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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.

By Jana Grauberger

Two recent federal district court decisions have reached differing results in considering the scope of exculpatory clauses in JOA disputes. In PYR Energy Corp. v. Samson Resources Co., 470 F. Supp. 2d 709 (E.D. Tex. 2007), the court found itself bound to follow Fifth Circuit precedent set in Stine v. Marathon Oil Co., 976 F.2d 254 (5th Cir. 1992), which held JOA exculpatory language limiting operator liability to situations of gross negligence of willful misconduct applicable to all good faith actions undertaken by the operator under the JOA, including performance of its contractual duties. By contrast, in Forest Oil Corp. v. Union Oil Co., 2006 WL 905345 (D. Alaska Apr. 7, 2006), the court followed the Tenth Circuit and refused to require a showing of gross negligence or willful misconduct in holding an operator liable for breach of contract regarding its duties to charge for NORM disposal.

By Jana Grauberger

Oil prices of $60/barrel are expanding the industry and providing incentive and opportunities for more small independent “wildcatter” companies. For some interesting statistics concerning exploration trends and a profile of one wildcatter, Cobalt International Energy, see the attached article from the New York Times.

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.

The new rules call for an initial Commissioner’s conference, at which a hearing date and deadlines for release of technical data, hearing notices, filing of all plans, witness and exhibit lists will be set.  All responsible parties, as defined in the rules, must participate in the conference, and all other litigation parties may participate.  

Fifteen days prior to the hearing, DNR will provide the Court and litigation parties a schedule of its estimated costs for the review and evaluation of any plans, comments, or responses, hearing costs, and any other costs the agency expects to incur.  The responsible party has the choice of depositing sufficient funds in the registry of the court to cover these costs, or with approval of the Court, submitting such funds directly to the Commissioner.

DNR will only evaluate proposed plans in accordance with Statewide Order 29-B, unless a party seeking an exception specifies Louisiana rules, regulations or statutes sought to be applied in lieu of Statewide Order 29-B and establishes good cause to grant an exception. A party seeking an exception must show that the alternative basis will not endanger the lowermost underground source of drinking water. 

The rules also contain provisions for the release of any technical data.  Such data must be provided to each party (at the cost of the party submitting the technical data) at the time the plan, comment or response is filed.  All technical data available to any party filing a plan, comment or response must be disclosed to all parties on or before the date such plan, comment or response is filed with the Commissioner, regardless of whether the technical data is used or referenced in the plan, comment or response.  If new technical data becomes available to any party after proceedings have been initiated, such data must be made available immediately to all parties by notice of its availability and release in the same manner as the initial technical data.

DNR will only consider plans, comments or responses submitted within the deadlines set by the court.  The Commissioner may designate a licensed Louisiana attorney to act as a hearing officer in any hearing or at any conferences.  Hearing officers are given the authority to rule on evidentiary or procedural matters, maintain order at hearings, and generally ensure that an accurate record is made of the proceedings.

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.