HLS 12RS-962 ORIGINAL
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are additions.
Regular Session, 2012
HOUSE BILL NO. 388
BY REPRESENTATIVE JOHNSON
CIVIL/INDEMNIFICATION: Prohibits indemnification for environmental damage to an
oilfield site
AN ACT1
To enact R.S. 9:2779.1, relative to certain indemnity agreements; to provide for legislative2
findings; to provide for definitions; to provide relative to the validity of certain3
indemnity agreements; to provide for exceptions; to provide for liability; to provide4
for penalties; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 9:2779.1 is hereby enacted to read as follows: 7
ยง2779.1. Certain indemnity agreements relative to environmental damage invalid8
A. The legislature hereby finds and declares that Article IX, Section 1 of the9
Constitution of Louisiana mandates that the natural resources and the environment10
of the state, including surface and ground water, are to be protected, conserved,11
repaired, and replenished insofar as possible and consistent with the health, safety,12
and welfare of the people, and further mandates that the legislature enact laws to13
implement this policy. The enactment of laws that require persons who cause14
environmental damage to remediate such damage are in furtherance of the public15
policy expressed in Article IX, Section 1 of the Constitution of Louisiana. The16
legislature further finds that the purpose of such laws are undermined as a result of17
certain hold harmless and indemnity agreements, and that such agreements interfere18
with and hinder the necessary remediation of environmental damage, all of which is19
contrary to the best interest of the public, and the purpose of Article IX, Section 1 of20
the Constitution of Louisiana. It is the intent of the legislature by this Section to21 HLS 12RS-962 ORIGINAL
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declare null and void and against public policy of the state of Louisiana any1
provision in any agreement which requires defense or indemnification for2
environmental damage subject to the provisions of R.S. 30:29, where there is3
negligence or fault on the part of the indemnitee, or an agent or employee of the4
indemnitee, or an independent contractor who is directly responsible to the5
indemnitee.6
B. Any provision contained in, collateral to, or affecting an agreement7
pertaining to an "oilfield site" or an "exploration and production (E & P) site" as8
defined in R.S. 30:29(I)(4) is void and unenforceable to the extent that it purports to9
or does provide for defense or indemnity, or either, to the indemnitee against loss or10
liability for damages arising out of or resulting from environmental damage caused11
by or resulting from the sole or concurrent negligence or fault of the indemnitee, or12
an agent, employee, or an independent contractor who is directly responsible to the13
indemnitee.14
C. The term "agreement", as it pertains to an "oilfield site" or an "exploration15
and production (E & P) site" as defined in R.S. 30:29(I)(4), means any agreement or16
understanding, written or oral, pertaining to the assignment, sublease or transfer of17
rights to explore for or produce minerals on lands subject to the provisions of R.S.18
30:29, and includes but is not limited to the assignment, sale, or transfer of any rights19
contained in a mineral lease, mineral sublease, surface lease or sublease, mineral20
servitude, or royalty interest in or on lands defined in R.S. 30:29(I)(4).21
D.(1) The provisions of this Section do not affect the validity of any22
insurance contract, except as otherwise provided in this Section, and do not deprive23
an owner, co-owner, or usufructuary of a surface estate of the right to secure an24
indemnity from any lessee, operator, contractor, or other person conducting25
operations for the exploration or production of minerals on the owner's land.26
(2) Any language in this Section to the contrary notwithstanding, nothing in27
this Section shall affect the validity of an operating agreement or farmout agreement,28
as defined in this Paragraph, to the extent that the operating agreement or farmout29 HLS 12RS-962 ORIGINAL
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agreement purports to provide for defense or indemnity. This exception shall not1
extend to any party who physically performs any activities pursuant to any2
agreement as defined in Subsection C of this Section. For purposes of this3
Subsection, operating agreement and farmout agreement shall be defined as follows:4
(a) "Farmout agreement" means any agreement in which the holder of the5
operating rights to explore for and produce minerals, the "assignor", agrees that it6
will, upon completion of the conditions of the agreement, assign to another, the7
"assignee", all or a portion of a mineral lease or of the operating rights.8
(b) "Operating agreement" means any agreement entered into by or among9
the owners of mineral rights for the joint exploration, development, operation, or10
production of minerals.11
E. Any provision in any agreement defined in Subsection C of this Section12
which requires waivers of subrogation, additional named insured endorsements, or13
any other form of insurance protection which would circumvent the prohibitions of14
this Section, shall be null and void and of no force and effect.15
F. The provisions of this Section do not deprive a person who has transferred16
land, with a reservation of mineral rights, of the right to secure a defense or17
indemnity agreement from any lessee, operator, contractor, or other person18
conducting operations for the exploration or production of minerals in connection19
with the reserved mineral rights; provided such person does not retain a working20
interest or an overriding royalty interest convertible to a working interest in any21
production obtained through activities conducted on an "oilfield site" or an22
"exploration and production (E & P) site" as defined in R.S. 30:29(I)(4).23
G. Whoever intentionally violates the provisions of this Section shall be24
liable to any person who suffers damage arising from such violation. Any person25
aggrieved of an intentional violation of this Section shall be entitled to treble26
damages.27
Section 2. The provisions of this Act shall apply both prospectively and28
retroactively.29 HLS 12RS-962 ORIGINAL
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Johnson HB No. 388
Abstract: Provides that certain indemnity and defense agreements relative to environmental
damages arising from oilfield operations are void and unenforceable.
Proposed law provides for legislative findings, relative to protection and conservation of
natural resources, and provides for the public policy in favor of the enactment of laws that
require persons who cause environmental damage to remediate such damage.
Proposed law provides for further legislative findings that certain hold harmless and
indemnity agreements hinder the necessary remediation of environmental damage.
Proposed law provides that any provision in an agreement pertaining to an "oilfield site" or
an "exploration and production (E & P) site" is void and unenforceable to the extent that it
purports to or does provide for defense or indemnity, or either, to the indemnitee against loss
or liability for damages arising out of environmental damage resulting from the sole or
concurrent negligence or fault of the indemnitee, or an agent, employee, or an independent
contractor who is directly responsible to the indemnitee.
Proposed law defines "agreement", "operating agreement", and "farmout agreement".
Provides that the provisions of proposed law do not affect the validity of any insurance
contract and do not deprive an owner of the right to secure an indemnity from any lessee,
operator, contractor, or other person conducting operations for the exploration or production
of minerals on the owner's land.
Provides that proposed law shall not affect the validity of an operating agreement or farmout
agreement to the extent that such an agreement purports to provide for defense or indemnity,
but that this exception shall not extend to any party who physically performs any activities.
Proposed law provides that any provision in any agreement which requires waivers of
subrogation, additional named insured endorsements, or any other form of insurance
protection which would circumvent the prohibitions of proposed law shall be null and void
and of no force and effect.
Provides that the provisions of proposed law do not deprive a person who has transferred
land, with a reservation of mineral rights, of the right to secure a defense or indemnity
agreement from any lessee, operator, contractor, or other person conducting operations for
the exploration or production of minerals, unless such person does retain a working interest
or an overriding royalty interest convertible to a working interest in any production obtained
through activities conducted on an oilfield site or an exploration and production (E & P) site.
Provides that whoever intentionally violates the provisions of proposed law shall be liable
to any person who suffers damage arising from such violation and that any person aggrieved
of an intentional violation shall be entitled to treble damages.
Proposed law provides for prospective and retroactive application.
(Adds R.S. 9:2779.1)