Supreme Court Resolves Wind River Reservation Boundary Case

The U.S. Supreme Court ended a decade-long dispute on Monday, June 25, 2018, regarding the boundaries of the Wind River Reservation by denying certiorari in the combined case of Northern Arapaho Tribe, et al. v. Wyoming, et al. and Eastern Shoshone Tribe, et al. v. Wyoming, et al. The case answers two questions: (i) were the boundaries of the Wind River Reservation (the “Reservation”) diminished in 1905 by an agreement between the Northern Arapaho and the Eastern Shoshone (the “Tribes”), and (ii) do the Tribes have sovereignty over the City of Riverton, Wyoming?1

The 1868 Treaty of Fort Bridger established the Reservation, originally for the Eastern Shoshone Tribe.2 The Northern Arapaho Tribe joined the Reservation in 1878. The Reservation’s boundaries changed frequently throughout the first decades of its existence. In 1874, the southern boundary was changed when the Eastern Shoshone Tribe sold all of its land south of the forty-third parallel in the “Lander Purchase.”3 The Reservation’s boundaries changed again in 1897 with the “Thermopolis Purchase,” affecting the northern boundary. In 1904, the Tribes and the federal government entered into an agreement to open up largely unclaimed land north of the Wind River for sale to non-Indians under the Homestead Act.4 This agreement was enacted by Congress in 1905, but an unanswered question simmered under the surface for over one hundred years – did the 1905 agreement reduce the size of the Reservation?

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The Supreme Court’s Pen Strikes Down Quill-Now What???

On June 21, 2018, in South Dakota v. Wayfair, Inc., the U.S. Supreme Court struck down over fifty years of precedent when it ruled that retailers are no longer required to have a physical presence in a state to be subject to the state’s tax jurisdiction for sales tax purposes. Importantly, the question before the Court was never whether South Dakota has the authority to tax the sales of goods and services delivered to consumers within its borders, as there is no doubt that such transactions are subject to South Dakota sales and use tax. Rather, the question was: who bears the tax compliance responsibility – the retailer or the consumer?

Sales and use taxes can often be thought of as two sides to the same coin. If a transaction is subject to sales tax, generally, the retailer must collect the tax from the consumer then report the sale and remit the tax to the appropriate taxing authorities. If a retailer is not subject to the tax jurisdiction of the state (or local authority) to which the tax is owed, the consumer is required to remit the tax (as a use tax) and report their purchase to the appropriate taxing authority. The question before the Court in Wayfair was: when may a state exercise tax jurisdiction over a retailer and require such retailer to collect, remit and report sales tax to the state?1

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Trump NEPA Initiatives to Expedite Energy Infrastructure: “One Federal Decision”

One of President Trump’s first actions was to issue Executive Order 13766, “Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects” (Jan. 24, 2017), directing the Council on Environmental Quality (“CEQ”) to begin efforts to identify high priority infrastructure projects and expedite federal environmental reviews required by the National Environmental Policy Act (“NEPA”). This was followed by the more detailed EO 13807, “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects” (Aug. 15, 2017) describing the “One Federal Decision” (“OFD”) policy. The CEQ, the Department of the Interior (“DOI”) and the Bureau of Land Management (“BLM”) have taken several actions to implement this presidential OFD direction.

The challenge the EO is trying to address is the integration and timely coordination of the multiple federal agencies, federal laws and permit decisions that are triggered by a major infrastructure project. Expediting NEPA is not new; Congress and prior administrations have addressed the need for permit streamlining for at least the last 15 years. For example, in 2001, President George W. Bush created a NEPA Task Force to modernize agency regulations implementing NEPA. In 2004, BLM issued a “cooperating agency” rule directing that BLM invite state, local and tribal governments to participate as cooperating agencies in the Bureau’s NEPA processes. In 2003, as part of the President’s Healthy Forest Initiative, bi-partisan legislation, the Healthy Forest Restoration Act, was enacted to expedite NEPA and court review of hazardous fuels reduction projects. Congress also created expedited NEPA for airports (Vision 100 Act of 2003), for highway and transit construction (SAFETEA-LU Act of 2005), and for oil and gas and LNG terminals (Energy Policy Act of 2005).

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Zero Carbon Natural Gas Would Support More Fracking and More Natural Gas Power Plants

One of the arguments against fracking, and the natural gas industry in general, is that burning gas releases carbon dioxide, which contributes to global warming.i What if burning natural gas resulted in no CO2 emissions? In the next three to five years that may be true.

MIT Technology Review has identified “zero carbon natural gas” as one of ten breakthrough technologies for 2018. NET Power, LLC is currently testing the concept with a 50-megawatt demonstration power plant in LaPorte, Texas. “The plant puts the carbon dioxide released from burning natural gas under high pressure and heat, using the resulting supercritical CO2 as the ‘working fluid’ that drives a specially built turbine. Much of the carbon dioxide can be continuously recycled; the rest can be captured cheaply.”ii NET Power plans to sell or use the remaining CO2 for enhanced oil recovery and manufacturing cement and plastics. 8 Rivers Capital invented and is advancing the Allam Cycle technology behind the project.

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Mandatory Reporting And The Rise Of Elder Abuse

The number of elderly people continues to rise across the nation. In fact, it is projected that approximately 1 in 5 Coloradans will be 65 years of age or older by the year 2030. Unfortunately, with the rise in the number of elderly people, the frequency of elder abuse is also on the rise, particularly for widows. Additionally, a recent report prepared by the state’s Strategic Action Planning Group indicated that Colorado citizens do not believe that the needs of seniors are a top priority for elected officials.

In response to the rise in elder abuse, legislation was passed a few years ago to require certain people to be held accountable to report elder abuse to law enforcement. C.R.S. § 18-6.5-108. Under Colorado law, these people are defined as mandatory reporters and are required to file a report with law enforcement if they witness or become aware of the fact that an at-risk elder, defined as any person 70 years of age or older, has been or is at imminent risk for abuse, caretaker neglect or exploitation. Exploitation is defined as the taking of an at-risk elder’s money or other assets against their will or without their knowledge. The report must be filed within 24 hours of observing or discovering the abuse, caretaker neglect or exploitation. Willful failure by a mandatory reporter to make a report is a class 3 Misdemeanor. Conviction can result in a fine of up to $750.00, a jail sentence of up to 6 months, or both.

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Wyoming Supreme Court Punts on Potential BLM “First in Time, First in Right” Interpretation of Competing Mineral Developers

A recent case before the Wyoming Supreme Court failed to clarify what, if any, remedies are available to conflicting developers of federal mineral rights on overlapping lands. Rather, the Court’s ruling in Berenergy Corporation v. BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC, and BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC v. Berenergy Corporation1 stated it could not decide the issue, while not so subtly asking the Secretary of the Interior and Bureau of Land Management (BLM), which could decide, to no longer “sit this one out.”

Berenergy Corporation (Berenergy) owned three oil and gas leases granted by the BLM. Berenergy originally filed for a declaratory judgment that the rights under its leases were superior to those under coal leases on overlapping lands that the BLM had issued later to affiliates of Peabody Energy Corporation (Peabody). Berenergy sought to prevent Peabody from shutting down Berenergy’s wells for fifteen to twenty years while Peabody mined areas in the overlapping land, and to prevent interference with Berenergy’s operations, including plans to water-flood oil-bearing formations covered in its leases.

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What Changes Does the “Tax Cuts and Jobs Act” Make to Estate Planning?

There are a variety of tax law changes as a result of the “Tax Cuts and Jobs Act” (the “Act”). However, the following is a brief summary of the specific changes that will impact estate planning issues.

Although only approximately 0.2% of the population was subject to the federal estate tax prior to the Act, now the estate tax will apply to even fewer people. If you died in 2017, you could leave up to $5,490,000.00 estate tax free as a single person and $10,980,000.00 as a married couple. The Act changed the amount to $11,200,000.00 for a single person and $22,400,000.00 for a married couple. In addition to amounts that you can leave on death, these figures also apply to gift tax exemptions as well as generation-skipping transfer tax exemptions. The amounts will be adjusted for inflation in 2018 through 2025. However, on January 1, 2026, the amounts are scheduled to revert to the 2017 amounts adjusted for inflation. The top estate tax rate will remain at 40% and the tax rate for generation-skipping transfers will remain at a flat rate of 40%.

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IBLA Upholds ONRR $3 Million+ Penalty For A Company’s Delay In Correcting Royalty Report Forms

A recent decision of the Interior Board of Land Appeals (IBLA) vividly makes the point that the Department of the Interior considers accurate royalty reporting to be equally if not more important than payment of the proper amounts. In Quinex Energy Corp., 192 IBLA 88 (2017), the operator underpaid royalties on several tribal and allotted leases covering lands on the Uintah and Ouray Indian Reservation in Utah in the amount of $120,242 because it used “erroneous gas prices.” The decision does not explain the reason for the erroneous prices but apparently the underpaid amount was promptly paid upon receipt of the Office of Natural Resources Revenue (ONRR) order to report and pay sent to Quinex. However, it took Quinex between 8 and 22 months to correct the royalty reports on the ONRR-2014 forms that it had filed relating to the royalty underpayments. The ONRR sent civil penalty notices to Quinex assessing penalties in the aggregate amount of $3,217,250 - more than 26 times the amount of the underpaid royalty! The penalty was assessed based on $25 per day for 229 reporting violations (one for each inaccurate line on the 2014 form) that continued for between 8 and 22 months.

The ONRR has statutory authority to assess civil penalties of up to $25,000 per day per violation for knowingly or willfully preparing, maintaining or submitting false, inaccurate, or misleading royalty reports. 30 U.S.C. § 1719(d). Under the Federal Civil Penalties Inflation Adjustment Act of 1990, that $25,000 statutory maximum is now $59,834 (30 C.F.R. § 1241.60(b)(2)). At the time of the events involved in the Quinex case, $25,000 was the maximum penalty, which ONRR reduced, in its discretion, based on the size of the payor (Quinex stated that it had five full-time and four part-time employees). Although there was no allegation that Quinex had behaved willfully, the IBLA stated that it did behave knowingly, because of the significant time between receipt of notice of the order to report and pay and final correction of the reports. The regulations define “knowingly or willfully” to include an act or failure to act committed with actual knowledge, deliberate ignorance, or reckless disregard of the facts surrounding the event or violation. 30 C.F.R. § 1241.3(b). No proof of specific intent to defraud is required as a condition to assessement of a civil penalty for knowing and willful violations of the regulations.

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Interior Reins in the MBTA to Remove a “Domestic Energy Burden”

Mining, oil and gas, wind, solar and transmission companies who have struggled to comply with the Migratory Bird Treaty Act of 1918 (MBTA) received an early Christmas present from the U.S. Department of the Interior’s lawyer. On December 22, 2017, the Principal Deputy Solicitor issued a binding Memorandum Opinion, M-37050, to limit the reach of the MBTA to intentional, unlawful acts of hunting and poaching. In a 41-page legal analysis, the Solicitor concludes, “The text, history and purpose of the MBTA demonstrate that it is a law limited in relevant part to affirmative and purposeful actions, such as hunting and poaching, that reduce migratory birds and their nests and eggs, by killing or capturing, to human control. . . . Interpreting the MBTA to criminalize incidental takings raises serious due process concerns and is contrary to the fundamental principle that ambiguity in criminal statutes must be resolved in favor of defendants.” This action came in response to Executive Order 13783, Promoting Energy Independence and Economic Growth (March 28, 2017) and was a regulatory review specifically identified by Interior in the “Final Report: Review of the Department of the Interior Actions that Potentially Burden Domestic Energy,” (October 24, 2017) at pp. 32-33.

Why was addressing the MBTA a priority for the Trump Administration? For one, it was a “midnight rule” exemplifying the Obama-era regulation of the energy industry. On January 10, 2017, as the Obama Administration was drawing to a close, its Solicitor issued a legal analysis determining that the MBTA should be interpreted to cover “incidental take” (“apply broadly to any activity”) of migratory birds, and the U.S. Fish and Wildlife Service (USFWS) issued an implementing guidance document. “Incidental take” liability means that otherwise lawful actions like constructing a wind turbine, maintaining an oil and gas wastewater facility or constructing a transmission line could result in prosecutable take under the MBTA.1

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Community Land Trusts and the Effort to Implement Affordable Housing

Community land trusts (“CLTs”) are gaining popularity across the country as many communities and city leaders search for ways to develop and maintain affordable housing. Although CLTs are not a new tool, they are becoming more widespread with over 200 now in operation and more likely to follow as people flock to city centers.1 CLTs developed as a mechanism to combat complex social issues - the first CLT was established in Georgia as part of the civil rights movement - and they are certainly not without their critics. It is undeniable, however, that the demand for affordable housing only continues to rise and CLTs may be one answer to this growing problem.

A CLT is defined by the Institute for Community Economics as “an organization created to hold land for the benefit of a community and of individuals within the community.”2 Although typically a nonprofit organization, there are numerous CLT models that can be tailored to fit the community in which they operate. CLTs are typically governed by a board of trustees or directors and acquire land either through purchase or donation. The acquired land can be vacant, agricultural, or residential in nature, but the goal is to determine the best use of this land in the community and develop it accordingly.

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The Surge in DUC Wells Begs the Question: How Long Can a DUC Well Hold a Lease?

Just over a year ago, the U.S. Energy Information Administration (“EIA”) began including a supplement to its Drilling Productivity Report that contains monthly estimates of the number of drilled but uncompleted (“DUC”) wells in seven key oil and gas producing basins (the Anadarko, Appalachia, Bakken, Eagle Ford, Niobrara, Haynesville, and Permian basins). Prior DUC well inventory numbers made headlines starting in late 2015 (see here and here). The most recent EIA Drilling Productivity Report 1 shows that while DUC well inventory began to subside in the latter part of 2016 and first part of 2017, there has been a recent surge - largely led by significant growth in the Permian basin.

The economic impact of completing and bringing these wells online could create a surge in oil supply and destabilize recent crude oil price gains. Aside from the potential implications to crude oil prices, one consideration that remains top of mind for operators with DUC wells on maturing oil and gas leases is whether, or for how long, a DUC well can hold a lease.

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Russia Fails to Defeat Fracking

Gazprom, Russia’s government owned natural gas company, has for decades supplied many Eastern European countries with most or all of their natural gas. It has also had a habit of using its dominant market position to bully its customers into paying more, often by cutting off natural gas supplies needed for heating in midwinter. Gazprom reduced or completely stopped flows of gas to Ukraine in 2006 and 2008, to 18 European countries in 2009, to Ukraine and Poland in 2014, and to Ukraine, Bulgaria, Romania, Slovenia and Bosnia in 2015.

Several years ago Russia and Gazprom identified U.S. hydraulic fracturing technology (fracking) as a threat to Gazprom’s market share, especially its near monopoly over supplying gas to Eastern Europe. The Russians realized that fracking technology had the potential to undermine their position by increasing the development of natural gas that would compete on the open market with Russian gas. In an attempt to address this threat, Russia turned to RT (formerly Russia Today), Russia’s government controlled television network aimed at influencing audiences outside of Russia.

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IBLA Resolves Procedural Question for Review of Lease Suspension Decisions

Most decisions of the Bureau of Land Management (BLM) are appealable to the Interior Board of Land Appeals (IBLA). However, some decisions must first be reviewed by the applicable BLM State Director. Parties who wish to appeal from decisions issued under the oil and gas operating regulations (43 C.F.R. Part 3160) and unitization regulations (43 C.F.R. Part 3180) must first seek State Director review before appealing to the IBLA.

Until recently, it was unclear whether a decision granting, denying or lifting a suspension of a federal oil and gas lease was a decision issued under the Part 3160 regulations, and therefore subject to State Director review, or was a decision issued under the Part 3100 regulations appealable directly to the IBLA. The reason for this uncertainty was that regulations pertaining to suspensions of leases are found in both Part 3160 (43 C.F.R. §3165.1) and Part 3100 (43 C.F.R. § 3103.4-4). Consequently, in the past, if a suspension request was denied by the BLM, we advised clients to file both a State Director review request and a provisional notice of appeal with the IBLA. Of course, the duplicate processes added cost and time to the appeal. In their responses to such provisional notices of appeal, the solicitor’s office generally took the position that such decisions should first be reviewed by the State Director. Now there is a recent decision of the IBLA that clarifies that decisions challenging a BLM suspension decision should first be reviewed by the State Director under the State Director review regulations.

In Southern Utah Wilderness Alliance, 190 IBLA 152 (2017), the IBLA addressed the ambiguity as to the proper appeal route from suspension decisions. It acknowledged that suspsensions are addressed in both parts of the regulations but noted that the regulation at § 3165.1(b) directs the authorized officer to act on suspension applications filed under § 3103.4-4, so that the decision-making authority is more clearly placed in the Part 3160 regulations. The Board also noted that, historically, when the U.S. Geological Survey (USGS) managed operations on federal leases, suspension decisions were first appealable to the Director of the USGS and then to the IBLA. Finally, the IBLA cited to a few of its earlier decisions which, although not directly addressing the question of whether suspension decisions should first be reviewed by the State Director, at least assumed that was the proper route. With the Southern Utah Wilderness Alliance decision, it is now clear that review of any BLM decision granting or denying a suspension of an oil and gas lease must first be reviewed by the State Director under the regulation at § 3165.3(b).

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The Battle over Local Control Heats up Again as Thornton’s Oil and Gas Regulations Challenged in Court

Six weeks following the City of Thornton’s adoption of strict new regulations on oil and gas operations, the Colorado Oil and Gas Association (“COGA”) and the American Petroleum Institute (“API”) have filed suit, in what looks to be just the latest clash in Colorado’s struggle over who manages oil and gas in the state – the Colorado Oil and Gas Conservation Commission (“COGCC”) or cities and towns?

In August, after what COGA described as “an extremely limited stakeholder process,” Thornton’s City Council adopted Ordinance No. 3477 by a 7-2 vote. The ordinance provides for much stricter standards than the rules of the COGCC. Some of the differences are highlighted below:

   Thornton's Ordinance COGCC Rules
Setback from Buildings/Lots Well pad must be at least 750 feet from existing or planned buildings and existing or platted residential lots (Section 18-881.(a)(1), (2)) Well must be at least 500 feet from a Building Unit (Rule 604.a.(1))
Setback from Water Bodies Well pad must be at least 500 feet from the ordinary High Water Mark (HWM) or the edge of the bank of any irrigation or lateral ditch (Section 18-881.(a)(3)) Setbacks only required for Drilling, Completion, Production and Storage Operations within Public Water System Surface Water Supply Areas (Rule 317B)
Surface Disturbance Multiple wells proposed by Operator must be located on a multi-well pad
(Section 18-881.(b)(1))
Operators must consolidate wells on multi-well pads only in Designated Setback Locations and only where technologically feasible and economically practicable (Rule 604.c.(2)E.i.)
Liability Insurance Operator must maintain general liability insurance of $5 million per occurrence (Section 18-881.(y)) Operator must maintain general liability insurance of $1 million per occurrence (Rule 708)
Flowlines  Abandoned flowlines must be removed (Section 18-881.(c)(1))  Flowlines may be abandoned in place if disconnected, buried, and permanently sealed (Rule 1103)

 

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Tenth Circuit Finds Wyoming Statutes Concerning Data Collection on Public Lands Violate First Amendment

In what is being hailed as a victory for conservation groups, the Tenth Circuit recently held that Wyoming Statutes1 concerning data collection on public lands violate the First Amendment. The statutes at issue were passed after fifteen Wyoming ranchers settled with Western Watersheds Project (“WWP”) after filing a lawsuit accusing the group of trespassing on private lands in Fremont, Sublette, and Uinta Counties in order to access public lands to sample water for fecal coliform. The statutes imposed both criminal and civil liability on any individual who entered “open land for the purposes of collecting resource data” without permission of the owner. “Resource data” is broadly defined and includes “numerous activities on public lands, such as writing notes on habitat conditions, photographing wildlife, or taking water samples, so long as an individual also records the location from which the data was collected.”2 In order to fall under the statutes, resource data must have also been submitted to a government agency.3 The criminal statute imposed a maximum penalty of a year in jail and a fine of $1,000.00 for first-time offenders and a minimum of ten days’ imprisonment (maximum of one year) and a $5,000.00 fine for repeat offenders; notably, the fine and imprisonment term were greater than those imposed under Wyoming’s preexisting general trespass statutes.4 The civil statute imposed liability for proximate damages and litigation costs, including attorneys’ fees.5 Additionally, any government agency that received resource data collected after a trespass occurred was required to expunge any collected data from its records.6

Several conservation groups, including the WWP, National Press Photographers Association, Natural Resources Defense Council, PETA and Center for Food Safety, sued the State in Federal District Court7, arguing that the imposition of these greater penalties amounted to a violation of several constitutional rights, including the Free Speech and Petition Clauses of the First Amendment and the Equal Protection Clause of the Fourteenth Amendment, and argued that they were preempted by Federal law. After the State filed a Motion to Dismiss the claims, the Federal District Court allowed the Plaintiffs’ claims regarding the First Amendment and Equal Protection Clause to go forward, but held that the Plaintiffs failed to state a preemption claim.8

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Know When to Hold ‘em and Know When to Fold ‘em - Managing Deal Fatigue During the Negotiation Process ~ Part 2

Upon completion of the majority of due diligence, frustration with the transactional process has generally started to set in, at least for sellers. However, the process is far from over. If a purchase and sale agreement has not already been signed, the real negotiations begin at this stage. It may also take time to draft other major transaction documents such as employment contracts and forward-looking operational agreements such as operating agreements and shareholder agreements.

It is extraordinarily important for parties to review all documents, or at least changes to those documents, as those documents and changes are prepared. The parties should discuss the documents with their attorneys and accountants so that they understand the financial and legal implications for each document as well as the purpose of each document. The role of accountants, attorneys and similar advisors is to provide advice, counsel and guidance during the negotiation process; however, all decisions are ultimately up to the parties. Consequently, the parties must understand the implications and nuances of each term and condition in the various documents.

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A “Momentous” Supreme Court Term

The United States Supreme Court was back in action on Monday, October 2, 2017, and is now moving into what Justice Ruth Bader Ginsburg says is going to be a “momentous” upcoming term. This will be the first full term for Justice Neil M. Gorsuch, who replaced Justice Scalia, providing an extended look at his jurisprudence. The upcoming term also promises to showcase cases touching several hot button issues. Here is a quick overview of some of the notable cases coming before the Supreme Court.1

Gill v. Whitford, No. 16-1161, which is being argued before the Supreme Court on Tuesday, October 3, 2017, could have important impacts in how elections are conducted. In this case, the Supreme Court is being asked to rule that extreme political gerrymandering violates the U.S. Constitution. The Supreme Court has never struck down a voting map on the ground that politics overly impacted how it was drawn, but Justice Kennedy has expressed uneasiness about this issue in the past. The decision in this case has the potential to not only reshape voting maps, but in so doing, shift the political landscape.

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Know When to Hold ‘em and Know When to Fold ‘em - Managing Deal Fatigue in Mergers and Acquisitions ~ Part 1

Anyone who has ever purchased a car or bought a house knows that purchases and sales of large assets are stressful, time consuming, expensive and involve more paperwork than expected. In many transactions, either or both parties reach a point in the process where they just want the process to be done.  In corporate transactions, this point in the decision making process can be dangerous because parties agree to liabilities, indemnities, potential losses, reductions in the purchase price, broad or too narrow non-competes, unreasonable or unlikely forward measured financial requirements and generally unfavorable terms, or they cut corners on due diligence simply to make the process stop.  Alternatively, either or both parties throw their hands up and walk away from a good deal, not because of the deal terms, but out of frustration with the process.

My partner, Ken Barbe, has astutely termed this behavior “Deal Fatigue.”  We liken it to the point in a torture session where the individual being tortured is willing to say anything in order to make the torture stop.  Decisions made as a result of Deal Fatigue can have long-reaching fiscal, legal and mental impacts. Accordingly it is important to manage Deal Fatigue to the extent possible so that parties do not make a bad deal or walk away from a good deal.

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Standing to Challenge Decisions Approving Federal Units or Suspending Federal Leases

Non-governmental organizations that oppose oil and gas development have in the last few years begun to challenge not only Bureau of Land Management (BLM) decisions authorizing oil and gas drilling operations but also BLM decisions that could have the effect of continuing leases in effect that might otherwise expire. In two recent decisions, the Interior Board of Land Appeals (IBLA) reiterated its position that, in order to seek State Director review of a decision or to appeal a decision to the IBLA, the appellant must demonstrate that the “legally cognizable interests” of it or its members will be adversely affected by the decision under review. Southern Utah Wilderness Alliance, 190 IBLA 152 (2017) (SUWA); Citizens of Huerfano County, 190 IBLA 253 (2017) (Huerfano).

Legally cognizable interests can include cultural, recreational and aesthetic use and enjoyment of the lands. But there must be a causal relationship between the alleged injury to those interests and the BLM decision under review. In addition, the threat of injury must be real and immediate. In SUWA, the appellant challenged a BLM decision suspending leases committed to the Deseret Unit in the Uintah Basin. BLM granted the suspension because its approval of the drilling permit (APD) for the unit obligation well would be delayed for several months while analysis of the proposal under the National Environmental Policy Act (NEPA) was prepared. SUWA asserted that the suspension was improperly granted because the unit operator had allegedly delayed in developing the leases, its application was not supported by sufficient information, and the BLM should have prepared an environmental assessment or environmental impact statement on the suspsension application. The IBLA did not address the substance of SUWA’s allegations because it found that SUWA had failed to demonstrate that its members’ health, recreational, spiritual, educational, aesthetic and other interests would be directly harmed by BLM’s decision to approve the suspension. The Board concluded that SUWA’s interests would be harmed only if oil and gas development occurred (i.e., if the APD was approved). The suspension of the leases did not result in “real and immediate” harm to SUWA’s interests so there was no causal link between the alleged injury and the BLM decision to suspend the lease. Any injury to SUWA which might occur was contingent on a future decision to approve drilling. Therefore, the IBLA upheld the State Director’s decision dismissing SUWA’s State Director review request for lack of standing.

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Colorado Supreme Court upholds optional liquidated damages provisions

This week the Colorado Supreme Court answered a lingering question about liquidated damages provisions; namely, are they enforceable if the non-breaching party can elect to pursue actual damages instead? The Court said yes. Ravenstar v. One Ski Hill Place, 2017 CO 83.

Liquidated damages are an amount the parties designate in their contract as a reasonable compensation for a specific breach of a contract. To be enforceable, courts typically require that liquidated damage provisions meet three elements: "1) the parties intended to liquidate damages; 2) the amount of liquidated damages, when viewed as of the time the contract was made, was a reasonable estimate of the presumed actual damages that the breach would cause, and 3) when viewed again as of the date of the contract, it was difficult to ascertain the amount of actual damages that would result from a breach.” Id. at ¶ 10 (quotation marks omitted).

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