The Use of Historical Evidence in Light of LL & E and Act 400

By Loulan J. Pitre, Jr.

Kelly Hart & Pitre

LOGA Oil & Gas Seminar

September 16, 2014

Corbello

“[W]e decline to set forth a rule of law ... that in cases ofbreach of a contractual obligation of restoration in alease, the damage award to [the surface owning]plaintiffs must be tethered to the market value of theproperty. To do so would give license to oil companies toperform their operations in any manner withindifference to the aftermath of its operations becauseof the assurance that it would not be responsible for thefull cost of restoration.”

Corbello, Continued

• Large damage award based on theoretical cost of groundwater remediation, more in the nature of a pubic harm

• Landowner not required to remediate property under law at that time

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

C o r b e l l o ' s U n t e t h e r i n g

$108,000

$33,000,000

Property Value

Damage Award

After Corbello

• Reactive legislation passed in 4 of 12 years

• Several hundred lawsuits claim environmental damage arising from oil and gas exploration and production operations

• Courts attempt to interpret and apply complex law in the face of repeated legislative changes

The Traditional View

• Rohner v. Austral Oil Exploration Co. (1958):

– Corn and watermelon crops (express provision)

– Land’s Loss of Productivity (no express provision)

– “Poor Man’s Cut” in fence (no express provision)

Castex (2005)“Although the temptation may be to thrust a great part of the solution to the problem of coastal restoration upon the oil and gas companies and other private parties, . . . we decline to do so out of respect for the terms of the mineral lease to which these parties agreed. Thus, we reverse the courts below and find that, where the mineral lease expressly grants the lessee the right to alter the surface in the manner it did, and is silent regarding restoration, article 122 only imposes a duty to restore the surface to its original condition where there is evidence of unreasonable or excessive use.”

Act 312

• Defendants required to remediate to current regulatory standards if contamination admitted or proven

• Plaintiffs still attempt to articulate theories for money they can keep

Marin (2010)

• Decided after full trial on the merits

• Court determined operations were negligent

• Court determined that 29-B remediation satisfied lease requirements

• 1994 v. 1941

LL & E

• Operator admitted environmental damage under Act 312

• Operator obtained a partial summary judgment that no “excess” damage award was possible as a matter of law

• Supreme Court and Court of Appeal reverse the summary judgment, suggesting that reasonableness of operations requires a factual inquiry

Reasonable When?

• Example: Marin

– 1994 lease vs. 1941 lease

– Parties’ contemplation

– “environmental unsoundness”

• La. R.S. 30:29(M):“. . . rules, regulations, lease terms and implied lease obligations arising by operation of law, or standards applicable at the time of the activity complained of.”

Historical Evidence: Witnesses

Scientific Data from 20 years ago-EPA Legal Document

Historical Evidence: Ancient Documents

Expert Historians

• “The reason science historians are in demand is that science does not invariably progress in a strictly linear or cumulative fashion. Scientific knowledge is accepted (or ignored) in different ways at different times and places, making it important to establish what was known concretely by specific individuals at a given place and time.” -- Dr. Robert N. Proctor, Stanford University

Daubert Factors

(i) whether the theory or technique can and has been tested; (ii) whether the theory or technique has been subjected to peer review and publication; (iii) the theory or technique's “known or potential rate of error”; (iv) whether there are standards that control the theory or technique's operation; and (v) the degree to which the theory or technique has been accepted in the relevant scientific community (“general acceptance” test).

Kumho Tire

“A trial judge determining the admissibility of an engineering expert's testimony may consider one or more of the specific Daubert factors. . . . The Daubert factors do not constitute a definitive checklist or test . . . and the gatekeeping inquiry must be tied to the particular facts. Those factors may or may not be pertinent in assessing reliability, depending on the nature of the issue, the expert's particular expertise, and the subject of his testimony.”

Examples

• EEOC v. Sears, Roebuck & Co.: gender discrimination

• Cayuga Indian Nation of New York v. Pataki: land rights

• Irving v. Penguin Books: libel & the Holocaust

• B. Waterhouse v. R.J. Reynolds Tobacco Co.: public awareness of the dangers of smoking

Possible Questions with Respect to Historical Reasonableness

• Were others in the industry using a practice at that time?

• Were alternatives to the practice well-known and cost-effective at that time?

• What was the generally accepted scientific knowledge at that time?

• What were the common expectations of lessees and lessors at that time?

• Was there an express or implied consensus at that time of lessors, lessees, and policymakers to accept certain practices in exchange for the economic benefits of oil and gas production?