Alert

Alert: Louisiana Supreme Court Signals More Flexibility in Awarding Excessive Damage Claims in Legacy Cases

February 15, 2013

State of Louisiana and the Vermilion Parish School Board v. The Louisiana Land & Exploration Company, et al.

On January 30, 2013, the Louisiana Supreme Court issued its decision in State of Louisiana and the Vermilion Parish School Board v. The Louisiana Land & Exploration Company, et al. Among other things, that decision addressed a mineral lessee’s obligation to remediate contaminated property in legacy oilfield cases in those instances where the lease did not require the surface of property to be restored to its prelease condition. The Supreme Court concluded that, at least in certain circumstances, a landowner would be entitled to collect damages above and beyond the cost of restoring the property to regulatory standards established by the Office of Conservation of the Louisiana Department of Natural Resources.

In a 2009 decision, Marin v. Exxon Mobil Corporation, 48 S.3d 234, the Louisiana Supreme Court determined that, absent an express contractual provision to the contrary, the landowner could recover only the cost of a remediation to Office of Conservation Rule 29B standards – even in those cases in which the lessee had acted unreasonably. The Vermillion Parish School Board decision did not expressly overrule Marincould support an award of excess damages above and beyond the cost of remediation to regulatory standards – even in the absence of express contractual provisions. A dissent by Justice Victory and a concurrence by Justice Guidry both assert that the majority’s opinion is contrary to legislative intent as expressed in La. R.S. 30:29(H).

Following Marin, lessees generally had believed that their obligation for the cost of remediation would be limited to regulatory standards in the absence of an express contractual provision to the contrary. In light of the Vermillion Parish School Board decision, it remains to be seen how far trial judges will go in awarding damages in excess of regulatory standards. And it remains to be seen whether this decision will trigger yet a further legislative battle to clarify the extent of damages to which landowners may be entitled in order to cover the cost of remediation.

McGlinchey Stafford’s Environmental Section works with clients at all levels in responding to federal and state regulatory and criminal environmental enforcement actions.