Environmental Management Orders: Timing Is in the Eye of the Beholder

It’s a pretty safe bet that if you work in the Louisiana oil and gas industry, you will have some connection to a legacy lawsuit in some capacity at some point.  A legacy lawsuit is a suit for alleged property damage due to historic oil and gas exploration and production activities.

As recently as 2012, the Louisiana Legislature revisited Act 312 of La. R.S. 30:29 (often referred to as “Act 312”) to enact a number of revisions.  One such revision is the promulgation of La. Code of Civil Procedure art. 1552.  Article 1552 allows any party to the litigation, along with the Louisiana Department of Natural Resources (LDNR), to move the court to order the development of an environmental management order (EMO).  Before Article 1552, parties often voluntarily agreed to a testing protocol that included reasonable notice and access to the subject property.  These ranged from an informal, oral agreement to an order signed by the judge.

Article 1552 now makes an EMO available as a matter of right and mandates that certain issues be addressed.  Most notably, the EMO must include reasonable terms as to:

(1)  Access to the property;

(2)  Investigation and environmental testing;

(3)  Sampling and testing protocols; and

(4)  Specific time frames within which to conduct such testing and sampling.

To give the EMO “teeth,” Article 1552 states that all test results must be submitted to all parties, including the LDNR, within 30 days of receiving the results.  “Failure by a party to provide the results of testing to the other parties shall preclude that party from admitting those results into evidence in the civil action.”

When Article 1552 was enacted, I reasonably assumed that all parties would be eager to enter into a testing protocol at the very early stages of the litigation.  But it has been my experience that different parties—and not necessarily divided along oil and gas company/landowner lines—perceive an EMO to fulfill different purposes. 

My goal in drafting an EMO is transparency in the environmental sampling process.  I’m particularly concerned with notice of the sampling event and the opportunity to observe opposing parties’ testing.  Some counsel, on the other hand, view an EMO as the trigger to make a limited admission of liability.  Thus, they prefer that an EMO be entered after there has been a reasonable opportunity to conduct discovery.  These differing ideologies affect not only the timing of entering an EMO, but also the deadlines contained in an EMO.

Under Article 1552, an EMO must contain a reasonable timeframe to conduct sampling.  My preference is to rely upon a case management order for this timeframe, even if the case management order has not yet been entered.  That way testing deadlines keep the same pace as the litigation, without the need for extensions or other motions.  Those that use an EMO as a trigger tend to push for express deadlines so that there is no question when the delays for limited admissions begin to run.

The underlying goal of an EMO largely influences the negotiation process.  Fortunately, however, parties generally are able to present the court with an agreed upon EMO without requiring a judge’s intervention.  Even though an EMO is not a new tool in the legacy litigation toolbox, the recent legislation encourages parties to reduce their agreements to writing and provides the parties with the opportunity to assess their strategy for testing earlier in the litigation—whether they enter the EMO early or wait until more facts are made available.

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