§2780. Certain indemnification agreements invalid
A.The legislature finds that an inequity is foisted on certain contractors
and their employees by the defense or indemnity provisions, either or both,
contained in some agreements pertaining to wells for oil, gas, or water, or
drilling for minerals which occur in a solid, liquid, gaseous, or other state, to
the extent those provisions apply to death or bodily injury to persons. It is the
intent of the legislature by this Section to declare null and void and against
public policy of the state of Louisiana any provision in any agreement which
requires defense and/or indemnification, for death or bodily injury to persons,
where there is negligence or fault (strict liability) on the part of the indemnitee,
or an agent or employee of the indemn
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§2780. Certain indemnification agreements invalid
A. The legislature finds that an inequity is foisted on certain contractors
and their employees by the defense or indemnity provisions, either or both,
contained in some agreements pertaining to wells for oil, gas, or water, or
drilling for minerals which occur in a solid, liquid, gaseous, or other state, to
the extent those provisions apply to death or bodily injury to persons. It is the
intent of the legislature by this Section to declare null and void and against
public policy of the state of Louisiana any provision in any agreement which
requires defense and/or indemnification, for death or bodily injury to persons,
where there is negligence or fault (strict liability) on the part of the indemnitee,
or an agent or employee of the indemnitee, or an independent contractor who
is directly responsible to the indemnitee.
B. Any provision contained in, collateral to, or affecting an agreement
pertaining to a well for oil, gas, or water, or drilling for minerals which occur
in a solid, liquid, gaseous, or other state, 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 or resulting
from death or bodily injury to persons, which is caused by or results from the
sole or concurrent negligence or fault (strict liability) of the indemnitee, or an
agent, employee, or an independent contractor who is directly responsible to
the indemnitee.
C. The term "agreement," as it pertains to a well for oil, gas, or water,
or drilling for minerals which occur in a solid, liquid, gaseous, or other state,
as used in this Section, means any agreement or understanding, written or oral,
concerning any operations related to the exploration, development, production,
or transportation of oil, gas, or water, or drilling for minerals which occur in
a solid, liquid, gaseous, or other state, including but not limited to drilling,
deepening, reworking, repairing, improving, testing, treating, perforating,
acidizing, logging, conditioning, altering, plugging, or otherwise rendering
services in or in connection with any well drilled for the purpose of producing
or excavating, constructing, improving, or otherwise rendering services in
connection with any mine shaft, drift, or other structure intended for use in the
exploration for or production of any mineral, or an agreement to perform any
portion of any such work or services or any act collateral thereto, including the
furnishing or rental of equipment, incidental transportation, and other goods
and services furnished in connection with any such service or operation.
D.(1) The provisions of this Section do not affect the validity of any
insurance contract, except as otherwise provided in this Section, or any benefit
conferred by the workers' compensation laws of this state, and do not deprive
a full 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 on the owner's land.
(2) Any language in this Section to the contrary notwithstanding,
nothing in this Section shall affect the validity of an operating agreement or
farmout agreement, as defined herein, to the extent that the operating
agreement or farmout agreement purports to provide for defense or indemnity
as defined in Subsection B of this Section. This exception shall not extend to
any party who physically performs any activities pursuant to any agreement as
defined in Subsection C of this Section. For purposes of this Subsection,
operating agreement and farmout agreement shall be defined as follows:
(a) "Operating agreement" means any agreement entered into by or
among the owners of mineral rights for the joint exploration, development,
operation, or production of minerals.
(b) "Farmout agreement" means any agreement in which the holder of
the operating rights to explore for and produce minerals, the "assignor", agrees
that it will, upon completion of the conditions of the agreement, assign to
another, the "assignee", all or a portion of a mineral lease or of the operating
rights.
E. This Section shall have no application to public utilities, the forestry
industry, or the sulphur industry, so long as the work being performed is not
any of the operations, services, or activities listed in Subsection C above,
except to the extent those operations, services, or activities are utilized in the
sulphur industry.
F. The provisions of this Section do not apply to loss or liability for
damages, or any other expenses, arising out of or resulting from:
(1) Bodily injury or death to persons arising out of or resulting from
radioactivity; or
(2) Bodily injury or death to persons arising out of or resulting from the
retainment of oil spills and clean-up and removal of structural waste
subsequent to a wild well, failure of incidental piping or valves and separators
between the well head and the pipelines or failure of pipelines, so as to protect
the safety of the general public and the environment; or
(3) Bodily injury or death arising out of or resulting from performance
of services to control a wild well so as to protect the safety of the general
public or to prevent depletion of vital natural resources.
The term "wild well," as used in this Section, means any well from
which the escape of salt water, oil, or gas is unintended and cannot be
controlled by the equipment used in normal drilling practices.
G. Any provision in any agreement arising out of the operations,
services, or activities listed in Subsection C of this Section of the Louisiana
Revised Statutes of 1950 which requires waivers of subrogation, additional
named insured endorsements, or any other form of insurance protection which
would frustrate or circumvent the provisions of this Section, shall be null and
void and of no force and effect.
H. The provisions of this Act do not deprive a person who has
transferred land, with a reservation of mineral rights, of the right to secure an
indemnity from any lessee, operator, contractor, or other person conducting
operations for the exploration or production of minerals in connection with the
reserved mineral rights; provided such person does not retain a working
interest or an overriding royalty interest convertible to a working interest in
any production obtained through activities described in Subsection C of this
Section.
I. This Act shall apply to certain provisions contained in, collateral to
or affecting agreements in connection with the activities listed in Subsection
C which are designed to provide indemnity to the indemnitee for all work
performed between the indemnitor and the indemnitee in the future. This
specifically includes what is commonly referred to in the oil industry as master
or general service agreements or blanket contracts in whatever form and by
whatever name. The provisions of this Act shall not apply to a contract
providing indemnity to the indemnitee when such contract was executed before
the effective date of this Act and which contract governs a specific terminable
performance of a specific job or activity listed in Subsection C.