On June 1, 2022, the Louisiana Supreme Court issued a significant ruling in the legacy litigation arena, settling once and for all the issue of what damages are available to landowners in oil and gas remediation lawsuits under the 2006 version of Act 312. In Louisiana Land II, the Court overturned its prior decision in Louisiana Land I issued nine years earlier, and concluded that a landowner’s recovery is limited to a regulatory cleanup of contaminated property, unless it had expressly contracted for more.
Legacy Litigation and Act 312
Legacy lawsuits have plagued oil and gas companies operating in Louisiana for decades. Landowners typically file these lawsuits against practically anyone who has ever operated or had an interest in a particular site, alleging that their operations contaminated the property. In the early days of legacy litigation, these suits would result in large monetary awards that were rarely used to remediate the property. To combat this issue, the Louisiana legislature enacted Act 312 in 2006 to ensure that any damages received for evaluating and remediating contamination would be used solely for those purposes by way of a court approved “feasible plan.”
The Louisiana Land Decisions
Since Act 312 was enacted in 2006, there has been much confusion about exactly what damages are recoverable in remediation cases. For years, the Louisiana Supreme Court has grappled with the question of whether Act 312 (2006) allows a landowner, in the absence of an express contractual provision, to recover an award for remediation damages that exceeds the cost for the feasible plan. In its 2013 decision in Louisiana Land I, the Supreme Court held that excess remediation damages were allowed under Act 312. However, on June 30, 2021, in Louisiana Land II, the Supreme Court concluded that the Louisiana Land I holding was “palpable error”; and that absent an express contractual provision, Act 312 does not allow for remediation damages in excess of those required to fund the feasible plan.
The Supreme Court granted rehearing of its Louisiana Land II decision, and on June 1, 2022, affirmed its ruling in a 4-3 decision, settling the question once and for all. The Court expanded upon its reasoning, explaining that
(1) both the Act and jurisprudence are clear that a landowner’s remediation remedy is correcting the contamination, which is accomplished through the feasible plan;
(2) any excess award would be duplicative and result in a windfall to the landowner, which is never proper; and
(3) a landowner may still bring tort claims, but any damages it receives may not be duplicative of an award for evaluation or remediation of environmental damage. While this rationale is applicable to all versions of the Act, the decision is limited to the 2006 version of Act 312.
Adams and Reese is proud to have played a role, working with other law firms, in obtaining this significant result. Martin Stern and Alexandra Lamb worked on the case here, with Martin making both of the recent arguments to the Louisiana Supreme Court.