Has big oil and gas undeclared liabilities undermined confidence in the industry

Canals map

Ezra Boyd (Reprint with permission) Recently, the Southeast Louisiana Flood Protection Authority-East, a small flood protection board for the New Orleans area filed a lawsuit against 97 oil and gas companies that they allege caused damage to the region’s coastal wetlands and hence contributed significantly to the cost of managing flood risk for their jurisdiction.  The industry responded with their typical denial and an approach that seems more based in fantasy than sound business accounting.

The industry has not convincingly argued against the merits of the lawsuit, and in fact they even acknowledge that their activities have been a major contributor to Louisiana’s coastal crisis.  However, instead of demonstrating that they are prepared to honestly account for this liability, the industry approach has been to use politics and legal maneuvers to block the lawsuit. For example, the Louisiana Oil and Gas Association (LOGA) recently filed suit against the Louisiana Attorney General’s office for approving the flood protection board’s request to hire lawyers to pursue their case. This suit has nothing to do with the industry’s responsibilities for damages they caused; it just argues that the board followed the wrong procedure when putting together their legal team. In the end, it’s doubtful that this strategy will get them off the hook. In fact, three parishes have since started the process of filing their own, independent lawsuits for oil and gas’s coastal damage.

 Indeed, a slow but steady tide is building to use legal instruments to force oil and gas companies to pay compensation for the damages that they acknowledge causing.  Such judgements could reach into the billions.

In pursuing a strategy of denial, the industry and LOGA are sending a bad signal to investors.  This strategy indicates that it is an industry that remains in denial of large sums of undeclared liabilities.  Instead of showing a plan to manage this cost, this strategy has just created a big, grey cloud of uncertainty over the industry. Ultimately, the strategy has scared off investors.

The coastal damage lawsuit comes on the heels of another high profile attempt by the industry to avoid their liabilities: BP’s attempt to do away with an independently administered settlement process.  The company initially agreed to this settlement process, but then experienced second thoughts once they realized their true liabilities.
Like the damage from oil and gas canals, no one denies that BP’s Deepwater Horizon Oil Well Blowout caused damage to Louisiana’s coast and communities.  With this case, the legal process has had time to play out and it’s clear that BP’s legal tactics have largely failed, as have their public relation attempts. A Federal judge has repeatedly denied BP’s attempts to have the claims settlement process tossed out or delayed.  BP remains on the hook for the billions in damages they have caused, and, of course, their global brand is mud.

Just to prove to everyone how deep their denial goes, BP recently attacked famed Chef Emeril Lagasse, alleging that he wrongfully claimed damages due to the spill.  Chef Lagasse’s lawyers and investors know that the Gulf seafood brand will suffer long-term damage because BP’s Spill.  Based on an honest accounting of his company’s future liabilities, Lagasse’s damage claims have merit.  The independent administrator of the claims process agreed, as did a three panel review board.  On the other hand, investors are starting to appreciate that BP’s brand will long be associated with Beached Petroleum and Beyond Polluted or simply Bad Prospects for a return on your investment.

The final example is LOGA’s failure to stop what they call ‘Legacy Lawsuits.’  ’Legacy Lawsuits’ are the industry’s term for a series of lawsuits they have faced from private landowners in Louisiana who have suffered damages because of oil and gas activity on or near their land. Instead of honestly accounting for this liability, they have spent 10 years pursuing a failed strategy of lobbying to change laws to stop the suits.

And, it appears that investors have taken note of this failed strategy, exemplified by declining rig counts in South Louisiana.  After observing the failure to stop so called legacy lawsuits despite a decade of effort, and then hearing the same broken record played out in the BP case and now in the lawsuit over oil and gas canals, a rational, third party investor can only wonder why the industry remains steadfast in pursuing the failed strategy of denying their undeclared liabilities for coastal damage.

Linking legacy lawsuits to declining investment, Don Briggs, who heads LOGA, was recently quoted as saying: “”Why would anyone want to invest millions of dollars drilling in south Louisiana if you’re just going to get sued?”  For the sake of the industry’s future, he asks the right question.  But, to the industry’s detriment he finds the wrong answer when he blames landowners, environmentalists, and trial lawyers.  For ten years, LOGA fought the landowners, environmentalists, and trial lawyers, and, for ten years, it has failed miserably to see the fantasy of stopping legacy lawsuits become reality. In turn, investors have noted that Louisiana’s oil and gas companies do not have a realistic plan to meet their liabilities and, as LOGA notes, they have acted as any smart investor would — putting their money into companies that do have realistic financial plans.

Investors want honesty and predictability, not a business model based on the fantasy that an industry can avoid responsibility for its harmful actions by hiring some lawyers and bribing lobbying some politicians.  If the industry wants to regain investor confidence, then they need to honestly account for their liabilities and send investors a message that they have a sound financial plan to meet them.

The industry’s damage to Louisiana’s coast is not going away anytime soon.  Likewise, as long as they remain unsettled, the coastal damage lawsuits, like the legacy lawsuits and the BP settlement, will remain big, dark clouds of uncertainty in any investor’s forecast.  When the industry and LOGA are ready to regain investor confidence, the first step is to acknowledge that their failed policy of the past has led to serious questions about the industry’s ability to manage its liabilities, and then they should start seriously accounting for the full costs of the industry’s damage to Louisiana’s land and communities.  Once they have declared these liabilities, they can take the next step by demonstrating that that the have a fiscally sound to manage this cost.

Dr. Ezra Boyd, a co-founder of DisasterMap.net, is a hazards geographer and disaster scientists who resides near New Orleans. He recently earned his PhD from Louisiana State University, and his dissertation presented a comprehensive assessment and analysis of deaths associated with Hurricane Katrina and the catastrophic failure of the Federal levee system for southeast Louisiana.  While at LSU, he participated in theTeam Louisiana report for the Louisiana Department of Transportation and Development and co-authored the Health Care and Disaster Planning book for the Louisiana State Medical Society.  His research on the preparations, response, and impacts of Hurricane Katrina has been published in Risk Analysis, Public Performance and Management Review, and Risk, Hazards, and Crisis in Public Policy..

Edited by Bruce Biles.

References:

Louisiana’s attorney general defends his approval of east bank levee authority’s resolution for hiring wetlands suit law firmhttp://www.nola.com/environment/index.ssf/2014/01/louisiana_attorney_gen_buddy_c.html

Oil industry blames ‘legacy lawsuits’ for drilling rig decline in south Louisianahttp://www.nola.com/business/index.ssf/2013/12/oil_industry_blames_legacy_law.html

Celebrity chef Emeril Lagasse targeted by BP in fight over oil spill paymentshttp://www.nola.com/business/index.ssf/2013/12/celebrity_chef_emeril_lagasse.html

Historic lawsuit seeks billions in damages from oil, gas, pipeline industries for wetlands losseshttp://www.nola.com/environment/index.ssf/2013/07/historic_east_bank_levee_autho.html#incart_2box

Diversifying Energy Industry Risk in the Gulf of Mexico: Post-2004 Changes in Offshore Oil and Gas Insurance Market / BOEM 2011-05http://www.data.boem.gov/PI/PDFImages/ESPIS/5/5164.pdf

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Ezra Boyd, Ph.D, is an expert in weather information and disaster, both as a professional and a survivor of Hurricane Katrina.  He brings relevant information to the world from a high degree of sophisticated knowledge and experience.

Google lawsuit losses and spamming show need for vigilance in blogging

Google sign

Carol Forsloff –  Should bloggers have insurance? They might consider it, although it’s expensive if a company offers coverage. That’s because people can sue Internet titans and bloggers as well. Some years ago Google lost a lawsuit that raises privacy concerns.  It also shows why Google is penalizing sites where there have been questionable practices.  And at times some of that spill over onto the innocent as well.





Bitten Bound, a media source covering celebrity material, reported on a case regarding Vogue model Liskula Cohen who became outraged at the remarks of an anonymous blogger. Cohen maintained she had been defamed by the blogger who posted photos of her, along with derogatory comments. The blog was entitled “Skanks in NYC.”





In rendering a decision against Google and requiring the Internet industry giant to reveal the blogger’s identity, Judge Madden who rendered the decision in the case declared, “The protection of the right to communicate anonymously must be balanced against the need to assure that those persons who choose to abuse the opportunities presented by this medium can be made to answer for such transgressions.”

The Seattle Post Intelligencer examined the “Skank Case” as it is now famously called, maintaining how privacy groups will likely be especially concerned about a precedent set by this case. The court had ordered Google to identify the blogger who had made what was alleged to be defamatory comments. The issue of defamation wasn’t ruled on, but the blogger’s service responsibility was examined instead.





Within a day or so after the announcement of the “Skank Case” decision about Google, according to New York’s Daily Intel, Liskula decided to forgive and forget that anonymous blogger whose identity she got as a result of the lawsuit. It turned out to be someone she knew quite well, 29-year-old Rosemary Port. Port apparently had been angry over something she believed Cohen told Port’s boyfriend. So Port retaliated with a blog entry.





After the Google verdict and Cohen’s filing of a $3 million lawsuit for “defamation in the form of libel and intentional emotional distress,” Cohen changed her mind and advised her attorney to drop the lawsuit against Port. Later in an interview with Post’s Andrea Peyster Cohen lit a cigarette, hiding it from the photographer lens, while exclaiming her “grandma wouldn’t like it” as Peyser wrote down the quote. Intel reports an angry outburst from Cohen about the cigarette issue, the newspaper maintains leaves people wondering what really happened in the case involving Cohen and Port. Despite the complexities of this case, however, there have been other cases that raise concerns about some of the same issues of privacy and freedom of speech issues.





Several years ago USA Today reported a Florida jury awarded a woman $11.3 million in a defamation lawsuit against a Louisiana woman. Carey Bock was found guilty of posting messages on the Internet accusing Sue Scheff of being a “crook,” a “con artist” and a “fraud.” Scheff declared she had pursued the lawsuit even though she knew Bock didn’t have any money because, “People are using the Internet to destroy people they don’t like, and you can’t do that.”





Another case was Stratton Oakmont vs. Prodigy (1995)where someone posted an accusation about Daniel Porush, the President of Stratton Oakmont, that Porush was “soon to be proven criminal” and that the company itself was a “cult of brokers who either lie for a living or get fired.” Porush, through his company, argued that the fact Prodigy had editorial control over content it could be classified as a publisher and thereafter had responsibility to filter material that was defamatory. The court awarded damages to Stratton Oakmont against Prodigy.





Shortly after that decision, the Huffington Post and others wrote about how Sarah Palin, through her attorney, threatened to serve papers on a blogger, accusing the blogger of defamation for posting material about Sarah Palin’s marriage and a possible divorce. A number of writers throughout the Internet world pounced on the blogger’s story and spread it, bringing consternation and concern to former Alaska Governor Sarah Palin. This incident revealed that whether left or right of the political spectrum, even the politicians are considering lawsuits to stop what they consider verbal abuse over the Internet.





Are all cases pursued like this given a judgment for the plaintiff? A review of court cases by Stanford University online reveals some plaintiffs lose, and the cases themselves sometimes have underlying issues that may not be known by the public at the outset when the case is first filed.

On the other hand, the cases do present questions, and concerned experts say the cases might make a difference in the use of the Internet, since they underline the seriousness of posting defamatory material, even if it is done anonymously. The cases also reveal issues of consistency and the fact that responsibility and blame are yet a part of the controversy over what one can or cannot write about others.





And that slippery slope of blogging boomerangs as well on innocent sites, when bloggers use spamming techniques to develop backlinks, catching the innocent as well as the guilty.  All of this abuse adds up to the need for Google to be watchful, but even so in the world of the Internet, where good things are learned and yet bad things lurk, we are all in this together.

Growing number of seniors on unemployment lines

[caption id="attachment_10026" align="alignleft" width="241" caption="Elderly worker"][/caption]

Carol Forsloff--NEW YORK, NY, - The Equal Employment Opportunity Commission (EEOC) and a number of New York employment discrimination lawyers  report an increase in age discrimination lawsuits, as more and more seniors observe they are finding their age counts against them when looking for a job in the economic downturn and so should take preemptive measures.


"Age discrimination is an equal opportunity problem. Members of all races, genders industries or regions can be affected," said David Perecman, a New York employment discrimination lawyer with over 30 years of experiences dealing with employment discrimination and sexual harassment in the workplace claims in New York.

An age discrimination lawsuit (Civil Action No. 1:11-cv-11732-DJC) was filed by the EEOC against Texas Roadhouse restaurants recently.  The Texas Roadhouse represents 350 restaurants where it is said older applicants were rejected because of their age.   A class action lawsuit indicates that an organization has sufficient issues for a number of people to want to file in order to reduce discrimination in larger establishments, but these are difficult cases to win, according to legal experts because of the variety of issues and exceptions that can occur in the cases.  That is why these same experts maintain people should prepare themselves for the age discrimination issues that occur in the workplace.
Laurie McCann, senior attorney for AARP tells us that the reason many people don’t file complaints is because age discrimination is very difficult to prove.  Instead of waiting until you're laid off and filing a complaint, it may be better to protect yourself sooner, says McCann, and take preemptive measures.

What are these preemptive measures?  McCann says, "Take advantage of any sort of training, especially in computer skills and technology. Make sure you're not getting behind. Maintain your professionalism, down to your dress and hairstyle."  She also says getting feedback from a manager is important in a courtroom where an employer might have to explain why he or she fired someone who was given a good review.  Lori Rassas, an attorney and author, reminds folks also that it’s age related factors that are important, so the saying a person has too much experience could be a clue to age discrimination.

Should you sue if you’re not hired for a job?  Experts like Rassas say age discrimination is even more difficult to prove.  “It’s harder to do,” she says, “It’s not worth it. “

Adrian Crawford, an  employment partner at law firm Kingsley Napley, maintains,: "It is noteworthy that while age discrimination claims are still a long way behind sex discrimination, they are now catching up with disability claims and have overtaken race-related claims to be the third most frequent type of discrimination action.

"Everybody has an age so anyone can potentially formulate an age discrimination claim. This may explain why there are already so many claims even before we have felt the impact of the abolition of the default retirement age, which is likely to lead to a huge increase in age discrimination.



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