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SB469: Jindal's statement, LOGA'S letter and counsel's memo

Written by  // Friday, 06 June 2014 16:39 //

 logaThe debate over whether to sign into law or veto SB469 is now over as Louisiana Govrnor Bobby Jindal did so today.

Below is a press release from the Office of the Governor, a letter from the Louisiana Mid-Continent Oil & Gas Association's president Chris John sent to the governor yesterday in support of his signing SB 469 and a memo from Jindal's attorney in support of the veto

 Today, Governor Jindal signed SB 469 by Sen. Bret Allain, legislation that will help continue coastal restoration work and stop unnecessary, frivolous lawsuits. The bill is part of Governor Jindal’s 2014 Legislative Package.

The Governor signed SB 469 to clarify that only entities authorized under the Coastal Zone Management Act (CZMA) may bring litigation to assert claims arising out of permitted activities. These parties include parishes and the state. It further requires that dollars recovered through CZMA litigation must be spent on coastal restoration. This law ensures that the state’s coastal master plan and the collaborative work of the state and the parishes on coastal restoration are not threatened with lawsuits.

Governor Jindal said, “This bill will help stop frivolous lawsuits and create a more fair and predictable legal environment, and I am proud to sign it into law. It further improves Louisiana’s legal environment by reducing unnecessary claims that burden businesses so that we can bring even more jobs to our state. The bill will also send future recovered dollars from CZMA litigation to coastal projects, allowing us to ensure Louisiana coastal lands are preserved and that our communities are protected.”


Senator Bret Allain said, “As a senator, and life-long resident of a coastal parish, there is no one who is more concerned about protecting the state I love. The fact is the Louisiana Legislature sees the suit for what it is, a frivolous lawsuit that hurts jobs, and we have voiced our support for SB 469 to end this frivolous lawsuit. I am proud that the Governor is signing this legislation.”

Senator Robert Adley said, “This bill keeps a rogue agency from misrepresenting this State and trying to raise money through illegal actions. This lawsuit was never about repairing the coast; it was about enriching lawyers and certain individuals. I applaud the Governor for signing the bill and standing up for Louisiana and it's people.”

LOGA President Don Briggs said, “The signing of SB 469 is a huge victory for the oil and gas industry as well as the economy for the state of Louisiana. We commend Governor Jindal for his leadership and support of this bill as it made its way through the process. The governor understands the importance of keeping the hardworking men and women of our state employed with good paying jobs. While there is still much work to be done, this piece of legislation is a big step in the right direction.”

A letter from the Louisiana Mid-Continent Oil & Gas Association's president Chris John sent to the governor yesterday in support of his signing SB 469

June 5, 2014

The Honorable Bobby Jindal

Governor of Louisiana

P.O. Box 94004

Baton Rouge, LA 70804

Dear Governor Jindal:

I write on behalf of Louisiana Mid-Continent Oil and Gas Association (“LMOGA”) in response to the Memorandum dated June 3, 2014, which urges you to veto Senate Bill 469, passed by the Legislature on June 2, 2014.  LMOGA is a trade association that represents all sectors of the oil and gas industry operating in Louisiana and in the Gulf of Mexico.  As you know, the oil and gas industry is one of the leading industries in Louisiana in terms of economic impact, taxes paid, and people employed.  As an industry, we are committed to protecting our employees, contractors, facilities, and the environment.

                  Senate Bill 469 was made necessary because a single levee district—Southeast Louisiana Flood Protection Authority - East (“SLFPAE”)—filed a massive lawsuit seeking to hold the entire oil and gas industry liable for land loss on the Louisiana coast.  The suit usurps the authority of the Coastal Protection and Resource Authority (“CPRA”) to speak to these important issues on behalf of the State.  It is an attempt to use litigation to achieve policy objectives that fall far outside the scope of SLFPAE’s proper authority.

                  After extensive public debate and careful consideration, the Legislature enacted a targeted measure designed for the purpose of reining in this irresponsible suit.  Proponents of the suit argued strenuously against the Legislature taking any action.  But fulfilling the will of their constituents, the Legislature rejected those arguments and passed Senate Bill 469.  Now, in what can be seen only as an effort to breathe life into the moribund suit, the Memorandum’s signatories (most of whom are from outside Louisiana) are attempting to create a false controversy regarding the Bill’s effect.  Their strategy is to suggest that Senate Bill 469 could be construed to defeat the State’s claims in the unrelated Macondo oil spill litigation.  In this way, they seek to persuade you to take the extraordinary step of vetoing Senate Bill 469 so as to allow the SLFPAE’s suit to go forward.  Their ploy should not be allowed to succeed.

                  Senate Bill 469 is straightforward in its scope and application.  It adds a single provision to the section on “Enforcement,” La. R.S. 49:214.36, stating:  “Except as provided in this Subpart, no state or local governmental entity shall have, nor may pursue, any right or cause action arising from any activity subject to permitting . . . ”.  With this language, the Bill makes clear that if a proper governmental entity has a claim that arises out of activity subject to permitting under the State and Local Coastal Resources Management Act of 1978, then an enforcement action under that Act is the remedy.  The Bill’s purpose, as has been widely reported by the press, and as is confirmed by its legislative history, is to clarify that where the SLFPAE complains of activities subject to permitting, its remedy is to seek enforcement of those permits through the proper channels designated by law, not to usurp the CPRA’s authority on coastal land use policy.   

                  The Memorandum nonetheless suggests that Senate Bill 469 could eliminate claims made under the Oil Pollution Act of 1990 (“OPA”) in the Macondo oil spill litigation.  But even the Memorandum’s signatories do not really believe this.  Instead, they speak only in terms of Senate Bill 469 creating a potential “risk” that certain claims in the Macondo litigation could be defeated.  (Mem., p. 2.) 

                  If the Memorandum’s signatories really believed their arguments, they would have expressed their concerns to the Legislature in a timely fashion and before it passed Senate Bill 469.  There was ample opportunity for them to do so; as is apparent from the face of their Memorandum, they have been working on it for some time.  If the signatories really believed their arguments but did not share them with the Legislature, the only possible conclusion is that they chose to sacrifice the State’s “multi-billion dollar claims.”  (Mem., p. 2).  We do not believe they are that cynical. Rather, it is apparent that they have contrived their arguments and, for political purposes, chosen to hold them until after the Bill’s enactment. 

                  Apart from the gamesmanship in this approach, the bigger problem with the Memorandum is that it is demonstrably flawed.  Senate Bill 469 does not defeat the OPA claims advanced in the Macondo litigation.  That is true for many reasons, several of which the signatories have themselves acknowledged.

1.    The legislative history of Senate Bill 469 makes clear that it does not impair OPA claims.

                  The debate over the passage of Senate Bill 469 establish that the bill only clarifies Louisiana’s existing law, namely that Louisiana’s coastal policy-making authority does not belong to a local levee authority.  See, e.g., House Hearing, May 29, 2014, available at: http://senate.la.gov/sessioninfo/ Archives/2014/rs.htm, at 6:30:28 – 6:32:49.  As a clarification of existing law, Senate Bill 469 does not alter what the State can recover under the OPA.  For the signatories concern to be legitimate, there would already have to be a concern that Louisiana’s existing law prevents claims under the OPA.  No one, including the signatories, has ever stated such a concern—until now when there is a political motive for them to do so.  In any event, the Legislature has made clear that Senate Bill 469 is not and never was designed to impact claims in the Macondo litigation.  The Bill’s author, Senator Allain, could not have stated it more plainly: “It’s not our intent with this legislation to affect any claims by the Parishes or the State against BP or anybody else.”  See, Senate Hearing, May 30, 2014, available at: http://senate.la.gov/sessioninfo/ Archives/2014/rs.htm, at 1:30:45.  (emphasis added).

2.    The text of Senate Bill 469 makes clear that it does not impair the State’s OPA claims. 

                 

Senate Bill 469 states that it applies only to certain specified causes of action, including claims “arising from or related to any use as defined by R.S. 49:214.23(13)”—that is, from “any use or activity within the coastal zone which has a direct and significant impact on coastal waters.”  R.S. 49:214.23(13).  The Memorandum concedes, as it must, that “the Macondo spill occurred in deep water fifty miles off Louisiana’s shore . . .”  (Mem., p. 5).   Thus, Senate Bill 469 does not reach the Macondo spill.  Faced with this, the Memorandum can muster only that there is “at least an argument” that the “BP Macondo oil spill could be interpreted to trigger SB 469’s ‘use’ language” because the spill reached the Louisiana coast.  (Mem., pp. 5, 7).  This is a contrived argument for which the signatories offer no real support.

                  Furthermore, Senate Bill 469 recognizes that public bodies may pursue damages under the OPA.  It simply provides that any awards received by public bodies for damages to the coastal zone must be used for coastal protection purposes. It applies to damages received by state and local entities for violations of federal or state coastal use permits and from enforcement of those permits.  It also applies to claims “for damages or other relief arising from or related to any use as defined by R.S. 49:214.23(13).”  This section in turn defines “use” as “any use or activity within the coastal zone which has a direct and significant impact on coastal waters.”  Damage claims under the OPA arise from activities that directly impact coastal waters.  Therefore, on its face, Senate Bill 469 does not bar OPA claims. 

                  Finally, to the extent that Section 1 of the Bill restricts claims by public bodies, it does so subject to the caveat that its restrictions apply “except as provided in this Subpart.”  This critical phrase, “except as provided in this Subpart,” is overlooked by the authors of the Memorandum for obvious reasons:  the phrase negates any suggestion that Senate Bill 469 impairs the State’s rights to seek recovery under the OPA or other available theories of recovery.  In simple terms, the phrase “except as provided in this Subpart,” means that to the extent the State has the right to sue under existing law, the Bill preserves the State’s right to do so.  Under La. R.S. 49:214.36(D), which is unaffected by Senate Bill 469, the State may bring any actions “as are necessary to ensure that no uses are made of the coastal zone for which a coastal use permit has not been issued….”   This includes causes of action under OPA. 

3.  If Senate Bill 469 impaired OPA claims, and it doesn’t, it would be preempted by federal law.

Even assuming Senate Bill 469 could be construed as the Memorandum proposes, it offers no plausible argument that the Bill could prevent claims under the OPA from being litigated against BP in the Macondo litigation.  BP has consistently argued that the OPA governs claims arising out of the Macondo spill regardless of whether the spill reached Louisiana’s coast and clean-up activity occurred on the coast.  For example, BP recently told the United States Court of Appeals for the Fifth Circuit that “the state law causes of action pursued by the Parishes are preempted by federal law” and that state law causes of action are not covered by the OPA’s savings clause.  (Brief of BP-Defendants, In re Deepwater Horizon, No. 12-30012, doc. 00511958445 p. 44.)  In acknowledging the viability of the OPA claims even where there is an impact on the Louisiana coast, BP has relied on long-standing United States Supreme Court precedent.  See International Paper Co. v. Ouellette, 479 U.S. 481 (1987).  Tellingly, the Memorandum does not even mention that precedent or attempt to distinguish it.

In addition to raising unsubstantiated concerns about the Macondo spill litigation, the Memorandum also argues that state and local governments face “significant litigation risk” should you sign Senate Bill 469 into law, sketching out in cursory fashion other potential arguments and counter-arguments concerning whether the Bill is preempted by federal law.  With only superficial analysis, the Memorandum describes cases addressing “commandeering” under the Tenth Amendment, discusses the purported differences between “rights of action” and “causes of action,” and raises technical questions about the authority of states to restrict their political subdivisions.  (Mem., pp. 6-7).  The Memorandum even tries to connect Senate Bill 469 to the Governor’s decision to reject the expansion of the state’s Medicaid program under the Affordable Care Act.  (Mem., p. 6 n.7).

None of this can be taken seriously.  All of these hypothetical arguments stem from the unsupported suggestion that instead of preventing the SLFPAE from pursuing its irresponsible lawsuit, Senate Bill 469 is designed to interfere with causes of action under the OPA.  Indeed, the Memorandum conspicuously fails to offer any opinion on, or even meaningful analysis of, the merits of the hypothetical arguments and counter-arguments it cobbles together.  It merely states that “open questions” may remain.  (Mem., p. 7).  Such contrived concerns, offered for political purposes, are not reason to take the extraordinary step of vetoing a bill.

In the end, the Memorandum is nothing more than a belated attempt to usurp the legislative process.  After losing in the Legislature, the signatories waited until the eleventh-hour to unleash a Memorandum that can only be fairly characterized as a political maneuver designed to scuttle the Legislature’s hard work.  Contrary to the Memorandum’s assertions, however, its contrived arguments serve only to confirm that Senate Bill 469 has nothing to do with the OPA.  The fact is that the Bill remains what it purports to be—the Legislature’s appropriate antidote to the SLFPAE’s irresponsible abuse of authority. 

We respectfully urge you to sign Senate Bill 469.

 

Legal Memo on Senate Bill 469

BATON ROUGE - The following is a legal memorandum from Thomas Enright, Executive Counsel to Governor Jindal, on the subject of Senate Bill 469.

June 6, 2014

MEMORANDUM FOR FILE

This memorandum addresses the so-called “litigation risk” posed by the Legislature’s passage of SB 469 to state and local government claims available under the federal Oil Pollution Act of 1990 (OPA), if the bill is signed into law. The assertions, first appearing in media outlets subsequent to its passage, are that SB 469 poses an unacceptable risk to the claims brought by the state and local governments in the ongoing British Petroleum (BP) litigation resulting from the tragic explosion approximately fifty miles off Louisiana’s shores on April 20, 2010.  That explosion developed into the first-ever declared Spill of National Significance (SONS) under the OPA, as BP was unable for weeks to obtain source control over its well, and millions of gallons of oil drifted primarily onto Louisiana’s shores, causing immense ecological damage.  This ecological damage, combined with the subsequent federally-declared moratorium on drilling in the Gulf of Mexico, resulted in massive economic damages to the state and local government, as well as people of Louisiana. 

For the reasons provided herein, we disagree with the assertion that SB 469 overrides the clear language of the federal Oil Pollution Act.    

It is both black-letter law and conventional wisdom that the Supremacy Clause of the U.S. Constitution mandates that federal law preempts state law when in conflict.  U.S. Const. Art. VI, cl. 2.  The OPA, in its very first substantive section, begins with the unmistakably clear language:

“Notwithstanding any other provision or rule of law and subject to the provisions of this Act, each responsible party…is liable for the removal costs and damages specified [in the Act] that result [from a discharge of oil] into or upon the navigable waters or adjoining shorelines…” 33 USC 2702(a).

The OPA, in 33 U.S.C § 2701, defines both “claimant” and “person” to clearly include state and local governments. Subsection (4) defines “claimant” as “any person or government who presents a claim for compensation under this subchapter;” while Subsection (27) defines “person” as “an individual, corporation, partnership, association, State, municipality, commission, or political subdivision of a State, or any interstate body.” While “claimant” and “person” overlap in some respects, both are clearly eligible for the damages and compensation that the OPA requires a responsible party to pay.

It is important to note that at least one body of federal law – the U.S. Bankruptcy Code – does allow state law to determine the right of the state’s own municipalities to access the federal law, by declaring bankruptcy. The elements for when a municipality is eligible to file for bankruptcy are laid out in 11 U.S.C. §109(c):

(1) the entity must be municipality
(2) the municipality must be “specifically authorized, in its capacity as a municipality or by name,” to be a debtor under [Chapter 9] by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtorunder [Chapter 9].” (Emphasis added.)

***

In reliance upon this federal authority, R.S. 13:4741 explicitly denies authority to declare bankruptcy to “any parish, municipality, political subdivision, public board or public corporation, taxing district, or other agency of the state . . . without the written approval of the [State Bond Commission].” 

Thus, where Congress enacts law that either clearly preempts conflicting state laws or clearly allows a state to determine eligibility for its political subdivisions to avail themselves of the federal law, it does so in unmistakable language. The Oil Pollution Act and the Bankruptcy Code are excellent examples of both.

Additional points:

SB 469 does not impact the OPA claims raised in the BP litigation. 
• SB 469 relates to claims arising from a “use” occurring within the coastal zone. 
• The Coastal Zone Management Act (CZMA) provides that “use” “shall mean any use or activity within the coastal zone which has a direct and significant impact on coastal waters.” (R.S. 49:214.23(13)).
• All BP claims arise out of the event that occurred approximately fifty miles off Louisiana’s shores, and clearly outside the coastal zone.  For this reason, BP claims plainly are not impacted by the bill.
• Even if a similar event occurred within the Coastal Zone, the OPA would preempt SB 469 from precluding the state or local governments from making claims for damage.
• Relying on the preemptive language contained in the OPA, BP has already obtained the dismissal of claims by local governmental agencies seeking to recover under a state law that expressly authorizes damages for injuries to wildlife.  It would represent a complete reversal by BP, and one to its own detriment, to argue now that a state statute implicitly prohibits OPA claims. See In re DEEPWATER HORIZON, 745 F.3d 157 (5th Cir. 2014).

SB 469 preserves parish claims.
• Current law (La. R.S. 49:214.36(D)) grants broad authority to the Secretary of DNR, the AG, an appropriate district attorney or a parish with a local program to bring “injunctive, declaratory, or other actions as are necessary to ensure that no uses are made of the coastal zone for which a coastal use permit has not been issued when required or which are not in accordance with the terms and conditions of a coastal use permit.” (emphasis added)
• The statute authorizes any claims relating to activities requiring a permit in the coastal zone, not just permit enforcement proceedings.  It covers both uses “for which a coastal use permit has not been issued when required” or uses “which are not in accordance with the terms and conditions of a coastal use permit”.

SB 469 preserves the court’s ability to impose penalties as it sees fit.
• This same statute (La. R.S. 49:214.36(E)) grants the court broad authority to
“impose civil liability and assess damages; order, where feasible and practical, the payment of the restoration costs; require, where feasible and practical, actual restoration of areas disturbed; or otherwise impose reasonable and proper sanctions for uses conducted within the coastal zone without a coastal use permit where a coastal use permit is required or which are not in accordance with the terms and conditions of a coastal use permit.”
• Not only do statutory claimants have the express authority to bring “injunctive, declaratory, or other actions as are necessary”, BUT the court also has the authority to “impose civil liability and assess damages”, “order…the payment of restoration costs”, “require the actual restoration of areas disturbed,” as well as “otherwise impose reasonable and proper sanctions”.

SB 469 does not affect any existing or future contracts.
• The bill specifically preserves contractual rights. In paragraph (4) on page 2, SB 469 states: “(4) Nothing in this Section shall prevent or preclude any person or any state or local governmental entity from enforcing contractual rights or from pursuing any administrative remedy otherwise authorized by law arising from or related to a state or federal permit issued in the coastal area pursuant to R.S. 49:214.21 et seq., 33 U.S.C. 1344 or 33 U.S.C. 408.”

SB 469 does not have any impact on the authority of any state agency.
• Current law (La. R.S. 49:214.31) expressly preserves the constitutional authority of all state agencies and specifically preserves existing statutory authority unless otherwise repealed.
• This means that all state agencies, including for example CPRA, DEQ and DNR, can continue to issue and enforce permits, regulate air and water quality, and perform all the functions provided in the Constitution or other provisions of law.
• In addition, the bill specifically preserves “any administrative remedy otherwise authorized by law” for any state or local governmental entity, which would include the regulatory enforcement of state agencies.

 

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