On May 9, 2019, the Louisiana Supreme Court issued an important opinion restricting application of the collateral source rule in personal injury lawsuits. In Simmons v. Cornerstone Investments, LLC, et al., 2018-CC-0735 (La. 5/8/19), the Court held the collateral source rule inapplicable to medical expenses charged above the amount actually paid by a workers’ compensation insurer pursuant to the workers’ compensation medical fee schedule.
Liskow Obtains Victory for the Oil and Gas Industry in the Louisiana Third Circuit
In a victory for the oil and gas industry, the Third Circuit rendered a decision rejecting attempts by the Louisiana Department of Revenue to impose severance taxes on crude oil production based on index pricing. The Third Circuit reaffirmed that severance taxes should be based on the “gross proceeds” obtained in an arm’s length sale at the lease. The Department had sought additional severance taxes from numerous Louisiana producers that sold crude oil in arm’s length sales at the lease. The contracts provided that the sales price of the crude oil was based on index pricing, less an amount sometimes designated as a “transportation differential” or simply as a deduction. The Department argued that this “differential” or deduction must be “disallowed” when computing severance taxes, effectively imposing severance taxes on the index pricing. The Louisiana Board of Tax Appeals, faced with numerous cases raising this same issue, heard a “test case” involving Avanti Exploration, LLC. The BTA held that the Department’s theories were invalid, and severance tax properly was based on the actual “gross receipts” received by the producer in an arm’s length sale. In a decision issued on April 17, 2019, the Louisiana Third Circuit Court of Appeal affirmed, holding that, pursuant to the Louisiana Constitution, the severance tax statutes, and the Department regulations, in the absence of any “posted field price,” severance taxes must be based on the actual “gross receipts” received by the producer in an arm’s length sale at the lease.
A New Opinion Report is Published: Assistance for Real Estate Financing Transactions
A Lender in a real estate financing transaction often requires borrower’s counsel to opine on certain aspects of the transaction as a condition to the closing. Often, the negotiations between borrower and lender counsel are as contentious and extended as are negotiations regarding the loan documents themselves. The respective attorney opinion committees of the American College of Real Estate Lawyers, the American College of Mortgage Attorneys, and the Real Property, Trust and Estate Law Section of the American Bar Association have worked for years to produce opinion reports that are fairly balanced between the needs of lenders and borrowers and that can reduce the negotiations over real estate finance opinions. The first opinion report specifically addressing financing opinions in real estate transactions was the Real Estate Opinion Letter Guidelines published in 38 Real Prop. Prob. & Tr. J. 241 (2003). The next report was the comprehensive The Real Estate Finance Opinion Report of 2012 published at 47 Real Prop. Tr. & Est. L. J. 213 (2012) and The ACREL Papers 121 (Spring 2013). The Local Counsel Opinion Letters – A Supplement to the Real Estate Finance Opinion Report of 2012, 51 Real Prop. Tr. & Est. L. J. 167 (2016) directly addresses the particular issues facing local counsel in real estate finance transactions. The latest report, just published at 53 Real Prop. Tr. & Est. L. J. 163 (Fall 2018/Winter 2019), is Uniform Commercial Code Opinions in Real Estate Finance Transactions (the “UCC Opinion Report”). In addition to accessing these reports in the Real Property Probate and Trust Journal, the Legal Opinion Resource Center of the ABA Business Law Section contains these and many other opinion reports and resources.
EPA’s New Audit Program for New Owners of Upstream Oil and Natural Gas Facilities
On March 29, 2019, the U.S. Environmental Protection Agency (EPA) announced it had finalized a voluntary disclosure program for new owners of upstream oil and natural gas exploration and production facilities. Under the program, EPA will not impose any civil penalties on new owners of these facilities (which include well sites and associated tanks and vapor control systems) who find, self-disclose, and correct Clean Air Act violations pursuant to an audit program agreement with EPA. EPA is offering the program to such new owners because EPA and states have seen significant excess emissions and Clean Air Act noncompliance from vapor control systems at these facilities.
Derivatives: Regulators Address No-Deal Brexit Cross-Border Issues
On March 29, the UK House of Commons rejected, for the third time in three months, a draft withdrawal agreement for a negotiated exit of the UK from the European Union. The UK now has until April 12 to present the EU with a new exit proposal. The lack of a negotiated transition for the UK (a “no-deal Brexit”) could present uncertainty for participants in the global derivatives markets. In response to concerns over such potential uncertainty, regulators on both sides of the Atlantic are taking measures to reassure the markets that U.S.-UK derivatives activity will continue with minimal interruption. Continue Reading
Alaska District Court Vacates Trump Executive Order On Offshore Leasing
On March 29, 2019, Alaska Federal District Court Judge Sharon Gleason granted summary judgment in favor of plaintiff environmental groups in League of Conservation Voters v. Trump, 3:17-00101. The case stems from Executive Orders issued under the Obama Administration in 2015 and 2016 which withdrew certain areas in the Arctic and Atlantic regions from exploration and development under the offshore oil and gas leasing program. President Trump issued an Executive Order in 2017 which revoked the Obama withdrawals. The Court’s summary judgment ruling vacated certain portions of the 2017 Trump Executive Order and concluded that the prior Obama Orders would remain in place. In effect, the ruling removes the areas in the Arctic and the Atlantic covered in the Obama Orders from the five-year leasing program proposed by the Trump Administration. Continue Reading
City of New Orleans Sues Oil and Gas Companies for Allegedly Damaging Coastal Wetlands
On Friday, March 29, 2019, the City of New Orleans filed a lawsuit in Civil District Court against eleven oil and gas companies seeking damages for alleged harm to Louisiana’s coastal wetlands. Introducing its lawsuit with statements that “New Orleans is imperiled” and its “people are in danger,” the City contends that the defendants’ failure to maintain access canals, spoil banks, and earthen pits created in the course of exploration and production has destroyed the coastal zone. The City’s allegations mirror those levied in recent years by the parishes of Plaquemines, Jefferson, and St. Bernard, among others: that the defendants’ activities constitute coastal “uses” under the Louisiana State and Local Coastal Resources Management Act (“SLCRMA”) and that they violate coastal use permits issued pursuant to that statute. The City has requested a trial by jury, from which it seeks damages, “restoration costs,” restoration of “disturbed areas,” sanctions, costs, attorneys’ fees, and/or declaratory and injunctive relief. Continue Reading
Liskow & Lewis Celebrates 15th Annual Black History Month Program with Ruby Bridges and Judge Brian Jackson
Liskow & Lewis celebrated Black History Month with Ruby Bridges, the first African-American child to integrate an elementary school in the South, and Judge Brian Jackson of the United States District Court for the Middle District of Louisiana (and a former Shareholder at Liskow & Lewis). While practicing at Liskow, Judge Jackson initiated the firm’s first formal celebration of Black History Month, a tradition which is now in its 15th year.
Judge Jackson first learned of Ruby Bridges’ story through Norman Rockwell’s historic painting “The Problem We All Live With.” The painting captures the bravery of the six-year-old girl who was advised by U.S. marshals to “walk straight ahead, and don’t look back” as she integrated William Frantz, an all-white elementary school in New Orleans. Judge Jackson met Ruby when he reconnected her with one of the U.S. marshals depicted in the painting.
Western District of Louisiana Holds that Unit Operators May Not Recover Post-Production Costs from an Unleased Mineral Owner’s Share of Production Proceeds
On March 21, 2019, the U.S. District Court for the Western District of Louisiana held that a unit operator may not recover post-production costs from an unleased mineral owner’s share of production proceeds in Allen Johnson, et al. v. Chesapeake Louisiana, LP.[1] The dispute in Johnson involved a group of unleased mineral owners (“UMOs”) who filed suit against a unit operator for deducting a litany of post-production costs against their share of production proceeds from an oil and gas unit in the Haynesville Shale.[2]
The UMOs argued that La. R.S. 30:10 governed whether a unit operator may deduct post-production costs against UMO’s share of production proceeds.[3] The argument, however, was one of exclusion. The UMOs argued that La. R.S. 30:10 contains the exclusive list of any costs that could be properly charged against a UMO’s share of production proceeds. Therefore, because post-production costs were not expressly listed in La. R.S. 30:10(A)(3), the UMOs argued that such expenses were not recoverable from a UMO’s share of production.[4] In opposition, the unit operator contended that La. R.S. 30:10 was inapplicable to the case because the costs outlined in the statute comprised only pre-production and production costs. The operator argued the statute was never intended to address post-production costs.[5] As a result, the unit operator claimed that the statute did not forbid deductions for post-production costs against a UMO, but instead those costs were properly authorized under the general principles of unjust enrichment and co-ownership.[6]
Admiralty Professor Haycraft Reports from the Courthouse Steps on the Dutra v. Batterton Supreme Court Argument
This morning I attended oral argument at the United States Supreme Court in the maritime case of Dutra Group v. Batterton.[1] The question in the case is whether a Jones Act seaman may recover punitive damages on an unseaworthiness claim. Former Solicitor General Seth Waxman argued for Petitioner Dutra Group and David Frederick argued for Respondent Christopher Batterton.
Waxman began his argument by explaining that Miles v. Apex set boundaries constraining what common law admiralty courts can do when Congress has legislated as it has in the Jones Act. He was quickly interrupted by Justice Sotomayor who noted that the Jones Act was enacted to supplement, not restrict, remedies available to a seaman. Justices Ginsberg and Kagan also pressed Waxman, with Kagan questioning why unseaworthiness doctrine has evolved over the past few decades, becoming more favorable to the seaman, if the Jones Act in 1920 constrained the common law admiralty courts?
