Louisiana Third Circuit Requires Oil & Gas Operators to Restore Contaminated Property

A company filed suit against three oil and gas operators for causing environmental damage to 12 acres of its 199 acre tract. The jury found that one of the defendants was 100% at fault for the environmental damage and thus was solely responsible for the subsequent remediation.

La. Rev. Statute 30:29 (commonly known as Act 312), created a procedure to resolve claims for environmental damage arising from oilfield operations. Notably, the statute provides that when the fact finder determines environmental damage exists and identifies the party or parties who caused the damage, the court shall order those parties “whom the court finds legally responsible for the damage” to develop a remediation plan. The remediation must adhere to applicable statutory standards. The matter then proceeds to the Louisiana Department of Natural Resources to determine the most feasible plan for remediation.

In this instance, the plaintiff appealed the jury’s finding that two of the three oil and gas operators were not responsible for remediation. The Louisiana Court of Appeal for the Third Circuit reversed the jury’s verdict that found one of the oil companies was not in breach of their obligation to restore the property under a 2003 lease. The Third Circuit also reversed the jury verdict that held the second oil company was not in breach of their obligation to restore the property under a 2008 lease. Regarding damages, the plaintiff’s remediation plan amounted to an excess of $75 million. The court remanded the case to the trial court because the record failed to establish with any measure of reasonable certainty the amount of damages required to remediate the property.

Sweet Lake Land and Oil Company, LLC v. Oleum Operating Company, LC.

Juan C. Obregon