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Louisiana’s Act 312 and its Impact on the Environment and Oil Exploration

La. R.S. 30:29 (“Act 312”) was in enacted in 2006 and became effective in June of that year. Act 312 provides a procedure for the remediation of oil field sites as well as oil exploration and production sites. Generally, remediation is “the action of remedying something, in particular of reversing or stopping environmental change.” Before the Louisiana legislature enacted Act 312, most remediation requirements were through private party contracts; therefore, Act 312 did not change the normal trial procedures established by the Louisiana Code of Civil Procedure.

The Louisiana Supreme Court recently discussed Act 312 at length, explaining what it did change, in a case involving the Vermilion Parish School Board. The Court explained that Act 312 was enacted because of serious concerns with the state of the land and ground water after an area was used for oil exploration and production. Parties would use the land and ground water under a mineral lease for several years, and leave the property in terrible shape by the time that they were done. Mineral leases allow the parties to contract for only the minerals or the potential oil that is located on that property. The party with the mineral lease, then, does not rent the entire property, but just the ability to find minerals or oil within or upon that property.

Before Act 312, parties could still sue if one party left the land in terrible shape. Occasionally, however, it does not make sense economically to force a party to fix the land they damaged. Instead, the renting party would have to give the “landlord” the difference between the value of the land when they received it and the value of the land when it was returned after the lease, under a tort law theory. However, the person who owned the land, the “landlord,” was not required to use the funds to fix damage done to the land. As a result, property that had serious environmental problems often went without remediation because the landlord was not required to fix it. This creates health and safety concerns for the general public.

When parties file under Act 312, a notice is sent to the Louisiana Department of Natural Resources, Commissioner of Conservation (“DNR”) and the attorney general. The court cannot issue a judgment unless this notice is filed. After the notice is filed, the DNR and the attorney general can intervene in the case if they so choose; they also retain the ability to bring an independent action through civil or administrative means. Then, the matter proceeds to trial as any normal case would.

At the trial, the fact finder will determine if there actually is any environmental damage and whether the defendant or defendants were responsible for that damage. If the fact finder finds that there is environmental damage and the defendant is responsible, then the defendant is required to form a “remediation plan.” The remediation plan is submitted to the court for approval; the plaintiff is allowed to submit a suggested remediation plan to the court as well.

Then, the DNR will hold a public hearing on the submitted remediation plans. The DNR will then determine the most feasible plan to accomplish the remediation of the environmental damage, keeping the health, safety, and welfare of the public at large in mind. After they approve the plan, the plan is sent to the court for further review. Within a certain time frame, parties can submit alternations, comments, or new plans to the court during this time as well. Unless the parties prove that another plan is more feasible, the court will allow the plan approved by the DNR to move forward. In addition, the court will determine how much of the damages amount will be required to be used exclusively for remediation. Then, the legally responsible parties will deposit funds into the court’s registry for remediation purposes.

One of the many issues in the case involving the Vermilion Parish School Board was whether private parties could seek additional damages apart from the required remediation funds. The Court determined that Act 312 specifically provided that private parties would not be limited by the remediation plan. That is, if they wanted to seek damages beyond what would be required to correct the environmental damages, such as punitive damages (damages that are meant to punish the offending party), then Act 312 did not limit them from doing that.

The Berniard Law Firm specializes in oil claims, including their effects on the environment. If you have questions about Act 312 or think your mineral lease has been violated, contact The Berniard Law Firm today.