Fortune Natural Resources Corp. v. United States Department of Interior
2015 U.S. App. LEXIS 20114
| 5th Cir. | 2015Background
- ATP Oil & Gas filed bankruptcy in August 2012; Fortune Natural Resources owned a 12.5% working interest in an ATP lease that terminated in 2010, creating decommissioning obligations.
- Under a Joint Operating Agreement, ATP (as operator) was responsible for plugging and abandonment, with costs allocated to co-lessees in proportion to interest; Fortune filed a proof of claim for $3,385,300 as its potential share.
- ATP sought bankruptcy-court approval to sell substantially all assets to Bennu; Interior initially objected but withdrew after Bennu agreed to fund a $44,255,000 trust (administered by BOEM) for remaining decommissioning obligations.
- Fortune objected to the Sale—though its lease was not a purchased asset—arguing the trust allocation should cover decommissioning for the Fortune Lease; the bankruptcy court overruled Fortune and entered a Final Sale Order; the sale closed without a stay.
- Fortune appealed the Final Sale Order to the district court; the district court dismissed for lack of standing under the “person aggrieved” test and as statutorily moot; Fortune appealed to this court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fortune has standing to appeal the bankruptcy court's Final Sale Order under the “person aggrieved” test | Fortune: the Final Sale Order and BOEM’s allocation of trust funds directly and adversely affected Fortune’s pecuniary interests because prior orders indicated trust funds would cover leases like Fortune’s | Bennu/Interior: Fortune failed to show the Final Sale Order caused a direct pecuniary injury; the lease wasn’t a purchased asset and Fortune would not have received estate funds absent the Sale | Fortune lacks standing; it did not show the bankruptcy order directly and adversely affected it pecuniarily |
| Whether prior versions of the sale orders obligated BOEM to fund decommissioning for the Fortune Lease | Fortune: earlier order language (“any or all Federal Leases that do not constitute Purchased Assets”) required funding for non-purchased leases like Fortune’s | Court/Defendants: language permits discretionary allocation (“any or” is ambiguous and does not guarantee funding for every non-purchased lease) | Court rejected Fortune’s construction; even if language differed earlier, Fortune did not show a causal pecuniary effect |
| Whether Fortune’s separate obligations to BOEM (letter requiring decommissioning) establish causal injury traceable to the Final Sale Order | Fortune: BOEM’s decommissioning demand shows injury and thus standing | Defendants: paying decommissioning may show injury but not that the bankruptcy order caused it | Court: BOEM’s demand doesn’t establish the necessary causal nexus to the bankruptcy order; standing not met |
| Whether the district court’s alternative statutory mootness ruling must be addressed | Fortune: appeal is not moot because relief could affect allocation or obligations | Defendants: statutory mootness applies given sale closed and trust implemented | Court: no need to reach mootness because standing dispositive; affirmed dismissal on standing grounds |
Key Cases Cited
- Joffroin v. Tufaro, 606 F.3d 235 (5th Cir. 2010) (standard of review for district court dismissal for lack of standing)
- Rohm & Hass Tex., Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205 (5th Cir. 1994) (burden on appellant to allege facts demonstrating proper party to appeal)
- Warth v. Seldin, 422 U.S. 490 (U.S. 1975) (pleading-stage standing principles—accept factual allegations as true)
- In re Coho Energy Inc., 395 F.3d 198 (5th Cir. 2004) (person aggrieved test in bankruptcy requires direct, adverse pecuniary effect)