Judge Combines Alabama, Louisiana Lawsuits over Federal Offshore Drilling Royalties

on 09/20/2012

A federal judge has decided to combine 2 lawsuits filed by the states of Alabama and Louisiana against the federal administration.  The dispute is over millions of dollars in oil and gas royalties.  The Alabama lawsuit involves $7.5 million, while Louisiana's lawsuit involves $2.8 million in royalties.

The Department of Interior set the ball rolling when it made an announcement that it had miscalculated the amount of royalties that it had to pay the states of Alabama and Louisiana for offshore oil and natural gas drilling activities in the Gulf of Mexico.  The Department of Interior demanded the return of some of the money that was paid to the 2 states every year since 1986. 

However, Alabama and Louisiana insist that the Department of Interior changed the boundaries used to determine the royalty payments, in violation of federal law.  According to the lawsuits, the changes to the division of the money were made against accepted bureaucratic procedures.

Both Alabama and Louisiana have special reason to be concerned.   If the matter is decided in favor of the federal administration, then some of the royalties that have gone to Alabama over the years could now go to Mississippi.

The 2 lawsuits that have been filed by the states have asked the judge to block the agency from changing calculation parameters in violation of federal guidelines.    The Department of Interior has asked the judge to dismiss the 2 lawsuits, but the judge has decided to combine these lawsuits.  The lawsuit names the Bureau of Ocean Energy Management, the Interior Department and the Office of Natural Resources Revenue.

The oil and gas lawyers at Watts Guerra Craft are dedicated to representing plaintiffs in contract and partnership disputes, breach of contract, and oil and gas lease disputes.

Tags: Oil and Gas Law, Commercial Litigation

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