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Legacy Reform Limits Liability

Legacy Reform Limits Liability

*Originally published on March 7, 2013 in Energy Law Currents, the Companion Blog to the LSU Journal of Energy Law and Resources

With a history of extensive claims and monetary awards never being used to actually remediate property, the state has struggled with how to handle the environmental damage in legacy cases. New legislation hopes to ease the burden, particularly on business.

The Louisiana Legislature added two new articles to the Code of Civil Procedure to encourage the remediation of environmental damage and to expedite the procedural process: Louisiana Code of Civil Procedure articles 1552 and 1563. Louisiana Code of Civil Procedure Article 1552 authorizes the courts to develop environmental management orders that allow all parties access to the allegedly impacted property to perform inspections and environmental testing. This legislation is highly beneficial in that it prevents a party from prohibiting access to the property for in question for testing.

Louisiana Code of Civil Procedure Article 1563 allows any party to make a limited admission of liability for environmental damage to the contaminated property at the heart of the litigation. This limited admission restricts liability of the party to the implementation of the “most feasible plan” to evaluate and remediate all or a portion of the contamination to applicable regulatory standards. The Department of Natural Resources (DNR) Office of Conservation is charged with conducting public hearings to approve and structure “the most feasible plan” for the evaluation and remediation of environmental damage. The limited admission, the plan approved by DNR, and all agency comments are admissible into evidence. Parties choosing to make a limited admission and thus limit their exposure to the approved plan must deposit $100,000 with DNR to cover the cost of reviewing the plan and holding public hearings. Any remaining funds will presumably be returned to the depositor. Although the business community generally supports the ability to limit liability to the actual cost of remediation and that the new enforcement procedures empower the court to ensure money paid actually goes to remediation, concern remains over how the substantial $100,000 deposit will be handled by DNR. With no regulations or processes in place, substantial amounts of money may float around the department without clear oversight.

These new articles work in conjunction with amended Louisiana Revised Statute 30:29 governing the remediation of oilfield sites and production sites to now provide a mechanism for testing the validity of environmental damage claims early in the process. Any defendants served with such an action can request that the court conduct a preliminary hearing within 60 days to determine whether there is good cause for keeping the defendant as a party in the litigation; if there is not, the court should dismiss the case without prejudice. This new procedure benefits companies by allowing for a faster and more cost-effective way out of suit before incurring additional defense costs.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.