Cover Story

Fatally Flawed

by Patrick Flanagan

How Big Oil played a major behind-the-scenes role in LSU's legacy lawsuit' study.

How Big Oil played a behind-the-scenes role in LSU's 'legacy lawsuit' study

**By Patrick Flanagan / Photos by Robin May

In 2012 David Dismukes, the associate director at the Center for Energy Studies at LSU, authored a controversial study claiming the state's hostile legal climate has resulted in 30,000 job losses and about $6.8 billion in drilling revenue.

The Dismukes study, "The Impact of Legacy Lawsuits on Conventional Oil and Gas Drilling in Louisiana," has served as one of the main weapons in the arsenal of the Louisiana Oil & Gas Association's battle over so-called "legacy lawsuits" and more recently with the New Orleans levee board regarding its lawsuit against 97 oil and gas companies for decades of destruction wrought on the state's coastline.

But neither lawyers representing landowners with claims against oil companies nor Dismukes' academic peers are buying his study. And Dismukes himself isn't talking.

David Dismukes, right, appeared March 18 as a panelist for a Grow Louisiana Coalition forum hosted by the Center for Energy Studies at LSU, where he serves as associate director. Other panelists were LOGA VP Gifford Briggs, left, LSU economist Jim Richardson and Louisiana Mid-Continent Oil and Gas Association President Chris John.

Since the release of his revised report in 2012, Dismukes, who has a Ph.D. in economics, has done everything he can to avoid being questioned on the validity of his research, claims attorney John Carmouche of Talbot, Carmouche & Marcello, the firm now representing Jefferson, Plaquemines and Cameron parishes in a series of coastal zone management lawsuits filed against the industry.

A number of problems with Dismukes' study have been raised by his academic peers, including an April 2012 response published by ECONorthwest economists and University of Oregon Ph.D.s Ed Whitelaw and Bryce Ward. Their response is a scathing review of Dismukes' work, which they call a "fatally flawed" study that puts bias before scholarly methods.

According to Dr. Robert Gramling, a retired UL Lafayette professor of environmental sociology and author of a number of books on the oil and gas industry, the only flaw with the ECONorthwest review is that it doesn't go far enough.

"Conventional drilling started very early in South Louisiana - in 1907, I think - and has continued ever since," says Gramling. "There is a finite amount of oil in any location, and much of what is in South Louisiana has been located and produced. So there is less drilling because there is less oil. Dismukes is mistaking correlation with causation. Drilling is down in South Louisiana simply because there's less oil, not because there's more legacy lawsuits."

Also problematic, says Gramling, is that Dismukes' study splits Louisiana into two regions - north and south - which he uses to compare to other states in their entirety. The activity in those other states is based on unconventional drilling, or fracking, which also has resulted in a boom in North Louisiana. That, however, is not the case for South Louisiana, where the activity has solely been focused on conventional forms of extraction.

Carmouche says since 2012, his firm has attempted to subpoena Dismukes to give a deposition on his study. After a series of unsuccessful attempts, Carmouche says his firm hired Kenneth Ricks, a private process server, who paid Dismukes a visit at his office on April 3, 2012.

Really, Giff? As the article in which that rhetorical gem appeared points out, "oil thieves routinely close down pipelines by cutting holes into them. Nigeria closed all colleges in provinces where terrorist group Boko Haram murdered scores of students with guns, machetes and blow torches. Boko Haram released a video ... vowing to attack Western oil companies and kill their workers." Not coincidentally, Briggs declined to name the "people" who would rather risk terrorist attacks and the loss of workers' lives than deal with those pesky, litigious Louisianans. Because, we suspect, nobody said that ever.

"[Ricks] goes to Dismukes' office, asks the receptionist to speak with him, [and] she recognizes this is someone to serve him and comes back saying he's not here anymore," recalls Carmouche. "[Ricks] then sees Dismukes running out the back door, so he runs out, gets in his truck and pulls behind Dismukes to block him in, but Dismukes looks in his mirror, starts his car and runs his car into [Ricks]."

According to an accident report filed by the Baton Rouge Police Department, here's how the responding officer described the incident: "[Ricks] explained he was stopped behind vehicle 1 because he was serving David DISMUKES with a subpoena. [Ricks] further informed me [Dismukes] backed out of the parking space in an aggressive manner in an attempt to avoid being served a subpoena."

"You've got [LOGA President] Don Briggs and others in the industry who keep talking about this guy and his report, so all we want is for him to come testify and explain the report," says Carmouche. "What's the big deal, he wrote the report, he's an expert in economics, he testifies in court all over the country on other matters, so why's he running?"

The reason behind that reluctance is best summed up through a series of 2012 emails - released by LSU following a public records request from Carmouche's firm - between Dismukes, his research assistant and oil and gas industry officials.

In a Feb. 5, 2012, email to his research assistant, Chris Peters, a seemingly frustrated Dismukes writes: "Here's the F$@### legacy report !!! aghhh ... If we can get this spinned back around and out tomorrow I would be so grateful --I want these people off my back so I can get back to other things."

The identity of "these people" is revealed in a follow-up email Dismukes sends to Peters Feb. 6, writing: "Chris how is the legacy stuff going? I need to get something out to Exxon and Chevron today."

Responding to a question from Peters on the study's fuzzy data, Dismukes sends an even more revealing email Feb. 6: "I would say various filings' as the source ... I got the data from Exxon so not sure how I want to fess up' on where that info came from."

In an earlier email to Peters, sent Jan. 20, Dismukes is clear about his intention for the study: "[C]an you combine the south LA and the offshore - call it South LA and Inland Waters' - I want to be a little ambiguous."

Where to start with this one? A booming economy for oil execs like Mr. Moncla, certainly, but to suggest without cracking a Cheshire Cat grin - in fairness, maybe Moncla was speaking in jest, but no, he wasn't - that oil has "pulled Louisiana up from poverty" is utterly divorced from reality. By most measures Louisiana is the 49th poorest state in the U.S., just ahead of (thank God for) Mississippi, and our public school system is among the worst in the nation, too. The oil and gas industry has been active in Louisiana for a century and accounts for up to a third of the state's economy, and the best it can do is, "Well, at least we're not Mississippi"? Some goose.

The study immediately drew criticism with its release on Feb. 28, and in a March 1 response email to Exxon's Jeff Copesky, Dismukes asks for post-2007 data from the company to shut down arguments that the study is flawed because it centers on the years impacted by hurricanes Katrina and Rita, which had a devastating impact on South Louisiana's drilling operations. Dismukes writes to Copesky: "If you all could get me that extra data that I sent you a request about I could clearly shut this line of argument down since I could take the model out to 2010."

The report was never updated, so it appears Exxon did not supply that information (presumably the information would have been sent in an email that would have been turned over to Carmouche by LSU).

The report raises further questions with Dismukes' citing of a World Energy article without listing its author, which upon further inspection turns out to have been written by LOGA's Don Briggs, who, it's worth noting, also sits on the board of directors for LSU's Center for Energy Studies. Likewise, Dismukes also cites attorney William Jarman, known for his representation of oil and gas companies.

Dismukes appeared March 18 as a panelist for a Grow Louisiana Coalition forum hosted by the Center for Energy Studies at LSU. The IND spoke with him before the event, but he declined comment on the legacy lawsuit study saying, "I can't talk because of a number of legal reasons."

Dismukes deferred comment to his attorney, John Murrill, who says he was retained by LSU in 2012 following the attempts by Talbot Carmouche to subpoena Dismukes.

"When the university and Dr. Dismukes were subpoenaed I was retained to defend against both of those subpoenas since neither was a defendant in a lawsuit; they were simply subpoenaed to give depositions in a lawsuit against other parties," Murrill tells The IND. "The university is interested in protecting the academic freedom of its faculty members, but given the fact that Dr. Dismukes may be subject to future subpoenas I don't want to comment on that any further."

Murrill says in 2012 he filed a motion to quash the subpoenas against Dismukes and LSU, and so far neither has been deposed.

While Dismukes has so far seen no backlash from the university's administration over the industry's heavy hand in his research, his case is not unique.

David Dismukes

In 2012, UT Austin's Energy Institute released a study claiming hydraulic fracturing had nothing to do with water contamination. Controversy quickly followed when it was discovered that the study's author, professor Charles Groat, was also sitting on the board of Plains Exploration and Production (now Freeport McMoran Oil and Gas, headed by Lafayette native Jim Flores) and had taken in about $1.5 million in cash and stock compensation from the company within a five-year time frame, according to an investigation by StateImpact Texas, a reporting project of NPR member stations. That discovery prompted Groat to "retire" from the university, and the controversy also resulted in the resignation of the Energy Institute's director, Raymond Orbach. The university responded by revising its conflict of interest policies and restructuring the Energy Institute.

UT Austin Provost Steven Leslie responded to the controversy in an interview with StateImpact Texas, saying, "These are matters that affect the credibility and the public trust relating to the university."

A similar situation unfolded in November 2012 at the University of Buffalo over a study released by the school's Shale Resources and Society Institute claiming natural gas drilling operations at the Marcellus Shale in Pennsylvania had become safer because of increased regulation. What the study did not disclose was the connection between its authors and the industry. Following an internal investigation launched by an industry watchdog group, which claimed the study's authors used "flawed methodology," "biased language and industry spin" and an "artificial peer review' process," the university shut down the institute, according to StateImpact Pennsylvania.

The Dismukes study and the controversial reports released by UT Austin and the University of Buffalo have many similarities: All three attempted to hide the influence of the oil and gas industry and employed biased language and flawed methodologies, and each lacked a legitimate peer review process.

But, at least for now, the one major difference between these three cases is that LSU is backing the industry's influence in its professor's research.

"As a research institution, LSU will always protect the academic freedom of its faculty," says Jason Droddy, the university's interim vice president of communication.

"David Dismukes is an experienced and accomplished analyst with an extensive, peer-reviewed, academic record in this field," writes Allan Pulsipher, executive director of LSU's Center for Energy Studies, in a March 21 email. "There was no involvement or financing from the oil and gas industry. It is not surprising that some in the industry took an active interest in the study, but they did not participate in its design, execution, or interpretation. The informal email exchanges you cite are without context and do not support your interpretations or assertions. The study is transparent and speaks for itself. The data are available to the public, the methods used are traditional and well tested, and the results satisfy standard statistical criteria and meet the test of common sense."

Yet, according to Chris Peters, the research assistant who worked with Dismukes on the report, questions regarding the study, for the most part, are relevant.
Peters, who worked with Dismukes between May 2008 and May 2012, says there are several aspects of the study he would approach differently if given the chance, namely the decision to split the state into two regions that were used to compare with other states in their entirety, and the study's cut-off right after hurricanes Katrina and Rita. Both of those decisions, according to Peters, came from Dismukes.

Asked about the industry's influence on Dismukes, and its role in his decision to publish the legacy lawsuit study, Peters says, "I have the same wonder, but don't know."

"The Center for Energy Studies origin story is tied with the oil and gas industry 100 percent. They helped create CES, and the partnership has been really great for producing world-class research. But your concern is very legitimate," says Peters. "I think the solution is open research - 100 percent reproducible data, hosted online so people don't have to ask for it and the public can run through the data sets, which lowers the barriers to critiquing the analysis. Instead we have opaqueness, and it's a question of credibility.

"If people have questions on the relationship between oil and gas and the Center for Energy Studies, personally, as I've seen massive cuts to higher ed, more departments are turning to outside private funding. I'm sure a few freedom of information requests would show that's the case."

The IND submitted two public records requests asking for the center's budgets for the 2011-2013 fiscal years, as well as an itemized list of funding sources and private donations received by the center during those same years. The university responded by sending a condensed version of the center's budgets for those fiscal years. The problem is that the information supplied by the university only shows the center's expenditures, conspicuously leaving out where its money comes from.

An additional request asking in even more specific terms for a listing of the center's funding was submitted three days before this publication went to press - i.e., 72 hours as allowed by the state's public records law. The university responded by sending the exact same information it had the first time around, once again leaving out the information we requested.

Former levee board member John Barry says based on the university's track record, its defense of Dismukes - which he likens to a defense of Big Oil - is not at all surprising.

Barry points to the university's firing of the former Hurricane Center Director Ivar Van Heerden over his 2005 claim that the U.S. Army Corps of Engineers was responsible for Hurricane Katrina's flooding of New Orleans because of mistakes in the engineering of the city's levee system.

"This is the same university that fired Ivar Van Heerden because he wouldn't shut up," says Barry. "He sued LSU and it reached a [$435,000] settlement about a year ago. But the reality is that he was fired because LSU was more concerned about its relationship with the Corps of Engineers than they were concerned with the truth."

Barry also points to Dismukes' use of questionable source material - twice he cites an article by LOGA's Don Briggs without naming the author, as well as attorney Jarman, a longtime legal henchman for the industry - as one more in a long list of reasons for discrediting his work.

"I think Dismukes has been pretty discredited. His methodology doesn't follow normal scholarly practices. He gets his data from Exxon, and the most interesting part of the whole thing is that he's been ducking deposition for such a long time," says Barry. "I think that story of him running out of his office and ramming his car into the guy's car who was trying to serve him speaks to the honesty of his report. He will not stand up to cross examination, and his report won't either. Anybody with any integrity would stand up and defend his work, and he's just afraid to."

A state senator files staggeringly self-interested legislation to protect the oil and gas industry from those "greedy trial lawyers."

Hundreds rallied March 8 on the steps of the state Capitol as the Green Army protested complicity between our state lawmakers and the industries they acuse of abusing our water, air and coastline.

Sen. Robert Adley, a wealthy oilman from north Louisiana who has long ridden shotgun with Don Briggs and the Louisiana Oil & Gas Association - the two were famously photographed in loving embrace at a LOGA reception in Baton Rouge, the state Capitol building rising like a priapic specter behind them (the image was published in Harper's Magazine's November 2013 "Dirty South," an investigative piece that looked at the political battle over legacy lawsuits) - has filed a number of bills that would make it next to impossible for the citizens of Louisiana to seek redress in our court system against oil and gas companies that don't play by the rules.

SENATE BILL 79: At the behest, no doubt, of Gov. Bobby Jindal, who opposes the levee board's lawsuit, Adley filed SB 79, which would wrest control of the board's membership away from the chairman of the Coastal Protection and Restoration Authority and move it to the governor's office by giving the governor veto power over nominees. That veto power is tantamount to stalling power: if nominees aren't appointed within 45 days the governor gets to make the appointment.

SENATE BILL 469 would give the secretary of the Department of Natural Resources much more control over how local jurisdictions bring action against oil companies for violating the terms of their permits in coastal zones and it makes the process much more cumbersome. The DNR, it's worth noting, is part of the executive (read, governor) branch of state government.

SENATE BILL 546 prevents local governing authorities such as parishes from filing suit against oil and gas companies. The proposed law targets Cameron, Jefferson and Plaquemines parishes, which last year filed separate lawsuits against Big Oil to recover damages for coastal loss; SB 546 is retroactive and applies to any suits already filed.

SENATE BILL 553 would force levee boards to get approval from the governor before hiring outside attorneys to go after oil companies for coastal loss. Currently the boards must merely get approval by the state attorney general. Such suits represent exceptionally complex litigation that requires special knowledge of oil and gas matters, which is why Attorney General Buddy Caldwell signed off on the Southeast Louisiana Flood Protection Authority - East's request to hire outside attorneys to sue 97 oil and gas companies, an approval that was met with an unsuccessful lawsuit by LOGA. SB 533 would apply retroactively, meaning that if approved Gov. Jindal could quickly quash the suit or, at the least, force the levee board to use AG Office attorneys with no specialty in oil/gas litigation.

As of press time for this issue of The IND, Adley had yet to file a bill, as reported by the Associated Press in late March, that seeks a compromise between oil companies and landowners over legacy lawsuits - those brought by landowners against companies for contamination of land and/or water resulting from drilling operations decades ago. According to the AP, which paraphrased Jindal, the bill would "spell out the types of damage that can be recovered in the lawsuits and the standards for recovery. It also would define contamination to clarify what type of environmental damage is covered for recovery."