Preliminary approval for $41 million+ settlement in TEP class action lawsuit

A class-action lawsuit against TEP Rocky Mountain LLC, a subsidiary of Terra Energy Partners, resulted in a preliminary approval of a $41.7 million settlement. The lawsuit was initiated by Jolley Potter Ranches Energy Co. LLC, accusing TEP of underpaying mineral rights owners for natural gas and hydrocarbon gas liquids collected in the Piceance Basin in Garfield County from the Grand Valley Gathering System. The underpayment allegedly occurred from August 1, 2011, through December 31, 2020, by deducting unreasonable costs and paying below-market rates.

Jolley Potter Ranches discovered the alleged underpayments through remittance statements, sparking a legal battle to seek fair compensation for the mineral rights owners. Attorney Nathan Keever, representing Jolley Potter Ranches, highlighted the challenges in understanding the deductions and pricing, emphasizing that legal intervention was necessary to uncover the discrepancies.

The lawsuit was filed as a class action to cover the costs of experts and legal fees, with approximately 1,600 mineral rights owners affected by the case. Keever noted that settlements in similar cases are typically below $100,000, making class-action lawsuits a practical approach to address such matters. After six years of litigation, TEP agreed to settle the case for $41.7 million, with a preliminary proposed settlement receiving approval from U.S. Magistrate Judge N. Reid Neureiter.

Keever mentioned that extensive evidence collection and deposition testimonies contributed to TEP’s decision to settle, avoiding the continued accrual of interest on the claim. A final fairness hearing is scheduled for August 1, 2025, where the terms of the settlement will be reviewed. If approved, members of the Jolley Potter Ranches Class will receive their entitled compensation after deductions for attorney fees and court-approved expenses.

Keever expressed satisfaction with the settlement terms, emphasizing the substantial amount being returned to the claimants, some of which include up to 90% of the improperly deducted funds with an additional 8% interest. He advised royalty owners to vigilantly monitor their remittance statements to ensure fair compensation. Despite attempts to reach out to TEP for comment, there was no response provided by the company or its representative at the time of publication.