Federal Judge Dismisses Levee Authority’s Lawsuit Against Oil and Gas Companies
Back in October, we wrote about an ongoing lawsuit filed by the Southeast Louisiana Flood Protection Authority against eighty-eight oil and gas companies operating off the Louisiana coast. Last Friday, February 13, 2015, this lawsuit saw its final days in court, as Federal Judge Nannette Jolivette Brown dismissed the lawsuit under Rule 12(b)(6) of the Federal Rules of Civil Procedure for the plaintiff’s failure to state a claim upon which relief can be granted.
The Levee Authority filed this lawsuit ostensibly under its authority to “ensure the physical and operational integrity of the regional flood risk management system.” Their central contention was that the defendant oil and gas companies’ operations “have led to coastal erosion in the Buffer Zone, making south Louisiana more vulnerable to severe weather and flooding.” The Buffer Zone is an area in which the defendant oil companies currently operate and extends from the Mississippi River “through the Breton Sound Basin, the Biloxi Marsh, and the coastal wetlands of eastern New Orleans and up to Lake St. Catherine.”
The Levee Authority’s specific claims were that the defendants dredged a network of access canals for transportation of oil and gas products, which killed off much of the vegetation, caused sedimentation inhibition, erosion, and subsequent submergence of coastal land. Additionally, the Levee Authority claimed that the defendant oil companies failed to properly maintain the access channels and canals, which exacerbated erosion of canal banks, creating wider, deeper canals than permitted.
In addition to these claims, the Levee Authority cited ten other activities which caused or contributed to the significant coastal erosion south Louisiana is currently experiencing. Specifically, the Authority cites the oil companies’ “road dumps, ring levees, drilling activities, fluid withdrawal, seismic surveys, marsh buggies, spoil disposal/dispersal, watercraft navigation, impoundments, and propwashing/maintenance dredging” as inhibiting natural hydrological patterns and processes of the coastal lands.
Although this lawsuit was filed in Federal court, the Levee Authority’s legal basis for their claims is rooted in Louisiana law. The Authority contends that the defendants were (1) negligent under Louisiana Civil Code Article 2315, (2) strictly liable pursuant to Articles 2317 and 2317.1, (3) the defendants interfered with a natural servitude of drain in violation of Article 656, (4) through their actions, the defendant has effected a public and private nuisance against citizens, and (5) by causing the above-mentioned coastal erosion, the oil companies breached their contract vis-à-vis their dredging permits.
Judge Brown systematically responded to each of these claims, ultimately concluding that the Levee Authority failed to state a claim upon which relief can be granted, granting the oil companies’ motion to dismiss.
First, Judge Brown addressed the Levee Authority’s negligence claim, finding that the oil companies were not negligent under Rivers and Harbors Act of 1899, the Clean Water Act of 1972, and the Coastal Zone Management Act of 1972. Under a negligence theory of liability, Judge Brown found that the Levee Authority failed to demonstrate that the oil companies owed a “specific duty to protect [the Levee Authority] from the results of coastal erosion allegedly caused by [the oil companies’] activities in the Buffer Zone.” Judge Brown found that under the above-mentioned Federal laws, the Levee Authority can’t make this showing that they owed the Authority a legal duty, and therefore, the Authority has not stated a claim upon which relief can be granted.
Next, Judge Brown assessed the viability of the Authority’s Strict Liability claim under Articles 2317 and 2317.1. Judge Brown borrowed from her negligence ruling for this strict liability claim, citing her finding that, because the oil companies never owed a legal duty to the Authority, they weren’t negligent. Accordingly, absent a showing of negligence, a theory of strict liability must fail as a matter of law.
The Authority’s next claim, that the oil companies interfered with a natural servitude of drain in violation of Article 656, also failed to state a claim upon which relief can be granted, according to Judge Brown. Under Louisiana law, “a natural servitude of drain is a type of predial servitude, which is “a charge on a servient estate for the benefit of a dominant estate, and requires that the two estates must belong to different owners.” Brown goes on to acknowledge that “there can be no predial servitude without an identified dominant estate and identified servient estate.” The oil companies argue that the Authority’s natural servitude of drain claim failed because the Authority failed to demonstrate that they own property “adjacent to property owned by the oil companies,” or that any dominant or servient estates were in any way affected by activities of the oil companies. The Authority attempted to circumvent this latter claim by citing case law which stands for the proposition that dominant and servient estates need not be contiguous. Judge Brown found this case law to be fatally distinguishable from the current case.
Judge Brown also rejected the Authority’s claim that the oil companies’ activities have effected a public and private nuisance on the Authority. Judge Brown correctly notes that, generally, a property owner has the right to use their property in any way they please, limited, of course, by a use which causes damage to neighbors. Under Louisiana law, public and private nuisance are generally referred to as the “obligations of neighborhood,” and are located in the Louisiana Civil Code Articles 667-669. While Judge Brown ultimately rejects the Authority’s nuisance argument on other grounds, she first notes that nuisance claims require a showing of negligence, which she previously found to lack merit. The thrust of Brown’s ruling on the Authority’s nuisance claims, instead, focus on the “neighbor” aspect of this claim. Citing the lack of physical proximity of the servient and dominant estates, the lack of adjacency of property, and the lack of ownership of the Authority’s property, Brown found that the Authority has “not sufficiently alleged that it is a ‘neighbor’ within any conventional sense of the word, to any property of [the oil companies].”
Finally, the Authority claims that, because the oil companies’ dredging activities caused the coastal erosion at issue, the defendant oil companies breached their contract by depriving them of the benefit of preventing coastal erosion vis-à-vis their dredging permits. For this claim, the Authority claims that they are a third party beneficiary of the oil companies’ dredging permits. Judge Brown dismissed this claim by finding (1) that under prevailing law, these dredging permits are not contracts “such that the third party beneficiary doctrine is applicable,” and (2) even if the dredging permits were properly characterized as contracts, that the Authority has not establish that they were intended third party beneficiaries under the contract. Judge Brown notes that a party can only recover under breach of contract as a third party beneficiary if they were intended to be a third party beneficiary, rather than an incidental beneficiary. Because the Authority failed to direct the court to any language in the permits which explicitly, or even implicitly, characterizes the Levee Authority as a third party beneficiary, Judge Brown dismissed this claim.
It is unclear at this point whether the Levee Authority will appeal the decision to the 5th Circuit Court of Appeals.