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Jurisdiction and Venue

The Outer Continental Shelf Lands Act (OCSLA), vests the U.S. with jurisdiction over the soil and seabed of the oceans and artificial islands and fixed structures located thereon, and grants to the U.S. the mineral resources that are part of the Outer Continental Shelf[i].

In Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521 (5th Cir. La. 2000) the court held that a federal oil and gas lease on the outer continental shelf has been deemed adjacent to Alabama, rather than Louisiana, for the purpose of determining the applicable law and hence the most appropriate forum for litigation between the parties to a joint operating agreement where although the lease was closer to Louisiana, several federal government agencies considered it to be off the coast of Alabama, and it fell on the Alabama side of the projection of the Mississippi-Alabama boundary.

Four types of evidence in the adjacency analysis are[ii]:

  • geographic proximity;
  • which coast federal agencies consider the subject platform to be “off of”;
  • prior court determinations; and
  • projected boundaries.

A court with jurisdiction over the subject matter and persons in litigation arising out of the operations of the gas and oil industry has power, after its jurisdiction is properly invoked, not only to render the final judgment disposing of the case but also to make any necessary interlocutory orders such as an order appointing a receiver to operate the leasehold.

A royalty interest under oil and gas leases issued on public lands is not real estate and an action involving the right to accumulated royalties already produced and royalties thereafter to accrue need not be commenced in the county in which the lands subject to the royalties are located.

An oil and gas lease is an interest in land[iii].  However, oil and gas when produced and severed becomes personal property.

Thus, action to recover an oil royalty involved an interest in real estate, so that action was properly brought in county where realty was located rather than in county where defendant qualified[iv].

[i] Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521 (5th Cir. La. 2000).

[ii] Id.

[iii] Phillips Petroleum Co. v. Mecom, 375 S.W.2d 335 (Tex. Civ. App. Austin 1964).

[iv] Williams’ Adm’r v. Union Bank & Trust Co., 283 Ky. 644 (Ky. 1940).

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