the SLFAP-E’s allegations of land loss due to the failure of the defendants to maintain oil and gas industry canals constituted a disruption of navigability to a level that tortuously interfered with maritime activity, triggering federal jurisdiction.[79] The SLFPA-E argues that this reasoning is incorrect on a few grounds, premised on the fact that the test generally used to find maritime jurisdiction is designed to allow courts flexibility in screening out unusual fact situations that are not maritime issues by nature, but happen to occur in navigable waters.[80] Here, SLFPA-E asserts that its claims do not involve a “potentially disruptive impact on maritime commerce” because neither the impairment of navigability nor the impact upon the maritime commerce forms any basis for its claims.[81] Rather, its claims focus on the defendants’ activities affecting the degradation of coastal lands, not coastal waterways.[82] Further, the SLFPA-E’s motion notes that not only do its claims not allege the defendants’ in any way disrupted navigability, if anything, its claims are that through dredging and eroding the wetlands, the defendants’ actions actually enhanced coastal navigability and commerce.[83] Therefore, it concludes, its case does not involve any traditional maritime activities, negative impact on navigability, or disruption of maritime commerce.[84]

The SLFPA-E goes on to alternatively argue that even if the claims in its case somehow constitute maritime jurisdiction, such claims can only be removed when there is another separate basis for federal jurisdiction as well.[85] The motion finds that the Ryan and Wells cases cited by Chevron from Texas finding no additional basis for jurisdiction needed in maritime cases are outliers within the Fifth Circuit and conflict with very recent Fifth Circuit precedent.[86]

(b)   Class Action Fairness Act

In contesting Chevron’s use of CAFA to confer federal jurisdiction, the SLFPA-E argues that the plain language of CAFA itself forecloses any use of it to remove the case.[87] The SLFPA-E’s remand motion claims that Chevron’s treatment of the action as if the SLFPA-E is seeking to obtain monetary damages for each resident and business in the Greater New Orleans area is a “novel” interpretation of CAFA’s numerosity requirement (100+ plaintiffs) at best.[88] The SLFPA-E re-asserts that it is the only real party in interest in the action noting that it is the sole party directly and personally concerned in the outcome of the litigation.[89] Specifically, it argues that there is no credible argument that residents and businesses of Greater New Orleans have any real interest in the case because damages are not sought for injuries to each resident or business.[90] While these residents and benefits may indirectly benefit from the suit, the SLFPA-E argues that it is seeking remedies to ameliorate the damages that solely it “has sustained and will continue to sustain” through the defendants’ actions.[91]

(c)    Outer Continental Shelf Lands Act

Regarding Chevron’s OCSLA argument, the SLFPA-E avers that its case is not removable under OCSLA because none of the defendants’ alleged actions occurred on the outer continental shelf.[92] The SLFPA-E alleges that although the jurisdictional grant in the OCSLA is generally considered to be broad, it is limited to activity occurring beyond state territorial waters.[93] The SLFPA-E asserts that nowhere in its case does it reference any activity occurring beyond Louisiana’s territorial waters and supports this by referring again to the fact that the case is mainly concerned with coastal lands, not waters.[94] Chevron’s removal notice suggested that the connectivity of certain pipelines at issue to offshore oil rigs was enough to activate federal jurisdiction under the OCSLA.[95] In contesting this, the SLFPA-E states that even if this connectivity is true, Chevron failed to cite any case law in support of this argument being accepted by any prior courts.[96]

(d)   Federal Enclave Jurisdiction

The SLFPA-E claims that Chevron’s final assertion based on “federal enclave” jurisdiction, does not apply in this case because Chevron failed to factually demonstrate that there is any federal enclave at issue.[97] The SLFPA-E asserts in its motion that although Chevron lists a dozen supposed “federal enclaves,” it failed to show how any “fort, magazine, arsenal, dock-yard or other needful building erected by the United States”[98] was the actual location of any of the defendants’ actions or injuries suffered by the SLFPA-E.[99]Even assuming that Chevron could establish the presence of a federal enclave, the SLFPA-E asserts that its complaint makes clear it is only stating causes of action created by Louisiana law. The SLFPA-E specifies that even if it could have stated a claim under federal law applicable within a federal enclave, under the well pleaded complaint rule it chose not to do so.[100] The SLFPA-E rounds out this argument by recognizing that previous cases finding federal enclave jurisdiction required a close relationship between the federal enclave at issue, the conduct that occurred, and the injury sustained.[101] In its case, the SLFPA-E argues that it is suing for the increased costs that it will bear in carrying out its responsibilities, not a suit for injuries sustained on any a “federal enclave.”[102]

Possible Outcome

While originally set for October 2, 2013, the hearing on the motion to decide whether the lawsuit should be heard in federal court or remanded to state court was delayed to provide an opportunity for Chevron and/or its co-defendants time to answer the SLFPA-E remand motion.  The hearing has tentatively been docketed to be heard by Federal District Court Judge Nannette Brown on November 13, 2013 in New Orleans.[103]

The federal jurisdiction, scientific, and political issues this suit raises are novel to say the least. This federal jurisdiction issue will be a tough one for Judge Brown to decide, and she will certainly have her hands full. Barring some further compelling clarification of its claims in an answer by Chevron or its co-defendants to the SLFPA-E’s motion to remand, it appears that the SLFPA-E has a fairly strong overall argument for the federal court to remand the suit back to state court, as it appears to cite more mainstream reasoning. However, both sides appear to have stronger arguments in some areas and some weaker arguments in others, so it will be interesting to see where the court lands. Whatever court ultimately ends up with this case, it will pose many extremely difficult issues, with far reaching implications, possibly to last for years to come.

Preferred citation: Casey Pickell, Louisiana Levee Litigation Brings the Legal Significance of Wetland Loss to Light, LSU J. Energy L. & Res. Currents (October 21, 2013), http://sites.law.lsu.edu/jelrblog/?p=362.