The question in Self v, BPX Operating Company is how to balance the Louisiana Civil Code Art 2292 principle of negotiorum gestio against Louisiana’s conservation statutes.  

When a tract of land is subject to a unit formed under La. R.S. 30:9(B) and 30:10(A(1) and the tract is not subject to a lease, the unit operator can sell the landowner’s share of production but must pay the landowner his pro rata share of “proceeds”.

The Selfs own unleased mineral interests that are in a forced drilling unit. BPX is the operator. The Selfs allege for themselves and for a class that BPX has been improperly deducting PPCs from their pro rata share of production. BPX has also been withholding amounts related to minimum volume commitments and capacity reservation fees. The district court granted BPX’s motion to dismiss, holding that the doctrine of negotiorum gestio provides a mechanism for BPX to properly deduct PPCs not otherwise covered by specific statutes.

Self contends that La. R.S 30:10(A)(3) requires BPX to pay on gross proceeds from the sale of production. BPX counters that “proceeds” is ambiguous and should be interpreted to mean net proceeds after deduction of PPCs. Regardless, 30:10(A)(3) is harmonized with the Louisiana Civil Code regime under the negotiorum gestio doctrine. The relationship between the parties is quasi-contractual under Louisiana law.

If negotiorum gestio applies, Art. 2297 allows reimbursement by a manager of another of all necessary and useful expenses. The gestor must act (1) voluntarily and without authority, (2) to protect the interests of another, and (3) in the reasonable belief that the owner would approve of the action if made aware of the circumstances.

The Selfs assert that BPX’s acts are not voluntary and without authority because it acts pursuant to a statutory duty and it acts to protect its own interests, not the interests of unleased mineral owners.

The Fifth Circuit determined that there is no controlling case law dealing specifically with the facts at hand and that it could not make a reliable guess as to the applicability of the doctrine. Thus, it certified to the Louisiana Supreme Court:

Does Louisiana Civil Code Art. 2292 apply to a unit operator selling production in accordance with La. R.S. 30:10(A)(3)?

Justice Dennis dissented, arguing that under 30:10(A)(3) a unit operator who sells an owner’s production under the authority of the statute cannot be a gestor because it acts with authority.  The majority disregarded the plain text of Art. 2292, he says. Rather than elaborate, we will wait for a definitive answer from the Louisiana Supreme Court.

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