State v. La. Land & Exploration Co.

• Decision Date: 01 June 2022
• Docket Number: 2020-C-00685
• Citation: 339 So.3d 1163
• Parties: STATE of Louisiana, et al. v. LOUISIANA LAND & EXPLORATION CO., et al.
• Court: Louisiana Supreme Court

339 So.3d 1163

STATE of Louisiana, et al.

v.LOUISIANA LAND & EXPLORATION CO., et al.

No. 2020-C-00685

Supreme Court of Louisiana.

June 01, 2022

PER CURIAM^*

We granted rehearing to reconsider our prior decision in State v. Louisiana Land and Exploration Co. , 20-00685 (La. 6/30/21), ––– So.3d ––––. The case presents two main issues, the proper interpretation of Act 312 relative to the award of damages for the evaluation or remediation of environmental damage and whether the strict liability tort claim prescribed. See La. R.S. 30:292.¹ With the benefit of additional oral argument and briefing, we affirm our original decree.

FACTS AND PROCEDURAL HISTORY

Vermilion Parish School Board ("VPSB") filed suit in 2004, alleging oil and gas operations conducted pursuant to a 1935 mineral lease and a 1994 surface lease damaged Section 16 land.² VPSB asserted causes of action for negligence, strict liability, unjust enrichment, trespass, breach of contract, and violations of Louisiana environmental laws.

Union Oil Company of California and Union Exploration Partners ("UNOCAL") admitted responsibility for environmental damage to the land. La. R.S. 30:29(C)(1)(2006). Act 312 sets forth an administrative procedure where, upon an admission of responsibility, the trial court orders the development of a plan to evaluate and remediate the environmental damage. The plan ultimately adopted by the court in accordance with this administrative process is the "feasible plan." La. R.S. 30:29(I)(3)(2006).

UNOCAL filed an exception of prescription alleging VPSB knew of its strict liability tort claim more than one year before filing suit, as evidenced by it consulting an attorney regarding the damaged land. VPSB argued hiring counsel did not commence prescription and, further, the claim is imprescriptible because the suit is on behalf of the State of Louisiana, which has immunity to prescription pursuant to Louisiana Constitution Article XII, Section 13. The trial court denied the exception of prescription, eventually stating:

This lawsuit is a civil action for property damages based on tort, property law, and mineral law. The damaged property is a 16th Section of Vermilion Parish. Section 16 lands are owned by the State but managed by various school boards for the benefit of public education. When a claim for property damage is brought by a school board in the name of the State, the claim cannot be prescribed. La. Constitution Art. 12 § 13 provides, "Prescription shall not run against the state in any civil matter, unless otherwise provided in this constitution or expressly by law."

A jury trial was held in April and May of 2015. The jury awarded $3,500,000 for remediation damages pursuant to Act 312. Additionally, after the trial court found the strict liability claim did not prescribe, the jury awarded $1,500,000 for that claim. According to the judgment, the strict liability award was for "damage to the property" and "to restore the property." The jury found no liability for breach of contract, negligence, or trespass.³

VPSB and UNOCAL appealed. The court of appeal affirmed the prescription ruling, finding the strict liability claim imprescriptible because VPSB "functions as the State in the State's capacity of trustee for the benefit of public education." The court of appeal also found the verdict inconsistent, primarily reasoning that the jury's finding of environmental damage necessarily meant UNOCAL breached its lease obligations, which conflicted with the jury's finding of no breach of contract. The trial court judgment was vacated and the case was remanded for a new trial. State v. Louisiana Land and Exploration Co. , 19-0248 (La. App. 3 Cir. 5/6/20), 298 So.3d 296.

We granted writs in State v. Louisiana Land and Exploration Co. , 20-00685 (La. 6/30/21), ––– So.3d –––– ("Louisiana Land II ) and affirmed the court of appeal's ruling on prescription, but found the claim not factually prescribed, making it unnecessary to decide if it was imprescriptible. Additionally, we found error in the jury deciding Act 312 issues that, following the admission of responsibility, should have been reserved solely for the trial court.

That error resulted in improper jury instructions and interrogatories that tainted the entire jury verdict. We affirmed the court of appeal vacating the trial court's judgment and remanding for a new trial, but with additional guidance on the application of Act 312. Both VPSB and UNOCAL requested rehearing, which we granted. State v. Louisiana Land and Exploration Co ., 20-00685 (La. 10/19/21), 326 So.3d 257.

DISCUSSION

Act 312

After considering the arguments raised on rehearing, we affirm our holding in Louisiana Land II that the plain language of Act 312 only allows recovery of excess remediation damages when expressly provided by contract.

Since the enactment of Act 312, a struggle has ensued to determine the amount of remediation damages that must be deposited into the registry of the court and used solely to evaluate or remediate environmental damage, as opposed to being awarded to the landowner without the obligation to clean up the environmental damage. Until Act 312, unless the landowner only sought specific performance, there was no legal compulsion to use money awarded to remediate environmental damage to actually clean up the property. See Corbello v. Iowa Production , 02-0826 (La. 2/25/03), 850 So.2d 686.

Act 312 changed the process for recovering remediation damages by requiring that all damages awarded for the evaluation or remediation of environmental damage shall be paid into the registry of the court and used for cleanup. La. R.S. 30:29(D).⁴ Act 312 broadly defines the scope of those damages. "Environmental damage" is defined as "any actual or potential impact, damage, or injury to environmental media caused by contamination resulting from activities associated with oilfield sites or exploration and production sites. Environmental media shall include but not be limited to soil, surface water, ground water, or sediment." La. R.S. 30:29(I)(1). "Evaluation or remediation shall include but not be limited to investigation, testing, monitoring, containment, prevention, or abatement." La. R.S. 30:29(I)(2). According to the statutory scheme, any amount awarded for evaluation or remediation of environmental damage, but not needed for cleanup, is returned to the responsible party, not to the landowner. La. R.S. 30:29(D)(4). The question presented in this case is whether, in the absence of an express contractual provision, Act 312 allows a landowner to recover an award for remediation damages that exceeds the cost for the feasible plan. We again find it does not.

Resolution of the question before us turns on the language of the statute. The 2006 version of Act 312 provides in pertinent part:

Subsection (D)(1): Whether or not the department or the attorney general intervenes, and except as provided in Subsection H of this Section, all damages or payments in any civil action, including interest thereon, awarded for the evaluation or remediation of environmental damage shall be paid exclusively into the registry of the court in an interest-bearing account with the interest accruing to the account for cleanup.

* * *

Subsection(H): This Section shall not preclude an owner of land from pursuing a judicial remedy or receiving a judicial award for private claims suffered as a result of environmental damage, except as otherwise provided in this Section. Nor shall it preclude a judgment ordering damages for or implementation of additional remediation in excess of the requirements of the plan adopted by the court pursuant to this Section as may be required in accordance with the terms of an express contractual provision. Any award granted in connection with the judgment for additional remediation is not required to be paid into the registry of the court. This Section shall not be interpreted to create any cause of action or to impose additional implied obligations under the mineral code or arising out of a mineral lease.

Subsection (D) states "except as provided in Subsection (H) of this Section, all damages or payments in any civil action ... awarded for the evaluation or remediation of environmental damage shall be paid exclusively into the registry of the court ... for cleanup." (emphasis added). Therefore, the starting point for recovery for "evaluation or remediation of environmental damage" is that "all" such damages must be deposited into the registry of the court. Significantly, this requirement is limited to one element of damages, "evaluation or remediation of environmental damage," which, as specifically defined terms in Act 312, are essentially oil field cleanup costs.

Subsection (H) recognizes the statute does not preclude "a judicial award for private claims suffered as a result of environmental damage, except as otherwise provided in this Section." The legislature did not define "private claims suffered as a result of environmental damage." Consequently, we have no statutory listing of these "private claims." However, because of the definition of "environmental damage," we know that the term "private claims" broadly relates to "any actual or potential impact, damage, or injury to environmental media. ..." The statute also clearly and unambiguously says what "private claims" are not. Subsection (H) says they are not "as otherwise provided in this Section." This statutory directive reincorporates subsection (D)(1), which says these private claims are not for the "evaluation or remediation of environmental damage."⁵ Subsection (D)(1) mandates that evaluation or remediation damages be recovered through the feasible plan, regardless of the cause of action sued upon or the legal theory of recovery. The application of subsection (D)(1) is triggered by the nature of the damage, that is, whether it is evaluation or remediation of environmental damage as defined in Act 312, not the legal theory that determines the defendant...