For years, fans who want to see their favorite performers and teams have been faced with the luck of the draw or the challenge of negotiating the secondary ticket market. Therefore, ticket reselling is big business. The challenges encountered by fans purchasing tickets for Taylor Swift’s Eras Tour and the exorbitant resale prices for those tickets thrust the issue into the spotlight. It is not uncommon that a fan comes across deceptive websites that suggest they are endorsed by the performer or venue, or is sold a ticket by a speculative seller that does not have the ticket in hand. In late 2023, Senator John Cornyn introduced the Fans First Act (the “Act’) which aims to increase ticket sale transparency, protect American consumers, and stop bad actors.[1] The reaction to the bill, which has been referred to the committee on Commerce, Science, and Transportation, has been mixed. Some of the responses, as well as the results of similar efforts in Europe, are discussed below.

The Act would require sellers and resellers of tickets to disclose the total price of the ticket at the time it is first displayed to the consumer, and to provide an itemized breakdown of the face value of the ticket, taxes, and ancillary fees. The seller would also be required to provide a full refund of the full cost of the ticket when an event is cancelled. The Act would also require the Government Accountability Office to conduct a study of the ticket marketplace, including the percentage of tickets acquired by professional resellers, the average cost of tickets in relation to their face value, and an assessment of the primary and secondary market share. Finally, the Act includes strengthening of the previously enacted Better Online Ticket Sales Act and methods for enforcement by the FTC and the States.

The Act has bipartisan sponsorship and is widely endorsed by venues, performers, and fans. The Recoding Academy, best known for the Grammy Awards, played a role in crafting the legislation.[2] Fix the Tix,[3] a group of live event industry organizations, drafted a letter in support of the Act which was signed by almost 300 musicians including Cyndi Lauper, Dave Matthews, and Billie Eilish.[4] The letter claims that resellers are buying large swathes of tickets for resale at inflated prices, using deceptive advertising and URLs to trick consumers into paying higher than face value while tickets are still available from the venue, and speculatively listing tickets for sale before they have them in hand. The artists and venues claim that these actions sever the backbone of the music industry: the relationship between artists and fans.

On the other hand, there is voiced criticism of the Act. Diana Moss,[5] the Vice President and Director of Competition Policy at the Progressive Policy Institute, argues that the ticket resale market matches more fans with more artists to expand demand for events and that the resellers are the only source of competition in ticketing.[6] Dr. Moss’s view is that the Act risks strengthening Live Nation/Ticketmaster’s monopoly on the ticketing market because it would shield Live Nation/Ticketmaster from competition. Live Nation supports the Act, and claims it has long supported a “federal all-in pricing mandate” and the banning of speculative sales.[7]

Perhaps nothing illustrates fans’ frustrations than the Swifties who found it more economical to travel to Europe to see Taylor Swift perform this year. In Germany, tickets cannot be sold at more than 25% over their face value.[8] Other countries have laws that prevent concert tickets being sold over their face value.[9] In England and Wales, tickets for certain football (soccer) matches cannot be resold.[10] Critics of price caps claim that it will force the secondary market underground, which nowadays means through social media. Lloyds Bank estimated that Swift fans lost $1.27MM in ticket scams for the first leg of the UK Eras tour, with 90% of the scams originating on Facebook.[11] The 2023 Rugby World Cup was hosted in France and ticket purchasers were unable to resell through the secondary market, but could resell for face value through an official resale website.[12] Unfortunately, some of the tournament’s premier games had unsold tickets and empty seats. Fans blamed their inability to buy tickets under face value, and ticket holders complained about their inability to recoup some of their expenses for tickets they did not want to use. Similar issues were encountered in the Paris 2024 Olympics.[13] Meanwhile, reselling platforms claim that they provide a market for tickets to be bought and sold safely and securely.[14]

Whether through legislation or litigation[15], fans, performers, and organizers seek reform. Whether fans will ultimately benefit remains left to be seen.

[1] S.3457 – 118th Congress (2023-2024): Fans First Act | Congress.gov | Library of Congress. Similar legislation titled the TICKET Act passed the House in May 2024. Text – H.R.3950 – 118th Congress (2023-2024): TICKET Act | Congress.gov | Library of Congress.  

[2] House & Senate Take Critical Steps Toward Ticketing Reform: Learn How (recordingacademy.com).

[3] Fix The Tix — National Independent Venue Association (nivassoc.org)

[4] Fix The Tix Artist Letter [FINAL].docx (squarespace.com)

[5] Progressive Policy Institute Diana Moss – Progressive Policy Institute

[6] Fans Last? How the Fans First Act Hands Live Nation-Ticketmaster More Market Power (promarket.org)

[7] Senate Introduces Long-Awaited Bill Promising Changes for Ticket Buying – The New York Times (nytimes.com)

[8] Can technology fix the ‘broken’ concert ticketing system? (bbc.com)

[9] Can technology fix the ‘broken’ concert ticketing system? (bbc.com)

[10] SN04715.pdf (parliament.uk)

[11] What would be the impact of a ticket resale price cap? – SportsPro (sportspromedia.com)

[12] EXCLUSIVE: England’s World Cup semi-final against South Africa to be played out in front of thousands of empty seats… with organisers under fire for charging up to £500 for tickets | Daily Mail Online

[13] Ticket resale cap will see fans lose out, Viagogo claims (thetimes.com)

[14] StubHub Support: StubHub’s FanProtect Guarantee

[15] Office of Public Affairs | Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets Across the Live Concert Industry | United States Department of Justice

In order to classify employees as exempt from overtime pay requirements, employers may rely on the so-called “white-collar” exemptions available for administrative, executive, and professional employees. In addition to meeting the job duties test of each exemption, employers are required to pay a guaranteed minimum salary specified in Department of Labor regulations.

At the start of 2024, the minimum salary requirement for the white-collar exemptions stood at $684 per week, or $35,568 on an annual basis, reflecting an increase implemented by the Department of Labor (“DOL”) in 2019 under the Trump administration. In April 2024 the DOL issued a new rule that implemented a two-stage increase to the exempt employee salary amount – a smaller increase effective July 1, 2024, to $844 per week/$43,888 per year and a larger increase which goes into effect January 1, 2025, to $1,128 per week/$58,656 per year. The rule also provides for automatic increases to the salary threshold every three years (starting on July 1, 2027) to reflect current earnings data.

Multiple lawsuits have been filed challenging the legality of the salary increase rule, including three lawsuits filed in Texas federal courts. One these lawsuits was brought by the State of Texas, State of Texas v. Department of Labor et al., United States District Court for the Eastern District of Texas, Civil Action No. 24-cv-499. On June 28, 2024, the Court issued a preliminary injunction blocking the DOL rule (and related salary increases) from going into effect – but this ruling only blocked enforcement of the DOL rule against the State of Texas in its capacity as an employer. Although this decision did not decide the legal validity of the DOL rule on the merits, the Court’s ruling explained that the State of Texas had demonstrated a likelihood of success on the merits of these arguments as the basis for issuing the preliminary injunction.

Arguments against the validity of the DOL rule gained a significant boost from the United States Supreme Court’s decision in Loper Bright Enterprises v. Raimondo issued on June 28, 2024 – which eliminated the requirement that federal courts give broad deference to federal agencies when reviewing the validity of administrative agency rules. In the wake of the Loper Bright decision, a number of federal courts have invalidated federal agency rules, including other rules issued by the DOL. The district court in the State of Texas case cited Loper Bright in granting its limited preliminary injunction.

The State of Texas, and other business groups whose cases were later consolidated with the State of Texas action, have filed motions for summary judgment seeking a judgment on the merits of their legal challenge, and the DOL has opposed these motions. The briefing of these motions in the State of Texas case was completed on September 19, 2024, and the motions are now under submission for decision by the district court. Should the Court grant the motion for summary judgment and rule that the DOL’s rule is legally invalid, the decision may have the effect of invalidating the DOL salary increases on a nationwide basis – similar to the outcome of litigation in 2017 which blocked a salary threshold increase attempted by DOL rule under the Obama administration.

With the second DOL salary increase (to $1,128 per week/$58,656 per year) set to go into effect on January 1, 2025, employers nationwide are anxiously awaiting the outcome of the legal challenges currently pending in multiple federal courts. With the motion for summary judgment fully briefed in the State of Texas case, a ruling before the end of the year is anticipated. But there is no hard deadline for the Court to issue its ruling. And, of course, there are no guarantees that the Court’s decision (even if it invalidates the rule) will do so in a way that will block the DOL rule nationwide (although that relief has been requested). Beyond this, any district court decision will almost certainly be appealed to the federal Fifth Circuit Court of Appeals (and perhaps eventually to the United States Supreme Court). Earlier this month in Mayfield v. Department of Labor, Case No. 23-50724 (5th Cir. September 11, 2024), the Fifth Circuit Court of Appeals (which covers Louisiana, Texas, and Mississippi) recently upheld the legal validity of the DOL’s 2019 salary threshold increase; however certain language in the Court’s opinion suggests that the new 2024 increases by the DOL may not be protected by the Court’s analysis in this decision. Future developments in these cases bear close watching as we move into the final quarter of 2024.

While awaiting the outcome of this litigation, employers should be reviewing their current wage payment practices and making contingency plans for how they will adjust pay practices for employees who salaries are currently below the new threshold should the second salary increase go into effective January 1, 2025. Planning options include increasing the salaries of employees to comply with the higher salary threshold, re-classifying employees as non-exempt and paying these employees time and a half overtime (for all hours worked in excess of 40 hours per week), or taking steps to limit the number of hours worked by these employees to ensure they do not trigger overtime pay requirements.

There is good reason for employers to be optimistic that the new DOL rule may be blocked by federal courts from going into effect, but employers should remain vigilant and start making contingency plans now for how they will meet this new compliance challenge should the second salary increase go into effect on January 1, 2025. Employers should consult their labor and employment counsel in developing the best strategy for managing this legal risk.

In Crosby, as the Trustee of Aaron Guidry Trust and Trustee of the Lauren Guidry Trust, Guidry and Guidry v. Crosby Enterprises, LLC, Crosby Dredging, LLC, Tala Air Logistics, LLC, Crosby Holding, LLC, Crosby, Trosclair, and Dufrene, 2023-1338 (La. App. 1 Cir. 8/9/24), 2024 WL 3733158, — So.3d —. a five judge panel of the Louisiana First Circuit Court of Appeal recently upheld the trial court’s sustaining of a dilatory exception of prematurity and dismissal of the action, based on the existence of an arbitration agreement between the Parties.   The underlying merits of Crosby, 2024 WL 3733158, concern a management dispute over multiple family business entities in the marine transportation industry formed over almost fifty years (the “Crosby Entities”); however, the appellate court’s decision dealt with whether the trial court should have stayed rather than dismissed the case.  Suit was filed in January 2023 alleging breach of fiduciary duties, gross mismanagement and wasted corporate assets, improperly used false and unauthorized signatures of plaintiffs on documents submitted to banks to inflate the financial condition of the companies.  Id.at *3. 

In response to the petition, the defendants pleaded a dilatory exception of prematurity arguing the entire matter was subject to arbitration based upon an arbitration clause found in all of the operating agreements of the various companies, save two, providing: 

This Agreement and the relations of the Members with each other and with third persons shall be governed by the laws of the State of Louisiana.  Any and all disputes arising from this Agreement shall be submitted to binding arbitration pursuant to the Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

Id.(Emphasis added). 

Following a hearing in August 2023 when the trial court orally ruled it “would suspend the relevant claims until the proper arbitration proceedings had occurred”, the trial court signed a judgment sustaining the exception of prematurity and dismissing the plaintiffs’ claims as to all of the Crosby Entities except the two companies whose operating agreements did not contain the arbitration provision. Id.at *4.  Plaintiffs filed a motion for devolutive appeal of the judgment “challenging the trial court’s ruling insofar as the trial court dismissed the plaintiffs’ claims instead of staying the trial court’s proceedings pursuant to La. R.S. 9:4204.”  Id.

Upon lodging of the appeal, the defendants filed a motion to dismiss the appeal for lack of appellate jurisdiction contending the judgment granting the exception of prematurity was interlocutory.  Id.at *4.  Plaintiffs opposed the motion to dismiss the appeal arguing the judgment was a final, appealable judgment as it completely dismissed their claims against some of the defendant entities.  Id.at *4-5.  The First Circuit denied the defendants’ motion to dismiss the appeal holding that the judgment was final and appealable under Louisiana Code of Civil Procedure article 1915(A)(1). Id.at *5.  While recognizing that a defense of a valid arbitration agreement can be raised by either a dilatory exception of prematurity or a motion to stay the case pending arbitration, the First Circuit upheld the trial court’s judgment sustaining the dilatory exception of prematurity, holding that the plaintiffs’ claims were subject to arbitration and upholding the trial court’s dismissal via the exception for all but two defendants.  Id.at *5-6.  The Crosby court agreed with the trial court’s reliance on Louisiana Code of Civil Procedure article 933, which provides, “[i]f the dilatory exception of prematurity is sustained, [then] the premature action … shall be dismissed.” Id. at *8. The Crosby court further acknowledged that La. R.S. 9:4202 provides that upon application of a party, the trial court is required to stay the case until the arbitration occurs; however, in this instance, the plaintiffs did not timely file a motion to stay before the judgment on the exception was signed by the trial court.  Id.at *7-8.  The appellate court simply stated “[o]nly when a stay is asked for does the statute come into play.” Id.at *8.

            The court’s decision in Crosby provides a valuable lesson to parties opposing a dilatory exception of prematurity based on an arbitration agreement. The opposing party should always file a motion to stay, allowing the court the option to either stay or dismiss the claim. This protects the party from waving the option to stay the claim and allows them to raise the issue on appeal, if the trial court dismisses the claim.

The Crosby opinion is located at 2023 CA 1338 Decision Appeal.pdf (la-fcca.org).

Louisiana business owners often form corporations and LLCs in Louisiana with the assumption that they cannot, as owners of these companies, be held personally liable for any debts or liabilities related to these companies or their operations.  Although Louisiana law provides a general rule of non-liability for these business owners, there is no absolute protection against such personal liability.  Exceptions to this general rule of non-liability are found both in the applicable corporate and LLC statutes themselves, as well as in jurisprudential theories of liability created by the courts.

This article will first address the statutory rules of non-liability and the statutory exceptions found in the Louisiana corporate and LLC laws.

Louisiana Corporations:  The general rule for Louisiana corporations is that a shareholder of a corporation is not personally liable for the acts or debts of the corporation. (See La. R.S. 12:1-622(B)). Under this simple framework, a shareholder could become personally liable in connection with acts carried out in operating the corporation’s business; however, that liability would not arise from the imposition of the corporation’s debt on the shareholder. Rather, the liability would arise from personal duties imposed under other bodies of law, such as tort law and contract law, and so would not operate as an exception to the simple corporate law rule that a shareholder is not personally liable for the debts of the corporation.

The simplicity of the rule stated above was also designed to avoid the confusion and uncertainty that was created by the non-liability provisions of the LLC law, which are discussed below:

Louisiana LLCs:  The liability of members of an LLC is governed by La. R.S. 12:1320(B), which provides, “Except as otherwise specifically set forth in this Chapter, no member, manager, employee, or agent of a limited liability company is liable in such capacity for a debt, obligation, or liability of the limited liability company.”  As this provision suggests, there are exceptions to the limited liability of LLC members.  Statutory exceptions are found in La. R.S. 12:1320(D), which includes (1) fraud, (2) breach of professional duty, and (3) other negligent or wrongful act of an LLC member.  These rules under the LLC law clearly lack the simplicity of the corporate rule discussed above, and it represents what can be fairly seen as a failed attempt by the drafters of the LLC statute to draft an all-encompassing non-liability rule that has actually resulted in weakening the protections provided by the LLC statute.  For years, Louisiana courts have struggled to establish a consistent interpretation and application of these statutory exceptions.  Taking these exceptions in reverse order:

  • As for the “negligent or wrongful act” exception, the Louisiana Supreme Court provided some guidance in Ogea v. Merritt, 2013 WL 6439355 (La. 12/10/13), where the Court introduced a 4-factor test that focused on whether the LLC member’s conduct (1) constituted a breach of a duty owed in tort, (2) constituted a crime, (3) was required by, or was in furtherance of, a contract between the claimant and the LLC, or (4) was done outside the member’s capacity as a member.  The Court explained that application of the 4-factor test must be done on a case-by-case basis, and the tort factor alone may be sufficient to find personal liability.  This ruling by the Court in Ogea was possibly aimed at getting the LLC rules closer to the simple corporate rule stated above, where an LLC member’s personal liability in connection with acts carried out in operating the LLC’s business would arise only from personal duties imposed under other bodies of law, such as tort law and contract law; however, some uncertainty remains.
  • As for the “breach of professional duty” exception, the Court in Ogea identified the legal, medical, dental, accounting, chiropractic, nursing, architectural, optometry, psychology, veterinary medicine and architectural-engineering professions as being historically recognized within the Louisiana law of business entities.  In Nunez v. Pinnacle Homes, L.L.C., 2015-0087, p. 1 (La. 10/14/15); 180 So.3d 285, the Court held an individually licensed contractor is not a “professional” within the meaning of La. R.S. 12:1320(D).  Aside from this guidance, we don’t have clear understanding of what could amount to a breach of professional duty giving rise to personal liability of an LLC member.  Importantly, the 4-factor test from Ogea does not apply to an alleged breach of professional duty.
  • As for the “fraud” exception, courts have looked to the definition of fraud in La. C.C. art. 1953:  “Fraud is a misrepresentation or suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.”

Veil Piercing:  There are limited exceptions to the rule of non-liability of owners for the debts of their entities, where the court may ignore the corporate fiction and hold the individual owners liable.  Such exceptions are the creations of our courts, and this theory of liability continues to evolve.  One such exception is when courts pierce the corporate “veil”, which, much like the Wizard of Oz (“pay no attention to the man behind the curtain”) is a reference to the owners of a company that stand behind the veil of the company and are, under normal circumstances, invisible in terms of legal liability.

Typically, in order to pierce a company veil, there must be some type of “shenanigans” by the owners which inspires courts to defend the interest of creditors, both consensual and non-consensual (tort victims), but this is not always the case.  In Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164 (La. 1991), the Louisiana Supreme Court found a shareholder was merely an “alter ego” of the corporation and imposed liability.  The court listed a number of non-exclusive factors it considered in reaching its decision: (1) disregarding formalities in forming and running the entity, (2) comingling of corporate and shareholder funds, (3) undercapitalization, (4) failure to maintain separate bank accounts, and (5) failure to hold regular shareholder and director meetings.  It is important to note that these factors are always referred to by the courts as non-exclusive (other considerations may become important) and all factors need not apply to the case at issue.

Single Business Enterprise:  Traditional veil piercing is applied vertically, extending liability up to the owners for the debts of the entity.  The Single Business Enterprise doctrine (“SBE”) is a method for imposing liability on affiliated “sister” companies, and thus operates laterally in a company structure, and permits a court to impose liability to all affiliated entities, thus treating multiple entities as a single enterprise for liability purposes.  The case in which this theory of liability was first created in Louisiana was Green v. Champion Insurance Co., 577 So.2d 249 (La. App. 1st Cir.1991), wherein the court stated: “If one corporation is wholly under the control of another, the fact that it is a separate entity does not relieve the latter from liability. In such instance, the former corporation is merely an alter ego or a business conduit of the latter. When corporations represent precisely the same single interest, the court is free to disregard their separate corporate identity.”  In Green, the court established 18 non-exclusive factors to evaluate to determine if multiple companies in a group should be combined for liability purposes.

While many cases have applied the SBE theory, there may be changes in the future.  In St. Romain v. Cherokee Insurance Company, 328 So. 3d 72 (La. 11/23/21), while denying a writ of review, Justice Crighton quoted the Federal Fifth Circuit Court of Appeals, stating: “…the law on this subject matter is “unsettled” because this Court “has never affirmatively endorsed the single business enterprise theory,” which “has contributed to a hodgepodge of views about the doctrine in lower Louisiana courts.”  Justice Crighton held the view that the Louisiana Supreme Court needed to weigh in on whether Louisiana should have an SBE theory.

Finally, in the last legislative session in 2024, Act 277 was passed into law, and became effective August 1, 2024.  This law, it appears, is intended to address and limit SBE.  In particular, the statute provides that separate juridical entities shall not be disregarded except on grounds that would justify disregarding the separate personality of an entity as between the entity and a natural person.  This appears to be an attempt to legislatively limit cases that have applied SBE merely because there are a number of companies owned under a common umbrella.  However, the specific language of the Act is subject to interpretation, so we will have to wait and see how the courts interpret this new statute in the future to determine its impact on application of the SBE.

Hopefully, this article has made you aware of the potentially dangerous exceptions that apply to the general rule of non-liability for corporate shareholders and LLC members under Louisiana law.  Louisiana business owners should consult their legal counsel to discuss measures that can be taken to mitigate or avoid the risk inherent in these exceptions.  Some companies are able to manage this risk through measures such as (1) indemnification (and advancement of legal expenses) by the company of the owners, and/or (2) director & officer insurance policies.  Other business owners may choose to form their corporation or LLC in a state other than Louisiana, in which case your legal counsel can direct you to a state with more favorable limitation of liability.  Louisiana corporations and LLCs already in existence may also choose to change jurisdictions, in which case your legal counsel can advise on the necessary steps and implications.

Brief Introduction:

On July 1, 2024, the Western District of Louisiana ruled in favor of the plaintiffs in the case, State of Louisiana et al. v. Joseph R. Biden Jr. et al. No. 2:24-CV-00406 (W.D. La. July 1, 2024), ordering that the Biden Administration’s ban on the export of liquified natural gas (LNG) be stayed in its entirety, effective immediately. Plaintiffs in this case are sixteen (16) states (Louisiana, Alabama, Alaska, Arkansas, Florida, Georgia, Kansas, Mississippi, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming) who jointly filed to challenge the Biden Administration’s LNG export ban to countries without a free trade agreement (“non-FTA countries”) in violation of the Administrative Procedure Act (“APA”), Congressional Review Act, and the United States Constitution. Under this ban, the Department of Energy (“DOE”) halted permit approvals to export LNG to non-PTA countries while the agency reviewed how the shipments affect climate change, the economy, and national security. The Court granted the plaintiffs’ request for a preliminary injunction, which will freeze the Biden Administration’s LNG ban in its entirety while litigation is pending and will stop the Administration’s delay of consideration of projects aimed at the exportation of LNG. This ruling has nationwide impacts.  

Top 2 Takeaways:

  1. The Biden Administration’s ban departs from historical precedent and the legal requirements for the approval process of LNG export licenses, especially considering the DOE’s relatively recent dismissal of a similar petition, stating that there is “no factual or legal basis” for “halt[ing] approval of pending applications to export LNG.” DOE, Order Denying Petition for Rulemaking on Exports of Liquified Natural Gas at 27 (July 18, 2023), https://perma.cc/TB8Y-56TV.
  • While the instant decision is a major win for the LNG industry, given the DOE can continue scrutinizing proposals for new LNG exports, the short-term practical effects of the ruling are likely to be minimal. This ban creates uncertainty for American citizens employed in LNG production and exportation and likely discourages new investments.

Substantive Content:

The United States is the largest producer and largest exporter of LNG in the world. In 2023, it was reported that 88.9% of the total U.S. LNG exports were to non-Free Trade Agreement countries, and the remaining 11.1% went to Free Trade Agreement countries. Natural Gas Imports and Exports Monthly February 2024.pdf (energy.gov). The domestic LNG market is not only crucial to the United States’ capital expenditures and job markets, but also critical to global energy markets.

In January of 2024, President Joe Biden and his administration announced a temporary and possibly indefinite hold on pending decisions of LNG exports. The DOE also announced that it was pausing determinations of applications to export LNG exports to all but eighteen (18) countries to “update the assessments used to inform whether additional LNG export authorization requests to non-FTA countries are in the public interest.”

Leading foreign and domestic business groups seeking to quash their dependence on Russian natural gas have expressed concern. In a letter dated January 26, 2024, the U.S. Chamber of Commerce, Business Europe and Keidanren (Japan Business Federation) wrote to President Biden expressing concern with the pause on new LNG export license applications. https://www.keidanren.or.jp/en/policy/2024/011.pdf. The groups noted their dependence on U.S. LNG imports for energy security and urged President Biden to reconsider his decision “in light of the unique and vital role of American natural gas in meeting the critical energy security and Paris Agreement objectives that our nations share.” Id. Similarly, on March 18, 2024, nearly 150 state and local chambers from thirty-five states joined the U.S. Chamber of Commerce in a letter to the DOE expressing their concerns about the recent moratorium on LNG export license applications. https://www.uschamber.com/assets/documents/240318_Coalition_LNGExports_Sec.-Granholm.pdf. Sixteen states – including Louisiana, Texas, and West Virginia – took matters a step further and filed a civil action in the United States District Court for the Western District of Louisiana.

These sixteen states filed suit against President Biden and the DOE moving for a preliminary injunction on the Biden Administration’s LNG export ban. The states argued that the ban exceeded statutory authority, abused the federal government’s discretionary authority, posed significant harm to the economy, and violated the Natural Gas Act (NGA), which governs LNG exports and strives to “encourage the orderly development of plentiful supplies of electricity and natural gas at reasonable prices.” More importantly for purposes of the injunction, Plaintiffs argued that the LNG ban inflicted significant harms to each individual state, including loss of jobs and revenue streams. Louisiana, for example, is home to 18,000 jobs rooted in LNG production and export. LNG production has contributed to more than $175 million in state tax revenue and had over $4.4 billion in statewide economic impact. Thus, the LNG export ban could cost Louisiana thousands of jobs and deprive the state of weighty revenues.

The Biden Administration responded to plaintiffs’ Complaint and Motion for Preliminary Injunction with a Motion to Dismiss for Failure to State a Claim and a Motion to Dismiss for Lack of Jurisdiction. Defendants contended (1) that the Western District of Louisiana did not have jurisdiction, (2) Plaintiffs failed to establish standing, (3) Plaintiffs did not challenge a final agency action under the APA, and (4) Plaintiffs failed to state a claim for relief.

Less than two weeks after the hearing, on July 1, 2024, U.S. District Judge James Cain, Jr. ruled in favor of the plaintiffs, granting the preliminary injunction and finding that the states demonstrated there was “evidence of harm” caused by the ban “specifically to Louisiana, Texas, and West Virginia in the loss of revenues, market share, and deprivation of a procedural right.” DOE, Order Denying Petition for Rulemaking on Exports of Liquified Natural Gas at 46 (July 18, 2023), https://perma.cc/TB8Y-56TV. In temporarily blocking the ban on new LNG approvals, Judge Cain stated that the states will likely succeed in their case, citing the evidence the states presented showing loss of revenues and deferred investments in LNG projects due to the Biden Administration’s actions and noting that the DOE had failed to provide a “detailed justification” for stopping the permit approval process when it had continued to process applications during previous updates to the agency’s analyses. The Court also noted its confusion with the Biden Administration’s decision to halt the LNG approval process in the first place, given the Natural Gas Act’s “express language that applications are to be processed expeditiously” and the DOE’s July 2023 decision on essentially the same topic. The Court was of course referring to the DOE’s July 2023 order denying a petition for rulemaking on LNG exports, in which the DOE acknowledged that “there is no factual or legal basis” to “halt approval of pending applications to export LNG.” DOE, Order Denying Petition for Rulemaking on Exports of Liquified Natural Gas at 27 (July 18, 2023), https://perma.cc/TB8Y-56TV. The Court had strong words regarding the DOE’s decision to halt the permit approval process for LNG exports to non-FTA countries stating that it is “completely without reason or logic and is perhaps the epiphany of ideocracy.”

The Biden Administration, fighting to uphold the ban, filed an appeal to the Fifth Circuit Court of Appeals on August 5, 2024.

Conclusion:

This victory for the energy industry may be short-lived as everyday Americans, business groups, and global energy markets await the Fifth Circuit Court of Appeals decision on whether to permanently strike down the LNG ban. The potential implications of this ruling on the global natural gas supply are significant, as countries in Europe and Asia, in need of a reliable natural gas supply, may now be forced to seek natural gas from sources other than the United States.

Kean Miller will continue to monitor these developments and the pending appeal. For questions or to discuss any of the foregoing, please contact Kean Miller’s Energy/Environmental Team.

As previously reported, on April 23, 2024, by a vote of 3-2 along party lines, the Federal Trade Commission (FTC) voted to approve a final rule effectively banning employers from entering into non-compete agreements with their workers, with few limited exceptions (the “Rule”). The Rule was set to go into effect on September 4, 2024.

But, on August 20, 2024, the federal district court for the Northern District of Texas entered a Memorandum Opinion and Order and a Final Judgment in the Ryan LLC v. Federal Trade Commission case, holding that the Rule is unlawful and setting it aside. Pursuant to the court’s order, the Rule shall not be enforced or otherwise take effect on September 4, 2024, or thereafter. And although the FTC sought to limit the application of the court’s order to the named plaintiffs in the lawsuit only, the court confirmed the relevant law did not contemplate party-specific relief, that setting aside agency action has nationwide effect, and the ruling affects persons in all judicial districts equally.

Although the FTC will likely appeal the district court’s ruling, for the time being, all employers can halt any preparations they were taking and/or planning to take in anticipation of the Rule’s September 4, 2024 effective date. As a result of the district court’s ruling, employers: (1) may continue drafting and entering into non-compete agreements with their workers consistent with applicable state and other laws; (2) will no longer be required to rescind existing non-compete agreements that otherwise comply with applicable laws; and (3) are no longer required to provide individualized notice of rescission to current and former workers bound by non-compete agreements.

During the 2024 Regular Session of the Louisiana Legislature, the Louisiana Natural Resources Trust Authority was created to address a longstanding problem involving abandoned or orphan wells. This Trust Authority will allow the State of Louisiana to revamp its approach to orphan well management and finance, with goals of responsible development and cost savings across the industry.[1]

The Louisiana Department of Energy and Natural Resources (“DENR”), led by Secretary Tyler Gray and assistant secretary and former Kean Miller attorney, Andrew Young, will take charge of this project. DENR has previously identified as many as 4,600 orphaned or abandoned wells in Louisiana which are characterized as having no responsive owner.[2]

Act No. 727 allows DENR the financial flexibility develop a more robust system of plugging abandoned wells, protecting the environment, preventing serious safety hazards, and allowing operators to do business more easily in Louisiana going forward.[3] This is a win-win for the environment, the people of Louisiana, and our great oil and gas industry.

[1] advocate-la.newsmemory.com/?publink=43fa68ee2_134d3d4

Program targets orphan wells – The Advocate (newsmemory.com)

[2] www.dnr.louisiana.gov/index.cfm/page/1622

[3] www.legis.la.gov/legis/ViewDocument.aspx?d=1382753

The 2024 Regular Session of the Louisiana Legislature ended on June 3, 2024. The first regular session of the new term saw legislation on several hot-button issues, including criminal justice reform, reorganization of state governmental entities, insurance reform, education, public access to government records, public libraries, protection of the Louisiana seafood industry, and improvements to correctional facilities. Legislators introduced 1,491 bills (982 House/509 Senate), 42 constitutional amendments, and 771 resolutions and study requests. 792 bills became law. The Legislature also approved a $42.1 billion state operating budget to fund executive department operations.[1]

The Legislature also enacted several new laws affecting energy production and environment regulation. Legislation was passed on several topics including carbon capture and sequestration, air quality monitoring, the sale of electric vehicles, federal revenue sharing for alternative energy projects, liquified natural gas (“LNG”) exports, and changes to “dig law,” among others. Many of these laws go into effect on August 1, 2024, while others became effective upon signature of the Governor, or another date prescribed by legislation. This article offers a synopsis of relevant changes that were made to energy and environmental laws, as well as the regulatory agencies that enforce them.

Environmental Quality & Natural Resources

HB 474 (Act No. 473) affects wetland assimilation projects, which are natural wetlands into which secondarily treated and disinfected effluent from a wastewater treatment plant is discharged to improve water quality and wetland sustainability. HB 474 requires that if wetland assimilation projects discharge treated wastewater, warning signs must be posted near the entrance to wildlife management areas affected by the discharge.[2]

SB 432 (Act No. 494) added requirements for groundwater well meters and monitoring devices for wells capable of drawing 50,000 gallons per day that operate within the Capital Area Groundwater Conservation District. The new law provides that if well owners/operators can comply with the new statutory requirements, secondary monitoring devices from the Capital Area Groundwater Conservation Commission are not required. The new law also adds appointment procedures for industrial members of the Commission.

SB 503 (Act No. 181) creates the Community Air Monitoring Reliability Act to establish standards for community air monitoring programs. The new law provides that air monitoring data collected by third party organizations can be used by the Louisiana Department of Environmental Quality if the data meets federally approved standards for testing and monitoring. The new law also provides that third party data can be used for enforcement proceedings against emission sources for potential violations of the source’s air permits so long as there is other corroborating evidence that a violation has occurred. The new law became effective upon signature of the Governor.

SCR 30 urges and requests the Louisiana Department of Environmental Quality to study the implementation of real-time community air monitoring and notification systems. The resolution creates the Community Air Monitoring and Notification Task Force and requests that it study the costs and benefits of implementation of such systems in communities disproportionately impacted by the negative effects of air pollution.

Coastal Protection & Restoration

HB 806 (Act No. 726) makes changes to the membership of the Coastal Protection and Restoration Authority Board. It adds three at large members who are appointed by the governor and removes the secretaries of the Department of Transportation and Development and the Department of Economic Development, the commissioners of administration, agriculture, and insurance, and the director of the Governor’s Office of Homeland Security and Emergency Preparedness. The new law became effective upon signature of the Governor.

HB 300 (Act No. 408) proposes a constitutional amendment to require all federal revenues generated from alternative or renewable energy production on the Outer Continental Shelf be allocated to the Coastal Protection and Restoration Fund. Current law already allocates revenues generated from oil and gas activity on the Outer Continental Shelf to coastal restoration; this amendment would add funds generated by all other energy activities. The constitutional amendment will be considered by the voters on the November 5, 2024 ballot. HB 305 (Act No. 684) is a companion to HB 300 that, if the constitutional amendment passes, will codify the amendment’s provisions, and provide funding allocations for projects related to hurricane protection and repairs to infrastructure impacted by coastal land loss.

Carbon Capture & Sequestration (CCS)

HB 966 (Act No. 645) allows the commissioner of conservation to order unitization for CCS projects under certain conditions.[3] The commissioner of conservation is authorized to order unitization for a public and necessary purpose with consent of 75% of the property owners within the area of the proposed unit. HB 966 provides that property owners within the unit will receive compensation and requires notice to all mineral interest owners when an application for a CCS injection well permit is completed. It requires the commissioner to determine whether the area of review for a CCS project is within a 500-foot radius of a proposed drilling site and prohibits CCS wells in a unit from being within 500 feet of an inhabited dwelling. It also establishes procedures for authorizing unitization, judicial review of unitization orders and terms, and modification of units. Existing agreements, however, will not be affected by the unitization order.

HB 492 (Act No. 620), a companion bill to HB 966, provides clarification on the rights of owners of land as it relates to eminent domain by requiring a certificate of public necessity and convenience prior to the exercise of eminent domain for CCS facilities and pipelines. It also prohibits expropriation of underground storage rights.

HB 937 (Act No. 461) pertains to landowner liability for carbon dioxide sequestration and clarifies which parties are responsible for obligations established by law. Under HB 937, surface and pore space owners are not liable for any claims related to CCS simply because they are the property owner or due to the fact that they have entered a contract to allow their property to be used for CCS projects.

HB 516 (Act No. 702) requires CCS operators to have an emergency response plan and record maps of CCS projects in affected parishes. It prohibits a CCS well within 500 feet of schools, inhabited dwellings that do not belong to the CCS operator, and health care facilities. It also requires CCS operators to conduct periodic ground water quality testing and monitoring above the stored carbon dioxide and report to the office of conservation. The new law became effective upon signature of the Governor.

HB 169 (Act No. 415) changes current law by converting the established cap on damages for non-economic, or “general,” damages for injuries arising out of CCS projects from a “per occurrence” cap to a “per person” cap. As originally drafted, the bill would have removed the $250,000 damages cap altogether; however, the bill was amended in the House to retain the cap but convert it to a ‘per-person’ application.

HB 934 would have changed the allocation of carbon capture revenues and would have required that the distribution of funds for constitutional and statutory dedications also adhere to the new allocation formula provided by HB 934. However, the bill was vetoed by Governor Landry. In his veto message, the Governor stated that while he supported the sharing of CCS revenues, changes to constitutionally dedicated funds cannot be made through statute.

State Government Organization

HB 810 (Act No. 727) governs the organization, duties, and responsibility of the Department of Energy and Natural Resources (DENR) and creates three new offices with the DENR: (1) the Office of Enforcement, (2) the Office of Energy, and (3) the Office of Land and Water.

  • The Office of Enforcement’s duties are to inspect the regulated community and enforce the laws and regulations within its jurisdiction.
  • The Office of Energy is to manage functions and programs related to the alternative energy infrastructure and the unified energy data and information program.
  • The Office of Land and Water’s duties include managing state lands and water bottoms, issuing energy-related permits and leases on state lands and water bottoms, and managing surface waters of the state.

HB 810 also transfers the Office of the Oil Spill Coordinator from the Department of Public Safety and Corrections to DENR and creates the Natural Resources Trust Authority within DENR to manage grants, investments, and the financial obligations of the permitted community. Additionally, it adds powers and duties for the secretary (i.e., deployment and operation of energy infrastructure and energy and natural resources data and information program and reporting to the legislative oversight committee on termination of board and commission within the department every four (4) years). It also removes the independent operation of the Office of Conservation. HB 810 became effective on July 1, 2024.

HCR 18, SCR 36, and SCR 14 urge federal action on liquified natural gas (LNG) exports. SCR 14 urges the Department of Energy to consider the benefits of LNG exports, while HCR 18 urges the Biden Administration to resume consideration of applications and cites the disruption its “pause” in application approvals has on the global supply chain. SCR 36 requests that Congress block the Administration’s decision to pause export application approvals.

Alternative Energy

SB 268 (Act No. 327) creates a state sales tax rebate for the purchase of equipment, machinery, and other items used in lithium recovery activities. It caps the total rebates that can be granted to $100,000 for the program’s life and ends, or “sunsets,” the program on December 31, 2025. The new law became effective upon signature of the Governor.

HB 515 (Act No. 251) prohibits state governmental entities from restricting a private individual from buying or selling a vehicle that uses a combustion engine. The law does not, however, restrict the sale of electric vehicles.

HCR 64 creates the Clean Hydrogen Task Force to study the growing clean hydrogen industry in Louisiana. Louisiana has been a leading energy center for our nation, and hydrogen can be used as a substitute for conventional fossil fuels with considerably lower greenhouse gas emissions. One of the project’s goals is to make the Louisiana market more competitive in this sector.

Utilities & Infrastructure Security

HB 397 (Act No. 75), commonly referred to as the “One-Call” bill, provides relative to the Louisiana Underground Utilities and Facilities Damage Prevention Law. The largest change made through the legislation is the process for project ticket authorization. The bill also addresses excavations and utilities and allows marking of utilities in certain areas. The bill will allow work to continue a project without the need for an operator to refile project tickets at each project stage. Operators will also be notified when work starts. If an agreement cannot be reached with utility operators, the one-call ticket process can be used. The new law will become effective on January 1, 2025.

HB 507 (Act No. 565) changes the existing prohibition of unlawful entry of a critical infrastructure by adding water control structures, including floodgates or pump stations, wireline, wireless communication networks, and data network facilities to the definition of “critical infrastructure.” The bill also adds penalties for second offenses and offenses committed during a state of emergency.

Litigation

SB 355 (Act No. 765) provides that evidence of third-party litigation finance agreements is discoverable in all state civil actions.

Effective Date of Acts and Future Sessions

Unless otherwise specified in the legislative text, the effective date of all bills during the 2024 Legislative Session is August 1, 2024. The next regular session of the Legislature will begin on April 14, 2025, which will be a “fiscal” or “limited” session in which the Legislature may consider matters relating to state taxation.

It should be noted, however, that stakeholders and lawmakers considered the idea of holding a constitutional convention and also considered convening a limited special session in August or September for the purpose of amending Article VII of the state constitution prior to the fiscal session which convenes in April of next year. A decision was recently made to not convene a special session this year for the purposes of amending the Constitution.

Kean Miller will continue to monitor these developments. For questions or to discuss any of the foregoing, please contact Kean Miller’s Energy/Environmental Team.

[1] For more information about the State Operating Budget for the new fiscal year or other general information about the 2024 Regular Session or 2024 Special Session on criminal justice reform, please see the Louisiana House of Representatives Legislative Services “Session Wrap” summary report, which is available at https://www.house.louisiana.gov/Agendas_2024/2024%202ES-%20RS-Wraps.pdf.

[2] Act 473 became law without the Governor’s signature.

[3] Unitization, normally used for oil and gas projects, is the coordinated operation of a geological reservoir “by all the owners of rights in the separate tracts overlying the reservoir.” Jacqueline Lang Weaver & David F. Asmus, Unitizing Oil and Gas Fields Around the World: A Comparative Analysis of National Laws and Private Contracts, 28 HOUS. J. INT’L L. 3, 6 (2006).

On May 1, 2024, the U.S. 5th Circuit reversed an Eastern District of Louisiana decision based on a differing interpretation and application of the Supreme Court’s Lauritzen-Rhoditis factors; holding that the law of the flag state governed the injured mariner’s maritime law claims against the vessel operator.

In Ganpat v. Eastern Pacific Shipping PTE, Ltd., Kholkar Ganpat, an Indian citizen and seaman, contracted malaria while aboard the M/V STARGATE due to the ship’s alleged failure to stock enough anti-malaria medicine when it stopped at Savannah, Georgia. Ganpat became symptomatic, however, during the ship’s voyage from Savannah to Brazil. Upon reaching Brazil, Ganpat was hospitalized and had to have his toes amputated.

During Ganpat’s ordeal, the ship’s operator was Eastern Pacific Shipping (“EPS”), a Singaporean company, and the ship flew under the flag of Liberia. Ganpat was employed by a Liberian corporation, and his employment contract contained a clause providing that the agreement would be governed by and interpreted in accordance with the laws of the ship’s flag. A collective bargaining agreement was also incorporated into Ganpat’s employment contract. The ship was owned by a Liberian company.

In December 2018, Ganpat sued EPS in the Eastern District of Louisiana (“EDLA”) asserting Jones Act and U.S. General Maritime Law tort claims, as well as a claim for breach of his collective bargaining agreement. Notably, Ganpat did not sue the owner of the ship or his own employer. After consenting to jurisdiction in the EDLA, EPS sued Ganpat in India seeking an anti-suit injunction preventing the U.S. litigation. In turn, Ganpat sought his own anti-suit injunction against EPS’ suit in India. The EDLA granted Ganpat’s injunction, which EPS appealed. However, the 5th Circuit affirmed the decision, holding that EPS’ lawsuit in India was vexatious and oppressive enough to outweigh any comity concerns. EPS then sought writs with the U.S. Supreme Court, which was ultimately denied.

The EDLA was tasked next with determining what substantive law applied to Ganpat’s maritime claims. The district court concluded that U.S. law applied after analyzing the Lauritzen-Rhoditis factors. These factors include: (1) the place of the wrongful act; (2) the law of the flag; (3) the allegiance or domicile of the injured worker; (4) the allegiance of the defendant shipowner; (5) the place of the contract; (6) the inaccessibility of the foreign forum; (7) the law of the forum; and (8) the shipowner’s base of operations. The district court concluded that factors two, four, and eight pertained to the ship’s owner who was not sued, so they were inapplicable, while factors three and five favored Indian law. However, the latter factors traditionally do not carry much weight because a seaman’s work is transient and his place of contract fortuitous. Factor six was found to only be relevant in a forum non conveniens determination, which would not appear here. Finally, the district court found that factor seven favored U.S. law. Similarly, the district court concluded that this same analysis would apply to Ganpat’s collective bargaining agreement.

Thereafter, the EDLA’s ruling was appealed and Ganpat found himself back in the 5th Circuit. With respect to governing choice of law, the 5th Circuit held that “the only Lauritzen-Rhoditis factor that favored an application of U.S. law is the seventh factor—the law of the forum,” but noted that this factor is typically given “little weight” in choice of law determinations. The 5th Circuit also disagreed with the district court’s assessment that the “law of the flag” and the “base of operations” factors lack choice-of-law significance in cases where the shipowner is not a defendant because another party can act in place of the shipowner—like EPS. The fact that the allegedly tortious conduct occurred in Savannah, Georgia was also held to be fortuitous as EPS was visiting many other countries throughout the voyage as well. Lastly, the Court held that Liberian law applied to Ganpat’s breach of contract claim because his claim for disability was based on his employment contract, which contained a clear choice-of-law provision.

Thus, the 5th Circuit remanded the case back to the EDLA with instruction to apply Liberian law to Ganpat’s maritime tort and contract claims. Given the history of this case, it would not be surprising if Ganpat sought writs with the U.S. Supreme Court as EPS did after the last 5th Circuit decision.

An estimated 32 million companies are now facing new compliance obligations due to the Corporate Transparency Act (“CTA”), which aims to enhance transparency in corporate ownership and curb money laundering, terrorism financing and other financial crimes. The CTA, which took effect on January 1, 2024, represents a significant shift in the ownership information reporting obligations of corporations, limited liability companies and other business entities covered by the CTA. Companies subject to the CTA must report personal information about their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”). By strategically revising its organizational documents, a company can help itself avoid pitfalls related to CTA compliance and the associated penalties for noncompliance.

Updating Organizational Documents

To comply with the CTA, reporting companies are required to collect personal information from persons deemed to be “beneficial owners” under the CTA, which could include shareholders, members, managers, directors, officers and other key employees, and then file with FinCEN an initial report with that information, known as a Benefit Ownership Information Report (“BOI Report”). Reporting companies must thereafter continuously report any changes to reported information within the relatively stringent deadlines imposed under the CTA. Although much of the information required under the CTA would need to be provided to the reporting company by the beneficial owners, it is the reporting company’s responsibility to report the information to FinCEN and the reporting company is ultimately liable for any failure to comply.

The collection of personal information from beneficial owners to comply with CTA reporting obligations could present challenges to reporting companies with numerous or reluctant beneficial owners. In order to prevent the risk of beneficial owners failing or refusing to provide the required information, companies should review and potentially revise their organizational documents to include protective language requiring beneficial owners to provide their information. Companies should consider adding CTA-specific provisions to any organizational document or agreement between the company and persons who could be deemed to be beneficial owners, including: (i) agreements governing the rights and obligations of equity owners of the reporting company, such as operating agreements, shareholder agreements and subscription agreements, and (ii) agreements that provide for the services and responsibilities of senior officers and key employees of the reporting company, including employment agreements, offer letters and executive services agreements.

These documents should include explicit provisions imposing an obligation on the beneficial owner to provide accurate beneficial ownership information and to timely advise the reporting company of any changes to such information, as required by the CTA. Specifically, CTA provisions should include: (i) an acknowledgment by the beneficial owner of the company’s obligation to report certain beneficial ownership information as a result of such person being deemed a beneficial owner under the CTA, (ii) a covenant that the beneficial owner will provide all requested information to the reporting company, as well as any changes to such information, and (iii) a representation and warranty by the beneficial owner as to the accuracy and completeness of the information provided to the company.

An individual may obtain a FinCEN Identifier (“FinCEN ID”) by providing, directly to FinCEN, the same information as the reporting company is required to provide regarding its beneficial owners in its BOI Report. The reporting company may then report the individual’s FinCEN ID on its BOI Report in lieu of listing specific information for that individual. Companies may consider including provisions recommending or requiring beneficial owners to obtain a FinCEN ID and that the beneficial owner’s obligations can be satisfied by providing their FinCEN ID to the company. Such provisions should also include an acknowledgment by the beneficial owner that they would be responsible for updating their FinCEN ID with any changes to their personal information.

Companies should also review and potentially revise confidentiality provisions in their organizational documents to permit disclosures required by law, including those mandated by the CTA.

Conclusion

Integrating these types of provisions in organizational documents can be a useful tool for companies that need to navigate these regulatory changes and mitigate the risk of noncompliance. For more information on the CTA and related compliance tips, see How Your Company Can Prepare for the Corporate Transparency Act.

Business owners can utilize Kean Miller’s CTA compliance evaluation and reporting platform to determine if their companies are required to comply with the CTA. The platform offers a compliance screening questionnaire and, if necessary, guides users through the collection and filing process.