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Louisiana to Tackle 'Legacy Lawsuits,' Again

Legislation aimed at cleaning up energy industry environmental mistakes of the past and clearing courts of lawsuit abuse of the present was expected to be filed in the state senate Monday by Sen. Robert Adley, (R-Benton).

The compromise legislation was announced by Adley and Gov. Bobby Jindal last Friday. So-called legacy lawsuits have long been a bane of the state's oil and gas industry, sometimes resulting in outsized penalties on industry and windfalls for plaintiffs, according to energy interests.

"There have been efforts over the years to address this issue either through the Legislature or the courts. The Legislature has made several attempts to find a balance to these interests, and some progress has been made," Jindal said. "Unfortunately, however, progress has been hampered by [exploitative] lawsuits, or 'legacy lawsuits,' that do more to enrich lawyers than to resolve disputes or protect the rights of the parties. We can no longer let these lawsuits needlessly delay cleanup, investment and timely resolution to disputes, which is why I’m proud to support this legislation."

Nearly two years ago the state legislature passed "a compromise plan for dealing with issues arising in remediation disputes involving oil and natural gas production sites" (see Daily GPI, June 12, 2012; May 29, 2012). That didn't do the trick, apparently.

According to the Louisiana Department of Natural Resources (DNR), there are more than 360 legacy lawsuits pending in state courts. This time around, the legislation is intended to do four key things, according to Jindal.

It provides that if a responsible party admits liability for a regulatory cleanup, there will be a rebuttable presumption that the cleanup plan approved or structured by DNR is the most feasible plan to evaluate or remediate environmental damage. And this presumption will be charged to the jury. The provision is intended to fortify the "limited admission process" created by the 2012 legislation and will encourage more operators to make admissions, which will result in more regulatory cleanups prior to protracted and very expensive litigation, Jindal said.

Second, the legislation clarifies the types of damages that may be recovered in a legacy lawsuit and the standards for recovery. "This eliminates gamesmanship and provides predictability to the oil and gas companies while also protecting landowners so they are able to collect actual damages to which they are entitled," Jindal said.

The legislation also would allow for attorney fees in favor of a party who is dismissed on a motion for preliminary dismissal. The right to file a motion for preliminary dismissal was created in 2012 in order to give defendants an early path out of a case when there is no evidence that a defendant has any responsibility. The process was created to remedy "scattershot lawsuits" where the plaintiff names every person and company in the chain of title. "This new provision will discourage these types of claims in the first place, by making the plaintiff responsible for paying the cost of attorney fees incurred by the defendant to obtain a preliminary dismissal," Jindal said.

Finally the legislation would define "contamination" to mean the introduction or presence of substances or contaminants into a usable groundwater aquifer, an underground source of drinking water, or soil in such quantities as to render them unsuitable for their "reasonably intended" purposes. Current law defines "environmental damage," but that definition uses the word "contamination," which is not defined.

"Providing a common sense definition for 'contamination' will make clear that environmental damage means something more than the mere presence of any constituent in the soil or groundwater," Jindal said. "In other words, it must rise to some level that is unsafe or unsuitable before it can support a claim for environmental damage."

Adley said his bill would resolve "...conflicts resulting from judicial decisions in 2010 and 2013..."

Louisiana Oil and Gas Association President Don Briggs praised the legislation. "It is time for the oil and gas industry and the state of Louisiana to move past these legacy-style suits and the immense job loss that has resulted from the suits," he said. "The oil and gas industry is the backbone of our state but cannot thrive with a litigious legal climate like what is currently in place."

The state along with oil and gas pipeline interests operating in the Louisiana are currently embroiled in a lawsuit brought by the Southeast Louisiana Flood Protection Authority-East over damage to coastal lands allegedly caused by pipeline development (see Daily GPI, Dec. 17, 2013; July 25, 2013).

The state's regular legislative session began March 10 and is scheduled to adjourn by June 2.

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