Sinkhole suits will be consolidated into a class action
28th May 2013 · 0 Comments
By Susan Buchanan
Residents near Bayou Corne in Assumption Parish noticed excessive bubbling a year ago, and on August 3 the state issued a mandatory evacuation for about 350 people as a sinkhole grew. They weren’t forced to leave, however.
Last week, plaintiffs’ attorneys said hundreds of residents and business owners near the Bayou Corne sinkhole can participate in a class-action suit in U.S. Eastern District Court in New Orleans.
Larry Centola of Martzell & Bickford in New Orleans said Thursday “we estimate there are over 300 people in the class. The class definition is awaiting approval by Judge Jay Zainey.” Centola is a member of the Plaintiffs’ Steering Committee chosen by the judge in December in LeBlanc et al. versus Texas Brine in U.S. District Court.
In a May 22 press release, the Plaintiffs’ Steering Committee, appointed by Judge Zainey and representing property owners near the sinkhole, said the judge issued a small entry certifying a class action against Houston-based Texas Brine and Dallas-based Occidental Chemical on behalf of Bayou Corne residents evacuated since August. The judge’s action was based on a PSC motion.
Last week’s PSC release said all cases filed in U.S. District Court will be consolidated into one legal action. Individuals who aren’t represented by an attorney are included if they’re within the class. The release said “the presumed class will likely consist of all persons who owned or leased property that is included in the mandatory evacuation area.”
A document filed by the Plaintiffs’ Steering Committee in Eastern District Court on May 16 provides more hints about class characteristics. According to it, the class could consist of those who lived in the evacuation area on August 2 or owned a business there, along with any businesses that conducted most of their activity there.
Last Tuesday, Judge Zainey said attorneys have until June 10 to give him a proposed order to grant class-action status to four lawsuits.
Last Thursday, Centola said “Texas Brine has until June 24 to make offers to people who do not have a lawyer. That deadline will be set by court order but the order hasn’t been formalized yet.”
Texas Brine spokesman Sonny Cranch said last week his company is trying to settle with 108 property owners who aren’t represented by attorneys. Texas Brine was ready to make settlement offers to homeowners this month when two of its three insurers pulled out of the plan early last week, he said.
“Our principal insurer, Zurich American, is in full support, but we suddenly learned that two ancillary insurers were not on board,” Cranach said last Tuesday. The ancillary insurers are Arch Specialty Insurance Co. and American Guarantee and Liability Insurance Co.
Cranch said his company phoned Governor Bobby Jindal’s office Monday morning to discuss problems with those two insurers. “We asked if there was any way the governor could use his office to influence them. But Governor Jindal was noncommittal.”
At the time of the phone call, Texas Brine wasn’t aware that Governor Jindal planned to hold a press conference Monday afternoon in Bayou Corne.
Last Monday, Jindal criticized the company for its slow progress in settlement talks with homeowners. He said Texas Brine’s failure to offer settlements to owners raises question about the company’s ability to operate in Louisiana. Jindal said he asked the state’s Commissioner of Conservation to review permits issued to Texas Brine to assess the company’s financial condition and to decide if those permits should be altered or terminated. Jindal said he instructed all state agencies, along with any local government entities involved in sinkhole response, to gauge whether Texas Brine can meet its regulatory obligations.
Jindal said “it has become clear that Texas Brine is trying to run out the clock on the citizens of Bayou Corne and Grand Bayou by hiding behind insurance companies, lawyers and lobbyists.” The governor said the company is responsible for the sinkhole.
Jindal’s first visit to the sinkhole was on March 13. At that time, he appointed a blue ribbon commission to assess the situation, including public safety.
Last Tuesday, Cranch said “we would be devastated if the state of Louisiana closed our operations.“ The family-owned business also produces brine in Texas, Virginia and New York. “We’re in talks with our insurers as I speak. We’re prepared to settle with Bayou Corne homeowners. That’s why we hired home inspectors and appraisers in March.”
Cranch said “For homeowners who want to move, we plan to buy their property at market prices seen in January 2012 before the first bubbles appeared in the sinkhole last summer. We will also pay for emotional distress. For those owners who plan to stay in their homes, we’ll pay for their loss in home value and emotional distress.”
In a May 20 letter to Bayou Corne residents, Texas Brine said the company has spent more than $40 million on sinkhole response, including over $4.8 million on evacuation assistance. “We are actively engaged with the offices of the Governor and the Insurance Commissioner to keep them informed of the current situation with our insurance carriers,” the letter signed by Texas Brine operations vice president Bruce Martin said.
According to Texas Brine, 111 property owners had requested settlement forms as of May 21; 105 had submitted claims information; 103 properties had been inspected; and two properties still had to be inspected.
Cranch said Texas Brine voluntarily committed to make settlement offers within 45 days of property inspections. As of May 24, however, 85 inspected properties had reached the 45-day threshold without settlement offers.
As for the two insurers that are dragging their feet, Cranch said “this is like paying for car insurance every year, then you get in an accident and the insurer won’t cover injuries to passengers in the other vehicle. You ask yourself what have I been paying for all along?”
He’s sympathetic to residents but said the closest homes to the sinkhole are half a mile away. “No homes have fallen into the hole,” he said. “No one’s been injured. Some owners claim damage to their foundations or door frames, and we’ll consider that on a case by case basis.”
John Boudreaux, director of the Assumption Parish Office of Homeland Security, said last week “many residents have reported cracked foundations and also sheetrock cracks in their residences.” He’s not aware of any sinkhole-related injuries to residents of Bayou Corne or Grand Bayou. He said “a few months ago, when a rig for a well at the sinkhole was being demobilized, a worker sustained a minor injury.”
Rodney Mallett, Louisiana Dept. of Environmental Quality spokesman, said “the air and water quality samples we’ve taken show no environmental impacts. The air is okay and surface water is okay.”
The sinkhole formed following the collapse of a Texas Brine-operated cavern in a salt dome. The company extracted brine from the cavern and piped it to chemical plants along the Mississippi River. The cavern’s failure released natural gas and oil from formations along the salt dome.
Residents have worried about radioactivity at the site but Cranch believes that’s a non-issue. “A bag of fertilizer, the bricks in your home and clay are all radioactive but at such low levels they pose no health threat,” he said. “When we replace tubing in our wells, we find tiny flakes of radioactive metal caused by interaction with sodium. We report all of it to DEQ. Radioactivity in the flakes is at levels that are no threat to human health.“
Most of the issues at the sinkhole are moving towards resolution, Cranch said. “The sinkhole has widened since last summer, and it’s now 15 acres in area,” he said. “But it’s also gotten much shallower. Today it’s 170 feet deep compared to 450 feet deep last August. Tetra Tech is building an 8-foot containment levee around it. We’re flaring off what’s left of the natural gas in the aquifer. We feel as if we’re on he road to a stable situation.” Tetra Tech is based in California.
Cranch said “the sinkhole bubbles because gas in pockets squeezes up through rock and clay to the surface. The surrounding bayous also bubble.”
He said Texas Brine operates over a dozen brine wells in three salt domes in Assumption, Lafourche and Iberville parishes, supplying sodium chloride to chemical companies Georgia Gulf, OxyChem and Shintech for their plants on the Mississippi River between Baton Rouge and New Orleans. Those plants manufacture caustic soda and chlorine used in plastics, water purification, paper, pharmaceuticals and organic and inorganic chemicals. “PVC or polyvinyl chloride plastic pipes, widely used in home construction, are made from sodium chloride,” Cranch said.
Texas Brine produces water saturated with salt through solution mining, as opposed to dry mining. The cylindrically-shaped cavern at Bayou Corne was created in 1982 when the company drilled down 6,000 feet. Water injected into the underground salt dome dissolved salt and formed a liquid brine. The cavern was plugged under an order from the Louisiana Dept. of Natural Resources last June.
“It was our decision to close the cavern, and to do that we filled it with brine,” Cranch said. “We’d mined it to the end of its productive life.”
Cranch said the state-by-state contribution—from its operations in Louisiana, Texas, Virginia and New York—to the company’s bottom line is proprietary. Texas Brine is the nation’s top, independent brine producer, supplying over 30 percent of U.S. chlor-alkali needs, he said.
This article originally published in the May 27, 2013 print edition of The Louisiana Weekly newspaper.