Landowners, energy firms advance competing bills in 'legacy lawsuit' dispute

04 27, 2012 by The Times-Picayune

Landowners have answered the oil and gas industry with their preferred rewrite of the rules governing the lawsuits property owners file against energy firms alleging environmental damages left behind after exploration and production leases are up.

The landowner version, which the Senate Natural Resources Committee passed 3-2 Thursday, is similar to the industry-backed bill that cleared the House of Representatives a day before. Jimmy Faircloth, a former executive counsel to Gov. Bobby Jindal and the lead negotiator for Weyerhauser Corp. and other major landowners described Senate Bill 731 by Bret Allain, R-Franklin, as an honest attempt to reach a fair compromise.

But industry players -- and their most powerful advocate in the dispute, U.S. Sen. David Vitter -- say Allain's effort is not good enough. Vitter, who has described the so-called "legacy lawsuits" as a "trial-lawyer bonanza," blasted the measure as a sleight of hand by Faircloth and the plaintiffs bar.

With five weeks remaining in the legislative session, all sides say they want to rewrite existing laws to speed the cleanup of old oilfields while shielding Louisiana-based energy firms from shouldering more than their share of the costs. Landowners, meanwhile, insist that they not lose the ability to get a fair jury trial as they seek to be compensated for harm to their property. The multimillion-dollar question is how to reach those goals.

Rep. Neil Abramson's bill would have the state Department of Natural Resources step in to develop restoration plans whenever an energy firm claims responsibility for certain damages caused by exploration and production. That mitigation plan, including the cost, would be admitted as evidence in any subsequent civil lawsuit filed by the landowners who leased their property to an energy firm.

That represents a significant shift from existing law, which leaves it to a jury in district court to decide responsibility for what are called regulatory damages (effects, such as open waste pits, that are subject to state environmental regulations) and private damages, which refer to claims that fall outside state environmental regulations. Private damages might include crop damage or lost economic opportunity. State regulators get involved in crafting a remediation plan for regulatory damages only after a case is settled or a verdict assigns responsibility. In either instance, a judge has final approval.

Like Abramson's proposal, Allain's bill would allow a defendant to make a limited admission of responsibility, but the senator adds significant details for what happens next. Allain would require the admission to occur with 120 days of a landowner filing suit; 60 days after the admission, the party would have to file its proposed remediation plan for the damage that is covered by DNR's regulatory authority. Besides the responsible entity, any party could submit a plan or comments as DNR crafts its judgment in the matter. DNR's deadline for a final plan would be 60 days after the energy firm first submitted its plan, meaning a maximum 240-day span between the initial civil complaint and the remediation plan.

As does Abramson, Allain's bill would make the final plan admissible in court. Faircloth has previously said mandating admissibility unfairly strips a district judge of primary jurisdiction and potentially biases jurors as they consider private damages beyond the regulatory damages.

Vitter said the timeline would set "unrealistic deadlines that will nearly ensure that a credible and admissible cleanup plan will not be developed in most future cases." He also argued that the timeline effectively makes the bill apply only to future cases, meaning scores of pending suits - involving oilfields that have yet to be cleaned up - will continue unabated.

Just as significant as the timeline and the issue of admissibility, Allain would specifically block DNR, in its formation of a remediation plan, from granting any exceptions to environmental regulations unless the exception has been approved by all relevant executive authorities, which could include the commissioner of agriculture, the secretary of DNR, the secretary of wildlife and fisheries, the secretary of environmental quality, the secretary of health and hospitals, and chairman of the Coastal Protection and Restoration Authority.

Faircloth said the additional safeguards address his clients' concerns about DNR low-balling a regulatory cleanup and adversely affecting a jury's consideration of damages.

Vitter said widening the process to so many agencies "makes producing a credible and admissible clean-up plan nearly impossible."

Vitter, who has commented on statehouse affairs with increasing frequency in recent years, has attracted the spotlight in the dispute both by attacking plaintiffs attorneys and accusing Gov. Bobby Jindal of shilling for them by not actively attempting to force a resolution. Jindal, who has major campaign contributors on both sides of the issue, has said he wants a bill that allows faster cleanups and protects independent energy firms.

The Allain bill now moves to the Senate floor. Abramson's bill has yet to be assigned to a Senate committee. As the Thursday vote suggests, the Natural Resources Committee is the friendliest venue for landowners. The Judiciary Committee that handles civil law matters is the friendlier venue for the industry.