State Politics

Texas oil company wants to move Idaho natural gas royalties lawsuit to federal court

A class-action complaint filed by nine Idahoans who signed leases with a Texas-based oil and gas producer may be moved from state court to federal court.

The complaint, initially filed in May in Third District Court in Payette, alleges Alta Mesa committed fraud and breached the leases by underpaying royalties to the leaseholders on the natural gas it harvested from their property.

On Thursday, Alta Mesa filed notice to move the complaint to federal court because neither it nor any of the six other companies named in the complaint are from Idaho. Under federal law, defendants in a civil action filed in state court can move the case to that state’s federal court if none of the defendants are residents of that state.

In this case, the parent company, Alta Mesa Resources, is incorporated in Delaware and based in Texas. Several of its subsidiaries named in the complaint are organized in Delaware or Texas.

Also named in the complaint is a new company, High Mesa Holdings, LP, which says it is separate from Alta Mesa and took over all Idaho operations earlier this year. It is organized under Delaware law and its members are residents of Texas and New York, according to court documents.

The complaint alleges Alta Mesa “manipulated royalty accounting methods by calculating royalty on a net price rather than a gross price, by taking midstream deductions from royalty that the oil and gas leases do not expressly authorize, by failing to account for and pay royalties on all products produced, used, or sold, and by engaging in transactions with affiliates which reduced royalty paid…”

The state of Idaho has pending investigations into Alta Mesa for not complying with state rules and for possibly shorting the state in royalty payments for leases Alta Mesa has on state-owned land.

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Idaho Statesman investigative reporter Cynthia Sewell was named Idaho Press Club reporter of the year in 2017 and 2008. A University of Oregon graduate, she joined the Statesman in 2005. Her family has lived in Idaho since the mid-1800s.