For those who do business in the energy industry in Louisiana, recent developments regarding a new proposal could have a significant effect on business in the future. The proposed bill, House Bill 618, concerns the rules for lawsuits regarding damage caused on leased oilfields. The bill is sharply dividing oil companies and landowners because of its possible effect on business law in Louisiana.

The proposed legislation would implement certain guidelines for when an energy firm accepts responsibility for damage to land caused by exploration and production. The law would authorize the Louisiana Department of Natural Resources to step in earlier and create a “restoration” plan that could be applied in subsequent civil cases.

Currently, in such lawsuits, the government does not require a restoration plan until a jury has heard the merits of the case. If an oil or gas producer damages a landowner’s property (through excavation, for example), a jury is the arbiter of apportioning damages. That means it is left up to the jury to determine regulatory damages, which are damages that violate environmental regulations. It is also up to the jury to decide the apportionment of private damages, which are those that fall outside state environmental regulations.

But if the proposed bill passes, the jury will no longer be the primary determiner of awarded damages in such a lawsuit. Opponents of the bill are mostly landowners, and they fear the government will have too much control over matters before a jury hears the case. The landowners fear they will be denied a fair opportunity to be heard in court.

Proponents of the legislation believe it will improve the efficiency of environmental damage claims. They believe allowing the government to implement a restoration plan before a jury can hear the case will streamline the process by addressing what they think is the paramount concern in such cases: first the environment, second the awarded damages — not vice versa.

Source: nola.com, “House committee backs oil and gas producers over landowners,” Bill Barrow, April 18, 2012