Recent Developments in Oil and Gas Law

ACT 312 CHANGES – The 2012 legislative session brought significant changes to Louisiana law governing civil suits for the remediation of environmental damage to property caused by oil and gas operations. Louisiana Revised Statute 30:29, enacted in 2006 and commonly known as Act 312, provides the procedure for judicial resolution of such claims. In spring 2012, the Louisiana Legislature amended Act 312 via Act 779and adopted Code of Civil Procedure Articles 1552 and 1563 via Act 754. While these Acts of the Legislature effect a variety of changes to the law, the modifications and new provisions are primarily intended to expedite remediation of contaminated property by allowing a party to admit liability for environmental damage and submit a plan for remediation prior to a trial of the matter; by suspending prescription for plaintiffs investigating potential contamination once notice to the appropriate state agency is given; and by providing for an environmental management order setting deadlines in the case.

RECENT CHALLENGES TO ACT 312 – Since its inception, Act 312 and its meaning and application have been the subject of debate as well as litigation at all levels of the Louisiana court system. One such challenge to the interpretation of the statute will soon be heard by the Louisiana Supreme Court: whether Act 312 serves to limit the amount of a plaintiff’s recoverable damages in a lawsuit to only the costs required to implement the Act’s mandated “feasible plan” of remediation. In State of Louisiana and the Vermillion Parish School Board v. The Louisiana Land and Exploration Company, et al., the Third Circuit Court of Appeal held that “the language of the statute” was “clear and unambiguous,” and, citing to paragraph H of Act 312, stated that the “clear language of the statute contemplates the landowner receiving an award in addition to that provided by the feasible plan.” Nos. 10-1341, 11-843, 11-1016 (La. App. 3rd Cir. 2/1/2012), 85 So.3d 158, 162, rehearing denied 3/21/2012. Union Oil Company of California and Union Exploration Partners (collectively, “Unocal”) have requested a writ as to the Third Circuit’s ruling, in which the Third Circuit reversed the decision of the trial court granting Unocal’s partial motion for summary judgment on the afore-mentioned damages issue. The Louisiana Supreme Court granted Unocal’s writ and briefs have been filed, although a hearing date in the matter has yet to be set. See State v. Louisiana Land and Exploration Company, et al., No. 2012-C-0884, 90 So.3d 340 (La. 6/15/2012).

FEDERAL STUDY ON THE EFFECTS OF FRACKING – At the request of Congress, the United States Environmental Protection Agency (“EPA”) commenced a study in 2011 on the effects of hydraulic fracturing (“fracking”) generally, and specifically its effects on drinking water. Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water. The multi-state study includes an examination of several sites at which drilling has already occurred and where contamination is alleged as well as prospective sites. A few of the sites will be the subject of a longer-term review of impacts. While final results are not expected until 2014, the EPA released a progress report on December 21, 2012. The study and its results are expected to generate national attention and debate by both advocates and opponents of the controversial method of drilling, and could become the basis for federal legislation and regulation.