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Regular Session, 2014
SENATE BILL NO. 325
BY SENATOR MURRAY
MINERALS. Provides relative to certain indemnification agreements concerning
environmental damage. (gov sig)
AN ACT1
To enact R.S. 30:29.2, relative to oilfield sites and exploration and production sites; to2
provide for the effect of certain indemnity agreements related to environmental3
damages; to provide certain exemptions; to provide for penalties; to provide terms,4
conditions, and requirements; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 30:29.2 is hereby enacted to read as follows:7
ยง29.2. Certain indemnification agreements invalid8
A. The legislature hereby finds and declares that Article IX, Section 1 of9
the Constitution of Louisiana mandates that the natural resources and the10
environment of the state, including surface and ground water, are to be11
protected, conserved, repaired and replenished insofar as possible and12
consistent with the health, safety, and welfare of the people, and further13
mandates that the legislature enact laws to implement this policy. The14
enactment of laws that require persons who cause environmental damage to15
remediate such damage are in furtherance of the public policy expressed in16
Article IX, Section 1 of the Constitution of Louisiana. The legislature further17 SB NO. 325
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finds that the purpose of such laws are undermined as a result of certain hold1
harmless and indemnity agreements, and that such agreements interfere with2
and hinder the necessary remediation of environmental damage, all of which is3
contrary to the best interest of the public, and the purpose of Article IX, Section4
1 of the Constitution of Louisiana. It is the intent of the legislature by this5
Section to declare void and against public policy of the state of Louisiana any6
provision in any agreement which requires defense and indemnification for7
environmental damage subject to the provisions of R.S. 30:29 where there is8
negligence or fault on the part of the indemnitee, or an agent or employee of the9
indemnitee, or an independent contractor who is directly responsible to the10
indemnitee.11
B. Any provision contained in, collateral to, or affecting an agreement12
pertaining to an oilfield site or an exploration and production (E&P) site as13
defined in R.S. 30:29 (I)(4) is void and unenforceable to the extent that it14
purports to or does provide for defense or indemnity, or either, to the15
indemnitee against loss or liability for damages arising out of or resulting from16
environmental damage caused by or resulting from the sole or concurrent17
negligence or fault of the indemnitee, or an agent, employee, or an independent18
contractor who is directly responsible to the indemnitee.19
C. The term "agreement", as it pertains to an oilfield site or an20
exploration and production (E&P) site, shall mean any agreement or21
understanding, written or oral, pertaining to the assignment, sublease, or22
transfer of rights to explore for or produce minerals on lands subject to the23
provisions of R.S. 30:29, and includes but is not limited to the assignment, sale,24
or transfer of any rights contained in a mineral lease, mineral sublease, surface25
lease or sublease, mineral servitude or royalty interest in or on an oilfield site26
or an exploration and production (E&P) site.27
D.(1) The provisions of this Section shall not affect the validity of any28
insurance contract, except as otherwise provided in this Section, and shall not29 SB NO. 325
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deprive an owner, co-owner, or usufructuary of a surface estate of the right to1
secure an indemnity from any lessee, operator, contractor, or other person2
conducting operations for the exploration or production of minerals on the3
owner's land.4
(2) Notwithstanding any provision in this Section to the contrary, nothing5
in this Section shall affect the validity of an operating agreement or farmout6
agreement, as defined herein, to the extent that the operating agreement or7
farmout agreement purports to provide for defense or indemnity. This8
exception shall not extend to any party who physically performs any activities9
pursuant to any agreement. For purposes of this Subsection, operating10
agreement and farmout agreement shall be defined as follows:11
(a) "Operating agreement" means any agreement entered into by or12
among the owners of mineral rights for the joint exploration, development,13
operation, or production of minerals.14
(b) "Farmout agreement" means any agreement in which the holder of15
the operating rights to explore for and produce minerals agrees that he will,16
upon completion of the conditions of the agreement, assign to another person17
all or a portion of a mineral lease or of the operating rights.18
E. Any provision in any agreement which requires waivers of19
subrogation, additional named insured endorsements, or any other form of20
insurance protection which would frustrate or circumvent the prohibitions of21
this Section, shall be void.22
F. The provisions of this Section shall not deprive a person who has23
transferred land, with a reservation of mineral rights, of the right to secure a24
defense or indemnity agreement from any lessee, operator, contractor, or other25
person conducting operations for the exploration or production of minerals in26
connection with the reserved mineral rights provided that such person does not27
retain a working interest or an overriding royalty interest convertible to a28
working interest in any production obtained through activities conducted on an29 SB NO. 325
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oilfield site or an exploration and production (E&P) site.1
G. The provisions of this Section shall not apply to loss or liability for2
damages, or any other expenses, arising out of or resulting from bodily injury3
or death to persons occurring on an oilfield site or an exploration and4
production (E&P) site.5
H. Whoever intentionally violates the provisions of this Section shall be6
liable to any person who suffers damage arising from such violation. Any person7
aggrieved of an intentional violation of this Section shall be entitled to treble8
damages. 9
Section 2. The provisions of this Act shall be given retroactive application but shall10
not apply to contracts or agreements related to claims under R.S. 30:29 that have been settled11
in principle within the meaning of R.S. 30:29(J). 12
Section 3. This Act shall become effective upon signature by the governor or, if not13
signed by the governor, upon expiration of the time for bills to become law without signature14
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If15
vetoed by the governor and subsequently approved by the legislature, this Act shall become16
effective on the day following such approval.17
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by McHenry Lee.
DIGEST
Murray (SB 325)
Proposed law provides legislative findings.
Proposed law voids any provision in an oilfield site or exploration and production site
agreement that provides defense or indemnity against a person who is responsible for
environmental damage caused by his negligence or fault.
Proposed law defines "agreement", "operating agreement", and "farmout agreement".
Proposed law provides no affect on any insurance contract and will not deprive an owner,
or co-owner, or usufructuary of a surface estate of the right to secure an indemnity from any
lessee, operator, contractor, or other person conducting operations for the exploration or
production of minerals.
Proposed law provides no affect on the validity of an operating agreement or farmout
agreement to the extent that such an agreement purports to provide for defense or indemnity.
Proposed law provides that any agreement which requires waivers of subrogation, additional SB NO. 325
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named insured endorsements, or any other form of insurance protection are void. Further
provides an exception for a party who physically performs certain activities.
Proposed law does 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 productions
of minerals in connection with the reserved mineral rights provided that such person does
not retain a working interest or an overriding royalty interest convertible to a working
interest in any production obtained through activities conduction on an oilfield site or an
exploration and production (E&P) site.
Proposed law does not apply to loss or liability for damages, or any other expenses, arising
out of or resulting from bodily injury or death to persons occurring on an oilfield site or an
exploration and production (E&P) site.
Proposed law provides that whoever intentionally violates proposed law will be liable to any
person who suffers damage arising from such violation and that any person aggrieved of an
intentional violation will be entitled to treble damages.
Proposed law provides that the provisions of proposed law will be given retroactive
application.
Proposed law provides that the provisions of proposed law will not apply to certain contracts
or agreements related to claims under R.S. 30:29 that have been settled in principle.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 30:29.2)