The State Mineral Board Hires Outside Counsel to Take the Reins Signaling a New Approach in Their Pursuit of State Royalty Payments

At its most recent meeting on July 12, 2023, the Louisiana State Mineral and Energy Board voted in favor of a resolution to hire as contract attorneys the Hosie Rice, Beychok, and Talbot, Carmouche & Marcello law firms. The firms’ primary role will be pursuing claims for the underpayment of natural gas royalties to the State and its agencies, all subject to future agreement as to the specific terms and provisions of the contract from the Attorney General’s office.

The Mineral Board administers the state’s proprietary interest in minerals and includes the Governor, the Secretary of the Department of Natural Resources, and nine members appointed by the Governor. The Board has exclusive authority over leasing state lands for mineral development and is responsible for collecting royalties under their agreements with mineral lessees. Traditionally, staff support to the Mineral Board has been provided by the Office of Mineral Resources, which conducts the day-to-day operations of the Board’s business. This new development, however, indicates a shift in that longstanding paradigm.

The decision to engage private legal counsel signals the Mineral Board’s intention to double down on its efforts in pursuit of state royalty payments. As outside counsel begin to take the reins, current and previous mineral lessees over state-owned lands and water bottoms should be aware of the unique and oftentimes tricky royalty payment provisions found in state mineral leases and operating agreements. It remains to be seen whether these outside attorneys will focus on long-recognized accounting standards and treatments or instead will pursue aggressive, novel arguments that may cause more long-term harm to the State than any short-term benefit to the State’s coffers.

If you would like to learn more about how this development may affect you or your business, please contact Gordon Arata. Our team is ready to assist you.

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