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U.S. Fifth Circuit Finds no State or Federal Actionable Claims Against Oil and Gas Related Companies for Erosion of the Coastal Marsh

Case:   Board of Commissioners of the Southeast Louisiana Flood Protection Authority – East, et al v. Tennessee Gas Pipeline Company, L.L.C., et al,
             United States Fifth Circuit Court of Appeals
             Case No. 15-30162 (3/3/17)

The Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East (“the Board”), filed suit in Louisiana state court against 97 companies involved in the exploration for and production of oil reserves off the coast of Louisiana, alleging erosion and submergence of land overseen by the Board, which increased the risk of flooding due to storm surges and increased the cost of flood protection measures. They complained of conduct dating back to the 1930s, including the dredging of canals which resulted in land loss, negligence, interfering with the natural servitude of drain, nuisance and breach of contract. They explicitly relied on causes of action under Louisiana law, and sought damages including the backfilling and revegetation of canals, wetlands and reef creation, land bridge construction, hydrologic restoration, shoreline and structural protection, bank stabilization and ridge restoration.

The Defendants removed the case to federal court. Attempts to remand the case to state court failed, with the district court noting the claims stated “necessarily raise a federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing the congressionally approved balance of federal and state judicial responsibilities.” Defendants also filed a Motion to Dismiss, which was granted by the district court upon finding “none of the Board’s stated grounds for relief constituted a claim upon which relief could be granted under state law.” The Board appealed.

The Fifth Circuit first affirmed the district court’s decision to keep the case in federal court, finding the Board’s claims necessarily raised federal issues, including the negligence claim, which draws its requisite standard of care from three federal statutes and the nuisance claims, which rely on that same standard of care. The Court further concluded these issues were of importance to the federal system as a whole, meeting the Supreme Court’s substantiality requirement for exercise of federal jurisdiction.

The Fifth Circuit next affirmed the district court’s granting of Defendants’ Motion to Dismiss, holding the district court was correct that neither federal law, nor Louisiana law creates a duty that binds Defendants to protect the Board from the only damage it alleged, increased flood protection costs that arise out of the coastal erosion allegedly caused by Defendants’ dredging activities, such that the district court properly dismissed the negligence claim. For the same reasons, because the Court found the Board did not state a claim that Defendants owed it a duty of care, the Court found the strict liability claim failed as well. The Court also upheld dismissal of the claims related to the natural servitude of drain, finding there is no basis in law for finding that a natural servitude of drain, which deals with surface waters, may exist between non-adjacent estates with respect to coastal storm surge. Finally, the Court agreed the Board did not state a claim for nuisance, noting causal nexus alone is insufficient to state such a claim.

The Board has since filed for rehearing en banc


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