Reported / Citable
Background
Mieco, L.L.C. contracted to purchase 20,000 million British thermal units of natural gas per day from Pioneer Natural Resources USA, Inc. on a firm basis from November 2020 through March 2021. During Winter Storm Uri, Pioneer failed to deliver the full contractual amount from February 14 through February 19, 2021. Mieco bought replacement gas on the spot market and sued Pioneer for more than $9 million in cover costs. Pioneer maintained that the contract’s force majeure provision excused its nonperformance.
The district court initially granted summary judgment to Pioneer, but the Fifth Circuit reversed in 2024. The court held in that first appeal that “prevent” did not require literal impossibility, that Pioneer’s gas supply meant Permian Basin gas it produced and processed through Targa rather than spot-market gas, and that factual disputes remained over whether Uri prevented performance and whether Pioneer exercised due diligence. After a three-day bench trial on remand, the district court found that Uri was a force majeure event, that the storm prevented Pioneer’s full performance, and that Pioneer had made reasonable efforts both before and during the storm. Mieco appealed again, challenging compliance with the appellate mandate and the district court’s expert-testimony rulings.
The Court’s Holding
The Fifth Circuit affirmed. It held that the district court complied with the mandate by deciding the factual questions identified in the first appeal. The trial evidence supported the finding that Uri’s unprecedented well and pipeline freeze-offs rendered Pioneer’s full performance impracticable and therefore “prevented” performance under the contract, even though performance was not literally impossible.
The district court also made supported findings that Pioneer exercised due diligence. Before the storm, Pioneer increased its use of interruptible sales agreements, winterized wells and equipment, conducted site visits, staged equipment, and purchased additional gas. During and after the storm, it deployed teams to wells, staged personnel for the warming period, and sought assistance from third parties. The Fifth Circuit further held that the district court acted within its discretion by admitting Pioneer expert Kris Terry’s fact-based testimony about industry custom and practice while excluding Mieco expert Richard Smead’s proposed opinions about the meaning of “due diligence” and “reasonable efforts,” which would have supplied legal conclusions about the contract.
Key Takeaways
- A force majeure event may “prevent” contractual performance by making it impracticable; literal impossibility is not required under this contract.
- The evidence supported findings that Pioneer took reasonable preventive and responsive measures before, during, and after Winter Storm Uri.
- Industry experts may address relevant customs and practices, but they may not interpret contractual terms or offer legal conclusions reserved for the court.
Why It Matters
The decision illustrates how force majeure disputes may turn on fact-intensive proof about operational preparedness and mitigation after the court determines the governing contract’s meaning. A party invoking force majeure should be prepared to document both its advance precautions and its efforts to restore performance once the event occurs.
The opinion also underscores the latitude district judges receive when managing expert evidence in bench trials. Experience-based testimony about industry conduct may be admissible, while opinions defining contractual standards such as “due diligence” and “reasonable efforts” remain outside an expert’s proper role.