Energy Law

Louisiana Supreme Court Holds That Act 312 is Constitutional

On July 1, 2008, the Louisiana Supreme Court held that Act 312 of 2006 (“Act 312”) is constitutional and reversed the district court’s judgment declaring Act 312 unconstitutional and unenforceable under La. Const. art. V, § 16, La. Const. art. I, § 4 and the Fifth Amendment of the United States Constitution.  M.J. Farms, Ltd. v. Exxon Mobil Corp., 2007-2371 (La. 7/1/08); ____ So. 2d ____.

            In M.J. Farms, the Louisiana Supreme Court resolved several issues regarding the constitutionality and application of Act 312. First, the Court held that the provisions of Act 312 are “called into play when any litigation or pleading making a judicial demand arising from or alleging environmental damage is filed” and the litigation involves “contamination resulting from activities associated with oilfield sites and exploration and production sites.”  Second, the Court concluded that Act 312 applies retroactively and prospectively, except for a limited number of cases in which an order had been issued or signed setting the case for trial as of March 27, 2006.

            The Court also addressed whether retroactive application of Act 312 would unconstitutionally divest the plaintiff of a vested right in its cause of actions in violation of the substantive due process guaranties established by the Louisiana and United States Constitutions. The Court held that Act 312 does not divest the plaintiff of any cause of actions but, instead, Act 312 established a procedure for judicial resolution of claims for environmental damage.  The Court also concluded that Act 312 represents a “reasonable restriction” of private rights under La. Const. Art. I § 4.

            Additionally, the Court found that Act 312 does not divest the district court of original jurisdiction because 1) the claim for environmental damages is filed in the district court; 2) the claim is not deferred to the Louisiana Department of Natural Resources until the district court determines environmental damage exists and determines the legally responsible party or parties; and 3) the district court determines which remediation plan to adopt.  Finally, the Court held that Act 312 does not deny the plaintiff access to the district court because the district court remains an active participant in the entire restoration process.

            One issue the Court did not resolve was whether two trials were appropriate under Act 312. However, the Court did make it clear that it was aware of the two trial issue. Specifically, the Court noted that the denial of supervisory writs in Duplantier v. B.P. Amoco had “no precedential value.” See Duplantier, 07-293 (La. App. 4 Cir. 5/16/07); 955 So. 2d 763 (the Fourth Circuit held that the two trial procedure is contrary to Act 312 and applicable articles of the Code of Civil Procedure because it would result in bifurcation of the trial without consent of all parties and cause piecemeal litigation), writs denied, 07-1241, 07-1265, 07-1271 (La. 9/28/07), 964 So. 2d 367, 368.

            To read the Louisiana Supreme Court’s opinion in M.J. Farms click here.

Full post as published by The Energy Law Blog on July 03, 2008 (boomark / email).