A Case of Eminent Domain, or Intercorporate Back-Scratching in Louisiana?

The New York Times of today, runs a great story of environmental litigation, cum eminent domain with a soupcon of what looks suspiciously like intercorporate intrigue. See Campbell Robertson, Bitter Twist In Louisiana Family’s Long Drilling Fight, N.Y. Times, December 29, 2011.  Here is the short version.

Farmer A leases land to oil company B which then sets out to operate oil wells and pipelines on the subject property. All goes well for years — or so it seems — until one day the farmer learns that the oil company has contaminated the subject property so severely that he demands cleanup or lease termination. Litigation ensues, that has been pending for so long that 13 members of the lessor’s family (who are heirs to the title) have died awaiting the result.

But then, oil company C which has been operating quietly across the street for 60 years, steps up and proposes to condemn the subject property in order to, er, protect it. So what’s the problem? The problem is that the condemnor company C just happens to be a subsidiary of oil company B. Got it? Company C offers around a million bucks which the farmer thinks is grossly inadequate (the current lease payments are over $100,000 per year). So oil company C files an eminent domain action around Thanksgiving.

As far as we can tell, no hard evidence of collusion between the two oil company has been produced, but the litigation is still very young, so it remains to be seen how things unravel in the glare of litigation. But even at this stage, interesting issues of public use and necessity seem to be hovering around this controversy.  The owner is quoted by the Times as contending that the two companies are in collusion, which, if true, would raise interesting issues, such as whether improper motives of the condemnor can be a defense to the condemnation, or whether one should look only to the use to which the condemnor means to put the taken property, irrespective of its subjectiove motives. Then there is Justice Kennedy’s admonition in his concurring opinion in Kelo v. New London, that pretextual condemnations are a no-no. So if the Louisiana courts find that this is a collusive action, it would pretty much follow that it is a pretext to rescue company B from having to face the consequences of contaminating the subject property. We will look forward to learning how it all turns out.

We now have a real interest in this case because the N.Y. Times concludes this story by quoting your faithful servant. Can’t be all bad.

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