The Devil’s Ransom: Big Oil and the Louisiana Gulf Coast

August 10, 2018

I.

[dropcap]I[/dropcap]n 1780, more than two hundred years before Roxanne Hitchcock published a glossary of the oil and gas industry, the unfortunately-titled Lube Lingo, an Irish actor and elocutionist named Thomas Sheridan (who also happened to be the godson of Jonathan Swift) defined the word “petrolium” in his book, A General Dictionary of the English Language. Sheridan’s dictionary- really more of a thesaurus- is now considered a foundational text in contemporary Western civilization, even though its author remains a relatively obscure historical footnote. “Petrolium,” according to Sheridan, can be defined by an almost messianic metaphor: “floating on the water of springs.”

Oil doesn’t walk on water, but Sheridan is right: It definitely floats, and because of its unique properties, here in Louisiana, trillions of dollars have been extracted deep underground and deep under the ocean in order to fuel, literally, an enormous segment of the American and global economy, even if it is at the expense of the sustainability and viability of the entire Gulf Coast ecosystem. Hitchcock, in Lube Lingo, uses another, more sinister euphemism to define petroleum: “The devil’s tar.” [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-09-at-9.30.19-PM.png” panorama=”off” credit=”Credit: Roxanne Hitchcock of Oil City, PA” align=”center” lightbox=”on” caption=”The cover of Roxanne Hickcock’s 28-page glossary on the oil and gas industry, Lube Lingo. ” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] [dropcap]J[/dropcap]uan Pablo Perez Alfonzo, the Venezuelan energy minister and the so-called “Father of OPEC” (the Organization of Petroleum Exporting Countries), was more blunt: “Ten years from now, 20 years from now, you will see, oil will bring us ruin,” he famously and presciently declared in 1976. Oil, he said, wasn’t the devil’s tar; it was “the devil’s excrement.” “Far from an anomaly, Venezuela is a classic example of what economists call the ‘natural resource curse,'” Jerry Useem writes in a 2003 article for Forbes about Perez Alfonzo’s prophetic words (emphasis added). “…. Oil is not an economy. Creative economic activities have spillover effects that become self-sustaining. Oil spills only into a barrel–and from there usually into the hands of a favored few.” The spoils may belong to “a favored few,” but in Louisiana, we know that oil doesn’t spill only into a barrel. Sheridan was right: Oil floats on water. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2017/08/shutterstock_54991534.jpg” panorama=”off” credit=”Credit: Katherine Welles” align=”center” lightbox=”on” caption=”GRAND ISLE, LA: Signs on the front lawn of a home on June 5, 2010 in Grand Isle, LA. The BP oil spill that began April 20th, 2010, has resulted in oil washing up on the shores of Louisiana.” captionposition=”center” revealfx=”off” overlay_revealfx=”off”]

II.

[dropcap]D[/dropcap]uring our first 14 months, The Bayou Brief has published nearly two dozen reports and commentaries about environmental justice and the historic, ongoing litigation that alleges Big Oil illegally damaged the fragile Louisiana coast and its ecosystem. No other single issue represents a greater and more critical existential threat to the future of Louisiana, and with a few notable exceptions, the state’s establishment media has largely followed the industry’s talking points. Just last week, for example, in an editorial, The Advocate naively argued in favor of consolidating the 42 different lawsuits currently working their way through the court system, completely overlooking that each case presents a unique set of facts, circumstances, arguments, and defenses. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-12.52.46-AM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] The editorial also erroneously claimed that lawyers representing the plaintiffs- almost exclusively parish governments in these cases- would likely earn a fortune of any potential settlement. “It’s a complicated crisis, and the legal system will now have a hand in determining specific degrees of culpability among the players,” The Advocate falsely asserted. “But that could take years, with a big chunk of any potential financial settlement going to the trial lawyers. That’s not the best way to make the coast and its communities more resilient.”

It is actually not nearly as complicated as The Advocate‘s editorial board suggests, which they likely would have discovered had they read the reporting of one of their colleagues, the investigative journalist Tyler Bridges. None of the attorneys involved in this litigation could be compensated through a contingency fee arrangement tied to the total amount of an award for damages. Bridges and his colleague Gordon Russell clarified this misconception nearly two years ago in a report for The Advocate, writing (emphasis added):

Don Carmouche said the contracts do not guarantee the lawyer any specific percentage of a settlement, and points to language that says “that this contract shall not be construed to create a right in Attorneys to claim as a fee any portion of any cash recovery.” In an interview Sunday, Carmouche added that a judge would decide any money his law firm receives in a settlement, and that the fees awarded would not come out of the money paid to the parishes. ….While lawmakers could choose to ignore the cap they themselves set, Price said, there’s little reason to expect such an outcome. Legislators would have have to ultimately sign off on any payout, and business-friendly Republicans control the House, meaning the lawyers cannot count on a bonanza. “It’s a heckuva risk for the four law firms in going forward with this,” said lawyer Bernie Boudreaux, a former executive counsel to Gov. Mike Foster who now works for Jones Swanson, one of the firms representing the state. “The state will benefit if we accomplish something. I think some compensation will be afforded.”

Despite the fact that the stories of mega-billion dollar settlements with ~~attorneys~~ “trial lawyers” amount to nothing more than paid propaganda by Big Oil and their lobbyists, the public disinformation campaign has been remarkably effective. “Billions and billions of dollars,” Gifford Briggs, the president of the Louisiana Oil and Gas Association, told the Chamber of Commerce website Louisiana Record in a story published yesterday. “The plaintiffs have a 16-point compensation schedule, that basically ends up with them [the attorneys] having a 30 percent contingency fee. It’s not that hard to see why they are so interested in the litigation.” Again, however sensational it may sound, this is simply false. Attorneys fees will ultimately be determined separately by a judge.

III.

[dropcap]T[/dropcap]oday’s multi-trillion dollar Gulf Coast oil and gas industry may not have ever existed if it were not for a newly-minted Louisianian named Anthony Francis Lucas, who arrived in 1893 from his native Croatia. Lucas took a job with a New Orleans-based salt exploration company on Avery Island, which is most famously known as the headquarters for the McIllheney Company, makers of Tabasco. He was 38 years old. Seven years later, on Jan. 10th, 1901, and only a short trip across the Texas border, Anthony Francis Lucas discovered something that would dramatically change the future of both Texas and Louisiana and completely revolutionize energy production across the world. Its name was Spindletop, an oil well outside of Beaumont, and Lucas found the motherlode, named in his honor as the Lucas geyser. It produced an astonishing 100,000 barrels of oil a day. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Lucas_gusher.jpg” panorama=”off” align=”center” lightbox=”on” caption=”The Lucas Gusher at Spindletop. January 10, 1901″ captionposition=”center” revealfx=”off” overlay_revealfx=”off”] Eight months later, on Sept. 21st, 1901, the 29-year-old W. Scott Heywood found Louisiana’s first oil well outside of Jennings; the Jules Clement No. 1 sat on only 1/32rd of an acre, but produced more than 7,000 barrels a day. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-1.32.33-AM.png” panorama=”off” imgwidth=”75%” credit=”Photo courtesy Louisiana Geological Survey.” align=”center” lightbox=”on” caption=”The Jennings Oil Company No. 1 well, which discovered the first commercial oilfield in Louisiana on September 21, 1901. ” captionposition=”center” revealfx=”off” overlay_revealfx=”off”]

Louisiana would never be the same.

IV.

[dropcap]A[/dropcap]ccording to his April 2018 report, “The Energy Sector: Still A Giant Engine for the Louisiana Economy,” economist Loren Scott, a favorite of the industry, boasted that Louisiana is the nation’s second largest producer of oil, second only to Texas and accounting for more than 16% of all domestic production. Louisiana is also the fourth largest producer of natural gas; more than 8.6% of the country’s domestic production occurs in the Bayou State.

“The tasks of exploring for and lifting these two resources to the surface — what economists label oil and gas extraction — have created thousands of jobs and billions in household income for Louisianans each year,” Scott writes (emphasis original). It has also attracted closely related industries to the state as well. For example, Louisiana ranks number two among the 50 states in petroleum refining capacity. Louisiana ranks below Texas and ahead of California by this measure.” Nearly 45,000 people in Louisiana work directly for the oil and gas industry, and their wages are significantly higher, on average, than any other manufacturing-related industry in the state.

Although Dr. Scott is unquestionably a favorite of the industry (he wrote the report for the Grow Louisiana Coalition, a consortium of industry lobbyists and affiliated organizations like the Louisiana Oil and Gas Association (LOGA) and the Louisiana Mid-Contintent Oil and Gas Association (LMCOGA), among others), he refused to even acknowledge the lie that has animated so much of the communications work in which they have invested a considerable amount of time and energy: The notion that the industry is losing jobs because of the state’s “legal climate.” There’s a much simpler and much more obvious explanation, the global market. Quoting (emphasis added):

(N)ote that employment and earnings in these energy sectors remains very significant despite the fact that Louisiana’s oil and gas extraction sector — and its related support activities — have been in a major recession since late 2014 when the price per barrel of oil fell from $100+ to under $30 at one point. Employment in the top two rows of Table 4 fell 39% since our last report. Still, a very significant 30,731 people were employed in the extraction (industry) and its support activities in 2017 – II — a figure almost equivalent to employment in the state’s chemical and shipbuilding industries combined (32,125). The extraction industry and its supporting companies are still generating $2.7 billion in wages for Louisianans despite being in the third year of a very bad recession.

Dr. Scott did not even bother to speculate on whether the hypothetical, presumably psychological impacts of ongoing coastal restoration lawsuits has a role to play. The numbers speak for themselves. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-2.52.15-AM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-2.51.55-AM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-2.51.29-AM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”center” revealfx=”off” overlay_revealfx=”off”]

V.

[dropcap]L[/dropcap]ast month, the organization (ostensibly a nonprofit, though they have not filed 990 reports for more than a decade) Louisiana Lawsuit Abuse Watch hired a new executive director, Lana Sonnier Venable, a former communications and government affairs strategist for Exxon-Mobil, to replace the organization’s long-time leader, Melissa Landry. Director Venable seems determined to hit the ground running. Yesterday, she interviewed with Louisiana Record. “Lawsuits like the current parish suits, led by a handful of politically powerful, well-connected plaintiffs’ lawyers and environmentalists, breed unpredictability for business, hurt our economy and cement Louisiana’s reputation as one of the worst states to be sued in the U.S.,” Venerable wrote, without a shred of objective evidence. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-3.36.35-AM.png” panorama=”off” align=”center” lightbox=”on” caption=”Former Exxon communications and governmental affairs director Lana Sonnier Venable is now the Executive Director of Louisiana Lawsuit Abuse Watch” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] That same day, Venable repeated her arguments in an editorial published by The Advocate. “These politically powerful plaintiff’s lawyers are targeting Louisiana’s energy industry alleging damages from production activities conducted decades ago,” she writes. “The absence of real political leadership in the state has left a very lucrative void for those lawyers, many of whom are large donors to the governor. They stand to receive a substantial amount of any funds received in these cases.” The argument is fatally flawed for two obvious reasons: First, there is scant evidence that any law firm involved in these cases would be allowed to earn more than their hourly rate and all costs incurred. Second, the argument unwittingly implies that these lawyers will likely prevail in court, which, of course, means that the defendants in these cases are likely guilty.

VI.

[dropcap]T[/dropcap]here is one other character in this cast worth remembering, the Baton Rouge super-lobbyist and political consultant Jim Harris. [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-4.33.10-AM.png” panorama=”off” align=”center” lightbox=”on” caption=”Jim Harris” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] Harris’s fingerprints are all over the place. Among other things, he is the founder and managing member of Louisiana Coalition for Common Sense, a nonprofit advocacy organization that seeks to limit a victim’s access to a courthouse. Organizations like these claim to be only interested in expediting and ensuring greater efficiency the judicial process; however, their ultimate aim is to either dramatically reduce or completely eliminate a victim’s right to collect damages for harm suffered as a direct consequence of someone else’s negligence. Harris lists the Coalition’s sponsors on his website: [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-10-at-4.08.48-AM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”center” revealfx=”off” overlay_revealfx=”off”] But perhaps more importantly, here are the clients for whom Harris is currently registered to lobby in the Louisiana state Capitol: [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/jh1.png” panorama=”off” align=”center” lightbox=”on” captionposition=”left” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/jh2.png” panorama=”off” align=”center” lightbox=”on” captionposition=”left” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/jh3.png” panorama=”off” align=”center” lightbox=”on” captionposition=”left” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-09-at-3.28.52-PM.png” panorama=”off” align=”center” lightbox=”on” captionposition=”left” revealfx=”off” overlay_revealfx=”off”] [aesop_image img=”https://www.bayoubrief.com/wp-content/uploads/2018/08/jh9-1.png” panorama=”off” align=”center” lightbox=”on” captionposition=”left” revealfx=”off” overlay_revealfx=”off”]

VII.

[dropcap]I [/dropcap]have written about this before, in a report published last August and titled “Rigged: The Lies and Contradictions of Big Oil’s Campaign Against Protecting and Restoring Louisiana’s Coast. I will also readily admit that, despite my years in law school, phrases like “tort reform” seem defiantly vapid to me. There is nothing reformative about any attempt to change a law in order to ensure that a convicted criminal isn’t adequately punished for negligently destroying someone’s entire life, and much like medical malpractice claims, we are told that cases exhaustively documenting environmental harms caused by gross negligence are somehow sacrosanct. In its latest round of back-and-forth, attorneys representing Big Oil suggested they should effectively be immunized from prosecution, as a consequence of WWII. The trusty old Pottery Barn Rule, for some reason, doesn’t apply to Louisiana’s most important natural assets. Unless things change, we will continue to float on the water of the springs until we sink permanently into the gulf.