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Oilfield remediation measure defeated in Louisiana House committee

Oil and gas firms lose bid to shift jurisdiction over lawsuits to the Louisiana Department of Natural Resources

The old fault line between big business and the plaintiffs bar revealed itself again Wednesday, with Louisiana's largest landowners going against the world's largest oil and gas firms over how to settle environmental damage claims related to oilfields.

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Rep. Page Cortez, R-Lafayette

In a victory for the landowners and their lawyers, the House Natural Resources Committee rejected a measure that would have stripped primary jurisdiction over the lawsuits from local courts and given it to the Louisiana Department of Natural Resources. Republicans and Democrats fell on both sides of the 10-7 vote, which followed hours of debate witnessed by several of the state's most influential contract lobbyists.

Oil and gas representatives told lawmakers that House Bill 563 by Rep. Page Cortez, R-Lafayette, is a way to expedite clean-ups of oil fields that are now the subject of protracted "legacy lawsuits," so-called for the alleged legacy of contamination wrought by years of production on a site. Supporters also said the history of the suits, the 250 or so pending claims across the state and the threat of new torts hamper their business.

David Russell of McGowan Working Partners, an oil producer, told legislators he is unable to secure environmental liability insurance. Scott Sinclair of Tensas Delta Exploration said his firm has had to hold back on capital investments.

Opponents of the bill, lead by Jimmy Faircloth, a former executive counsel to Republican Gov. Bobby Jindal, framed the Cortez bill as a way to shield oil and gas firms from liability.

"Any time you have an industry say they want more regulatory involvement in their operations, you really ought to think about what that means," said Faircloth, who was representing the Roy O. Martin Lumber Co. and others he said combine to own hundreds of thousands of acres.

The debate concerned changes to a 2006 law -- called Act 312 -- that governs legacy lawsuits. The law was one of a handful of legislative actions responding to a Louisiana Supreme Court decision -- Corbello v. Iowa Production -- that essentially held that damages awarded to a landowner for oilfield surface damage did not have to be tied to the land's value and that the landowner was not required to use the settlement payments to clean up the effects of the damage.

Among several provisions, Act 312 has brought the Department of Natural Resources into the legacy lawsuits to help prepare clean-up plans -- assigning liability and cost -- as part of the suits, which typically are filed in the judicial district where the oilfield is at issue. Current law allows judges to review the clean-up plans.

Cortez emphasized the testimony of DNR officials who said that of 248 suits filed since Act 312 became law, only two fields are completely clean, while only 65 or so have even completed environmental testing to gauge damage.

The Cortez bill essentially would have pushed the formulation of a clean-up plan to the front of the legal process, once a firm admitted responsibility. Any challenge to the clean-up plans would have to be brought in the 19th Judicial District based in Baton Rouge. That is the court that handles all claims stemming from the administrative regulations of state executive agencies. The change would not have barred a landowner from filing an action in a local district court, but a firm's admission of liability for cleanup would not have been admissible in the subsequent private claim.

Russell, representing the McGowan firm, did not dispute that the act could help him in those cases. "I'd feel much better walking into court with a plan from Natural Resources" settling the cost of clean-up.

Faircloth seized on that testimony, saying the firms, from Exxon and Shell to independent firms, "would be more comfortable" dealing with state regulators and district judges in the capital "than with the judges and juries" around Louisiana.

Under questioning from Committee Chairman Gordon Dove, Faircloth conceded that the clean-up process has been slow for the past five years. But he said blame is misplaced: "I think talented lawyers from both sides have learned how to work it."

Bill Barrow can be reached at bbarrow@timespicayune.com or 504.826.3452.



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