Case Study:  Royalty Disputes

DGS assists clients in all aspects of royalty disputes, from initial audit inquiries, to discussions with the Minerals Management Service ("MMS") and State and Tribal royalty compliance officers, to litigation.  DGS’ public lands attorneys have a good working relationship with the MMS, its attorneys, and the State and Tribal entities auditing on behalf of MMS. 

When royalty disputes cannot be resolved DGS litigates those disputes before the MMS, the Interior Board of Land Appeals, and federal courts in the District of Columbia and across the West.  DGS has been on the forefront of royalty litigation over the deduction of oil and gas post-production costs such as compression, transportation, gathering, dehydration, and CO2 removal, and over the deduction of coal post-production costs such as transportation, washing, and treating.  Other royalty issues we have frequently faced are dual accounting, major portion pricing, the arm’s-length nature of contracts, affiliate sales, whether certain reimbursed costs are royalty-bearing, and Qui Tam actions for alleged underpayment of royalties. 

Some of the companies DGS represents in oil and gas royalty litigation involving federal and Tribal lands include BP, Burlington Resources, ConocoPhillips, Pure Resources, Unocal Corporation, and Williams Production RMT Company.  DGS has also litigated, arbitrated, and settled disputes over royalties on coal produced from federal and Tribal lands on behalf of, among others, Colowyo Coal Company, Kennecott Corporation, Montana Power, and Westmoreland.