On March 29, 2019, Alaska Federal District Court Judge Sharon Gleason granted summary judgment in favor of plaintiff environmental groups in League of Conservation Voters v. Trump, 3:17-00101. The case stems from Executive Orders issued under the Obama Administration in 2015 and 2016 which withdrew certain areas in the Arctic and Atlantic regions from exploration and development under the offshore oil and gas leasing program. President Trump issued an Executive Order in 2017 which revoked the Obama withdrawals. The Court’s summary judgment ruling vacated certain portions of the 2017 Trump Executive Order and concluded that the prior Obama Orders would remain in place. In effect, the ruling removes the areas in the Arctic and the Atlantic covered in the Obama Orders from the five-year leasing program proposed by the Trump Administration.
Continue Reading Alaska District Court Vacates Trump Executive Order On Offshore Leasing
City of New Orleans Sues Oil and Gas Companies for Allegedly Damaging Coastal Wetlands
On Friday, March 29, 2019, the City of New Orleans filed a lawsuit in Civil District Court against eleven oil and gas companies seeking damages for alleged harm to Louisiana’s coastal wetlands. Introducing its lawsuit with statements that “New Orleans is imperiled” and its “people are in danger,” the City contends that the defendants’ failure to maintain access canals, spoil banks, and earthen pits created in the course of exploration and production has destroyed the coastal zone. The City’s allegations mirror those levied in recent years by the parishes of Plaquemines, Jefferson, and St. Bernard, among others: that the defendants’ activities constitute coastal “uses” under the Louisiana State and Local Coastal Resources Management Act (“SLCRMA”) and that they violate coastal use permits issued pursuant to that statute. The City has requested a trial by jury, from which it seeks damages, “restoration costs,” restoration of “disturbed areas,” sanctions, costs, attorneys’ fees, and/or declaratory and injunctive relief.
Continue Reading City of New Orleans Sues Oil and Gas Companies for Allegedly Damaging Coastal Wetlands
New U.S. Supreme Court Decisions Clarify the Courts’ Authority to Compel Arbitration
Commercial and employment agreements often include provisions requiring arbitration of disputes between the parties. Some of these agreements contain “delegation clauses” requiring the arbitrator (as opposed to a court) to decide whether the dispute is subject to arbitration. Despite such provisions, one party may sue the other because it perceives an advantage to proceeding in court or wants to test the outer limits of the arbitration provision. The first battle in these suits is over who—the court or an arbitrator—decides whether the dispute must be arbitrated. In unanimous decisions issued over the last week, the Supreme Court addressed two scenarios where the parties fought over this question, despite having delegated questions of “arbitrability” to an arbitrator. Read together, the Court’s decisions clarify that a court should first decide whether the Federal Arbitration Act (“FAA”) applies to the parties’ agreement. If so, the court must honor the delegation clause and refer the matter to arbitration.Continue Reading New U.S. Supreme Court Decisions Clarify the Courts’ Authority to Compel Arbitration
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 Haynesville shale gas production is increasing again; Will Haynesville-related litigation increase again, too?
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 FIFTH CIRCUIT BEGINS TO CLEAN UP ITS JURISPRUDENCE ON HOW TO DETERMINE WHETHER A CONTRACT IS (OR IS NOT) MARITIME
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 Louisiana’s Third Circuit (Again) Affirms the Applicability of the Subsequent Purchaser Doctrine to Mineral Leases
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 The Coastal Zone Management Act Litigation Removed to Federal Court (Again)
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 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
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 Texas Court Holds Drop in Oil Prices is Not Force Majeure
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 Supreme Court Validates Employer’s Right to Require Class and Collective Action Waivers in Employment-Related Arbitration Agreements