The Louisiana Legislature’s 2023 Regular Session begins on April 10th, and last Friday, Louisiana Senator Allain of District 21 filed SB 154 proposing to enact a statutory framework directly governing the rights and obligations of parties to renewable energy leases.

The bill defines a “renewable energy lease” as a lease entered into for the purpose of producing “wind, solar, hydroelectric, or geothermal energy.” This definition further includes any lease pursuant to which the primary activity of the lessee is the production of wind, solar, hydroelectric, or geothermal energy.

Although the bill expressly provides that “[a] renewable energy lease is not a mineral lease,” the proposed legislation contains a number of provisions that are either identical or substantially similar to the Louisiana Mineral Code articles governing mineral leases. Such parallels include:

• Parties to a renewable energy lease would have a correlative obligation to “exercise their rights with reasonable regard for those of the other.” (compare to La. Min. Code art. 11);
• The lessee of a renewable energy lease would not be under any fiduciary obligation to its lessor, but is bound to perform the contract in good faith (compare toLa. Min. Code art. 122);
• The lessee of a renewable energy lease would be “bound to . . . operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor.” (compare to La. Min. Code art. 122);
• The lessee of a renewable energy lease would have the right to assign or sublease the lease in whole or in part (compare toLa. Min. Code art. 127);
• An assignee or sublessee of a renewable energy lease would become directly responsible to the original lessor to the extent of the interest acquired (compare to La. Min. Code art. 128), and the lessor would have to accept performance by the assignee or sublessee (compare to La. Min. Code art. 131); and
• When the renewable energy lessee makes an assignment or subleases the lease, the lessee lease is not relieved of his obligations under the renewable energy lease unless the lessor has discharged him expressly in writing (compare to La. Min. Code art. 129).

Read Full Article Here >>