Staying Out of Treble: A Comprehensive Civilian Approach to the Louisiana Mineral Code Provisions on Damages for Unpaid Royalties

• Author: Nathan Telep
• Position: J.D./D.C.L., 2015, Paul M. Hebert Law Center, Louisiana State University.
• Pages: 995-1024

Staying Out of Treble: A Comprehensive Civilian

Approach to the Louisiana Mineral Code Provisions

on Damages for Unpaid Royalties

TABLE OF CONTENTS

Introduction .................................................................................. 995

I. The Law of the Land: The Louisiana Mineral Code .................... 997

A. The Development of Mineral Law in Louisiana .................... 998

B. Mineral Leases and Remedies for Nonpayment of

Royalties............................................................................... 1001

II. Civilian Interpretation of the Mineral Code Articles .................. 1004

A. Exegetical Method: Using Logical and Historical

Interpretations to Show that the Mineral Code Does Not

Provide for Treble Damages ................................................ 1005

1. Logical Interpretation .................................................... 1006

2. Historical Interpretation ................................................. 1011

B. Teleological Method ............................................................ 1013

C. Secondary Sources ............................................................... 1015

1. Jurisprudence ................................................................. 1015

a. The Second Circuit Skirts Treble ............................ 1016

b. The Third Circuit Runs into Treble ......................... 1017

c. Justice Knoll Tries to Bail the Appellate Courts

Out of Treble ........................................................... 1018

d. Courts That Stayed Out of Treble ........................... 1018

2. Doctrine ......................................................................... 1019

III. A Proposal for the Mineral Code to Clearly Stay Out

of Treble ..................................................................................... 1023

Conclusion .................................................................................. 1024

INTRODUCTION

Louisiana’s economy has not been the same since September 1901,

when oil was first discovered near Jennings, Louisiana.1 Since this

Copyright 2016, by NATHAN TELEP.

1. See Patrick H. Martin, Preface to STATE OF LOUISIANA MINERAL CODE

AND FORMS, at iii (2009); Patrick S. Ottinger, From the Courts to the Cod e: The

Origin and Development of the Law of Louisiana on Mineral Rights, 1 LSU J.

ENERGY L. & RESOURCES 5, 9 (2012).

996 LOUISIANA LAW REVIEW [Vol. 76

discovery, the oil and gas industry has expanded immensely in the state,

establishing itself as a vital part of Louisiana’s economy.2 The oil and gas

industry had a $73.8 billion impact on the Louisiana economy in 2011 and

provided nearly 287,000 energy-sector jobs throughout the state.3

Louisiana ranks second in the United States in the production of crude oil,

second in the production of natural gas, and second in its capacity to refine

petroleum.4 Given the prevalence of mineral leases in the state, the

interests of Louisiana mineral lessors and lessees contribute significantly

to the sizeable economic impact of the oil and gas industry.5

Because mineral leases can typically be very valuable, it is

unsurprising that lease disputes often result in litigation between mineral

lessors and lessees.6 Several different articles in the Louisiana Mineral

Code provide remedies for one of these types of disputes—a mineral

lessee’s failure to pay royalties.7 These articles provide that “[t]he court

may award as damages double the amount of royalties due, interest on that

sum from the date due, and a reasonable attorney’s fee.”8 Over the years,

Louisiana courts and scholars alike have interpreted this code provision

differently, and the Louisiana Supreme Court has yet to provide any

guidance on the interpretation.9

2. See generally LOREN C. SCOTT, THE ENERGY SECTOR: STILL A GIANT

ECONOMIC ENGINE FOR THE LOUISIANA ECONOMY (2014) (an economic impact

study of the oil and gas industry commissioned by Mid-Continent Oil and Gas

Association in partnership with Grow Louisiana Coalition).

3. Id. at iii.

4. Id.

5. See Louisiana Sta te Mineral Royalty Revenue, LA. DEP’T NAT. RESOURCES,

http://dnr.louisiana.gov/assets/TAD/data/facts_and_figures/table28.htm [perma.cc/7

G9D-MYLB] (last updated May 27, 2015) (showing that the state of Louisiana had a

revenue of $568.42 million from mineral leases in 2013).

6. Id.

7. See LA. REV. STAT. ANN. §§ 31:139, :140, :212.23(C) (2000). Title 31 of

the Louisiana Revised Statutes is typically referred to as the “Louisiana Mineral

Code,” and the sections of the Title 31 are typically referred to as “articles.” Id. §

31:1. Accordingly, this Comment will refer to all sections of Title 31 as articles

of the Louisiana Mineral Code.

8. Id. § 31:139; accord id. § 31:140; see also id. § 31:212.23(C) (“[T]he

court may award as damages double the amount due, legal interest on that sum

from the date due, and a reasonable attorney’s fee . . . .”). Louisiana Mineral Code

article 31:138.1(D) uses the same language, except the award is mandatory rather

than discretionary. Id. § 31:138.1(D).

9. Compare Cimarex Energy Co. v. Mauboules, 40 So. 3d 931, 952 (La.

2010) (Knoll, J., dissenting) (stating that the natural reading of Mineral Code

article 212.21 calls for double, rather than treble the amount of royalties due as

damages), with Cimarex Energy Co. v. Mauboules, 6 So. 3d 399, 407 (La. Ct.

App. 3d 2009) (holding that Mineral Code article 212.23(C) provides for treble

damages), and Wegman v. Cent. Transmission, Inc., 499 So. 2d 436, 451–52 (La.

Ct. App. 2d 1986) (affirming the trial court’s JNOV award of triple the amount of