Facing fire over challenge to Louisiana's oil industry

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BATON ROUGE, La. -- State Sen. Gerald Long of Louisiana calls it "kind of a gentlemen's agreement."

For generations, and certainly since Mr. Long's third cousin Huey P. Long was the governor, this state has relied on the oil and gas industry for a considerable part of its revenues and for tens of thousands of jobs. In return, the industry has found the state an obliging partner and staunch political ally as it has fought off curbs on its business.

Now, however, a panel of state appointees, created after Hurricane Katrina to be largely insulated from politics, showed just how insulated it was by upending the agreement.

In July, the panel, the Southeast Louisiana Flood Protection Authority-East, composed primarily of engineers and scientists charged with managing flood control for most of New Orleans and its suburbs, filed a lawsuit against nearly 100 oil and gas companies. The suit argues that these companies unlawfully neglected to fix decades' worth of damage they caused to the state's wetlands, thus making flooding from hurricanes more dangerous and flood protection vastly more expensive.

The reaction was swift. Gov. Bobby Jindal, a Republican, immediately called the suit "nothing but a windfall for a handful of trial lawyers," prompting civic groups to highlight the $1 million he has received in donations from oil and gas interests. But at public meetings in Baton Rouge and down on the bayou, the board has faced the displeasure of public officials largely alone.

At the meetings, the governor's senior coastal adviser, Garret Graves, has strongly criticized the board as jeopardizing the broad coalition assembled to address coastal issues and needlessly complicating the state's own efforts to find money for remediation. Other officials at public meetings have taken turns disparaging the board for seeking to penalize companies for decades-old activities and, perhaps more than anything, acting without broad political consent.

"You are not a state unto yourself," state Sen. Robert Adley said at a crowded legislative hearing, a rare occurrence in August.

John M. Barry, a historian and writer who is the vice president of the flood panel, chalked the reaction up to politics, referring to an old saying that the flag of Texaco should fly atop the Louisiana Capitol.

It is true, at least, that the oil and gas industry's connection with Louisiana runs deep. Industry executives -- like Mr. Adley, who has run two different oil- and gas-related companies -- sit in the Legislature, and former politicians lobby on the industry's behalf. Several years ago, eight of the 16 judges on the U.S. Court of Appeals for the 5th Circuit, based in New Orleans, recused themselves because of perceived conflicts in a case involving the energy industry. But the connection goes beyond politics, into the state's identity and culture. In 2010, many residents of south Louisiana were as outraged at the federal government for its moratorium on offshore drilling as they were at BP for its Gulf of Mexico oil spill.

The industry -- which has shifted away from conventional drilling to refining, fracking and petrochemical manufacturing -- paid Louisiana $1.5 billion in 2012 in royalties and taxes. Industry analyses say it accounts for, directly and indirectly, around 16 percent of the state's workforce.

Although the energy industry has its complications, says Mr. Long, a Republican, the arrangement on the whole has been a net positive for the state.

Other officials put it more strongly. "We've had a $10 million surplus every year I've been president of Plaquemines Parish because of oil and gas," Billy Nungesser, whose own $20 million business provided services to offshore rigs and platforms, said at one public meeting. "We can't keep picking their pockets."

But studies of the state's catastrophic land loss in the past century -- the disappearance of nearly 2,000 square miles of marsh serving as a crucial buffer against hurricanes -- show that oil and gas activity for decades has come at a steep price. Dams and federally built levees holding back the replenishing sediment of the Mississippi River are main culprits in the land loss, but there is widespread agreement that the 10,000 miles of pipelines and canals cut into the marsh by oil companies are to blame as well. One widely cited study concludes that oil and gas activity accounts for 36 percent of the total loss.

No one anticipated a clash over these issues when civic activists and Chamber of Commerce groups urged an overhaul of New Orleans' patronage-riddled levee boards in the months after Hurricane Katrina. These efforts, over staunch opposition, led to laws and amendments creating a regional flood protection authority with east and west branches. More critically, the laws established a less political appointment process, putting a premium on technical expertise.

"It became a symbol of Louisiana willing to change its ways," said Robert Scott, the president of the Public Affairs Research Council of Louisiana, a good-government group.

Six years later, the experts in the east branch did something no one would have foreseen in Louisiana. They voted unanimously to file the lawsuit against oil and gas companies. Citing regulations and permits requiring companies to restore what they had disrupted, the suit argues that the wetlands crisis is at least related to unlawful neglect.

Mr. Graves does not dispute that damage was caused by industry, but does deny that opposition to the suit is about politics. He said the state had worked for years to build a broad coalition, including environmentalists and representatives from oil companies, to finance and implement a $50 billion coastal master plan.

"There's a bigger strategy that they've come in and really screwed up," he said.

For now, the suit's chief obstacles may be political rather than legal.

The terms of four of the nine authority members are either expired or in limbo. And lawmakers are already planning to pass legislation in 2014 to block the suit, possibly by taking away some of the authority's powers.

But the scope of opposition is unclear, as many politicians have remained conspicuously quiet. And in recent years, efforts by oil and gas interests to fight in the Legislature a wave of lawsuits by private landowners have not been entirely successful. Among residents along the coast, the crisis of the wetlands has complicated what were once straightforward arrangements.

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