Louisiana Amends La. Rs. 30:10 Non-Consent Law

The Governor has signed into law an amendment to Louisiana's forced pooling statute, 30:10.

This is the statute that provides for forced pooling of non-consenting Working Interests (WI) and Unleased Mineral Interests (UMI). The amended statute showing changes is attached.

The key substantive change is that a WI owner who non-consents will now be forwarded the royalty  he owes under the terms of his lease (or the average royalty of the unit, whichever is less) which he is then obligated to forward to the royalty owner. Prior to this change, the WI owner would get nothing from the operator, and would have to pay the royalties out of pocket. Needless to say, this was a substantial incentive to the WI owner to make a deal, because he would get sued when he most likely failed to pay that royalty. 

This situation appears much more just to the unsuspecting royalty owner who leased to the wrong party. Instead of getting no royalty and some legal bills, they will now get most or all of the royalty they are owed. The WI owner still gets a 200% risk charge after payout, and the UMI still has no risk charge.

 

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1kw6x71km1v37Permalink Reply by 1kw6x71km1v37 on January 20, 2014 at 7:55

A UMI has no intent to tort, and does not do anything, nullifying any claim of negligence, so there should be no cause of action against a UMI. Under the legal doctrine of mandate, the Commissioner would be liable first anyway. I don't think that is going to happen anytime soon. JMHO.

Permalink Reply by pip318 on January 21, 2014 at 15:20

 thanks for your opinions...

1kw6x71km1v37Permalink Reply by 1kw6x71km1v37 on April 22, 2014 at 6:20

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1kw6x71km1v37Permalink Reply by 1kw6x71km1v37 on April 22, 2014 at 14:31

RB Dunlap,

That's it!

Gulf Explorer vs. Clayton Williams Energy      964 So.2d 1042

The court failed to recognize the legal absurdity of drilling and development operations authorized by a lessor not being paid royalty from those very operations.

Royalty (thanks, IRS) is a rent. Everyone knows what happens when the rent isn't paid. Eviction is imminent. Yet, Louisiana law will only cancel the lease under the direst of circumstances, after the longest of times. This is hell on the  impecunious landowner ill equipped to fight Big Oil to the bone.

This strikes me as an unconstitutional restraint of the freedom to contract under Article 1, Section 10 of the U.S. Constitution, albeit now protected mostly by the due process clause of the 14th Amendment.

You write a contract of lease requiring payment in so many days of the operator is in default for non-payment of royalties, he should be terminated upon default, or at  your discretion. It's really none of the State's business.

Of course, now it's different with the statutory changes. Been a long time coming.

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