A new judge was assigned last month to preside over a local businessman’s lawsuit against an oil and gas conglomerate that he claims blackballed his Monroe-based remediation company for blowing the whistle on the illegal dumping of hazardous waste and the over-billing of millions of dollars for remediation work that may have never occurred.
Retired Judge Harry F. Randow, of Rapides Parish, was appointed ad hoc judge to preside over Stanley Palowsky III’s lawsuit against Anadarko Petroleum Corp. and other defendants in a June 16 order from the state Supreme Court.
Prior to Randow’s appointment, retired Judge Dee Hawthorne, of Natchitoches Parish, had presided over Stanley R. Palowsky III and others v. W. Brandon Cork and others since late 2015, but she recently left the case. No explanation was given for Hawthorne’s exit from Palowsky v. Cork.
In May, the First Circuit Court of Appeal in Baton Rouge ruled Hawthorne had abused her discretion as judge by forbidding Palowsky from filing an amended petition in the case, specifying how Anadarko and its employees damaged his company, Alternative Environmental Solutions Inc.
Alternative Environmental Solutions Inc., or AESI, is an environmental remediation company in Monroe that specialized in environmental consulting services evaluating soil shredding projects. (Soil shredding is a site remediation process by which contaminated soils are finely broken down and the contaminants exposed to the air.)
In light of the First Circuit’s ruling, Palowsky filed an amended petition last week at Fourth Judicial District Court in Monroe, elaborating on many of his claims against Anadarko, its employees and others.
(It was in Palowsky v. Cork that allegations arose in late 2014 accusing Allyson Campbell, a law clerk at the district court, of concealing or destroying documents in his lawsuit. Palowsky’s allegations against Campbell and several judges later became the subject of a separate, ongoing lawsuit and a criminal investigation by Louisiana State Police at the court.)
Palowsky’s racketeering lawsuit against Anadarko began in 2013. At that time, Palowsky claimed his former business partner, Brandon Cork, and others cheated him and AESI out of millions of dollars by cutting him out of projects after he exposed their alleged scheme to over-bill Anadarko. Anadarko, Palowsky has argued, also benefited from over-billing in some cases because the company could claim millions of dollars in false remediation costs and thus reduce its environmental liabilities and artificially inflate its stock price.
Besides Anadarko, defendants in Palowsky v. Cork include OHC Services LLC; Edith White (legal successor of the late Anthony White, officer of OHC Services LLC); Michael Holder; TP Environmental and Pipeline Services LLC; Anadarko Petroleum Corp.; and Dana Howard, a remediation group remedial project manager at Anadarko. (Palowsky has since reached a settlement with Cork, his former business partner.)
AESI was damaged when Howard and Cork, with the assistance of Anadarko, conspired to financially ruin AESI and convert business from AESI to Cork and other companies, according to Palowsky’s fourth petition. According to Palowsky’s fourth petition, Holder also was a convicted felon who previously pleaded guilty to unlawful transportation of a hazardous waste and unlawful concealment of a hazardous waste, including falsifying regulatory documents.
Many of the allegations in Palowsky’s fourth petition concerned remediation work done by AESI at the so-called Carpenter project in Evanston, Wyoming, in 2009.
According to Palowsky’s fourth petition, Howard —Anadarko’s remedial project manager — did not use verified third-party soil shredding rates but set the rates herself to reduce Anadarko’s environmental liability (as compared to usual costs for excavation and disposal at the work sites).
In addition to his allegations about over-billing at the Carpenter project, Palowsky also claimed Anadarko altered documents to conceal the risk to human health posed by well and gas plant sites.
“In 2007, Anadarko’s legal department wanted a database of potential liabilities in Louisiana,” stated Palowsky’s fourth petition. “Anadarko provided AESI with a list of 27 companies for which Anadarko could potentially be liable in Louisiana. As a result, over 3,500 well and gas plant sites were identified according to Louisiana Department of Natural Resource records.”
AESI sent Anadarko a $44,500 proposal in 2007 to generate a database indicating whether a site posed a risk to human health and how much it would cost to close a production pit or well. Palowsky claimed Anadarko removed information from the database proposal such as the human health risk evaluation and the liabilities associated with gas plants.
“The fact that (Chris Boyce, a manager at Anadarko’s EHS Remediation Group) and Anadarko’s legal department had the human health risk evaluation as well as the information concerning the wells identified as plugged and abandoned, removed from the 2008 Louisiana database project proves that Anadarko’s corporate mentality places greater value on maintaining Anadarko’s stock price than actually protecting human lives,” stated Palowsky’s fourth petition.
In 2012, Palowsky reached out to the Federal Bureau of Investigation (FBI) about the billing issues he reported to Anadarko.
“During this time, Anadarko was being sued by the U.S. Government in the Tronox Incorporated et al v. Anadarko Corporation et al., litigation for the fraudulent conveyance of environmental liabilities in what was described by the U.S. Government as a $25-billion scheme to illegally shed environmental liabilities from its balance sheet,” stated Palowsky’s petition.
Palowsky’s fourth petition also claimed the government’s settlement with Anadarko in 2014 did not account for 400 sites carrying additional environmental liability. The lawsuit recounted the history of Anadarko as a company as well as the environmental fines paid as part of its settlement with the government.
“In 2005 and 2006, Kerr-McGee fraudulently transferred liability for over 2,700 sites in 47 states to a company they created named Tronox, LLC, which was subsequently spun-off,” stated Palowsky’s fourth petition. “Anadarko then purchased Kerr-McGee in June 2006. Howard and other Kerr-McGee employees then became employed by Anadarko and brought with them the corporate culture of Kerr-McGee, a culture which resulted in the largest environmental fine in history.
After the sale, Anadarko took no action to correct the fraudulent transfer or to take responsibility for the massive clean-up left in the Tronox company. Burdened with the massive environmental liabilities, Tronox filed bankruptcy in January 2009 and sued Anadarko for the fraudulent conveyance of environmental liabilities.
“The United States EPA intervened in August 2009. In December 2013, the U.S. Bankruptcy Court for the Southern District of New York found Kerr-McGee liable for the fraudulent conveyance of environmental liabilities and awarded damages between approximately $5.2 billion and $14.2 billion. In April 2014, Anadarko agreed to pay $5.15 billion plus interest to a litigation trust in order to settle the claims. While Tronox and the U.S. EPA were focusing on the over 2,700 sites that were fraudulently conveyed to Tronox, apparently no one paid any attention to the 400 sites that Anadarko did acquire in the 2006 purchase of Kerr-McGee. Boyce’s Remediation Project Budgets spreadsheet identifies Active Reserve Project Number 50 as ‘KM-400,’ which is the 400 Kerr-McGee sites that Anadarko became liable for after the purchase of Kerr-McGee.”
“While Anadarko has a Total Reserve of $77.6 million for 49 active reserve projects, which is an average of approximately $1.58 million per project, astoundingly, Anadarko only has a Total Reserve of $11,481,400 to close the 400 Kerr-McGee sites,” stated Palowsky’s fourth petition. “If the average cost of $1.58 million per project for the first 49 active reserve projects was applied to the 400 Kerr-McGee sites, then Anadarko would have an additional declared liability of over $600 million. The fact that Anadarko has declared a liability of less than $30,000 per site for the 400 Kerr-McGee sites is glaring proof of Anadarko’s willingness to commit fraud in order to falsely maintain their stock price.”
In 2019, Occidental Petroleum bought Anadarko for $55 billion in a cash and stock deal.
Covington attorneys Joseph “Joe” Ward Jr. and Stacy Palowsky as well as Monroe attorney Sedric Banks are representing Palowsky and AESI in the lawsuit.
EDITOR'S NOTE: A previous version of this news report incorrectly stated AESI specialized in soil shredding. Instead, AESI provided consulting services evaluating soil shredding work. The Ouachita Citizen regrets the error.