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Article: Eastern District Finds Pipeline Companies Owe Duty to Servient Estate Landowner

S. Beaux Jones -  Posted on by Baldwin, Haspel, Burke & Mayer

Published in Louisiana Bar Journal Vol. 65, No. 5.

While most court watchers have been focused on the Southeast Louisiana Flood Protection Authority-East’s (SLFPA-E) pipeline damage case’s rise to and burnout at the United States Supreme Court or on the 41 ambitious coastal land loss cases brought by the parish and state governments, another pipeline damage case has been weaving its way through Eastern District of Louisiana.

Vintage Assets, Inc. v. Tennesee Gas Pipeline Co., et al., No. 16-713 (E.D. La. 2017), is a relatively focused pipeline damage case brought by a single group of landowners against pipeline companies who executed servitudes across their property. Unlike the more high-profile cases previously mentioned, this case does not involve a government plaintiff or regulatory body and, although it was originally brought under theories of tort and breach of contract, the case was narrowed to focus on the responsibilities that pipeline companies had by virtue of their servitude agreements and the laws interpreting them.

The Vintage trial took place in September of 2017, before District Judge Jane Triche Milazzo and, as of the writing of this update, the court has not ruled on the ultimate merits of the case. However, in a pair of rulings on pre-trial motions for summary judgment, it is clear that this case is shaping up to be an important component in the jurisprudential development of the duties and liabilities related to pipeline operations in the Louisiana coastal zone.

The court’s preliminary rulings were a mixed bag for both sides. On one hand, the court rejected several of the Plaintiff’s theories and claims like trespass. The Plaintiff argued that the erosive widening of the canals since their construction amounted to a trespass that was not contemplated by the original agreement. The court found that Louisiana law required an intentional or active step to constitute a trespass and that the failure to maintain the width of the canals simply constituted the passive work of erosion. Vintage, 2017 WL 3601215, at *4 (E.D. La. 2017), motion to certify appeal denied sub nom. Vintage Assets Inc. v. Tennessee Gas Pipeline Co., 2017 WL 3842245 (E.D. La. 2017).

However, the court also found that a combination of the servitude agreements and the suppletive law imparted a duty on the pipeline companies to maintain the canals where the agreements possessed an internal inconsistency by allowing the pipeline company to leave the canals “open” but also contemplating a maximum width. The court further found that this duty was ongoing, and, in several of the agreements, the duty had been breached.

“There is no dispute that Defendants did not maintain the canals at issue and allowed the canals to widen to widths far exceeding that set forth in the servitude agreements. Indeed, some of the canals have eroded into open water. Defendants do not dispute these facts. Accordingly, this Court holds that Defendants had a duty to maintain the canals, and that duty was breached.” Id. at 7. For the contracts that did not contain language providing for a maximum width, the court also found that there was no duty.

Regardless of the outcome in the Eastern District, the Vintage case will likely make its way to the U.S. Fifth Circuit and become a relevant jurisprudential signpost as Louisiana continues to reconcile historic oil & gas activities with coastal restoration.

LDEQ and US EPA settle Clean Air Act Allegations with ExxonMobil

On October 31, 2017, the Louisiana Department of Environmental Quality (“LDEQ”) and the U.S. Environmental Protection Agency (“EPA”) filed a Complaint and Consent Decree in case no: 4:17-cv-03302 in the Southern District of Texas to memorialize a settlement with Exxon Mobil Corp., and ExxonMobil Oil Corp., (collectively “ExxonMobil”) for alleged violations of the Clean Air Act.

The Settlement concerns 26 flares at ExxonMobil’s chemical, olefin, polymer, and plastic manufacturing facilities located in or near Baton Rouge, LA, Baytown, TX, Beaumont, TX, and Mont Belvieu, TX and requires ExxonMobil to implement numerous pollution control measures, pay civil penalties, and contribute to environmental projects. These measures include a requirement to implement flare gas recovery systems and other technology at the facilities, which are expected to reduce emissions of volatile organic compounds by 7,000 tons and benzene by 1,500 tons. ExxonMobil will also be required to pay $2.5 million in civil penalties, $470,000 of which will go directly to LDEQ. Additionally, the Settlement contains requirements for fence line monitoring systems and that ExxonMobil contribute $2.5 million to a federal Supplemental Environmental Project to plant trees in Baytown, TX, and to purchase a mobile air quality monitoring laboratory (“MAML”) for LDEQ. According to the proposed Consent Decree, “LDEQ expects the new MAML will be deployed throughout the state of Louisiana on special monitoring projects to provide instantaneous, onsite date directly related to air quality issue. It will allow the LDEQ to provide a more proactive approach to improving Louisiana’s air quality….” All told, between the civil penalties and injunctive relief, including investments in new technology, ExxonMobil will spend nearly $300 million to resolve the allegations.

In the complaint alleging violations of its Title V permits, the Texas and Louisiana State Implementation Plans, the Clean Air Act and its accompanying regulations, the regulators very clearly acknowledged ExxonMobil’s cooperation with the EPA and mitigation measures undertaken prior to the Consent Decree. This mitigation and cooperation was likely a significant contributor to the relatively low civil penalty compared to the scope of the allegations, the size of which created consternation among environmental organizations. But regardless of the civil penalty amount, the result of this Consent Decree will be a significant investment in new pollution controls and a large contribution of resources and money to LDEQ.

The public comment period for the proposed Consent Decree tolled on December 7, 2017. Subject to a review of those comments, the Consent Decree will likely become final in 2018.



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