Justia Energy, Oil & Gas Law Opinion Summaries

The case involves James and Wilma Self, who filed a lawsuit as representatives of a class of plaintiffs who own unleased mineral interests in Louisiana within compulsory drilling units operated by BPX Operating Company. The plaintiffs alleged that BPX's practice of withholding post-production costs from their pro rata share of production was improper. BPX sought dismissal of the claim, arguing that the Louisiana doctrine of negotiorum gestio provides a mechanism for unit operators to be reimbursed for post-production costs not otherwise covered by specific statutes. The federal district court granted BPX's motion to dismiss.On appeal, the United States Fifth Circuit found the law unsettled on this issue and certified a question of law to the Supreme Court of Louisiana. The question was whether the doctrine of negotiorum gestio applies to unit operators selling product in accordance with La. R.S. 30:10(A)(3).The Supreme Court of Louisiana found that the doctrine of negotiorum gestio does not apply and cannot be a basis for liability as a unit operator is always acting "with authority." The court reasoned that the oil and gas conservation law provides a unique quasi-contractual relationship between unleased mineral owners and unit operators, which cannot be applied consistently with the doctrine of negotiorum gestio. The court further explained that a party is only a gestor if his action is taken "without authority," but a unit operator is statutorily authorized by La. R.S. 30:10(A)(3) to sell an unleased owner's share of production when the unleased owner has not arranged to dispose of his share. Therefore, a unit operator who sells an owner's production under the statutory authority of La. R.S. 30:10(A)(3) cannot be a gestor under La. C.C. art. 2292. The court answered the certified question and sent its judgment to the United States Court of Appeals for the Fifth Circuit and to the parties. View "SELF VS. BPX OPERATING COMPANY" on Justia Law

This matter arose from a 2006 class action suit instituted by Steve Crooks and Era Lee Crooks (“Class Plaintiffs”) against the State through the Louisiana Department of Natural Resources (“LDNR”) concerning the ownership of riverbanks in the Catahoula Basin and subsequent mineral royalty payments. The Louisiana Supreme Court granted review in this case to address whether mandamus may lie to compel the State to pay a judgment rendered against it for mineral royalty payments. Finding that the payment of a judgment concerning the return of mineral royalties received by the State required legislative appropriation, an act that is discretionary in nature, the appellate court erred in issuing the writ of mandamus. View "Crooks, et al. v. Louisiana, Dept. of Nat. Resources" on Justia Law

In 2020, an accident, fire, and explosion occurred in the hydrocracker unit at a Valero Refining-Meraux, LLC refinery in Meraux, Louisiana. No significant levels of chemicals were detected as a result of the explosion. Multiple residents in the vicinity of the refinery filed suit for the negligent infliction of emotional distress. Plaintiff Brittany Spencer and her two minor children, Chloe LaFrance and Lanny LaFrance III, were at home sleeping when the explosion occurred. Their residence was approximately 2,000 feet from the epicenter of the explosion. Spencer and Chloe were unexpectedly awakened by a loud sound of unknown origin and a significant shockwave and vibration of unknown origin. Lanny was not awakened. The sound and/or shockwave shook Spencer’s bedroom window. Spencer went outside and observed a large flame of the fire coming from the refinery, and the sky was lit up. Almost immediately after the explosion, Spencer began to hear police vehicles, fire trucks, and ambulances as part of the emergency response that lasted for several hours. Spencer went back inside, and she and Chloe went back to sleep. On the morning of the explosion, Spencer and her children left their residence out of an abundance of caution and did not return until two days later. Spencer eventually returned to her normal sleep schedule, albeit with some trouble; she did not allow her children to play outside due to concerns for their safety. Thereafter, Spencer and her children began staying at their residence less and later moved away from the refinery in June 2020. Spencer, individually and on behalf of her minor children, and Lanny LaFrance, Jr. on behalf of his minor children, filed suit against Valero alleging damages for emotional distress, but did not allege physical injury, property damage, or financial loss. Valero appealed when a trial court awarded damages to plaintiffs for negligent infliction of emotional distress. The Louisiana Supreme Court found no Plaintiff met their burden of proving they were entitled to such an award, and reversed the trial court. View "Spencer v. Valero Refining Meraux, LLC" on Justia Law

In an issue of first impression for the Louisiana Supreme Court, was what prescriptive period, if any, was applicable to a citizen suit for injunctive relief pursuant to LSA-R.S. 30:16 suit. Justin Tureau instituted a citizen suit pursuant to LSA-R.S. 30:16, alleging that defendants drilled and operated numerous oil and gas wells on his property, or on adjacent property, as well as constructed and used unlined earthen pits. Specifically, Tureau alleged that said unlined pits were either never closed, or were not closed in conformance with environmental rules and regulations, including Statewide Order 29-B, L.A.C. 43:XIX.101, et seq, which, among other things, requires the registration and closure of existing unlined oilfield pits, as well as the remediation of various enumerated contaminants in the soil to certain minimum standards. The Supreme Court held that a LSA-R.S. 30:16 citizen suit was not subject to liberative prescription. The Court further found that, insofar as the petition alleges that defendants violated conservation laws, rules, regulations, or orders, the allegations were sufficient to defeat an exception of no cause of action. The Court therefore affirmed the appeals court ruling, which overruled defendants’ exceptions of prescription, overruled the exceptions of no cause of action, and remanded this case for further proceedings. View "Louisiana v. Pilcher" on Justia Law

Vermilion Parish School Board (“VPSB”) filed suit in 2004, alleging oil and gas operations conducted pursuant to a 1935 mineral lease and a 1994 surface lease damaged Section 16 land. VPSB asserted causes of action for negligence, strict liability, unjust enrichment, trespass, breach of contract, and violations of Louisiana environmental laws. The Louisiana Supreme Court granted rehearing to reconsider its prior decision in Louisiana v. Louisiana Land and Exploration Co., 20-00685 (La. 6/30/21), _So.3d_. The case presented two main issues: (1) the proper interpretation of Act 312 relative to the award of damages for the evaluation or remediation of environmental damage; and (2) whether the strict liability tort claim prescribed. With the benefit of additional oral argument and briefing, the Court affirmed its original decree. View "Louisiana, et al. v. Louisiana Land & Exploration Co., et al." on Justia Law

Arising under the 2006 version of La. R.S. 30:29 (referred to as Act 312), this oilfield remediation case involved the Vermilion Parish School Board (“VPSB”), individually and on behalf of the State of Louisiana, as petitioner, and Union Oil Company of California, Union Exploration Partners (collectively, “UNOCAL”), Chevron U.S.A., Inc., Chevron Midcontinent LP, and Carrollton Resources, LLC as defendants. Although the exact date of VPSB’s knowledge of contamination to the land was disputed, it was clear that VPSB became aware of such sometime in 2003 or 2004. In September 2004, VPSB filed a petition, urging causes of action for negligence, strict liability, unjust enrichment, trespass, breach of contract, and violations of Louisiana environmental laws. VPSB sought damages to cover the cost of evaluating and remediating the alleged damage and contamination to the property. It also sought damages for diminution of the property value, mental anguish, inconvenience, punitive damages, and stigma damages. UNOCAL sought reversal of the lower courts’ finding that VPSB’s strict liability claim was not prescribed. UNOCAL also contested the court of appeal’s ruling that the jury verdict was inconsistent and its remand for a new trial. Finding UNOCAL failed to prove that VPSB’s strict liability cause of action was factually prescribed, the Louisiana Supreme Court affirmed the court of appeal’s ruling on prescription, but on alternative grounds. Finding the jury was improperly allowed to decide issues reserved solely for the trial court, and cognizant the extraneous instructions and verdict interrogatories permeated the jury’s consideration of the verdict as a whole, the Supreme Court vacated the trial court’s judgment and affirmed the court of appeal’s remand for new trial. View "Louisiana v. Louisiana Land & Exploration Co. et al." on Justia Law

The issue presented for the Louisiana Supreme Court’s review in this case centered on whether an award of attorney fees and other litigation costs to defendant landowners in an expropriation proceeding could be upheld under current law. The underlying matter arose from the construction of the Bayou Bridge Pipeline. As part of the project, Bayou Bridge Pipeline, LLC (“BBP”), sought to acquire servitudes on the property of various landowners. The specific piece of property at the center of this litigation is approximately 38 acres of land (“the property”). Prior to reaching servitude agreements with all individuals with an ownership interest in this particular parcel of land, BBP began pipeline construction. Peter Aaslestad, one of the property owners, filed suit against BBP in order to enjoin BBP from further construction. BBP later stipulated that it would remain off the property as of September 10, 2018. However, the pipeline construction was more than 90% complete at that time. Meanwhile, in late July 2018, after it had begun construction on the property, BBP filed expropriation litigation against hundreds of property owners with whom servitude agreements could not be reached, including Mr. Aaslestad, Katherine Aaslestad, and Theda Larson Wright (collectively referred to as “defendants”). In response, defendants filed a reconventional demand against BBP, alleging BPP trespassed on their property and violated due process by proceeding with construction of the pipeline prior to a judgment of expropriation. The matter proceeded to a trial wherein the trial court granted BBP’s petition for expropriation, finding the expropriation served a public and necessary purpose. The trial court also granted defendants’ reconventional demand, finding that BBP trespassed on defendants’ property prior to obtaining permission or legal authority. The trial court ultimately awarded each defendant $75.00 for the expropriation and another $75.00 in trespass damages. The court of appeal reversed in part: upholding the constitutionality of the expropriation process, but finding that BBP violated defendants’ due process rights and awarded $10,000.00 to each defendant for trespass, and granted attorney fees. The Supreme Court determined the award of fees was constitutional, and upheld the Court of Appeal. View "Bayou Bridge Pipeline, LLC v. 38.00 Acres, More or Less, Located in St. Martin Parish et al." on Justia Law

This dispute involved ad valorem taxes for the tax years 2013 through 2016. In October 2012, D90 Energy, LLC, purchased two gas wells and one saltwater disposal well. The wells were subject to ad valorem property taxation in Jefferson Davis Parish, Louisiana. Relying on a Commission regulation applicable to oil and gas wells, D90 argued that a purchase price in a valid sale is fair market value; therefore, the wells should be valued at $100,000.00 for each of these tax years. For each tax year, the Assessor rejected D90’s documentation of the sale, explaining, in part, that his office never uses the sales price as fair market value for oil and gas wells. Rather, the Assessor used valuation tables provided by the Commission, which take into account age, depth, type, and production of the wells. D90 appealed each assessment to the Commission, presenting documentary evidence and live testimony to establish the $100,000.00 purchase price for the wells and the arms-length nature of the sale. It presented additional evidence to establish that the condition and value of the wells were virtually identical for each tax year. The district court affirmed the Commission’s valuations for all four tax years. Reviewing only what was presented to the Assessor, the court of appeal reversed the district court and reinstated the Assessor’s valuation. The Louisiana Supreme Court granted D90’s writ application to determine the correctness of the assessments, the proper scope and standard of review, and the legal effect of D90’s failure to pay taxes under protest. After review, the Court determined the district court was correct in affirming the Commission, thus reversing the appellate court's judgment. View "D90 Energy, LLC v. Jefferson Davis Parish Board of Review" on Justia Law

A landowner brought suit against several mineral lessees for breach of the obligations of the mineral lease. The mortgagee of one of the lessees was also named as a defendant. The lower courts held all lessees and the mortgagee jointly liable for damages resulting from the failure to furnish a recordable act evidencing the expiration of the lease (i.e., failure to release the lease). The Louisiana Supreme Court granted consolidated writ applications to determine: (1) whether the mortgagee was properly held jointly liable as an “owner” of the lease under La. Mineral Code art. 207 and a “lessee” under La. Mineral Code art. 140; (2) whether the imposition of joint liability was correct with regard to the owner of a portion of the shallow rights; (3) whether La. Mineral Code art. 140’s calculation of damages contemplated the inclusion of unpaid royalties (the amount due) in addition to double the amount of unpaid royalties (as a penalty) or whether the maximum damage award allowed is twice the amount of unpaid royalties; and (4) whether $125,000 in attorney fees for work done on appeal was excessive. The Court found: (1) the mortgagee was not an “owner” for purposes of La. Mineral Code art. 207 and was, therefore, not liable for failure to release the lease. For the same reasons, the Court found the mortgagee was not a “lessee” for purposes of La. Mineral Code art. 140 and, was, therefore, not liable for failure to pay royalties that were due. (2) The Court found Tauren is jointly liable for the damages because the failure to release the lease was an indivisible obligation under the particular facts of this case. (3) The Court held La. Mineral Code art. 140 authorized as damages a maximum of double the amount of unpaid royalties. (4) Last, the Court amended the award of attorney fees. View "Gloria's Ranch, LLC. v. Tauren Exploration, Inc." on Justia Law

Nelson Industrial Steam Company (“NISCO”) was in the business of generating electric power in Lake Charles. In order to comply with state and federal environmental regulations, NISCO introduces limestone into its power generation process; the limestone acts as a “scrubbing agent.” The limestone chemically reacts with sulfur to make ash, which NISCO then sells to LA Ash, for a profit of roughly $6.8 million annually. LA Ash sells the ash to its customers for varying commercial purposes, including roads, construction projects, environmental remediation, etc. NISCO appealed when taxes were collected on its purchase of limestone over four tax periods. NISCO claimed its purchase of limestone was subject to the “further processing exclusion” of La. R.S. 47:301(10)(c)(i)(aa), which narrowed the scope of taxable sales. The Louisiana Supreme Court granted NISCO’s writ application to determine the taxability of the limestone. The trial court ruled in the Tax Collectors' favor. After its review, the Supreme Court found that NISCO’s by-product of ash was the appropriate end product to analyze for purposes of determining the “further processing exclusion’s” applicability to the purchase of limestone. Moreover, under a proper “purpose” test, the third prong of the three-part inquiry enunciated in "International Paper v. Bridges," (972 So.2d 1121(2008)) was satisfied, "as evidenced by NISCO’s choice of manufacturing process and technology, its contractual language utilized in its purchasing of the limestone, and its subsequent marketing and sale of the ash." Therefore the Court reversed the trial court and ruled in favor of NISCO. View "Bridges v. Nelson Industrial Steam Co." on Justia Law