Potato, Potahto, Tomato, Tomahto, Let’s Call the Whole Thing Off!! Act 544 and the SLFPA- East

Senate Bill 469, Act No. 544 of the Louisiana legislature was enacted as LA. R.S. 49:214.36(O) on June 6, 2014 during the 2014 regular legislative session as: 

AN ACT to enact R.S. 49:214.36(O), relative to the coastal zone management program; to provide relative to the initiation or continuation of enforcement actions under the coastal zone management program; to prohibit certain state or local governmental entities from initiating certain causes of action; to provide for the uses of certain monies received by any state or local governmental entity; to allow any person or state or local governmental entity to enforce certain rights or administrative remedies; to provide terms, conditions, and requirements; and to provide for related matters. (Act 544). (Emphasis added)

Act 544 amends Louisiana Revised Statute 49:214.36 which provides for the Enforcement; injunction; penalties and fines relative to Louisiana’s Coastal Zone Management Program and, specifically provides, in pertinent part: 

(1) Except as provided in this Subpart, no state or local governmental entity shall have, nor may pursue, any right or cause of action arising from any activity subject to permitting under R.S. 49:214.21 et seq., 33 U.S.C. 1344 or 33 U.S.C. 408 in the coastal area as defined by R.S. 49:214.2, or arising from or related to any use as defined by R.S. 49:214.23(13), regardless of the date such use or activity occurred. (Emphasis added)

State and Local Coastal Resources Management Act of 1978 authorized the development, at the parish level, of local coastal management programs (LCPs) through the Department of Natural Resources. Once an LCP has received federal and state approval, the parish becomes the permitting authority for coastal uses of local concern defined as those uses which directly and significantly affect coastal waters and are in need of coastal management but are not uses of state concern and which should be regulated primarily at the local level if the local government has an approved program (see La. Rev. Stat. Ann. § 49:214.25.A.2).In Orleans parish, activities occurring in wetlands and water bodies outside the protective levee system require a coastal use permit. These activities would include oil and gas exploration, drilling, production and its related activities. Additionally, R.S. 49:214.23(13) defines “use” to mean “any use or activity within the coastal zone which has a direct and significant impact on coastal waters” which would include oil and gas activities within the coastal waters.

It’s no secret that this legislation stems from a July 2013 lawsuit brought by the Southeast Louisiana Flood Protection Authority-East (SLFPA-East) against 97 oil, gas and pipeline companies for wetlands damages. And that Act 544 was passed, at least in part, to limit certain government entities from taking legal action against individuals or entities engaged in oil and gas activities in Louisiana’s coastal waters. But did Act 544 accomplish this goal?

Last month, Judge Janice Clark, a state judge in East Baton Rouge’s 19 Judicial District Court, issued a ruling that Act 544 does not apply to the SLFPA-East because the authority is not a state or local government agency. In the local newspaper, Judge Clark was quoted as stating that the authority was “neither fish nor fowl” and that she agreed with the SLFPA-East attorneys that the levee authority “is neither a state agency nor a local government agency under the definitions for both contained in state law and in the state Constitution” (See Judge Rules New State Law Doesn’t Stop Levee Authority from Suing Oil Companies, Mark Schleifstein, The Times-Picayune /, October 6, 2014).

Attorneys representing the levee authority argued that previous state law defines the authority as a “political subdivision”—which is different from a state agency or a local government, and thus Act 544 does not apply to the SLFPA-East. But defense attorneys argued that lawmakers clearly intended Act 544 to address the levee authorities because it specifically applies to state and local government entities including the SLFPA-East. (See Future of levee authority’s wetlands damage suit may not be decided until December, judge says, Mark Schleifstein, The Times-Picayune /, November 12, 2014).

Further, the SLPFA-East, like its many counterparts, was established pursuant to Article VI, Sections 38 and 38.1 of the Constitution of Louisiana as a Levee district. See LSA-R.S. 38:330.1 A.(1).

“Levee district” means a political subdivision of this state organized for the purpose and charged with the duty of constructing and maintaining levees, and all other things incidental thereto within its territorial limits See LSA-R.S. 38:281(6).
“Political subdivision” means a parish, municipality, and any other unit of local government, including a school board and a special district, authorized by law to perform governmental functions See La. Const. art. VI, § 44 (2).

So it would seem logical to conclude that since the SLFPA- East is a levee district, and a levee district is a political subdivision of the state, then it must be, by definition since its inception, a state or local government entity, right? Surely the legislators who authored Act 544 drafted the statute to be clear and unambiguous. In fact, how could the drafters have been any more precise to avoid confusion regarding the words “state or local governmental, short of naming the levee districts individually? Unfortunately, the analysis has not yet been so simple.

Both sides will get another shot when U.S. District Court Judge Nannette Jolivette Brown again considers whether Act 544 prohibits the SLFPA- East from continuing the lawsuit. Oral argument is scheduled for December 10; although a ruling is not expected until early 2015.

Some good news. The recent settlement and dismissal of White Oak Operating, LLC and Chroma Operating, Inc. represents the first time the authority has reached a financial agreement with certain oil, gas and pipeline companies originally named in the suit. And earlier this year, the SLFPA- East agreed to dismiss nine companies from the suit because they were either improperly included or were bankrupt. Finally, for the 86 remaining oil and gas companies defending the suit, Governor Jindal has publicly opposed the suit since its filing. To that end, he has replaced four SLFPA- East board members who supported the lawsuit.

Several firm attorneys represent a number of the defendants in this litigation, and we will, of course, continue to provide updates to the lawsuit as they develop.

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