Louisiana Third Circuit Issues Decision on the Procedure for Settlements in Cases Governed by Act 312

Originally published by Kelly Brechtel Becker and Kathryn Zainey Gonski.

In a decision issued today, the Louisiana Third Circuit Court of Appeal issued the first appellate court opinion addressing the procedure for approval of settlements in cases governed by Act 312 (La. R.S. 30:29).  Britt v. Riceland Petroleum Corp., is a “legacy” lawsuit in which landowners sued Riceland Petroleum Company and BP America Production Company—the current and former operators on a certain tract of plaintiffs’ property.  Riceland and BP ultimately chose to settle all of the claims that Plaintiffs brought against them, and as part of the settlement they agreed to remediate the landowners’ property to the necessary state standards.  The settling parties then complied with the express mandates of Act 312 as they:  (1) provided notice of the settlement to the Department of Natural Resources (“LDNR”) and Attorney General (“AG”); (2) allowed the LDNR at least thirty days to review the settlement and provide any comments to the trial court; and, (3) sought and obtained the trial court’s approval of the settlement.

Certain insurers of Riceland, who were third-party defendants, appealed the trial court’s approval of the settlement, not challenging the terms of the settlement itself, but arguing that the trial court failed to make certain findings regarding the terms of the settlement that the Insurers claimed Act 312 required.  Specifically, the Insurers argued that before approving the settlement, the trial court was required to hold a contradictory hearing, and either:  (1) determine whether any additional remediation was required, and if so, order that funds be deposited into the court registry, or (2) make an express finding that no additional remediation would be necessary.  The Third Circuit disagreed, affirming the trial court’s decision to approve the settlement without the additional findings.  Recognizing that the settling parties complied with the only three mandatory requirements for approval of settlements (noted above), the Third Circuit held that the additional requirements that would be determined at a contradictory hearing only come into play when someone—the LDNR, the AG, or another interested party—objects to the terms of the settlement.  Having no objection to settlement in this case, the trial court correctly approved the settlement.

A copy of the Third Circuit’s Decision in Britt v. Riceland Petroleum Corp., can be found here.

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