CHAPTER 9 SPECIAL CONSIDERATIONS IN LITIGATING OIL AND GAS SUPPLY AGREEMENTS

• Jurisdiction: United States

Natural Resources and Environmental Litigation
(Dec 1989)
CHAPTER 9
SPECIAL CONSIDERATIONS IN LITIGATING OIL AND GAS SUPPLY AGREEMENTS
Michael L. Beatty
The Coastal Corporation
Houston, Texas

This paper is intended to be supplemental to the oral presentation at the Natural Resources and Environmental Litigation Seminar. Both written and oral material, however, are designed to discuss the special problems encountered in litigating oil and natural gas cases. The oral presentation will focus on the effective use of exhibits in the litigation process, while the written paper will examine other considerations which must be taken into account in litigating energy questions before lay juries.

When I first began the process of litigating major cases in the energy field, I was struck by the difficulties in trying to communicate effectively many of the most elementary aspects of the industry. One example will serve to illustrate the problem. In a very early case, I was an antitrust defendant. As part of the case, I had to have the jury understand from the very beginning the concept of a regulated monopoly. Imagine how to convince a jury to keep an open mind concerning a monopoly claim, while at the same time trying to explain that only one pipeline had served a particular town for the last 30 years. Then add to that the added difficulty of explaining fixed and variable costs, demand and commodity charges, rate making allocation formulae, PGAs, general rate cases, cost of service and tariffs.

The problems of explaining the industry are tremendous and frankly, the traditional method — using an expert — is usually unsatisfactory. Anyone who has ever spoken for any period of time with any individual who has spent their career at 825 North Capitol in Washington, D. C., (home of the Federal

[Page 9-2]

Energy Regulatory Commission) will quickly realize that while they may be experienced and sometimes even brilliant, they lapse into jargon without thinking about it. Any testimony becomes so sprinkled with numerical orders (380, 451, 490, 500) as to become incomprehensible. Each definition of one term bogs down in other terms equally ill defined. Yet I believe that juries can handle most complex energy cases without difficulty. All it takes is a little special planning.¹

The most critical part of educating the jury occurs early. In some jurisdictions, this will occur during voir dire. More often, in federal courts, it will occur in the opening. At that...