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
 
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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. DEPT 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

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