On February 1, 2016, a federal district court issued a ruling in Moore v. Denbury, — F.3d — (W.D. La. 2016), with important implications for “legacy” lawsuits in Louisiana. The court interpreted the 2014 amendments to Act 312 (La. R.S. § 30:29) to hold that “a plaintiff cannot directly recover additional remediation damages in the absence of an express contractual provision.” Instead, these additional remediation costs in excess of the amount needed to remediate the property to the requisite state standards must be paid into the registry of the court and used for remediation.
Following the enactment of Act 312, legacy plaintiffs profited from the “delta” between the amount necessary to remediate contaminated property to regulatory standards—which must be paid into the registry of the court, and damages for “additional remediation” above regulatory standards (most frequently to “original condition”)—which were paid to plaintiffs. In interpreting a prior version of Act 312, the Louisiana Supreme Court explained in State v. La. Land and Exploration Co., 110 So. 3d 1038 (La. 1/30/13) (“LL&E”), that legacy plaintiffs are entitled to additional remediation damages in two circumstances: (1) if required by an express contractual provision, or (2) if the mineral lessee has acted unreasonably or excessively under the lease.
The Moore plaintiffs sought original condition restoration under the second category, alleging that Denbury had operated unreasonably and excessively. In response to a motion for summary judgment filed by Denbury on its obligations, the court made an Erie determination as to the effects of post-LL&E amendments to Act 312.
The court methodically walked through the current version of Act 312 noting that: (i) under Subsection (D), all damages awarded for the evaluation or remediation of environmental damages shall be paid exclusively into the court registry except as provided in Subsection (H); (ii) Subsection (H) provides that any award for “additional remediation” in excess of the cost of the feasible plan is not required to be paid into the court registry, and (iii) Subsection (M)(b) further provides that damages for “additional remediation” are allowed only if an express contractual provision provides for them.
Specifically, Subsection (M), enacted in 2014, allows damages awards only for
(a) The cost of funding the feasible plan adopted by the court.
(b) The cost of additional remediation only if required by an express contractual provision providing for remediation to original condition or to some other specific remediation standard.
(c) The cost of evaluating, correcting or repairing environmental damage upon a showing that such damage was caused by unreasonable or excessive operations…
(d) The cost of nonremediation damages.
Id. at § M(1) (emphasis added).
The court concluded that because Subsection M uses the term “additional remediation”—but only in M(b)—only damages for “additional remediation” pursuant to an express contractual provision are exempt from deposit into the court’s registry. The court observed that “the Legislature could have easily placed ‘additional remediation’ in Subsection M(c) in connection with unreasonable or excessive operations. It did not.” Moore, p. 12-13. The court also found the timing of the amendments “immediately after the Supreme Court’s decision in LL&E” to be meaningful: “Had the Legislature desired the status quo, it would not have needed to alter the legislation.” Id. at p. 14.
Denbury’s motion for summary judgment was denied to the extent it urged that additional remediation damages based on excessive operations were not available at all, since “depending on the facts uncovered at trial, it may have a duty to repair damage caused as a result of its alleged unreasonableness or excessiveness. However, these damages would not go to the Moores directly; rather, Denbury would deposit them into the Court’s registry.” Id. at p. 16.
If the rationale of Moore is adopted by Louisiana courts, the “additional remediation damages–damages that plaintiffs can pocket” (Id. at p. 3) should be limited to those cases in which a landowner has an express contract-based claim for additional remediation. Although defendants who have operated “unreasonably or excessively” may still be compelled to pay such damages, plaintiffs cannot access them.