Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

By Kindall James

The issue of whether an individual employee is personally liable for oilfield environmental damages was recently addressed in Kling Realty Co., Inc. v. Texaco, Inc, 2007 WL 81665 (W.D. La. 2007).  The plaintiff mineral lessors claimed that their property had been damaged by oilfield operations, and sued not only the operator, but also a production supervisor.  The plaintiffs argued that the supervisor was individually liable because in his supervisory capacity he had the duty to prevent or limit hazardous pollution affecting the property.  Finding that the plaintiff failed to present any evidence that the supervisor’s responsibilities entailed more than general administrative responsibilities or that the supervisor knew or should have known of any ongoing activities hazardous to the property, the court held that the plaintiffs could not possibly establish that the supervisor was personally liable for their damages, and dismissed the plaintiffs’ claims against him. 

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In Duplantier v. BP Amoco, et al., the Louisiana Fourth Circuit Court of Appeal held that under Act 312 of 2006 (La. R.S. 30:29), there should be a single trial of both the regulatory remediation covered by the statute and the plaintiffs' separate damages claims (if any).  The Louisiana Supreme Court has now denied a writ application with respect to that opinion.  To view the Fourth Circuit's decision, click here.  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval and the deposit of remediation funds into the registry of the court to be spent on remediation, rather than payment of those funds to the plaintiffs.  However, the statute also preserves the plaintiffs' right to pursue any private cause of action - for example, a right under an express lease provision to a higher standard of clean-up.  Under the Duplantier decision, both the statutory remediation and any private claims will be addressed in a single trial before any plan is submitted to DNR.

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By Joe Giarrusso: 

In Louisiana, a lawsuit is generally deemed abandoned when the parties fail to take any step in its prosecution for three years.  This rule is operative without any formal order.  La. Code Civ. P. art 561.  However, Act 361 of 2007 extended the period for abandonment to five years where (1) the action was initiated prior to August 26, 2005, and was not previously declared abandoned under the general three year period, and (2) the party proves that the failure to take a step in the prosecution or defense of the suit was caused by or was a direct result of Hurricanes Katrina or Rita.  The revision became effective July 9, 2007.   Click here to read the Act.

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By Drew Spaniol

The Eastern District of Louisiana recently held that the Oil Pollution Liability and Compensation Act (OPA), 33 U.S.C. § 2701 et seq., does not preclude a plaintiff from bringing state law claims for additional liability or compensation.  Isla Corp. v. Sundown Energy, LP, 2007 WL 1240212 (E.D. La. 4/27/07).  The case concerned oil tanks on a drill site owned and operated by Sundown, which were ruptured in Hurricane Katrina. The plaintiffs asserted claims under both OPA and state law.  Seeking to avoid the additional liability of the state law claims, Sundown argued in a motion to dismiss that OPA provided plaintiffs’ exclusive remedy. The court held, however, that while OPA provides the sole federal remedy for oil pollution claims, OPA expressly allows states to provide for "any additional liability or requirements with respect to the discharge of oil or other pollution by oil within such state."  Because of this provision, the court denied Sundown's motion to dismiss and allowed plaintiff's state law claims to go forward. 

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By Robert E. Holden and Monica Derbes Gibson

The Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers have released long-awaited guidance addressing jurisdictional determinations under the Clean Water Act (CWA) in the wake of Rapanos v. United States, 126 S. Ct. 2208 (2006).  There is general agreement that Rapanos limited the reach of the CWA, but the Court did not articulate a clear standard for determining whether or not a wetland or body of water is covered by the CWA.  In the guidance, EPA and the Corps explain how they will approach jurisdictional determinations in light of the Rapanos decision.  Click here to view the guidance.  The agencies will take public comments on implementation of the guidance until December 5, 2007.  Comments may be submitted online at  www.regulations.gov, to Docket No. EPA-HQ-OW-2007-0282, or by email to OW-Docket@epa.gov, with the docket number in the “subject” line. 

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In Duplantier v. BP Amoco, et al., the Louisiana Fourth Circuit court of appeal recently issued a ruling on trial court procedure under Act 312 of 2006, La. R.S. 30:29.  Click here to view the opinion.  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval, and the deposit of remediation funds into the registry of the court for expenditure on actual remediation rather than payment of those funds to the plaintiffs.  For more on Act 312, click on this blog's "Environmental" archive.

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By Dana M. Douglas

On April 20, 2007, the Louisiana Department of Natural Resources (“DNR”) issued regulations establishing procedures for agency hearings and the submission and approval of remediation plans under Act 312 of 2006.  Act 312, which enacted La. R.S. 30:29, made sweeping changes to the procedures for litigation involving potential environmental damage to oilfield sites, in order to ensure that remediation awards are actually expended on remediation.  To view the new regulations, which are codified at La. Admin. Code tit. 43, § XIX, Ch. 6, click here.  Most significantly, the regulations establish that Statewide Order 29-B is the basis upon which the agency will evaluate such remediation plans.

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As previously reported, the trial court in M. J . Farms v. ExxonMobil held Act 312 of 2006, governing remediation of oilfield sites, to be unconstitutional.  The Louisiana Supreme Court has now held that the plaintiff did not properly raise the issue of constitutionality at the trial court level, and remanded to allow the plaintiff to specifically plead the unconstitutionality of the act.  M. J. Farms, Ltd. v ExxonMobil Corp.,  No. 07-CA-0450 (La. 4/27/07).  The Court noted that appellate jurisdiction was not invoked because the issue was first raised in a memorandum rather than a pleading.

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By:  Clare Bienvenu

On January 3, 2007, EPA promulgated a final rule amending 40 C.F.R. part 63, Subpart HH, “NESHAP (National Emission Standards for Hazardous Air Pollutants) for Source Categories from Oil and Natural Gas Production Facilities” to include the regulation of area sources. See 72 Fed.Reg. 26 (January 3, 2007).  The final rule is posted here.  Subpart HH has historically regulated various emissions points for major sources of air toxics in the oil and natural gas production industry. This amendment adds the regulation of benzene emissions from tetraethylene glycol (TEG) dehydration units at minor sources. The significance of this new rule is that all TEG dehydration units in the oil and gas production industry are now subject to Subpart HH unless they meet the exemption criteria provided in the regulations.  While the amendment adds the regulation of area sources, it does not alter any of the major source standards. Accordingly, any TEG dehydration unit already regulated under Subpart HH’s major source standards must continue to comply with those requirements. 

This article will first discuss control requirements for area source TEG dehydration units, which vary based on whether the unit is located within a high population density area, referred to as an “UA plus offset or UC.” The article will next discuss applicable compliance dates, which vary based on the date the TEG dehydration unit was constructed or modified and whether the unit is located in an “Urban 1 County” and/or a high population density area. Notably, this rule is immediately effective for any source constructed or modified on or after July 8, 2005 and for certain sources constructed or modified on or after February 6, 1998.

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On January 30, 2007, a class action settlement was approved in Turner v. Murphy Oil U.S.A., Inc., 05-4206 (E.D. La).  The Turner case asserted claims for property damage resulting from a release of oil from tanks located at Murphy's Meraux, Louisiana refinery after Hurricane Katrina.  The $330 million settlement includes a $55 million buyout program, a $120 million compensation program, a credit for $83 million in compensation already paid, and a $71 million remediation program (including credit for $51 million already expended for remediation).  In addition, Murphy agreed to pay plaintiffs' attorneys fees, which the court set at $33.7 million.  The Governor of Louisiana, Kathleen Blanco, testified in favor of the settlment at the Fairness Hearing.  To view the Court's order approving the settlement, click here.

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The Louisiana Department of Natural Resources has issued a proposed amendment to Statewide Order 29-B that details the procedures the Department will follow in implementing oilfield clean-up plans referred to the Department under Act 312 of 2006.  The Legislature passed Act 312 in 2006 to address the problem that damages awards in oilfield remediation litigation were not required to be expended on remediation.  Under the Act, the Department is involved in formulating a remediation plan, and the remediation funds are to be deposited in the registry of the court and actually spent on remediation.  The Commissioner of Conservation will conduct a hearing on the proposed regulations on Wednesday February 28, 2007.  Comments may be submitted at the hearing, or may be submitted in writing up to March 7, 2007.  To view the proposed regulations, click here.  Most notably, the draft regulations state that remediation plans must comport with the standards set forth in Order 29-B. 

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On January 8, 2007, a Louisiana trial judge held Act 312 of 2006 to be unconstitutional.  The Louisiana Attorney General's office immediately filed notice that it will take a suspensive appeal directly to the Louisiana Supreme Court.  M.J. Farms, Ltd v. ExxonMobil Corporation 24,055 (La. 7th J.D.C. Jan. 8, 2007).  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval, and the deposit of remediation funds into the registry of the court for expenditure on actual remediation rather than payment of those funds to the plaintiffs.  For further information on Act 312, click here. 

The plaintiff in M.J. Farms argued that retroactive application of the Act to a suit pending at the time the statute was promulgated unconstitutionally divests the plaintiff of a property right, that is, the cause of action to recover money damages for environmental contamination.  The Louisiana Attorney General opposed that motion, asserting that the statute only concerns remediation of public harm, and does not deprive landowners of claims for redress of private harm.  The January 8, 2007 ruling by Judge Johnson of the Louisiana Seventh Judicial District Court held Act 312 to be unconstitutional and unenforceable.  The opinion is available here.

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In Barasich v. Columbia Gulf Transmission, et al., Judge Sarah Vance of the Eastern District of Louisiana dismissed a suit in which plaintiffs claimed that oil and gas production and pipeline companies’ activities in South Louisiana marshes contributed to the destruction wreaked by hurricanes Katrina and Rita. The plaintiffs alleged that dredging of pipeline canals and wellsite locations damaged the marshland, thereby weakening a protective barrier against storm surge and increasing the storm damage suffered by citizens of South Louisiana. Judge Vance held that the complaint failed to state a claim under the Louisiana obligations of neighborhood or Louisiana tort law, finding plaintiffs’ claims to be too “attenuated because they are suing for hurricane damage from storm surge allegedly magnified by coastal erosion caused by the canals, not for a direct loss of acreage due to erosion.” 

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