Texas Brine Sued by its Insurer Over Sinkhole Site

One of the insurers for Texas Brine Company has filed a lawsuit accusing Texas Brine of ignoring warnings about the potential for disaster if it continued mining an Assumption Parish salt dome cavern.

The suit arises from the massive sinkhole created after the cavern collapsed in 2012.

Liberty Insurance underwriters Inc. says in the federal lawsuit that Texas Brine’s own people and others warned for years about the potential problems. The lawsuit cites internal company reports, memos and an email suggesting Texas Brine officials were warned with increasing specificity since the mid-1970s – before the cavern was even permitted and mined – that the area where the cavern was planned was close to the salt dome’s outer face, according to The Advocate.

Liberty, which faces $50 million in exposure as Texas Brine’s third insurer in line, is asking U.S. District Judge Lynne Hughes in Houston to declare the company does not owe Texas Brine under the policy because of their prior knowledge.

In a statement Tuesday, Texas Brine denied “many of the specific allegations made in the suit,” including Liberty’s claims that there is no coverage under its policy.

“For many months, we have been working closely with our insurers to resolve issues between us, and it is unfortunate that Liberty filed this suit at this time, particularly since information provided to Liberty in confidence was inappropriately used in making these claims,” the Texas Brine statement says. “We will deal with this issue in the litigation.”

Liberty’s lawsuit quotes internal documents portraying Texas Brine as pushing back against suggestions from the one-time well owner, Vulcan Materials Co., to mine the cavern at a shallower depth than had been planned to avoid the deeper trouble areas.

“Texas Brine knew in 1998 that the western wall of Oxy Geismar (hash)3 was already ‘precariously’ close to the edge of the salt dome, and that to continue increasing the level of salt reserves mined could ’cause a disaster,”‘ the Liberty lawsuit concludes.

The Liberty suit was filed Oct. 22 in U.S. District Court in Houston. A status conference has been set for 10 a.m. on Jan. 13 before Hughes.

Liberty, which faces $50 million in exposure as Texas Brine’s third insurer in line, is asking Hughes to declare the company does not owe Texas Brine under the policy because of their prior knowledge of the risks.

The sinkhole is now 26 acres, has led to a 15-month evacuation of about 150 homes in the Bayou Corne and Grand Bayou communities, home buyouts, the emptying of surrounding storage caverns and a barrage of lawsuits against Texas Brine and Occidental Chemical Corp., a New York-based company from which Texas Brine leased the site.

Texas Brine mines caverns from deep, solid columns of salt known as salt domes with wells drilled and pumped with fresh water. The water dissolves the salt and leaves behind a cavity. The watery brine byproduct is shipped by pipeline to petrochemical plants.