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Texas Supreme Court hears arguments in American Midstream v. Rainbow over MAG 5, OFOs and damages
Summary
At oral argument the Supreme Court of Texas considered whether operational flow orders (OFOs) and section 9.1 of a MAG 5 scheduling agreement excused American Midstream from performance and whether Rainbow Energy Marketing’s lost‑profits damages met Texas’s reasonable‑certainty standard.
The Supreme Court of Texas heard argument in American Midstream v. Rainbow Energy Marketing Corporation, a dispute over construction of a MAG 5 gas‑scheduling agreement and the effect of Transco operational flow orders (OFOs) on liability and damages.
Counsel for American Midstream argued that the trial court misread section 9.1 of the parties’ MAG 5 agreement and effectively inserted the word “scheduled,” a change that, the petitioner said, “infected all of the trial court’s liability findings.” Miss Phan told the court that when Transco issued OFOs requiring shippers to balance receipts and deliveries, section 9.1 relieved American Midstream of its obligation to allow out‑of‑balance nominations under the MAG 5. She…
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