Independent Petroleum Association of America v. DeWitt

After federal regulatory changes let gas producers sell gas downstream of the wellhead rather than only at the well itself, the Department of the Interior (DOI) (defendant) amended its royalty regulations to clarify that gas lessees on federal lands could not deduct marketing costs from royalty calculations, regardless of whether the point of sale was at the wellhead or somewhere downstream; the Independent Petroleum Association of America (IPAA) (plaintiff), while conceding wellhead marketing costs were non-deductible, argued downstream marketing costs should be treated differently and deductible, and the district court agreed, prompting the DOI's appeal.