Fifth Circuit Clarifies Force Majeure Obligations and Allocation Practices in Natural Gas Marketing Contracts After Winter Storm

The Fifth Circuit reversed partial summary judgment for Targa Gas Marketing on its force majeure defense during a severe winter storm, holding that genuine fact issues existed as to whether the marketer made reasonable efforts to procure gas from usual suppliers and the spot market before declaring force majeure. The court also affirmed a jury verdict on allocation practices, finding that usage of trade evidence supported a presumption that parties contracted with reference to industry practice requiring allocation of available gas to cheaper First-of-Month transactions before more expensive Gas Daily transactions.