Source: https://www.insurancejournal.com, January 14, 2019
By: David J. Mitchell
Wetland ecologist Scott Nesbit drove down a gravel oil field road in Louisiana in an all-terrain utility vehicle, zipping under a heavy forest canopy toward what he says is the source of it all.
Nesbit’s target was a shuttered and overgrown former Shell Oil production facility near a T-intersection where the forest has given way to the sky, scrub and open marsh in the heart of the Spanish Lake basin.
Backed with scientific measurements of land in Spanish Lake and the underlying aquifer, Nesbit and his business partners in the Spanish Lake Restoration land bank contend Shell’s shuttered main production facility and its oilfield pit near the “T” are the primary source of historical contamination across the swamp.
The allegations have come to light in an eight-year-old state court lawsuit in Iberville Parish that Spanish Lake Restoration land bank has brought against Shell Oil and other operators in the St. Gabriel oil field, where drilling first started in 1938.
Just 30 minutes from downtown Baton Rouge, the Spanish Lake basin is a huge patch of forest bounded by Bayou Manchac, a green jewel steeped in history amid the suburban sprawl emanating from the city.
Underneath that forest canopy, though, the legacy of oil drilling in the basin is hard to miss. Flow lines, old drill pits now filled with water, well heads, concrete slabs and other detritus of that era scatter the property held by the land bank, left from dozens of wells operated by a variety of companies.
Spanish Lake Restoration’s experts contend the contamination stems from millions of barrels of brine water and other drilling byproducts that came up through decades of drilling and were held in unlined, earthen pits. Carved from the swamp, the pits allowed the contaminants to seep back into the ground or overflow into the surrounding swamp now held by the private Spanish Lake Restoration land bank and other landowners.
These salts, the heavy metal barium, and naturally occurring radioactive material killed cypress forests decades ago, the land bank contends in court papers. But the contaminants also continue to scar the 10,000-acre swamp in and out of the 4,000-acre land bank by inhibiting regrowth of cypress and likely contributing to elevated chlorine levels in nearby Bayou Manchac.

The contention about the impact of old oilfield pits, for which state Department of Natural Resources ordered a statewide cleanup and closure in the mid-1980s, is not an unfamiliar one.
The suit is one of 473 oil legacy cases DNR is monitoring. Spanish Lake Restoration land bank is being represented by the leading firm in legacy cases, Talbot, Carmouche and Marcello.
The firm and the legacy suits have drawn fire from the oil industry, which charges that the financial risk the suits pose creates a poor business climate that undermines the health of their industry.
Spanish Lake Restoration wants a $350 million to $700 million remediation of a few hundred acres of its land.
On the case’s current trajectory, though, the plaintiffs’ prospects for a cleanup on Shell’s dime aren’t looking good, leaving open the questions of how the basin will be cleaned up and who will do it.
Nesbit said whether or not the case reaches a successful judgment or settlement, he wants to the public to take an interest in the swamp’s cleanup once the civil court dispute ends and moves to regulatory agencies.
“I guess my main point, it’s just not our property,” he said.
The responsibility would fall to DNR. Patrick Courreges, spokesman for DNR, said the agency has been monitoring the case and could pursue cleanup from the responsible operators regardless of any civil court ruling.
Any state-mandated cleanup would likely benefit the bottom line of the federally permitted land bank, which makes money by selling wetlands credits to people and businesses seeking to build elsewhere in wetlands. The land bank uses the credits to finance restoration of its private property in the Spanish Lake basin.
The Spanish Lake case had been in settlement negotiations last year and, for a moment this fall, was headed for a jury trial, pending key rulings. In dispatching those matters, though, retired state 21st Judicial District Judge Bruce Bennett, the ad hoc judge presiding in the case, apparently decided to throw out Spanish Lake Restoration’s remaining claims before trial.
Before a final judgment could be filed, though, Bennett recused himself in October amid complaints from Spanish Lake Restoration. The judge filed his reasons for throwing out the claims with his recusal, which Shell is appealing.
A host of other operators in the St. Gabriel oil field have been dismissed by or settled with the land bank in its long-running suit, but the court fight with Shell has continued since the lawsuit was filed in December 2010.
Among the mountain of documents Spanish Lake Restoration’s attorneys have unearthed is an internal Shell Oil memo from June 13, 1980, assessing the “bad” state of the St. Gabriel and other oil fields in Shell’s Riverlands Unit.
The memo notes widespread problems and violations of the law with the pits’ operation, where fluids were allowed to escape into the environment and waterways and to kill surrounding vegetation.
“Facility operations such as these are what cause regulations to be formulated by government agencies,” V.A. Harris, a then-Shell conservation manager, wrote to his superiors.
In a statement last month, a Shell spokesman issued a blanket denial of the suit’s allegations and said the company is proud of its operations. But, in court, the dispute has been less about whether there is contamination and more about its extent and whether Shell should pay to clean it up so many years later.
Part of Shell’s counter argument has been that the contamination has been visible and was well known for years to Spanish Lake Restoration and prior landowners and they failed to pursue a claim back then when legal deadlines were still fresh.
In recent court papers aimed at throwing out the plaintiffs’ legal claims before trial, Shell underscored the testimony of the plaintiffs’ own experts earlier this year, attempting to show how clear and long-standing the contamination has been.
Though the court has never fully tried the facts of the plaintiffs’ contamination claim, an earlier judge handling the case in June 2014 found that it had “clearly” been shown that the property had “some brine or salt intrusion that caused damage to the property.”
But that finding became part of a ruling to relieve Shell of responsibility for pre-1996 damage under the argument Spanish Lake Restoration’s suit was too late.
Spanish Lake Restoration has tried to use the discovery of the groundwater contamination underneath Shell’s pit site and surrounding land held by the land bank to defeat Shell’s timeliness claims.
Though a land bank expert acknowledged other non-Shell pits did contribute to the contamination, he found the majority stems from a large plume of underground salt and barium contamination underneath and around that one main Shell pit.
The plume extends half-mile to mile outward, the land bank expert found. The salt contamination reaches 90 feet deep and could be leaching deeper into the Mississippi River Valley Aquifer.
In an interview and court testimony, Nesbit said that, while he had some awareness of an old salt burn on the surface, the prior landowners never told him about the groundwater contamination when Spanish Lake Restoration bought the property in the late 2000s.
He said his first inkling about the full scope of the salt contamination didn’t occur until after the controversial reopening of the Alligator Bayou floodgate on Bayou Manchac in early 2009.
Spanish Lake Restoration and Nesbit were among those who pressed Iberville Parish government to open the floodgate in the late 2000s in a bid to restore the natural hydrology and improve the swamp’s health.
The regularly closed floodgate held up water levels in the basin. Once the gate was left opened and water levels dropped, the popular Alligator Bayou Swamp Tours, which used to ply the waters in Spanish Lake, was driven out of business.
Nesbit said signs of salt contamination also emerged once the water was gone.
“The water masked the damage,” he said.
Shell’s experts say Spanish Lake Restoration has overstated the extent of the contamination. Regrowth has already happened in some areas and the remaining contamination could be allowed to naturally attenuate. If a cleanup were needed, it should cover about 16 acres at a cost of $1.3 million, far less than what the land bank wants, Shell has argued.
But Nesbit said the long-term impact of this contamination is that the affected land can’t regrow the large cypress that used to populate it.
During a site visit over the fall, Nesbit showed a towering cypress on another part of the land bank property that, he says, was sealed off by oilfield roads from the contamination. In contrast, he said, affected areas have been repopulated by less productive, more salt-tolerant species.
“What’s in place of it is a cattail marsh, a very low habitat quality,” he said, standing next to one of the big trees.
Courreges said DNR won’t comment on Spanish Lake Restoration’s findings while the case is pending but will pursue a cleanup if the agency has indications environmental standards have been exceeded.
The state Department of Environmental Quality, which like DNR was provided a copy of Spanish Lake’s expert report, also won’t comment with the suit pending.