Louisiana Law Blog

By Lou Grossman

The Subsequent Purchaser Doctrine is a judicially created limitation on the rights of a current landowner to sue for pre-acquisition damages. For over 160 years, Louisiana courts have held that a current landowner has no right of action to sue for damages to his/her property occurring prior to the date of sale in the absence of an express assignment of that right. In environmental contamination disputes, appellate courts were divided on whether the doctrine should apply to cases involving non-apparent or subsurface property damage.

In a recent 4/3 decision, a majority of the Justices of the Louisiana Supreme Court rejected the notion that property damage must be overt, and held that a landowner has no right to sue for non-apparent damages to land inflicted before the act of sale in the absence of an express assignment of, or subrogation to, that right. Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, 2010-2267 (La. 10/25/2011) –So.3d --. In reaching this decision, the majority acknowledged 160 years of jurisprudence constante regarding the subsequent purchaser rule and found that the rationale should also extend to the situation where damage to the property is not apparent.

In reaching this decision, the Louisiana Supreme Court also rejected various theories advanced by Eagle Pipe, most notably of which was Eagle Pipe’s continuing tort theory. According to the Court, the presence of alleged contamination on Eagle Pipe’s property was not caused by “overt, persistent and ongoing acts,” but was simply a continuing ill effect from the original tortious acts. As such, it was not a continuing tort and could not give rise to a separate tort claim under that theory.

This decision resolves any dispute among the appellate courts and explicitly limits the rights of current landowners to bring suit for environmental harm inflicted prior to the date they acquired the property, regardless of whether the purchaser could have known of the contamination. Such landowners may still seek claims against prior owners and are further permitted to seek environmental remediation, but private actions and damages have been severely abrogated by the Court’s ruling. Moreover, in rejecting the continuing tort theory, the Court refused to allow private claims for environmental harm to exist in perpetuity, providing greater certainty to industry with respect to tort liabilities.

Notably, the Court’s decision created a sharp divide among the justices which continues to persist. Justice Clark, who authored the majority opinion, and Justice Weimer, who authored the dissent have both provided additional written opinions, days after the original opinion was released. As this dispute continues, it is important to recognize a number of similar cases currently pending before the Court, including two arising from oil and gas exploration and production activities performed pursuant to mineral leases. The Court will continue to face such sharp divisions in ruling on these matters and the issue is far from final resolution.
 

By Lee Vail

On October 15, 2010, the former Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued new regulations, incorporating in its entirety and making mandatory the implementation of the American Petroleum Institute’s Recommended Practice 75 (API RP 75).  The rule requires development of Safety and Environmental Management Systems (SEMS) plans by “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a state lessee granted a right-of-use and easement.” 30 C.F.R § 250.105. According to BOEMRE, “the purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents.” This final rule applies to all Outer Continental Shelf oil and gas and sulphur operations and the facilities under BOEMRE jurisdiction including drilling, production, construction, well workover, well completion, well servicing, and DOI pipeline activities.

Responsibility for developing and implementing a SEMS program lies with the lessee (or owner or holder of an operating right), unless it delegates the responsibility to another (likely the operator). Contractors are not responsible for developing the plan; however if compliant, contractor procedures may be incorporated into the lessee’s/operator’s SEMS plan.
 

By Esteban Herrera and Dwayne Johnson

On October 14, 2009, the Louisiana Department of Environmental Quality (DEQ) issued General Permit No. LAG260000 for discharges within the territorial seas of Louisiana from oil and gas exploration, development, and production facilities.

In a lawsuit filed in state district court in Baton Rouge, the Louisiana Environmental Action Network challenged this General Permit. In a May 2010 decision, the state district court upheld the permit. However, in a ruling dated June 10, 2011, the Louisiana First Circuit Court of Appeal remanded the permit to DEQ for further proceedings.  In a Notice published in the Potpourri Section of the Louisiana Register on October 20, 2011, DEQ said it would be modifying the General Permit to remove produced water discharges from coverage under the permit.  Facilities wishing to discharge produced water within the territorial seas of Louisiana now must seek authorization to do so under an individual permit.  In addition, facilities discharging produced water currently covered by the General Permit must file the O and G-IND permit application for an individual permit no later than April 1, 2012.  The notice states that “the individual permit will require an evaluation of the effects of produced water discharges on the environment and human health.”  DEQ further said that “the regulated community will be responsible for providing information that will be utilized to determine whether authorization to discharge produced water in the territorial seas will be granted.”

By Brittany L. Buckley

Effective today, October 20, 2011, new permitting and disclosure requirements apply to hydraulic fracturing operations in Louisiana. Known as “fracking” in the oil and gas industry, hydraulic fracturing refers to the process of injecting fluid into tight shale or sandstone formations, which creates fractures in the rock through which oil and gas may travel into the wellbore. When combined with horizontal drilling, fracking allows producers to capture oil and gas reserves that were once thought to be out-of-reach.

Pursuant to the newly-implemented amendment to Subpart I of LAC 43:XIX (Statewide Order 29-B), fracking operators must now apply for and obtain a specific permit for “hydraulic fracture stimulation” from the Louisiana Department of Natural Resources’ Office of Conservation before utilizing pressurized fluids to fracture any formation for the purpose of improving its ability to produce hydrocarbons. After obtaining the requisite permit and conducting its fracking operations, the operator must be prepared to publicly disclose (1) the types and volumes of base fluid used during fracking; (2) a detailed list of all additives used in the fluid and the name of the supplier for each type of additive; and (3) a list and concentration of any chemicals contained in the fracking fluid that are regulated by the Occupational Safety and Health Administration (OSHA) and reported on Materials Safety Data Sheets (MSDS). The lone exception to these disclosure requirements permits an operator to withhold trade secrets, but the regulations still require the operator to disclose pertinent chemical characteristics of even proprietary constituents used in fracking operations.

To comply with these disclosure requirements, the operator must utilize the Office of Conservation’s new WH-1 Form to disclose the information about the base fluids (discussed above), together with detailed information about the identities and volumes of water supplies used during each phase of fracking operations. In lieu of submitting the WH-1 Form directly to the Office of Conservation, the operator may elect to satisfy its chemical reporting obligations by publishing the required information to an online database that makes the information available to the public free of charge. If utilizing the online option, the operator must also furnish a written statement to the Office of Conservation certifying that all required information has been published in an online registry. FracFocus is one online database specifically endorsed by the new regulation, but the disclosure requirements can also be met by publishing the required information to any other “similar registry.” It is anticipated that the option to satisfy Louisiana’s new disclosure requirements by publishing information to FracFocus will be heavily utilized, as many oil and gas companies have already become accustomed to using this registry to comply with other states’ disclosure regulations.
 

By R. Lee Vail

In Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc, 617 F.3d 1296 (Fed. Cir. 2010), the Federal Circuit reversed a district court’s summary judgment decision that no patent infringement occurred when a US company made an offer to sell to another US company when the sale negotiations occurred outside of the US.

Transocean filed suit for infringement of patents related to an improved apparatus for conducting offshore drilling. In order to drill for oil and other offshore resources, drilling rigs must lower several components to the seabed including the drill bit, casings, BOB’s, and the drill string. A conventional offshore drilling rig utilizes a derrick with a single top drive and drawworks that can only lower one element at a time in a time consuming process. Transocean patented a specialized derrick to improve the efficiency of lowering the above components. The specialized derrick included “two stations – a main advancing station and an auxiliary advancing station that can each assemble drill strings and lower components to the seabed.” Id. at 1301. This duel-activity rig could significantly decrease the time required to complete a borehole. Id at 1302. Transocean sued Maersk rig for infringement of the specialized derrick patent.
 

By Brittany L. Buckley

The recent development of the Haynesville Shale in North Louisiana and other shale formations around the country has generated huge public interest in the hydraulic fracturing process, which is known as “fracking” in the oil and gas industry. Fracking refers to the procedure of injecting fluid into tight shale or sandstone formations to create fractures in the rock, through which oil and gas flow into the wellbore. When combined with horizontal drilling, fracking allows producers to capture oil and gas reserves that were once thought to be out-of-reach.

Last week, the Louisiana Department of Natural Resources (LDNR) filed a Notice of Intent to amend LAC 43:XIX Subpart I (Statewide Order No. 29-B). The proposal seeks to amend Statewide Order 29-B to include new reporting regulations for fracking operations in Louisiana. If the proposed regulation is promulgated, it would require any operator engaged in fracking to regularly report:

1. The types and volumes of base fluid used during fracking;
2. A detailed list of all additives used in the fluid and the name of the supplier for each type of additive; and
3. A list and concentration of any chemicals contained in the fracking fluid that are regulated by the Occupational Safety and Health Administration (OSHA) and reported on Materials Safety Data Sheets (MSDS).

If, however, the identity of any reportable chemical or additive is a “trade secret,” the operator may refuse to report proprietary details but must still report pertinent chemical characteristics of the product. The proposed regulation would only apply to new wells that are drilled after the date that a final regulation is promulgated.

The Notice of Intent is merely the first step in promulgating the new reporting requirements for fracking in Louisiana. This proposed regulation was initiated based on recommendations from the State Review of Oil and Natural Gas Environmental Regulations (STRONGER), (1) which champions itself as a “successful alternative to federal oversight of state oil and gas exploration and production waste regulatory programs.” (2)  With this proposal, Louisiana joins a growing list of states including Arkansas (3), Michigan (4), Montana (5) , Texas (6) , and Wyoming (7) that are discussing or have passed state regulations requiring disclosure or reporting of the contents of hydraulic fracturing fluids. A public hearing regarding the proposed Louisiana regulations will occur on August 30, 2011 in Baton Rouge.

To view the full Notice of Intent, visit the LDNR’s website.

 (1)  See Louisiana Department of Natural Resources, Notice of Intent: Hydraulic Fracturing Stimulation Operations (LAC 43:XIX.118) (“a review of the Office of Conservation policies and regulations associated with the hydraulic fracturing process was conducted by the non-profit, multi-stakeholder organization, STRONGER, Inc. to assess the effectiveness and adequacy of current regulations. Their report finalized March 2011, recommended some of the changes included in the proposed amendment.”).

(2)  STRONGER, Inc. website, “The History and Accomplishments of the State Review Process,” available at: http://www.strongerinc.org/documents/STRONGER%20State%20Review%20Process%203-4-2011.pdf.

(3)  See Arkansas Oil & Gas Commission, Rule B-19, available at: http://www.aogc.state.ar.us/PDF/B-19%20Final%201-15-11.pdf.

(4)  See Michigan Department of Environmental Quality, Supervisor of Wells Instruction 1-2011(Reporting Instructions), available at: http://www.michigan.gov/documents/deq/SI_1-2011_353936_7.pdf.

(5)  See Department of Natural Resources and Conservation of the State of Montana website, available at: http://bogc.dnrc.mt.gov/PDF/36-22-157pro-arm.pdf.

(6)  See Texas House Bill 3328 (effective 9/1/11), http://www.legis.state.tx.us/BillLookup/Text.aspx?LegSess=82R&Bill=HB3328; http://www.legis.state.tx.us/BillLookup/history.aspx?LegSess=82R&Bill=HB3328.

(7)  See Wyoming Oil & Gas Conservation Commission Rules (Chap. 4, Sect. 10), http://soswy.state.wy.us/Rules/RULES/7929.pdf.

By R. Lee Vail

In response to the Gulf of Mexico Deepwater Horizon Incident, the Louisiana Department of Natural Resources (“DNR”), Office of Conservation (“Conservation”) issued a series of emergency rules with effective dates: July 15, 2010(1) , December 9, 2010(2), January 12, 2011(3) and most recently May 12, 2011(4).  . The initial emergency rule created:

“a new Chapter within Statewide Order No. 29-B (LAC 43:XIX.Ch. 2) to provide additional rules concerning the drilling and completion of oil and gas wells at water locations, specifically providing for the following: rig movements and reporting requirements, additional requirements for applications to drill, casing-header requirements, mandatory diverter systems and blowout preventer requirements, oil and gas workover operations, diesel engine safety requirements, and drilling fluid regulations.” See, 36 La. Reg. 1427.

The initial emergency rule also amended Statewide Order No. 29-B-a (LAC 43:XIX. Ch. 11) “to provide for and expand upon rules concerning the use of storm chokes in oil and gas wells at water locations.” Id.

In the emergency rules, Conservation has reviewed and incorporated “all provisions of the MMS [Minerals Management Service] regulations concerning well control issues at water locations” that were not repetitive, duplicative or otherwise inapplicable to the situations encountered in Louisiana waters. See, 37 La. Reg. 1548. In addition to providing Conservation more time promulgate final comprehensive rules, the most recent version of the emergency rules contains a few noteworthy changes from the January 2011 version of the rule. These are:

• The Oil and Gas Well-Workover Operations section, located at LAC 43:XIX.211, contains specific requirements for blow out preventer components and configuration. Conservation removed a provision (formally located at LAC 43:XIX.213.L) allowing the Commissioner to grant an exemption from specific equipment requirements mandated by that section. The January 2011 version of the rule allowed an exemption from specific equipment requirements where the operator could demonstrate the unavailability of the mandated equipment and that anticipated surface pressures minimize the opportunity for loss of well control.

• Conservation changed the mandatory industry standard for design and operation of subsurface safety valves (“SSSV”) from “API RP 14B” to “API RP 14H”. See, LAC 43:XIX.1104.E (making the emergency rule consistent with 30 C.F.R. §250.804(a)(5)). 

• All four versions of the emergency rule require that installed subsurface-controlled SSSV’s be removed and tested every twelve or six months, depending on whether they were installed on a landing nipple or not. However, the most recent emergency rule also included a requirement that all SSSVs be inspected for leakage every month to six weeks. See, LAC 43:XIX.1104.E.2.a.

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(1)  36 Louisiana Register 1427, July 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1007/1007.pdf
(last visited June 27, 2011).

(2)  36 Louisiana Register 2823, Dec. 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1012/1012.pdf
(last visited June 27, 2011).

(3)  37 Louisiana Register 460, Feb. 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1102/1102.pdf
(last visited June 27, 2011). 

(4)  37 Louisiana Register 1547, June 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1106/1106.pdf (last visited June 27, 2011).
 

By R. Lee Vail

Deepwater oil and gas production from the Gulf of Mexico has become a significant portion of the current production within the United States, equal to over 1.6 million barrels per day of oil equivalent; total U.S oil production is around 5.3 million barrels per day. (1)  Worldwide shallow water oil production peaked around the year 2000 whereas worldwide deep water production has risen to around 5 million barrels per day. On May 10, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) approved Royal Dutch Shell’s Exploration Plan S-0744 to better define discoveries announced in 2009 and 2010. (2) 

Several environmental groups filed suit in an attempt to block the approved plan. Gulf Restoration Network, Inc., Florida Wildlife Federation, and Sierra Club Inc. filed a petition on June 8, 2011, in the United States Court of Appeals, 11th Circuit, in an attempt to set aside BOEMRE’s approval of the plan. The allegations in the petition are relatively general, alleging violation of the National Environmental Policy Act (“NEPA”) (i.e., for BOEMRE’s alleged failure to appropriately conduct the required environmental assessments and/or impact statements) and further alleging elements required pursuant to 43 U.S.C §1349(c) necessary to maintain the suit under the Outer Continental Shelf Lands Act (“OCSLA”).
 

By R. Lee Vail

On June 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) issued a notice to Gulf of Mexico Outer Continental Shelf Region (GOMR) lease and pipeline right-of-way (ROW) holders on reporting hurricane and tropical storm effects. Specifically, the recent notice, designated NTL No. 2011-G01(1), requires four reports, as appropriate:

• Evacuation and Production curtailment statistic report – partially evacuated platforms are not considered evacuated
• Facility shut-in reports – including facilities that are partially shut-in
• Facility damage reports – including platforms, rigs and pipelines
• Pollution reports - facility discharged or continues to discharge oil during or as a result of the event
   

The Evacuation and Production curtailment statistic report and the Facility shut-in report overlap in subject matter. They differ in that the first report is general and requires overall company statistics (number of facilities evacuated or not evacuated, overall production shut-in); the second report is specific, requiring statistics platform by platform. Facility damage reports are to be submitted as soon as the information becomes available. Other reports are to be submitted daily as long as the condition exists. Reports may be submitted by e-mail or through the BOEMRE GOMR internet-based Permitting and Reporting System (eWell). Although the notice outlines the specific information and instructions required when the transmission is by e-mail, BOEMRE GOMR strongly encourages use of eWell to transmit the required data.

The eWell system, described in NTL No. 2007-G15 (2), was developed to increase efficiency of well permitting and reporting transactions between OCS lessees and operators and the GOMR by both reducing the time (and cost) required to process data and to reduce input errors. The system is designed to simplify submittal of multiple reports and subsequent daily reports. Interested lessees and operators and pipeline ROW holders must apply to BOEMRE GOMR for access to the eWell system.
 

[1] BOEMRE, Hurricane and Tropical Storm Effects Reports, NTL No. 2011-G01, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2011NTLs/11-G01.pdf (last visited June 10, 2011).

[2] BOERME, eWell Permitting and Reporting System, NTL- No. 2007-G15, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2007NTLs/07-g15.pdf (last visited June 10, 2011).

By Lou Grossman

In a recent decision, the Louisiana Second Circuit Court of Appeals upheld the application of the longstanding subsequent purchaser doctrine to an oilfield legacy case.  The decision Wagoner v. Chevron U.S.A. Inc., et. al., No. 10-45507 (La. 2. Cir. 2010) affirmed the legal principle that the right to recover for property damages is a personal right that does not pass to subsequent purchasers of the property.  According to the Second Circuit, this right is a personal right even when the harm is subsurface environmental contamination.

In reaching its decision, the Second Circuit rejected multiple theories advanced by the plaintiffs. Most significantly, the Second Circuit rejected plaintiffs’ contention that the existence of a mineral lease created a real obligation to restore the leased premises to its original condition.

The right to damages conferred by a lease, whether arising under a mineral lease or a predial lease, is a personal right, not a property right; and, as a personal right, it does not pass to the new owners of the land when there is no specific conveyance of that right in the instrument of sale.

The Second Circuit’s decision creates a further divide among the Circuit Courts of Appeal on the subsequent purchaser doctrine. Plaintiffs have sought Writs of Supervisory Review from the Louisiana Supreme Court and this is one of several, similar decisions currently on review.
 

By Tokesha M. Collins

During the 2010 Session, the Louisiana Legislature enacted Act 986 to amend La. R.S. 30:2022, the state law concerning the Louisiana Department of Environmental Quality’s (LDEQ) permit process. The legislation began as House Bill 1169 and was authored by Representative Karen St. Germain. Governor Bobby Jindal signed the legislation on July 7, 2010, as Act 986. The Act became effective that same day.

The Act enacted La. R.S. 30:2022(D), which requires greater transparency from LDEQ regarding changes made to permits, renewals, extensions, and modifications. First, Act 986 requires that, if requested by a permit applicant, LDEQ provide the applicant with a written summary of the specific changes to the existing permit whenever LDEQ prepares a draft database permit for the renewal, extension, or substantial permit modification of an existing hazardous waste permit, solid waste permit, Louisiana Pollutant Discharge Elimination System (LPDES) permit, or air quality permit. The database is LDEQ’s Tools for Environmental Management and Protection Organization (TEMPO) database system. Previously, LDEQ was under no obligation to inform a permit applicant of each and every change that had been made in the renewal, extension, or substantial modification of an existing permit.
 

By Esteban Herrera, Jr.

The July 20, 2010 Louisiana Register contained a notice from the Office of Conservation, Louisiana Department of Natural Resources that purported to promulgate rules amending Statewide Order 29-B to add a new Chapter 8 on procedures for evaluation and remediation of groundwater at E&P sites. Conservation’s Web site on July 20, 2010 contained a “final” version of the SERP Manual that was part of the proposed rules.  In a memorandum dated July 20, 2010 sent to interested parties, the Commissioner of Conservation said the July 20 notice on these proposed rules had been “unintentionally and incorrectly published” in the Louisiana Register as a final rule.  The memorandum states that Conservation does not consider the proposed rules “to be final or in effect at this time.”  Look for future information on these proposed rules.

By Maureen N. Harbourt

On June 2, 2010, the Environmental Protection Agency adopted a final rule which significantly lowers the primary National Ambient Air Quality Standard (“NAAQS”) for sulfur dioxide (“SO2 ”). EPA is phasing out both the annual standard (0.03 parts per million or ppm) and the existing 24-hour standard set at 0.14 ppm, and phasing in a new 1-hour standard set at 75 parts per billion (“ppb”). The new 1-hour standard is met when the 3-year average of the 99th percentile of daily maximum 1-hour averages at each monitor does not exceed 75 ppb. EPA will transition to the new standard with overlap of the existing standards. In areas that are in compliance with the current standards (all of Louisiana), the existing 24-hour and annual standards will be revoked one year after the designations of new nonattainment areas. Designations are to be final in June 2012, so the existing standards will no longer remain effective as of June 2013.

By Victor J. Suane, Jr.

In 2006, the Louisiana Legislature enacted Louisiana Revised Statute 30:29 (“Act 312”) to provide a procedure for judicial resolution of claims for environmental damage to property. The provisions of Act 312 are applicable whenever there is “any litigation or pleading making a judicial demand arising from or alleging environmental damage” involving “contamination resulting from activities associated with oilfield sites or exploration and production (“E&P”) sites,” regardless of whether claims for remediation arise under the Louisiana Mineral Code or Civil Code. La. R.S. 30:29(I)(1).

By Linda S. Akchin

On Friday, April 9, 2010, the Louisiana Supreme Court (1) reversed the Third Circuit Court of Appeal’s decision in Cimarex Energy Co. v. Mauboules (2), in which the Circuit Court held that

(1) a royalty interest vendors’ oral assertion to a mineral lessee that the royalty interest vendee fraudulently inserted a prescription interruption provision in the royalty deed, and that therefore the royalty interest had reverted back to the vendors, is not a reasonable basis for the mineral lessee to initiate a concursus proceeding to determine the ownership of royalty payments because the innocent third party purchaser of the royalty interests is protected by the public records doctrine; and

(2) the mineral lessee is liable not only for the royalties paid into the registry of the court, but also for an additional sum equal to double the amount of royalties paid into the registry of the court, as damages.

The Third Circuit decision represented a gross departure from well-established Louisiana law relating to concursus proceedings, upon which the oil and gas industry, and mineral royalty payors in particular, have long relied in order to avoid the risk of multiple liability and the vexation of multiple lawsuits, as well as to avoid a penalty for nonpayment of royalties pursuant to Mineral Code provisions allowing a penalty under certain circumstances.

By Maureen Harbourt

On January 27, 2010, the SEC voted 3-2 to issue an interpretive guidance “on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change.” Chair Mary Shapiro emphasized that the interpretive release is not intended to create new legal requirements, but is to clarify the requirements already applicable for reporting material risks on public disclosure statements. She was careful to avoid arguments on the science, stating: “We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics."

By Len Kilgore and Esteban Herrera

In the January 20, 2010 Louisiana Register, the Office of Conservation, Louisiana Department of Natural Resources issued a Notice of Intent to amend Statewide Order 29-B to incorporate new rules for the evaluation and remediation of groundwater conditions at exploration and production sites.

The proposed rules can be found at this link.   As part of the proposal, Conservation has published a draft manual entitled “Exploration and Production Waste Site Evaluation and Remediation Procedures Manual” or “SERP Manual.”   A copy of the SERP Manual can be found here. 

Conservation will accept comments on the proposal through March 8, 2010.   A public hearing on the proposal is scheduled for March 1, 2010, at 9:00 a.m. (CST).   Anyone with interests involving energy exploration and production sites should carefully review the proposal.

By Tokesha Collins

During the past few years, the Louisiana Legislature has adopted many “green” initiatives as part of climate and energy policies. The state has placed a strong emphasis on increasing both renewable energy generation and energy efficiency. The following is a list of some of these important initiatives:

• The Louisiana Renewable Energy Development Act allows Grid Tied Net Metering systems throughout the state, which allows electric utility customers, who wish to install a net metering facility, to reduce their monthly electricity bill by using electricity that is generated from solar, wind, hydroelectric, geothermal, or biomass resources. See La. R.S. 51:3061-51:3063 (2003).
   

By Larry J. Hand, Jr.

According to a 2006 report of the Department of Interior, the Outer Continental Shelf (“OCS”) of the United States has the potential to generate 900,000 megawatts of power, which is roughly equal to the total installed electrical capacity in the United States. Of course, this potential resource cannot be realized without installation of significant infrastructure to harness the power of the winds that blow on the OCS.

by Gordon D. Polozola

“Shreveport and Bossier City and Caddo and Bossier parishes have been working on a comprehensive set of ordinances to give local governments leverage in controlling drilling in the Haynesville Shale natural gas field,” reports the Shreveport Times. According to the report, “the ordinances are aimed at protecting water, limiting road damage, and controlling noise, lighting and hours of operation at drilling sites. The Shreveport area has taken queues [sic] from Fort Worth, Texas, where the local government drew up similar laws for Barnett Shale production.”

by Gordon D. Polozola

The United States Court of Appeals for the District of Columbia Circuit affirmed an order of the Federal Energy Regulatory Commission approving a new long-term allocation of power-generating capacity among the affiliates of the Entergy system. Facing a complaint from New Orleans, which asserted that it was bearing unusually high production costs, Entergy submitted to FERC a proposed reallocation of generating capacity. Under the proposed allocations, Entergy Arkansas and Entergy Gulf States’ cheaper generation capacity would be “sold” to Entergy New Orleans and Entergy Louisiana. As described by the Court, this would thereby allow New Orleans to “pass costs from its more expensive generators on to the now-undersupplied Entergy Gulf States. These paper transfers of power would lower costs for New Orleans and Louisiana but raise costs for Gulf States.” The Louisiana Commission opposed the allocations as discriminatory. But, granting deference to FERC, the Court found there was not enough evidence to second-guess FERC’s decision.

by Katherine K. Green and Richard D. McConnell

There are scores of oilfield contamination cases, coined “legacy lawsuits,” in which landowners claim that their property has been contaminated by historical oil and gas exploration and production operations. Legacy lawsuits are a means for plaintiffs to potentially obtain large jury verdicts to remediate property. Plaintiffs, however, are not required to use their monetary awards towards the remediation of their property. In 2006, the Louisiana Legislature, in response to windfall jury verdicts, lack of remediation obligations on landowner plaintiffs, and the adverse effect of those events on oil and gas operators in the State, enacted Louisiana Revised Statute 30:29 (“Act 312”). Act 312 reflects the Legislature’s concern that the State’s natural resources were not being protected under then-existing laws. 

The constitutionality of Act 312 was recently challenged in M.J. Farms, Ltd. v. Exxon Mobil Corporation, No. 07-CA-2371. In a unanimous opinion rendered by the Court, Act 312 was held to be not only constitutional but also applicable to legacy cases.