Expropriation ruling explains landowner’s burden to prove severance damages to a “legal certainty.”

On November 8, the Louisiana First Circuit Court of Appeals added to the relatively sparse body of appellate rulings in pipeline expropriation matters. In an unpublished opinion, the court affirmed that landowners whose property is expropriated must prove their entitlement to severance damages to a “legal certainty.”

Under Louisiana law, owners of expropriated property can seek just compensation for the property taken. In addition, landowners can seek “severance damages” above and beyond the value of the expropriated property when the landowner has been deprived of the full potential of future development of the property due to the taking.

In Enterprise Products Operating, LLC, v. Southwood Terminal, L.L.C., Enterprise expropriated part of a large tract of undeveloped riverfront property for an NGL pipeline. The pipeline would then cross the Mississippi River, burrowing more than 100 feet below the riverbed.

At trial, the landowner sought millions in severance damages, arguing that the pipeline’s presence beneath the batture of the property (the land between the low-water level of the river and the levee) destroyed the property’s potential future use an industrial site with a dock to provide river access. However, Enterprise presented engineering testimony that the pipeline would not interfere with any potential dock. Continue Reading

Haynesville shale gas production is increasing again; Will Haynesville-related litigation increase again, too?

In August 2018, dry natural gas production from the Haynesville shale averaged 6.774 billion cubic feet per day, which is the highest daily Haynesville production average since September 2012 when production averaged 6.962 billion cubic feet per day.  August 2018 was not an anomaly.  Instead, this year, the Haynesville has seen steady increases in production since January when production averaged 5.293 billion cubic feet per day.  Although the recent Haynesville production increases are a positive sign for the Louisiana energy industry, the August 2018 daily production average is still below the previous Haynesville peak production average, which was 7.403 billion cubic feet per day in January 2012.  However, if the current trend continues, the Haynesville could approach its prior peak production average in early 2019. Continue Reading

Louisiana Fifth Circuit Weighs in on Proper Application of Prescription and Contra Non in NORM Litigation

In a case sure to be used as a sword by many defendants in the prevalent NORM (naturally occurring radioactive material) litigation in Louisiana and elsewhere, Patricia Lennie, et al. v. Exxon Mobil Corporation, et al., the Louisiana Fifth Circuit Court of Appeal concluded that plaintiffs’ survival and wrongful death actions were prescribed when plaintiffs brought suit almost four years after the diagnosis of cancer and subsequent death of their husband/father and failed to inquire as to the cause of illness and death.  In doing so, the Fifth Circuit affirmed the judgment of the district court dismissing the survival and wrongful death claims of plaintiffs on an exception of prescription. Continue Reading

FIFTH CIRCUIT BEGINS TO CLEAN UP ITS JURISPRUDENCE ON HOW TO DETERMINE WHETHER A CONTRACT IS (OR IS NOT) MARITIME

After some thirty years of wrestling with the cumbersome six-part test set forth in Davis & Sons, Inc. v. Gulf Oil Corp.,[1] for determining whether a contract to perform services related to oil & gas exploration on navigable waters is maritime, the Fifth Circuit took up In re Larry Doiron, Incorporated[2] earlier this year in an effort to streamline the test and bring clarity to an area of the law mired in uncertainty.  Continue Reading

Louisiana’s Third Circuit (Again) Affirms the Applicability of the Subsequent Purchaser Doctrine to Mineral Leases

While oil and gas company-defendants—and several courts alike—have deemed the applicability of the subsequent purchaser doctrine to mineral leases a settled issue of law, plaintiff-landowners have continued to argue otherwise.  In a unanimous opinion issued July 18, 2018 in Grace Ranch, LLC v. BP America Production Company, et al., the Third Circuit not only provides yet another example of the uniform application of the doctrine in cases involving mineral rights under Louisiana law, but expressly and thoroughly rejects the numerous arguments on which plaintiffs-landowners have continued to rely. 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

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.”

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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

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