Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

 By Andrew Wooley:

The Supreme Court of Texas issued a decision on rehearing in Entergy Gulf States, Inc. v. Summers April 3, 2009. The court’s original unanimous decision in August 2007 that a Texas premises owner can be a statutory employer for workers’ compensation purposes produced a great deal of political heat and a flurry of amicus briefs; so much so that the court departed from its normal practice and entertained oral argument on the motion for rehearing.

On rehearing, three justices joined in the opinion of the court; three justices concurred in different parts of the court’s opinion (two of them writing separate concurring opinions), and three justices dissented from the court’s decision and opinion. The court’s holding, however, did not change. 

In this workers’ compensation case, we decide whether a premises owner that contracts for the performance of work on its premises, and provides workers’ compensation insurance to the contractor’s employees pursuant to that contract, is entitled to the benefit of the exclusive remedy defense generally afforded only to employers by the Texas Workers’ Compensation Act. . . . We hold that the exclusive remedy defense for qualifying general contractors is, likewise, available to premises owners who meet the Act’s definition of “general contractor,” and who also provide workers’ compensation insurance to lower-tier subcontractors’ employees. Because we conclude that Entergy Gulf States, Inc. meets the definition of “general contractor” under the Act, and . . . otherwise qualifies under the Act . . . it is entitled to the exclusive remedy defense against the negligence claims brought by . . . John Summers [a subcontractor’s employee]. We reverse the court of appeals’ judgment and render judgment for Entergy.

The opinion of the court and the concurring and dissenting opinions are available on the court’s web site at http://www.supreme.courts.state.tx.us/historical/040309.asp. They are also available on Westlaw at 2009 WL 884906.

A bill has been introduced in the Texas legislature to “fix” the court’s decision in Entergy, however, so premises owners are well advised to monitor the progress of Texas Senate Bill No. 2063 (http://www.legis.state.tx.us/tlodocs/81R/billtext/pdf/SB02063I.pdf) before deciding whether to revise their insurance programs and forms of agreement with maintenance, construction, and other contractors in light of the decision in Entergy.

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By Everard Marseglia:

Last Friday, the Supreme Court of Texas issued decisions in two companion cases, No. 05-1076; Exxon Corp., et al. v. Emerald Oil & Gas Co., et al. (“Miesch”), and No. 05-0729; Exxon Corp., et al. v. Emerald Oil & Gas Co. (“Emerald”). Butch Marseglia, counsel in Liskow & Lewis’s Houston office, submitted a brief for the Texas Oil & Gas Association (“TxOGA”) as amicus curiae.

 

In Emerald, the Court held that Section 85.321 of the Texas Natural Resources Code creates a private cause of action, but it does not extend to a subsequent lessee against a prior lessee for damages to the subsequent lessee’s interest. Because the plaintiff Emerald owned no interest in the mineral leases when the prior lessee allegedly damaged the interest, the plaintiff lacked standing to assert the cause of action the Court recognizes under section 85.321. The Court also held that Emerald also lacked standing to bring a claim against its prior lessee based on negligence per se.

 

In Miesch, the Court held that statutory and common law waste, negligence per se, negligent misrepresentation, and tortious interference claims against the former lessee were time-barred. The Court also held that no evidence supported the lessors’; claim for breach of development claims under the oil and gas lease. Finally, the court affirmed the court of appeals’ judgment, for different reasons, reversing the trial court’s directed verdict with respect to fraud claims based on allegedly misrepresentation in Railroad Commission plugging reports filed by the former lessee, and remanded that claim to the trial court for further proceedings.

Click here for a link to the Miesch decision.

Click here for a link to the Emerald decision.

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By Jessica Gladney

In Broussard v. Hilcorp Energy Corp., 08-233, 2008 WL 5158887 (La. App. 3 Cir. 12/10/08) the plainiffs owned five separate and incongruous tracts of land located in three sections in Vermilion Parish, Louisiana. Mineral, surface, and subsurface leases on the various properties have been granted to seven separate entities for oil and gas operations on the property. Kern Broussard first filed suit in the Civil District Court of Orleans Parish against the various entities and their successors in interest for alleged damage and concealment of damage to the property as a result of oil and gas operations. The case was then transferred to Vermillion Parish, Louisiana pursuant to exceptions filed by the defendants for improper venue. A number of exceptions were raised by the defendants in Vermillion Parish, to include the exception of improper cumulation of actions. The trial judge ultimately granted the exceptions and dismissed the plaintiffs’ action without prejudice on May 7, 2007.
On appeal, the Third Circuit held that the actions were improperly cumulated. As recognized by the court, the properties that were allegedly contaminated were on five incongruous tracts located in three separate sections, and different parties were alleged to have contributed to the contamination on each tract. Furthermore, the proof of damages, if any, would be entirely separate for each tract. These factors contributed to the court’s ultimate conclusion that the claims do not share a community of interest and the actions were improperly joined.
 

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Shreveport and Bossier City as well as Caddo and Bossier parishes have been working on a comprehensive set of ordinances to give local governments leverage in controlling drilling in the Haynesville Shale natural gas field. Most of this oversight now lies with the state. Attorneys have been working on the proposed drafts since November and once the proposals are in the hands of elected officials, residents will be able to have access to them. The ordinances are aimed at protecting water, limiting road drainage, and controlling noise, lighting and hours of operation at drilling sites. The Shreveport area has taken note from Fort Worth, Texas, where the local government drew up similar laws for Barnett Shale production.

For more information see, http://www.shreveporttimes.com/article/20090217/NEWS01/902170307
 

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by April Rolen-Ogden

This case involved a suit by an unleased landowner against an oil and gas unit operator seeking unpaid production proceeds. The landowner owned a portion of a small tract of property, which was included in an oil and gas production unit that was apparently being operated by the defendant, Cedyco. The trial court awarded Caldwell the unpaid production proceeds attributable to Caldwell’s production unit acreage. It is significant to note that the operator was  not represented by counsel at trial, which may explain the ultimate outcome in this case.

 

On appeal, Louisiana’s Third Circuit initially applied Louisiana Civil Code articles 487 and 488 to the landowner’s claims, which is not typically seen in mineral law cases because of the presence of Louisiana Revised Statute 30:10. The court had held it was legal error for the trial court to not require the landowner to reimburse Cedyco, the operator, for its expenses. The appellate court reversed the trial court’s decision and ruled that the operator was entitled to reimbursement from the landowner of its production expenses; however, the operator was still required to pay the landowner the remainder of the production proceeds.

 

Then, on rehearing, the appellate court issued a per curiam decision which resulted in a complete about-face on this issue. The court held that, based on article 487 of the Louisiana Civil Code, “only a good faith possessor is entitled to reimbursement of production expenses.” Since the record revealed no act transferring title in the operator’s favor, i.e., no lease from the landowner to the operator, the court reversed its prior decision and held instead that the landowner was not required to reimburse the operator for the operator’s production expenses. The court reasoned that without an act translating title to the operator, any minerals reduced to the operator’s possession are possessed by the operator in bad faith. Possessors in bad faith are not entitled to reimbursement of expenses under the Louisiana Civil Code. 

 

The result in this case is atypical because this issue is generally analyzed under Louisiana Revised Statutes 30:10, which is based on the theory of unjust enrichment. Even unleased landowners are required to pay their proportion of the production expenses under the Louisiana Mineral Code. Nevertheless, this case presents an additional concern for oil and gas operators who have unleased owners within their production units. 

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On July 12, 1996, the Jameses purchased immovable property from Gray Investments, a corporation owned by Leon Gray, Sr. and his wife, Mary Gray. The deed conveyed to the Jameses one-half of the royalties and mineral interests in the property and reserved the other one-half to Gray Investments. Division orders were prepared by Kelley Oil Corporation, a predecessor-in-interest to Samson, and the Jameses began receiving royalties. When Mr. Gray died, his heirs inherited certain property, including the right to receive royalties on the property purchased by the Jameses. The heirs discovered that the Jameses had been receiving one-half of the total royalties owned by and owed to Gray Investments rather than the one-half due them for royalties on the property they purchased. 

As a result, the heirs filed suit against the Jameses and Samson, as successor-in-interest, to Kelley Oil Corporation, for recovery of mineral proceeds, claiming that the Jameses were unjustly enriched by receiving royalty payments in excess of their ownership interest in the subject property. The trial court denied the exceptions of no right of action, no cause of action, and prescription. Thereafter, the Jameses’ application for supervisory writs was granted and the Second Circuit granted their no cause of action. The Jameses argued that the plaintiffs had no cause of action against them because there was no privity of contract between plaintiffs and them; instead, each party had a contract with Samson for the payment of royalties. Thus, the Jameses contended that the plaintiffs should have only filed suit against Samson for overpaying royalties to the wrong party.

 

Relying on Louisiana Civil Code article 2298, which provides that unjust enrichment is a remedy of last resort, available only when no other remedy is available, the court found that since the plaintiffs had a cause of action against Samson to recover for the underpayment of royalties to them and overpayment to the Jameses, the requirement that the plaintiffs have no other remedy at law was not satisfied. Accordingly, the court held that the plaintiffs had no cause of action against the Jameses, and thus reversed the trial court’s judgment denying the exception of no cause of action. Such a ruling rendered the exception of prescription moot.

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by Elisabeth Lorio

The United States Court of Appeals for the Fifth Circuit recently affirmed the United States District Court for the Eastern District of Louisiana’s decision to grant partial summary judgment in favor of the operator co-owner in a dispute over liability after a fellow co-owner’s assignment of lease interests governed by joint operating agreements (JOAs). Southeast acquired ownership of fractional working interests in two oil and gas leases in the Gulf of Mexico governed by two separate, yet nearly identical JOAs. After acquiring the interests in the leases, Southeast became a party to and assumed the rights and obligations under the JOAs. Hunt, a co-owner and operator of the leases, advanced 100% of the costs of operations and later billed the other co-owners for their virile portion. After a number of years, Southeast ceased paying Hunt for its share of the expenses. Subsequently, Southeast entered into a written assignment with South Pass Properties, South Pass assuming all of Southeast’s rights and obligations under the leases and JOAs.  South Pass, however, never paid the outstanding balance owed to Hunt.

Hunt filed suit against both Southeast and South Pass alleging that Southeast’s assignment did not release Southeast from its obligations under the JOAs. The district court agreed, finding Southeast solidary liable, as the language of the JOAs did not unambiguously effect a release of Southeast. The Fifth Circuit affirmed the decision of the district court, holding that an assignee and an assignor remain solidarily liable to the assignor’s obligations to a third party unless third party releases the assignor. The appellate court found that the record was devoid of any effective release of Southeast by Hunt. In its decision, the Court rejected Southeast’s argument that the language of the JOA served as a release of Southeast from its liability after it assigned its interests to South Pass. Since the JOAs did not contain a clear and unambiguous release of Southeast by Hunt, Southeast was found solidarily liable for the obligations under the leases and JOAs.

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Despite the current problems facing the national economy, Louisiana collected $3.5 million at its mineral lease sale in November, which State Mineral Board Director Marjorie McKeithan describes as “showing interest [that] leasing Louisiana mineral rights for energy production is still strong.” Bids on tracts in the Haynesville Shale area decreased from the peak sales in June, as companies are focusing on developing the tracts that were leased in the past few months. Despite the recent trend of falling prices for oil and gas, the Department of Natural Resouces reports that “leasing activity in areas outside the Haynesville Shale zone closely tracks typical lease sale history from recent years.” The Department of Natural Resources’ news release can be found at http://dnr.louisiana.gov/INDBDS/MINBOARD/MINLEASE/112008/newsrel.ssi

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By Anundra M. Dillon

 

As previously reported, the Louisiana Supreme Court held that Act 312 of 2006 is constitutional and reversed the district court’s judgment declaring Act 312 unconstitutional and unenforceable under La. Const. art. V, § 16, La. Const. art. I, § 4 and the Fifth Amendment of the U.S. Constitution. M.J. Farms, Ltd. v. Exxon Mobil Corp., 2007-2371 (La. 7/1/08); ____ So. 2d ____. However, on page 30 of the Court’s Opinion in M.J. Farms, the Court stated:

 

In making this determination, we hasten to add that Act 312 exempts from its application all cases in which a contractual agreement exists between the parties that contains a remediation provision that exceeds state standards. La. Rev. Stat. §§ 30:29(A) and (H). It is only when no such proviso exists, that Act 312 mandates the state’s involvement.

 

Exxon Mobil Corporation and the State of Louisiana filed Applications for Rehearing asking the Court to modify, reconsider or strike this paragraph of the Court’s Opinion because Act 312 applied to all claims, including claims based on a contract that may contain a remediation provision that exceeds state standards.

 

On September 19, 2008, the Court granted the Applications for Rehearing in part and deleted the paragraph on page 30 from its Opinion. To read the Louisiana Supreme Court’s modified Opinion in M.J. Farms click on the following link: http://www.lasc.org/news_releases/2008/2008-58.asp. For more information regarding Act 312, please contact Robert B. McNeal (rbmcneal@liskow.com) or Anundra M. Dillon (amdillon@liskow.com).

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by John Almy.

Grand Isle Shipyard Inc. v. Seacor Marine, LLC (5th Cir. 2008)

 

The 5th Circuit reversed a Louisiana District Court decision that held a platform worker’s injuries, sustained while being transported from platform to platform by vessel, were subject to the Louisiana Oilfield Anti-Indemnity Act through the Outer Continental Shelf Lands Act (OCSLA). In rendering its decision, the District Court relied on the 5th Circuit’s finding in Union Texas Petroleum Corp. v. PLT Engineering, Inc. that “the locations where substantial work pursuant to the contract was done were covered situses,” to determine that OCSLA applied, and thus Louisiana law applied as surrogate federal law.

 

In reversing, the 5th Circuit pointed to three issues. First, the District Court relied too heavily on the fact that the locations of substantial work were covered situses as that was only one of several factors that weighed in favor of finding OCSLA applicable in PLT. Second, and more importantly, the District Court failed to apply the test for the application of OCSLA outlined in Demette v. Falcon Drilling which explicitly carves out ships and vessels from the list of potential OCSLA sites. Finally, the District Court failed to note the Supreme Court’s holding in Offshore Logistics, Inc. v. Tallentire that a individual’s status as a platform worker is not particularly relevant to the OCSLA analysis. Since the worker’s injuries occurred on a vessel, and not while on or in contact with an appropriate OCSLA situs, OCSLA could not apply.

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by:  April L. Rolen-Ogden

Currently, the talk of the town in North Louisiana is the “Haynesville Shale.” Experts describe this mineral formation “as one of the richest fields of natural gas ever discovered in this region.” Technically speaking, the Haynesville Shale is defined as “a layer of sedimentary rock more than 10,000 feet below the surface.” The Shreveport Times reports that “[a]t least 40 rigs are running now and 70 or more are to be in place by the end of next year . . .” This has been coined as the largest domestic find of natural gas in recent history.

 

The first Haynesville Shale EXPO, which is free to the public, is being held on November 21, 2008 at the Shreveport Convention Center. Persons and businesses interested in learning more about the Haynesville Shale and the opportunities it presents to landowners and the oil and gas exploration and production industry alike will benefit from this EXPO.

 

The EXPO is being presented by Petrohawk Energy, Chesapeake Energy, The Times, Devon Energy, EnCana Energy, and XTO Energy. For more information, please view the Shreveport Times article entitled First EXPO on Haynesville Shale Set for Nov. 21 at this link: http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=/20080916/NEWS01/80916026.

 

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The Texas Supreme Court this morning issued its long-awaited decision in Coastal Oil & Gas Corp. v. Garza Energy Trust, holding that the rule of capture bars recovery for damages for subsurface trespass caused by hydraulic fracturing. A concurring opinion and an opinion concurring in part and dissenting in part were also filed. Copies of the opinions are available at: http://www.supreme.courts.state.tx.us/historical/082908.asp

 The Court also held

 1. Mineral lessors with a reversionary interest have standing to bring an action for subsurface trespass causing actual injury;

2. The measure of damages for breach of the implied covenant to protect against drainage is the value of the mineral lost because of the lessee’s failure to act with reasonable prudence, and there was no evidence of such in this case;

3. Some evidence supported the jury’s finding of breach of the implied covenant to develop;

4. Some evidence supported the jury’s finding of bad faith pooling;

5. Admission into evidence of a memorandum containing a racial slur was reversible error; and

6. The trial court did not abuse its discretion in refusing to abate this case for two related cases.

 Liskow attorney Everard A. Marseglia, Jr., submitted a brief as amicus curiae on behalf of the Texas Oil & Gas Association. A copy of the TxOGA brief is available at this link.
 

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In March 2008, several oil and gas companies announced the finding of what could potentially be the fourth largest deposit of natural gas in the world underneath northwestern Louisiana, southwestern Arkansas, and eastern Texas: the Haynesville Shale.   

The Louisiana Natural Resources Department has now created a website to provide information to the public related to the Haynesville Shale formation.  To visit the website, click here.

A blog has also been created to provide information with respect to the area.  To visit the blog, click here.

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On July 1, 2008, the Louisiana Supreme Court held that Act 312 of 2006 (“Act 312”) is constitutional and reversed the district court’s judgment declaring Act 312 unconstitutional and unenforceable under La. Const. art. V, § 16, La. Const. art. I, § 4 and the Fifth Amendment of the United States Constitution.  M.J. Farms, Ltd. v. Exxon Mobil Corp., 2007-2371 (La. 7/1/08); ____ So. 2d ____.

Continue Reading...

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by Kelly Becker

In Barasich, et al. v. Shell Pipeline Co. LP, et al., 2008 U.S. Dist. Lexis 47474 (E.D. La. 6/19/08), at issue was, inter alia, whether a group of commercial oyster fishermen could bring a class action against a group of defendants that owned land-based storage tanks or pipelines that burst as a result of Hurricane Katrina, causing a release of crude oil that allegedly damaged the aquatic wildlife, estuaries, and plaintiffs’ interest in their oyster leases. At the outset, the court reaffirmed its earlier ruling that the plaintiffs failed to state a claim for alleged damages to non-proprietary State-owned natural resources, including marine estuaries. Thus, the only question was whether the plaintiffs could pursue a class action for the remaining claim of purported damage to their individual oyster leases. 

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In Victor Stanley, Inc. v. CreativePipe, Inc., __ F.Supp.2d __, 2008 WL 2221841 (D.Md. 2008), the court held that defendants waived any privilege that may have attached to 165 electronically stored documents, including communications between the defendants and their attorneys, which were mistakenly turned over to the plaintiff. Continue Reading...

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In Bridges v. Production Operators, Inc., 2007-0648 (La. App. 4th Cir. 12/12/07),974 So.2d 54, at issue was whether the provision of fuel by customers to a compression services operator at no cost for use in powering the operator’s compressors was subject to Louisiana sales or use tax.  Continue Reading...

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By April Rolen-Ogden

In Mayne & Mertz, Inc. v. Excalibur, et al., the issue presented was whether damages for loss of a lease opportunity were too speculative to survive summary judgment. The case involved a claim for misappropriation of trade secrets, in this case seismic data. The landowner, Excalibur, received the data but was required to maintain its confidentiality. Mayne & Mertz claimed that Excalibur violated those terms by using the seismic to obtain lease bids from competitors of Mayne & Mertz. Mayne & Mertz sued, contending that, but for the misappropriation of the seismic, Excalibur would have granted the lease to it. No well was ever drilled, and the lease granted by Excalibur expired. Accordingly, Excalibur sought summary judgment, claiming that Mayne & Mertz could not prove the value of an undrilled mineral lease. The Court disagreed. Citing the experts’ opinions and testimony, as well as the applicable jurisprudence, the Court held that a jury could conclude that Mayne & Mertz was entitled to damages for the value of the undrilled mineral lease. The decision can be found at 2007 WL 2900510 (W.D. La.)

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By Joe Giarrusso: 

In Louisiana, a lawsuit is generally deemed abandoned when the parties fail to take any step in its prosecution for three years.  This rule is operative without any formal order.  La. Code Civ. P. art 561.  However, Act 361 of 2007 extended the period for abandonment to five years where (1) the action was initiated prior to August 26, 2005, and was not previously declared abandoned under the general three year period, and (2) the party proves that the failure to take a step in the prosecution or defense of the suit was caused by or was a direct result of Hurricanes Katrina or Rita.  The revision became effective July 9, 2007.   Click here to read the Act.

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By Dana Douglas

The Louisiana First Circuit Court of Appeal recently held that an operator is not responsible for payment of a non-operator's royalties and overriding royalties before payout.  In Gulf Explorer, LLC v. Clayton WIlliams Energy Inc., 2007 WL 1651090 (La. App. 1st Cir. 6/8/07), the operator completed a well that was plugged and abandoned without reaching payout.  A non-participating working interest owner sued, asking the court to declare that its royalty and overriding royalty owners were entitled to their share of production.  Louisiana Revised Statute 30:10 provides that the party drilling a well can recover a non-participant's share of expenses from production, but also provides that royalty and overriding royalty owners shall receive the portion of production due them.  The court held that, because La. R.S. 30:10 allows the drilling party to recover from the tract, while royalty obligations arise from a lease, the operator had no obligation to pay royalties before it recouped its expenses from production.  Thus, the non-participant was responsible for payment of its royalty and overriding royalty payments.

 

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By Jonathan A. Hunter

MMS has announced proposed amendments to its deep gas royalty relief regulations under the Energy Policy Act of 2005. The proposed rule, “Royalty Relief – Ultra-Deep Gas Wells on Outer Continental Shelf (OCS) Oil and Gas Leases; Extension of Royalty Relief Provisions to OCS Leases Offshore of Alaska, 1010–AD33,” would extend existing deep gas royalty relief provisions to more OCS leases, provide additional royalty relief for certain wells on OCS leases in the Gulf of Mexico (GOM), and expand authority to grant royalty relief to leases offshore of Alaska.  The proposed rule extends deep gas royalty relief to GOM leases in 400 meters of water (up from the current limit of 200 meters), and would increase the royalty suspension volume to 35 Bcf for qualifying ultra-deep wells at least 20,000 feet total vertical depth subsea  in less than 400 meters of water.  The additional relief will only be available in years when the annual NYMEX natural gas price is at or below $4.47/MMBtu expressed in 2006 dollars.  MMS will accept comments on the proposed rule through July 17, 2007.  Click here to read the Notice.

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By Marie Carlisle:

Boldrick v. BTA Oil Producers, No. 11-06-00029-CV, 2007 WL 865811 (Tex. App.—Eastland March 22, 2007). 

The Eleventh Court of Appeals of Texas recently affirmed a District Court ruling granting summary judgment to BTA Oil Producers (BTA) on the basis that that the joint operating agreement (JOA), which governed the assignment of an overriding royalty interest to Plaintiff/Appellant, specifically provided guidelines for payments owed on an overriding royalty interest created by a non-consenting party. As BTA’s actions were consistent with the JOA, the court upheld the decision that no funds are due to Boldrick until the non-consent penalty provisions of the JOA are fully recouped and BTA itself receives payment for production from the well at issue.

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By Leta Seletzky:

In Seagull Energy E & P, Inc. v. Railroad Comm'n, No. 03-0364, 2007 WL 1299163 (Tex. May 4, 2007), the Texas Supreme Court affirmed a decision by the Austin Court of Appeals upholding the Railroad Commission of Texas' authority to regulate both drilling and production of commingled oil and/or gas deposits and to treat commingled deposits as one reservoir. The petitioner, who unsuccessfully sought a permit from the Commission to reopen a shut-in well to produce from one of three discontinuous, lenticular gas sands in a field, argued that the permit it sought was a drilling permit rather than a production permit, and thus the Commission lacked authority to deny it. The petitioner also asserted that the Commission's denial of the permit amounted to an unconstitutional taking of gas in the sand from which the well would produce. The Court rejected these arguments, holding that the Commission has broad authority to regulate commingled oil and gas. The Court also concluded that a mineral owner's property interest in its fair share of minerals on and under its property does not extend to specific oil and gas beneath its property and is in any event subject to the state's police power to conserve and develop natural resources. 

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By Jana Grauberger

Two recent federal district court decisions have reached differing results in considering the scope of exculpatory clauses in JOA disputes. In PYR Energy Corp. v. Samson Resources Co., 470 F. Supp. 2d 709 (E.D. Tex. 2007), the court found itself bound to follow Fifth Circuit precedent set in Stine v. Marathon Oil Co., 976 F.2d 254 (5th Cir. 1992), which held JOA exculpatory language limiting operator liability to situations of gross negligence of willful misconduct applicable to all good faith actions undertaken by the operator under the JOA, including performance of its contractual duties. By contrast, in Forest Oil Corp. v. Union Oil Co., 2006 WL 905345 (D. Alaska Apr. 7, 2006), the court followed the Tenth Circuit and refused to require a showing of gross negligence or willful misconduct in holding an operator liable for breach of contract regarding its duties to charge for NORM disposal.

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By Jonathan A. Hunter

In Weyerhaeuser Co. v. A. D. Hinton,  No. 07-30117 (5th Cir., May 1, 2007), the Fifth Circuit upheld a decision by the Federal District Court for the Western District of Louisiana rejecting a challenge to a group of mineral servitudes created in 1971. The plaintiff landowner, Weyerhaeuser Company, asserted that a series of formal "acknowledgments" executed by its corporate predecessor to interrupt prescription were part of an attempt to create fifty-year mineral servitudes in violation of Louisiana law. In a Memorandum Ruling, the district court held that the challenged acknowledgments fully complied with Louisiana Mineral Code articles 54 and 55; accordingly, the acknowledgments interrupted prescription running against the mineral servitudes. Weyerhaeuser Co. v. A. D. Hinton, et al., No. 06-0272 (W.D. La., Dec. 29, 2006, Walter, J.). On May 1, 2007, the Fifth Circuit heard oral argument on Weyerhaeuser’s appeal. That same day, the Fifth Circuit issued its per curiam decision upholding the district court’s ruling.   Click here to view the ruling.

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At its April 11 lease sale, the Louisiana Department of Natural Resources will offer four offshore tracts, one in the Grand Isle area and three in the Main Pass area.  The Department will also offer 17 tracts in waters that the state designates as inland.  Six tracts are in the Chandeluer Sound area, two will cover portions of the Chandeleur Sound, and nine will be offered in the Main Pass area.

For more information, visit the Department's website here.

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United States Senators have introduced three new bills that may impact offshore drilling:

Senators Byron Dorgan, D.-N.D., and Larry Crais, R-Idaho, have introduced the Security and Fuel Efficiency Energy Act 2007, S. 875.  The legislation would allow offshore drilling in the Eastern Gulf of Mexico to as close as 45 miles off the coast of Florida.  The bill, currently before the Senate Finance Committee, would also allow an inventory off the coast of Virginia, North and South Carolina and Georgia, which could lead to more offshore drilling there as well.

Senator Mel Martinez of Florida has also introduced S. 876, which would amend the Cuban Liberty and Demoratic Solidarity Act of 1996 by denying a United States visa to any foreign agent or entity who contributes to the development of Cuba's oil exploration plan.  The bill would also impose sanctions on individuals or entities who invest more that one million dollats in the devlopment of Cuba's oil and gas resources.

Senator Herb Kohl, D.-Wis. has alos introduced the Oil Industry Merger Antitrust Enforcement Act, or S. 878, which will demand evidence from merging oil and gas entities that their transaction will not harm competition.

The text of all three bills may be found at the United States Congress's website here.

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On February 13, the Texas Supreme Court will hear arguments in a case involving important issues to the Texas oil and gas industry, including whether or not Texas recognizes an independent private cause of action for waste based on violations of Texas conservation laws and whether an oil and gas lessee commits waste by plugging abandoned wells with minerals remaining in the reservoir. The Court will also hear arguments on the applicability of the discovery rule and fraudulent concealment to claims by oil and gas lessors.

Liskow & Lewis attorney Butch Marseglia submitted an amicus curiae brief on behalf of The Texas Oil & Gas Association. For a copy of TxOGA’s brief, click on the following link Amicus Curiae Brief of TXOGA - Received: 10/16/2006 .

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In the continuing dispute between federal offshore lessees and the Department of the Interior over missing price threshold provisions in 1998 and 1999 federal oil and gas leases, MMS announced today that it has signed agreements with BP, ConocoPhillips, Marathon Oil Company, Shell, and Walter Oil and Gas Corporation.   

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In BHP America Petroleum Co. v. Burton, 549 U.S. — (2006), the Supreme Court resolved a legal issue that has been at the center of federal royalty litigation for twenty years:  viz., whether 28 U.S.C. § 2415(a), which imposes a 6-year statute of limitations for Government “every action for money damages … founded upon any contract,” applies to administrative royalty payment orders issued by the Minerals Management Service (MMS). The Court held that it does not.  Read more . . . Continue Reading...

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