The Sweet Lake Land & Oil Co. v. Oleum Operating Co.
| Decision Date | 01 December 2021 |
| Docket Number | 21-169 |
| Parties | THE SWEET LAKE LAND AND OIL COMPANY, LLC v. OLEUM OPERATING COMPANY, L.C., ET AL. |
| Court | Court of Appeal of Louisiana — District of US |
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2010-1272 HONORABLE DAVID RITCHIE, DISTRICT JUDGE
Guy E Wall Paul E. Bullington Jonathan R. Cook Sara M. Lewis Wall Bullington & Cook, LLC COUNSEL FOR PLAINTIFF/APPELLEE The Sweet Lake Land and Oil Company, LLC
Alan J. Berteau R. Benn Vincent, Jr. Matthew B. Smith Hattie V Guidry James Patrick Dore Kean Miller, LLP COUNSEL FOR DEFENDANTS/APPELLANTS: Sohio Petroleum Company BP Exploration & Oil, Inc. BP Products North America, Inc.
Kelly B. Becker Liskow & Lewis COUNSEL FOR DEFENDANTS/APPELLANTS: Sohio Petroleum Company BP Exploration & Oil, Inc. BP Products North America, Inc.
Paul Matthew Jones Brian W. Capell Liskow & Lewis COUNSEL FOR DEFENDANTS/APPELLEES: AKSM, L.C. Oleum Operating Company, L.C.
Court composed of Elizabeth A. Pickett, John E. Conery, and Candyce G. Perret, Judges.
JOHN E. CONERY JUDGE.
Plaintiff Sweet Lake Land and Oil Company, LLC (Sweet Lake) pursued this legacy oilfield litigation against British Petroleum corporate entities (BP), among others, seeking remediation and damages associated with decades-long oilfield operations on its property. After a 2015 trial at which a jury determined BP to be solely responsible for environmental damage on the property, the trial court referred the matter to the Louisiana Department of Natural Resources (LDNR) for development of a most feasible remediation plan pursuant to La.R.S. 30:29 (sometimes referred to as Act 312). With no final remediation plan approved by 2020, and citing the lengthy delay after the initial referral for a remediation plan under La.R.S. 30:29, the trial court issued an interim award of fees and costs, and designated that judgment as a partial final judgment subject to immediate appeal. BP appeals, questioning the certification of the judgment as final, the referral to remediation under La.R.S. 30:29, and the award of attorney fees and costs. By Answer to Appeal, Sweet Lake seeks a new trial on the jury's rejection of its private causes of action against BP and seeks additional attorney fees for work performed on appeal. BP further moves to dismiss Sweet Lake's Answer.
Sweet Lake is the historical owner of Section 34 in Township 10 South, Range 6 West in Calcasieu Parish. Although the record indicates that the larger Sweet Lake property is multi-use, a succession of oilfield operators has performed exploration and production on the portion of the property at issue. Sweet Lake filed this oilfield legacy suit in 2010 seeking remediation of the subject property by its operators under two pertinent oil, gas, and mineral leases, and seeking additional damages in tort and contract.
Sweet Lake granted the first Oil, Gas and Mineral Lease in April 1947 (the 1947 Lease) to J.A. Bonham, a lease broker, who immediately sold and assigned his interest to Sohio Petroleum Company, a predecessor of BP. Sohio drilled a gas well on the property in 1948 and later added additional oil and gas wells which resulted in alleged contamination, including contamination by "produced water."[1] Sohio initially used clay-lined pits for disposal of the produced water and in 1957, added the first of two saltwater injection wells to the property for that purpose.
In 1989, the Louisiana Department of Conservation amended Order 29-B pertaining to oilfield pit registration, closure, and remediation. Sohio began the process of closing and registering its clay pits.[2] During that time period, BP acquired Sohio (hereinafter collectively referred to as BP). BP assigned the 1947 Lease to Jerry Suire in 1989, who in turn conveyed his interest to Flash Gas & Oil Northeast, Inc. (Flash). Numerous smaller operators thereafter worked the property, including Janex Oil Company, Arbol Resources, Inc. (Arbol), J&J Onshore Production, Inc. (J&J), Panterra Energy Group, LLC (Panterra), Oleum Operating Company, L.C. (Oleum), and AKSM, L.C. By a 2003 Amendment resulting from litigation[3] between Sweet Lake and Oleum and J&J as defendants, the acreage subject to the 1947 Lease was reduced. The 2003 Amendment further imposed remediation obligations on Oleum.[4] Oleum continued as operator for five years, with the 1947 Lease terminating in 2008.
Sweet Lake entered into a second lease on March 1, 2008 (the 2008 Lease) with AKSM. The 2008 Lease permitted AKSM to continue operations on certain acreage, but required it to abandon the area of historic BP operations, designated as the "Existing Oil Facility," and to remove "any contaminated soil" from that area.[5]AKSM permitted Oleum, a related company, to act as the operator on the property.
Sweet Lake initiated this suit in March 2010, naming BP and the other operators as defendants. It claimed that its contamination concerns had not been addressed, despite the contractual and legal obligations in place. Sweet Lake identified the operative leases, described the sixty-plus years of production, and alleged that:
Defendants' operations on the Property contaminated the soil and groundwater with produced water, oil, drilling muds, technologically enhanced naturally occurring radioactive materials (sometimes referred to as "TENORM"), hydrocarbons, metals, and other wastes, toxic or hazardous substances and pollutants (sometimes collectively referred to as "substances"). Defendants also left scrap equipment, pipelines, concrete and other debris (sometimes collectively referred to as "scrap") on the Property.
Sweet Lake maintained that "[t]he substances released onto the Property by each defendant combined with the substances left by the other defendants to contaminate and damage the property." Sweet Lake alleged that "[e]ach defendant is obligated by the mineral leases, surface leases, other contracts and law to restore the Property and has breached that obligation." Sweet Lake asserted that Oleum breached its obligation under the 2003 Settlement Agreement to "restore promptly the surface of the property" and that AKSM breached its obligations under the 2008 Lease to abandon the existing oil facility, to remove all contaminated soil thereon, and to conduct a site assessment.
Along with its contractual claims, Sweet Lake alleged that the defendants "negligently, recklessly or intentionally stored and disposed of the substances in pits located on or adjacent to the Property[, ]" and that they knew or should have known that the practice would result in seepage and cause soil and water contamination. Sweet Lake also maintained that the defendants negligently or intentionally released substances on the property, purportedly resulting in contamination and migration of some or all the substances. Identifying "[s]ome or all of the substances" as bio-available and susceptible of uptake by humans, animals, and plants, Sweet Lake alleged that the defendants acted with wanton or reckless disregard of public safety by "intentionally, recklessly or negligently" storing, handling, transporting, or disposing of "hazardous or toxic substances" on the property.
Sweet Lake explained that it uses the property for cattle grazing, hunting, and farming and alleged that the defendants' conduct interferes with the use and enjoyment of the property and has diminished its value. Seeking damages, Sweet Lake claims:
As a result of defendants' breach of contract, tortious conduct and violations of law, including but not limited to statewide order 29-B, plaintiff has sustained damages in the amount of (a) the cost to evaluate and clean up the Property and to protect human health and environment, (b) diminution in the value of the Property including the stigma associated with property even after it has been cleaned up, (c) lost revenues, (d) exposure to potential liability to the government, neighbors, and others and (e) other losses and damages.
Sweet Lake further asked for penalties, punitive damages, attorney fees, and costs.
The suit reached trial in 2015. By that time, only BP, Oleum, and AKSM remained as substantive defendants.[6] Over a two-week period, the parties presented the jury with fact and expert testimony regarding BP's forty-year presence on the property, BP's use and closure of the clay pits in its operations, and Oleum/AKSM's assumption of obligations to restore the property formerly occupied by BP. Much of the testimony and expert evaluation focused on the level of required remediation. Figures offered by experts for Sweet Lake and BP varied greatly with Sweet Lake offering remediation contingency estimates of up to $32 million dollars and BP offering a remediation estimate of $1.4 million dollars.
The jury was presented with a verdict sheet inquiring whether "environmental damage exists on Sweet Lake's property" and, if so, which party was "responsible" therefor. That specific inquiry reflects the requirements for referral for the regulatory remediation process of La.R.S. 30:29, [7] as discussed further below. The verdict sheet additionally inquired as to the plaintiffs' private causes of action sounding in tort and contract.
In response to the questions regarding regulatory remediation under La.R.S. 30:29, the jury found "environmental damage" on Sweet Lake's property and designated "Sohio Petroleum Co./BP" as the sole operator "responsible" for that damage. The jury assessed the "cost to...
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