Oil and Gas

Atchafalaya antics alive and well Although his legal battle continues, a whistleblower is finally vindicated in a case that should — but almost certainly won’t — send some current and former state officials to jail.

by Wynce Nolley and Lamar White Jr.

Although his legal battle continues, a whistleblower is finally vindicated in a case that should — but almost certainly won’t — send some current and former state officials to jail.

Whistleblower Dan Collins with his wife, Marian Pyle, left, and attorney, Crystal Bounds, after winning his long legal battle with DNR in December.
Submitted Photo

According to a whistleblower who remains actively involved in litigation with the state of Louisiana, over the course of the last decade, the Louisiana Department of Natural Resources spent millions of taxpayer dollars in phony environmental projects that earned a small cabal of lawyers, land owners and oil and gas companies an enormous fortune. In the process, each of them allegedly violated scores of federal and state laws, deceived the public and likely harmed Louisiana’s already-imperiled and fragile marshlands and ecosystem.

The FBI had once considered opening an investigation about public corruption in this case, and officials in the administration of former Gov. Bobby Jindal, who had been elected on a platform of ethics reform, had expressed a willingness to make these projects a prime example of cronyism and fraud. When the whistleblower came forward with documentation that the state had been misrepresenting the true intent of the work it conducted, the Jindal administration had been initially receptive. But for some reason they eventually determined the dispute was about engineering issues.

In 2008, Stephen Street, the state inspector general, told Baton Rouge’s Business Report that he simply didn’t have the resources to pursue an investigation. “It’s difficult to commit to such a large project,” he said at the time. The FBI backed off.

The story was supposed to be over. It wasn’t.

Today, Scott Angelle, the man who had led the state agency responsible for these projects, is running for Congress, only months after coming up short in a campaign for governor. Additionally, a recent court decision demands serious scrutiny over Angelle’s decisions during his eight-year tenure as secretary of the Department of Natural Resources and his relationships with an industry he continues to regulate as a member of the Public Service Commission.

“This is a John Grisham novel,” Dan Collins tells ABiz from his home in Baton Rouge. Collins is a veteran landman, a job that required him to spend countless hours surveying every nook of the vast landscape of coastal Louisiana, often in the service of DNR. He knows Louisiana like the back of his hand, which is why, for more than a decade, he was so valuable to the state agency tasked with protecting the sustainability and responsible use of its treasured reservoirs of oil and gas.

But, beginning in 2007, when Collins realized the real intent of a “water quality” project in Bayou Postillion, located 70 miles south of Baton Rouge, and discovered the state had misled the public and the federal government, he blew the whistle, alerting two of his superiors at DNR, Robert Benoit (now part of Lafayette Mayor-President Joel Robideaux’s administration) and then-Sec. Angelle, who was first appointed to the position by Gov. Kathleen Blanco.

In December, Collins won a $750,000 judgment against the state, after a jury determined he had been improperly denied contracts from DNR in retaliation for his decision to alert authorities about the agency’s wrongdoings.

“This case involves retaliation for reporting violations of environmental law associated with a publicly funded project in the Atchafalaya River Basin under the pretense of ‘water quality,’” Collins states in his brief to the court, “when the purpose for dredging the bayou was to access oil and gas exploration for the benefit of private landowners and companies.”

Back in the summer of 2007, Mary Tutwiler and Nathan Stubbs, former staff writers for ABiz sister publication The Independent, wrote a piece called “The Newman Trowbridge Files” about the duplicitous dealings of the late Newman Trowbridge, a well-connected Lafayette attorney who brokered deals with the state, big landowners and his own oil and gas partners.

The story led to a whistleblower lawsuit filed in 2010 by Collins against DNR where Collins claimed he suffered damages by DNR in the form of reduced state contracts for his firm — retribution after he reported what he believed were violations of environmental law connected with the Bayou Postillion Water Quality Project in the Atchafalaya Basin. The jury ultimately agreed with Collins.

Over a roughly 12-year period stretching from 1997 through 2010, Collins performed title research, ownership identification, servitude acquisition and mineral research for the Atchafalaya Basin Program and the Coastal Restoration Program under DNR.

In 2005, Bayou Postillion, which is located in the protected wetlands of the Basin, was dredged in excess of 150-200 feet wide in certain areas by a length of about three miles. The project was part of the Atchafalaya Basin Program in cooperation with the U.S. Army Corps of Engineers and used Collins’ land services in the process, under the guise of improving the waterway.

In February 2007, Collins and his firm performed contract services for a second project called the Bayou Pigeon Water Quality Project, which also involved publicly funded dredging in the same area. Later that year, Collins found himself at the North American Prospect Expo in Houston where by sheer chance he saw oil and gas prospects being advertised for the same area.

“I just found it coincidental,” says Collins. “They were actually promoting oil and gas deals [for Bayou Postillion] at this trade show.”

This 2005 image shows Bayou Postillion dredging; at back is where the bayou intersects with the Intracoastal Waterway.

When Collins returned home to do some digging, he discovered that the state of Louisiana spent upwards of $1 million on dredging only to retain ownership of a mere 25 feet in the middle of the bayou channel — within the actual waterway — from the mouth of the bayou for a considerable distance that essentially created toll road conditions for commercial barge traffic, which are typically about 50 feet in width. This in effect restricted the public from navigating from bank to bank without crossing an invisible boundary line within the waterway.

According to Collins, the publicly funded dredging project being promoted as a water quality project for fishermen and crawfishermen was, in fact, being used for the primary purpose of giving access to oil and gas exploration for the benefit of private landowners and oil companies.

“Lo and behold, I find out that coinciding with the exact time period that the dredge occurred in 2005, they drilled seven wells at the direct end of the dredge,” says Collins. “Those seven wells were very prolific, very productive natural gas wells. And, I mean, it was at the direct end of the dredge. And that occurred in 2005, and the wells coincided exactly with the same time period.”

Collins also revealed that the state wound up entering into a boundary agreement instead of going through the normal process of getting permission via right of way, or a servitude agreement. Collins and his firm were originally asked to acquire all the signatures, but were later asked only to do the title, so the task of securing the signatures fell to one of the landowners. Trowbridge was the attorney who facilitated the deal, as Stubbs and Tutwiler reported in their 2007 story.

According to Collins and many others, there was never any real problem with “water quality.” The state simply sold the project as such in order to justify dredging a canal that would allow oil and gas companies better access. The state failed to perform any wetlands mitigation for the project. Perhaps even more egregiously, the state actually relinquished publicly owned property, maintaining only a 25-foot servitude and ensuring that the industry could effectively charge the public to use a bayou it had paid to expand.

Collins’ lawsuit claims the state violated a litany of state and federal laws, including the Clean Water Act, the False Claims Act and the Louisiana Water Control Law. The state has consistently denied Collins’ accusations and recently filed a motion to vacate the December jury verdict.

Collins was not the only person who had warned Angelle that his department had failed to follow procedure. Paul Maclean, another veteran landman, wrote Angelle personally on Jan. 3, 2008, in the waning days of the Blanco administration. “(A)s a taxpayer, I must insist that you request your department personnel to immediately take a different approach to choosing, designing and/or constructing future water quality projects using public funds,” Maclean wrote. “In my opinion, the procedure used for at least the Bayou Postillion Water Quality Project was unsatisfactory.”

In early 2008, Collins also alerted a member of Bobby Jindal’s gubernatorial transition team, Pete Stewart, who put him in touch with Timmy Teepell, Jindal’s campaign manager and newly-minted chief of staff. “My understanding,” Stewart wrote Collins on Feb. 5, 2008, “is that this has been brought to the highest level.”

Shortly thereafter, an FBI agent in Lafayette reached out to Collins, requesting that he provide all of the information he possessed. Collins shipped him an entire box of files. “Keep it coming,” the agent e-mailed him. “I’m going to go through each word, line, sentence and paragraph. The process will result in my summary of every potential criminal allegation which will be reviewed by FBI management, myself and other Special Agents on the squad. We take this kind of information seriously, and will apply an unbiased evaluation. Of course, not every allegation which comes through our door results in the opening of a case, but this is obviously the first step in achieving that end.”

While public agencies and parish governments pursued historic litigation against oil and gas companies for destroying the environment by, among other things, dredging canals and bayous, DNR continued to green light allegedly unnecessary dredging projects, even after it was warned these projects were bogus and had actually done more harm than good. DNR claimed that former Sec. Angelle had no real oversight over the decision to give a multi-million dollar contract to a well-connected Lafayette law firm, Oats & Marino, for a controversial project at the center of Collins’ complaint.

“We just discovered a number of items that were relative to the project to show that it was really all about oil and gas, and it had very little to do with water quality,” says Collins. “The concerns were such that, in the overwhelming information with all the oil and gas leases that were directly over the dredge, I brought it forward to my superiors, and those were Robert Benoit in the Atchafalaya Basin Program and to Scott Angelle, who was the secretary of DNR.”

What is perhaps even more preposterous is that, as Collins later discovered, when the state was unable to get all of the landowner signatures for the boundary agreement, it simply deleted the names of those who would not sign the final documents.

“The landowner, who was also on contract to the Atchafalaya Basin Program, was asked to get the signatures, which took him about two to three years,” says Collins. “After all of the questions that arose with the project, I started looking at it closer, and I realized that in fact he didn’t get all of the signatures. He actually couldn’t get all of the signatures from his co-owners. And so, the ones that he couldn’t get, he just simply erased. He removed the names of the people who didn’t or wouldn’t sign the documents.”

Collins also learned that the servitude agreement related to the boundary agreement was invalid without all of the co-owners signing it. He says it was also revealed that Angelle made representation to the Army Corps of Engineers that permit consent had been obtained from all of the landowners despite the fact that the names of those unwilling to sign were removed from the agreements.

“That’s something that you just can’t do, because this documentation was tied to the Army Corps of Engineers permit, and you have to get real estate consent documents,” says Collins. “And so, we found information that the then-DNR secretary made to the Army Corps of Engineers was false. They said they had consent and approval when they didn’t. You can’t make false statements to the Army Corps of Engineers, particularly related to wetlands, because there’s real strict rules and regulations regarding wetlands.”

Collins says he also found out that, in order to make the project look legitimate, one of the formal lease nominations of the water bottom tract over the entire dredged area had been tampered with. While it had indeed been submitted correctly, once prepared by the Office of Mineral Resources and published within the official State Notice of Publication offering, the plat header on the named bayou — Bayou Postillion — instead read “Bayou Gravenburg,” which is located roughly 20 miles away on the west side of Atchafalaya Basin.

The notice that was falsely advertising the state’s water bottom properties as available for oil and gas lease, in other words, was changed to give it the appearance of another area and then forwarded to thousands of potential bidders under the state’s public bidding process.

State Lease 18258 was approved by the State Mineral Board and received only one bid, but it has generated oil and gas production sales of more than $20 million since 2005 for approximately 37 acres of state water bottoms within producing oil and gas units located at the end of the dredge project.

“I’ve never seen anything like that,” says Collins. “In fact, as a landman, it’s unheard of. So it was, in a word, very deceptive.”

Collins reviewed both state leases 18258 and 18070 covering portions of the dredged area and reported significant administrative lease penalties amounting to thousands of dollars that had accrued regarding those state leases, which were simply waived by the State Mineral Board, just like fixing traffic tickets, even after Collins had reported those violations.

Despite being publicized as a water quality project restoring the bayou to its original depth and width as administrators had touted, DNR’s true purpose for the Bayou Postillion project was actually for oil and gas exploration and to accommodate drilling barges while the state gave away valuable surface and mineral rights to the adjacent private landowners.

“Ultimately, I had a meeting with Secretary Angelle on Sept. 11, 2007, and presented a tremendous amount of information,” says Collins. “And needless to say from presenting this information over the time period of 2007, 2008, 2009 and into 2010, the amount of contracts I received from the state started going down to the point that I didn’t get any more contracts.”

Collins says that information was withheld and only known by a select group of people within DNR and never disclosed to the public or the committee selecting water quality projects. The Army Corps of Engineers permit for the project itself referenced only navigation and increased water circulation, not commercial purposes for oil and gas activity.

“And as a result of that, I feel that there were reprisals to not only me but to my firm in regard to the amount of work that I had historically received and hope to continue doing work with the department,” says Collins.

The original trial date was set for May 18, 2015; however, the state requested the trial date be continued, so it was delayed twice until Dec. 7, 2015, in the 19th Judicial District in Baton Rouge under Judge Wilson Fields. Perhaps coincidentally, the gubernatorial election in which Angelle, by then a public service commissioner, ran unsuccessfully was held on Oct. 24, 2015. Voters would have no idea about serious ethics questions swirling around Angelle’s tenure as DNR secretary until after the election.

The trial lasted a week until a jury voted to award Collins $250,000 in damages. Under the environmental whistleblower statute, Collins is eligible for three times that award in addition to attorneys’ fees, which brings the total amount to more than $750,000.

Angelle has not returned ABiz’s calls seeking comment for this story.

DNR has already filed motions to vacate the verdict and for a new trial. It maintains that no laws were violated, and it argues Collins should not be considered an “employee,” which would prevent him from whistleblower protection.

“So you would think, how could this occur in this day and age?” asks Collins. “We have corruption that goes all the way to the top in the state of Louisiana. And even though there might be parties that choose not to investigate, it doesn’t mean it didn’t happen. It does. It did.”

About a week ago, Collins alerted Louisiana’s newest secretary of DNR, Thomas Harris, of his ongoing concerns. “Again, I extend an invitation to address the discovered information and determine what the Louisiana Department of Natural Resources is going to do to address these serious state and federal issues, including not only the apparent misuse of public funds but also the manipulation and misrepresentation of the public oil and gas bidding process,” Collins wrote. He’s still waiting to hear back.