Devon loses federal court challenge of millions in government royalty payments

Devon Energy recently lost an 8-year legal fight with the Interior Department over increased royalty payments the Oklahoma City oil and gas company was to pay for gas production from federal lands in New Mexico.
Devon challenged the 2016 order from the Interior Department’s Office of Natural Resources Revenue to pay $2,841,264.58 after the ONRR disallowed transportation and processing costs calculated by Devon in its royalty reporting records covering a 5-year period. The government order informed Devon it had to pay additional royalties after disallowing the transportation and processing costs.
Oklahoma City Chief U.S. District Judge Timothy DeGiusti ruled in favor of the Interior Department after Devon argued the order violated statutory requirements and exceeded its authority. Devon also contended the Department had violated the Due Process Clause by denying the company access to the information needed to take authorized deductions.
“After careful consideration of strong arguments by both parties, the Court is not persuaded that Plaintiffs have fulfilled their obligation,” wrote the Judge in his decision, adding,  “Plaintiffs have carefully crafted an argument that is facially persuasive but does not withstand scrutiny.”