Louisiana Supreme Court’s reversal of Gloria’s Ranch clarifies calculation of damages for unpaid mineral royalties, provides relief for holders of security interests in mineral rights

The Louisiana Supreme Court’s reversal of Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., hands a victory to financiers of oil and gas operations and settles a long-running controversy over the amount of damages available for failure to pay mineral royalties.

The Gloria’s Ranch trial court held two mineral lessees and a mortgagee (Wells Fargo) solidarily liable for more than $20 million in damages resulting from failure to release a mineral lease in North Louisiana.  The Second Circuit affirmed the finding of solidarity on the basis that Wells Fargo became an owner of the mineral lease because it “controlled the bundle of rights that make up ownership, i.e., the rights to use, enjoy, and dispose of the lease.” However, a vigorous dissent warned that the majority’s “control theory” to impose solidarity between a mortgagee and a mineral lessee could have “[d]evastating economic repercussions” for the lending industry, and “[s]erious and harmful impact on the oil and gas industry.”

Continue Reading

The Coastal Zone Management Act Litigation Removed to Federal Court (Again)

On or about May 23, 2018, several Defendants in the Coastal Zone Management Act (“CZMA”) Litigation filed Notices of Removal in 42 lawsuits filed against 212 oil and gas companies by six different parishes (Plaquemines, Jefferson, Cameron, Vermilion, St. Bernard, and St. John the Baptist), removing the cases to federal court.  The timing of the removal was based on Plaintiffs’ expert report, which was produced on April 30, 2018.  In their Notices of Removal, Defendants allege that Plaintiffs’ expert report purportedly identifies state “permitting violations,” which revealed for the first time in the CZMA Litigation that Plaintiffs’ claims primarily attack activities undertaken before the state permitting law at issue was effective and that were instead subject to extensive and exclusive federal direction, control, and regulation. Continue Reading

BP Hosts Diversity & Inclusion Day

This week three Liskow & Lewis associates, Hilary Soileau, Trinity Brown, and Jackie Hickman, were invited to attend the BP legal department’s Summer Associate Diversity & Inclusion Day.

The program gave attendees the opportunity to gain insights into the behind-the-scenes workings of one of the world’s largest oil companies, including touring BP’s drilling simulator, the wind energy control room, and the commodities trading floor. Continue Reading

Texas Court Holds Drop in Oil Prices is Not Force Majeure

On Thursday, a divided panel of the Texas Court of Appeals in Houston held that the 2014-2015 drop in oil prices is not a force majeure for purposes of general force majeure contractual protection. In TEC Olmos, LLC v. ConocoPhillips, the court addressed a dispute between ConocoPhillips Company and TEC Olmos over a farmout agreement that required Olmos to commence drilling by a specified date. No. 01-16-00579, 2018 WL 2437449 (Tex. App. —Houston May 31, 2018). During the interval between execution of the agreement and commencement of drilling, however, changes in the global supply and demand of oil caused the price of oil to drop significantly. As a result, Olmos was unable to secure financing for drilling and informed ConocoPhillips that it would be unable to meet its drilling obligations. ConocoPhillips filed suit against Olmos and the guarantor of the contract, Terrace Energy Company, for breach of the farmout agreement. The lawsuit sought $500,000 in liquidated damages. Continue Reading

Supreme Court Validates Employer’s Right to Require Class and Collective Action Waivers in Employment-Related Arbitration Agreements

The United States Supreme Court ruled today that contracts requiring individualized arbitration of employment-related disputes are enforceable and do not violate Section 7 of the National Labor Relations Act (NLRA).

Background

Some employers require their employees to enter into agreements binding the parties to arbitrate employment-related disputes.  In recent years, many of those employers have drafted their mandatory arbitration agreements to prohibit employees from pursuing class or collective actions, which can be costly and eliminate the informality and speed of arbitration.  For example, the plaintiffs in the three cases decided by the Supreme Court today agreed not to pursue unpaid overtime claims under the Fair Labor Standards Act (FLSA) on behalf of other employees in class or collective actions. Continue Reading

Federal Circuit Holds U.S. Army Corps of Engineers Not Liable for Hurricane Katrina Flood Damage

The United States Court of Appeals for the Federal Circuit recently issued a significant opinion in a case in which a takings claim was asserted to redress Hurricane Katrina-related flood damage.  On April 20, 2018, it reversed a decision of the United States Court of Federal Claims (“Claims Court”), which had held the U.S. Army Corps of Engineers liable under the Tucker Act for flood damage to the Plaintiffs’ properties.

In 1968, the Corps completed construction of the Mississippi River Gulf Outlet (“MRGO”) in New Orleans.  The purpose of this navigation channel was to increase commerce between the port of New Orleans and the Gulf of Mexico.  Around the same time, Congress authorized funding for flood control through the Lake Pontchartrain and Vicinity Hurricane Protection Project (“LPV”).  This project was instituted to reduce the risk of flooding in New Orleans, and it resulted in the construction of levees and floodwalls along the banks of MRGO. Continue Reading

Third Circuit Issues Long-Awaited Ruling in OPA Liability Case

On March 29, 2018, the United States Court of Appeals for the Third Circuit issued its ruling in In re: Petition of Frescati Shipping Co., Ltd., as Owner of the M/T ATHOS I, Nos. 16-3552, 16-3867 & 16-3868 (3d Cir. Mar. 29, 2018).  ATHOS I had its genesis in a 2004 vessel allision and oil spill on the Delaware River between New Jersey and Pennsylvania.  The decision has particular relevance to the types of defenses that may be maintained against reimbursement claims brought by the United States Oil Spill Liability Trust Fund (OSLTF) to recover funds expended in responding to an oil spill. Continue Reading

Fifth Circuit Throws Out DOL Fiduciary Rule

The United States Fifth Circuit Court of Appeal vacated the entire DOL Fiduciary rule in a split decision on March 15, 2018, U.S. Chamber of Commerce v. DOL, No. 17-10238 (5th Cir. 3/15/2018).  Two other circuits have upheld the DOL rule (the Tenth and the District of Columbia Circuits).  This ruling will not become immediately applicable as it is subject to rehearing and appeal to the Supreme Court.  Accordingly, advisers should continue to follow applicable DOL fiduciary rule policies and procedures.  It may be several months before whether we know the impact of this decision. Continue Reading

FBA Provides Update on Maritime Developments in New Orleans and the Lower Mississippi River Region

I attended a great meeting yesterday at the Port of New Orleans hosted by the FBA Admiralty Law Committee. Here are some bullets and takeaways, which are certainly of interest to anyone in the maritime industry along the lower Mississippi River.  I am especially grateful that the following people were able to speak with us:

  • Patricia Krebs, Chair of the Admiralty Law Committee of the New Orleans Chapter of the Federal Bar Association
  • Robert “Rusty” Barkerding, Jr., Chairman of the Port of New Orleans Board of Commissioners
  • Ronald Wendel, Vice President- Finance & Administration (CAO/CFO) of the Port of New Orleans
  • Aaron C. Smith, President & CEO of OMSA (Offshore Marine Service Association)

It’s wonderful to have people at such a high level take time out of their day to share the latest and greatest of what’s going on locally in our industry. Continue Reading

Louisiana Third Circuit Issues Decision on the Procedure for Settlements in Cases Governed by Act 312

In a decision issued today, the Louisiana Third Circuit Court of Appeal issued the first appellate court opinion addressing the procedure for approval of settlements in cases governed by Act 312 (La. R.S. 30:29).  Britt v. Riceland Petroleum Corp., is a “legacy” lawsuit in which landowners sued Riceland Petroleum Company and BP America Production Company—the current and former operators on a certain tract of plaintiffs’ property.  Riceland and BP ultimately chose to settle all of the claims that Plaintiffs brought against them, and as part of the settlement they agreed to remediate the landowners’ property to the necessary state standards.  The settling parties then complied with the express mandates of Act 312 as they:  (1) provided notice of the settlement to the Department of Natural Resources (“LDNR”) and Attorney General (“AG”); (2) allowed the LDNR at least thirty days to review the settlement and provide any comments to the trial court; and, (3) sought and obtained the trial court’s approval of the settlement. Continue Reading

LexBlog