NAPOLEONVILLE — In a blistering new ruling, a state district judge criticized three companies for putting "economic interests over environmental and safety concerns" in operations that led to the formation of the 2012 Bayou Corne sinkhole, blaming longtime salt mining operator Texas Brine, Occidental Chemical and Vulcan Materials for the flawed underground mine that sparked the giant hole in the Louisiana swamp.
The sinkhole’s appearance overnight on Aug. 3, 2012, led Texas Brine to eventually agree to buy out dozens of home and camp owners in the scenic Assumption Parish fishing and retirement hamlet, as the dramatic and unprecedented failure of the salt cavern gained international attention.
BAYOU CORNE — After 2½ years stuck in sinkhole limbo, life is busy and headed toward change for Nick and Brenda Romero.
But Judge Thomas Kliebert Jr. of 23rd Judicial District Court found that Texas Brine wasn't the only company that should bear responsibility. Texas Brine, Occidental Chemical (OxyChem) and Vulcan all failed to heed warnings about potential problems with the salt cavern from its conception in the mid-1970s to its eventual shutdown about a year before the sinkhole appeared and converted acres of cypress swamp into a lake nearly 180-feet deep, the judge wrote in his 20-page ruling.
In reaching his conclusion of shared fault, Kliebert cited testimony from more than 40 witnesses in a bench trial over liability this fall and decades worth of internal warning emails, reports and memos going back to 1976, six years before the access well for the cavern was even drilled.
One internal Vulcan memo in 1980 called the then-planned cavern a “multimillion dollar gamble” that could not be recommended in “good conscience.”
Kliebert found that Texas Brine had the expertise in the field of solution mining, the day-to-day experience with the cavern and knowledge of long-standing concerns since the cavern was first dug.
But OxyChem and Vulcan exercised ultimate control over mining decisions and also had knowledge of the cavern's increasingly precarious status, he wrote.
“The warning signs were present for each party; however, each party was blinded by the financial implications of their actions,” Kliebert wrote.
Texas Brine was salt-mining operator of the failed salt cavern and two others nearby at a site off La. 70 just east of Bayou Corne. But salt from the caverns went by pipeline to a chloralkali plant in Geismar owned by Vulcan until a 2005 sale to an OxyChem subsidiary.
The production site land and underground mineral rights were owned by OxyChem, but the mineral rights were leased to Vulcan Materials until OxyChem took control of the Geismar plant and caverns after the sale.
The ruling recently came out of the first trial phase for consolidated lawsuits that Florida Gas and other pipeline companies brought against Texas Brine and other companies over the sinkhole. As it grew from just a single acre to nearly three dozen, the plaintiffs allege the lake-like hole undermined the earth around their transmission lines, destroying them. The suits are among a few dozen in state and federal court over the sinkhole. Many remain pending.
As the operator of record, Texas Brine has, for years, been held by state regulators and the public as “the responsible party” for the sinkhole response. The company has paid buyout, remediation and monitoring costs estimated at more than $225 million, a company attorney said.
But, in a legal victory for the Houston-based company, Kliebert found Texas Brine 35 percent at fault. OxyChem was found to have the largest share of liability at 50 percent. The judge repeatedly cited OxyChem for its "culture of pecuniary interest first" and concluded the chemical giant had a "superior capacity" to prevent the sinkhole. Vulcan was found 15 percent at fault.
OxyChem and Vulcan had already settled with the pipeline plaintiffs before trial, but the ruling will have a bearing on what Texas Brine has to pay. Also, Texas Brine has countersued OxyChem and Vulcan for about $120 million in sinkhole costs that insurers have not reimbursed, Texas Brine attorney James Garner said.
Garner welcomed the ruling. He added that though the company immediately "stepped up" in the sinkhole response for the betterment of the community, the company never accepted it was solely at fault for the sinkhole.
"We presumed we would let the legal system deal with that, and it ultimately did," he said.
OxyChem spokesman Eric Moses said in a statement the company was planning a vigorous appeal. Moses said Kliebert's ruling was "unsupported by the facts, expert testimony and law," including his finding that a nearby oil and gas well drilled in 1986 on OxyChem land played a role in the sinkhole’s formation. Moses added the judge also failed to account for some of his own conclusions that Texas Brine mismanaged the salt cavern and ignored warning signs.
“This finding is wrong on the facts and the law,” Moses wrote. “The Court’s decision to assign additional responsibility to OxyChem — a landowner and mineral lessor with no role in the operation of the oil and gas well at issue — is a dramatic departure from established Louisiana law and industry practice.”
Spokespersons for Florida Gas and the corporate parents of other pipeline companies in the lawsuits, Enterprise Products and EnLink, declined to comment, citing the ongoing litigation.
Though Kliebert is expected to take up the damages in a later phase, Florida Gas and OxyChem, which each had argued Texas Brine bore all or the vast majority of the liability, have already filed motions for new trial just weeks since the Dec. 21 ruling.
The years of warnings Kliebert referenced ranged from initial concerns about the underlying geology and whether the area would make for a financially viable and geologically stable salt cavern to warnings decades later airing at least some concern that rapid subsidence could occur in connection with the cavern then leaking brine thousands of feet underground.
Kliebert's review of this evidence also brought to light what he saw as growing distrust between OxyChem and Texas Brine near the end of the cavern's life and, often, a failure by all three companies either to believe the warnings of each other's experts or always share critical information.
The cavern, which eventually approached the volume of the Mercedes-Benz Superdome, was carved from a giant underground, column-shaped salt deposit known as the Napoleonville Dome. A well was drilled nearly 6,000 feet deep and fresh water was pumped down to dissolve the salt. The resulting watery brine was sent by pipeline to Vulcan’s and then OxyChem's chemical plant in Geismar as a raw material.
But, even before the drilling started for the Oxy-Geismar No. 3 cavern in 1982 — when experts knew far less about the underlying geology — the ruling noted that internal consultants worried the site for the cavern was too close to the outer face of the salt dome, or salt “edge,” and the salt could eventually be eroded away to surrounding rock and sediment as the mine grew over the years.
Even though Vulcan never shared its 1980 "multimillion dollar gamble" memo and others with Texas Brine, Kliebert noted Texas Brine had received a warning from a geologist in the early 1980s that creating the cavern was "likely a risky proposition." He added the record was "replete" with warnings to both companies before the cavern was created that the edge of the salt dome was a "serious issue that would require the parties to proceed with caution."
Joe Ratigan, a salt-mining expert hired first by Vulcan and then by OxyChem, issued internal analyses in 1998 and 2008, at least partially shared with Texas Brine, offering increasingly dire warnings about the cavern’s stability due to its growing proximity to the salt edge.
In 2008, armed with new seismic data, Ratigan advised OxyChem to halt production completely, which didn't happen. Ratigan testified at trial, however, that he never thought a sinkhole would form, though he discussed sinkholes with OxyChem in 2008 when he recommended shutting the well down, court transcripts say. Ratigan declined to comment last week.
The companies halted mining in June 2010 and closed the salt mine in June 2011.
“Simply stated, all three defendants possess the capacity and multiple opportunities to terminate solution mining of the ... cavern in the face of warning after warning,” Kliebert wrote. “Through the life of (the cavern), each defendant exercised their capacity over the other defendants to further their corporate interests.”
“Inversely, after the once hypothetical risks of operation became reality, each defendant attempted to shield themselves from liability by proclaiming their apparent lack of capacity over the situation. The fact remains that no party prudently stepped up to the plate and terminated the ... operations at the most critical stages of operation until it was far too late,” Kliebert added.
In answering Kliebert's finding that the companies knew of the risks associated with the cavern, each of the companies suggested the others were in a better position to know about the cavern's status or had more control to address problems.
Moses, the OxyChem spokesman, pointed out that the judge found "the vast majority" of the cavern's growth happened under Texas Brine's and Vulcan's watch before OxyChem took control in 2005 and cavern growth afterward was "negligible."
"OxyChem acted responsibly and prudently, and immediately instructed Texas Brine to stop running the brine well when it learned of the risk of continued operation," Moses said.
Garner, the attorney for Texas Brine, said that while there were concerns about subsidence in the shallow rock layer above the cavern, even Kliebert found a sinkhole-inducing failure along the cavern's side at more than 5,000 feet deep was "unprecedented." Meanwhile, Vulcan hid information from Texas Brine and OxyChem and Vulcan retained control over the cavern, Garner added.
As perhaps the best indication of Texas Brine's inability to foresee the sinkhole, Garner pointed to the testimony of Ratigan. Known as "Dr. Salt," the OxyChem expert said he told state officials days before the sinkhole appeared in 2012 that a sinkhole was "highly unlikely." It was "a sentence," Ratigan added, "I live to regret."
"So how could the operator (Texas Brine) have been in any better position than Dr. Joe Ratigan?" Garner asked.
Vulcan, in a statement, said that the company approached Texas Brine in 1975 to dig three salt caverns, including Oxy-Geismar No. 3, and that Texas Brine "designed, located, drilled," and got the permits for the caverns and, then was contractually obligated for all "aspects of the operation, maintenance, and development," including testing and analysis.
"Texas Brine repeatedly and routinely reported to Vulcan that the operation of the No. 3 well posed no environmental and safety concerns," the statement said.
The statement added that it was the actions of OxyChem and Texas Brine after Vulcan sold the cavern that caused the sinkhole, noting Texas Brine officials testified in open court last year that had the cavern remained in its condition from 2005, "there would have never been a sinkhole."
Vulcan also contended there was no reliable evidence before the sale to show how close the cavern was to the salt dome's outer face and suggested that their 1980 memo calling the then-proposed cavern a "multimillion dollar gamble" was based solely on how much brine the future cavern could produce.
"No one ever raised the risk of a sinkhole event with Vulcan," the statement said.
Oil well part of failure?
In divvying up responsibility, Kliebert found the decades of mining by Vulcan and Texas Brine through 2005 brought the cavern close to the salt edge.
But he also accepted a theory put forward by Texas Brine's expert that the old oil and gas well on OxyChem's property and near the cavern’s thin salt walls played a critical role in the cavern's unprecedented failure.
Salt caverns are often filled with highly concentrated brine when they are closed. Like the air in a balloon, the brine helps maintain a shut cavern's supporting salt structure against geologic forces that naturally press down on the underground cavity.
Kliebert accepted the Texas Brine expert's theory that an oil formation, depleted and depressurized from the old well, was tied into the cavern due to fractures in the thin salt wall. The oil formation provided a place for leaking brine to go that otherwise would not exist so deep underground.
Kliebert found OxyChem and its corporate allies were the only parties with financial interests in both the oil well and the salt cavern, but they failed to keep other companies involved in the cavern informed about the oil well's long-term status. He found OxyChem fully liable for the well's part in the failure and dismissed the drilling companies involved with the well.
Later, in 2011, the plugging and abandoning of the cavern “sealed" its "fate,” denying any chance to compensate for lost brine, Kliebert found. He wrote Texas Brine and OxyChem shared responsibility for this decision, instead of following Ratigan’s recommendation to monitor the well as long as possible.
The judge concluded that while salt mining is intricate, it doesn't take "a post-graduate degree in mining engineering to be aware of the risks associated with creating these massive caverns." Yet, he found, all three companies had plenty of experience and forewarning about the cavern that eventually failed and created the sinkhole.
"The totality of the evidence and testimony makes it clear that OxyChem, Texas Brine and Vulcan were each aware of the substantial risk associated with their conduct," he wrote.