Justia Energy, Oil & Gas Law Opinion Summaries

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In 2016, Venezuela's state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), offered a bond swap whereby its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. PDVSA defaulted in 2019, and the National Assembly of Venezuela passed a resolution declaring the bond swap a "national public contract" requiring its approval under Article 150 of the Venezuelan Constitution. PDVSA, along with its subsidiaries PDVSA Petróleo S.A. and PDV Holding, Inc., initiated a lawsuit seeking a judgment declaring the 2020 Notes and their governing documents "invalid, illegal, null, and void ab initio, and thus unenforceable." The case was taken to the United States Court of Appeals for the Second Circuit, which certified three questions to the New York Court of Appeals.The New York Court of Appeals, in answering the first question, ruled that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses plaintiffs' arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution. However, New York law governs the transaction in all other respects, including the consequences if a security was "issued with a defect going to its validity." Given the court's answer to the first certified question, it did not answer the remaining questions. View "Petróleos de Venezuela S.A. v MUFG Union Bank, N.A." on Justia Law

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In this case, the United States Court of Appeals for the District of Columbia Circuit was asked to review a decision by the Federal Energy Regulatory Commission (FERC) regarding the regulatory jurisdiction over a proposed liquefied natural gas (LNG) facility in Port St. Joe, Florida. The facility was being planned by Nopetro LNG, LLC, which sought a ruling from the FERC that the facility fell outside of its regulatory jurisdiction under Section 3 of the Natural Gas Act. FERC agreed, issuing a declaratory order to this effect, which it upheld on rehearing. Public Citizen, a nonprofit consumer advocacy group, sought review of the FERC's decision.However, before the appeal was heard, the FERC informed the court that Nopetro had abandoned its plans to build the facility due to market conditions. In light of this, the court found that the case was moot and dismissed Public Citizen's petition for review. The court also vacated the FERC's orders, stating that since the appeal was moot, it would exercise its equitable authority to vacate the orders at issue. The court noted that no party argued against vacatur and it would further the public interest by precluding any potential reliance on the challenged orders the court lacked authority to review. View "Public Citizen, Inc. v. FERC" on Justia Law

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The plaintiff, Great Northern Properties, L.P. ("GNP"), filed a lawsuit against the United States, alleging a Fifth Amendment taking of its coal leases on the Otter Creek property in Montana. GNP claimed that the federal government, through the Montana state regulatory authority, denied the necessary permits for coal mining. The United States Court of Appeals for the Federal Circuit affirmed the decision of the Court of Federal Claims, which dismissed the case for lack of subject matter jurisdiction. The court held that GNP could not establish that Montana's actions were coerced by the federal government or that Montana acted as an agent of the federal government. The court also noted that the federal government did not dictate the outcome in individual permitting cases and that state law governed the permitting process. Therefore, the federal government was not responsible for the permit denial, as Montana was not coerced to enact its own regulatory program following the passage of the Surface Mining Control and Reclamation Act. Furthermore, the court rejected GNP's claim that the existence of federal standards created an agency relationship between the federal government and Montana. View "GREAT NORTHERN PROPERTIES, L.P. v. US " on Justia Law

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The Supreme Court of Mississippi was asked to interpret Mississippi's Principal and Income Act of 2013 in a case involving the distribution of funds from a trust. The Crider Family Share Trust named Juliette Crider as the income beneficiary and Nathan Ricklin and Megan Woolwine as remainder beneficiaries. The Trustee, Haidee Oppie Sheffield, distributed a significant amount from Muskegon Energy Co. to the income beneficiary. Ricklin and Woolwine contended that this distribution was a breach of fiduciary duty, as they believed the funds should have been allocated to them as remainder beneficiaries. They argued that the distribution constituted a partial liquidation of the energy company's assets, and pursuant to the Principal and Income Act, the funds should have been allocated to the principal (the remainder beneficiaries) rather than the income beneficiary.The Jackson County Chancery Court ruled in favor of Sheffield. On appeal, the Supreme Court of Mississippi affirmed the lower court's decision. The Supreme Court held that the determination of whether a distribution is in partial or full liquidation, as per Section 91-7-401(e) of the Principal and Income Act, must be made on a post-tax basis. The court found that after reducing for income taxes paid by the Trust, the distributions from Muskegon Energy Co. fell below the 20 percent threshold that would trigger a partial liquidation. Therefore, the court concluded that the distributions were not in partial liquidation and Sheffield, the Trustee, did not breach any duty owed to Ricklin and Woolwine, the remainder beneficiaries. View "In The Matter of the Crider Family Share Trust v. Sheffield" on Justia Law

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The dispute revolves around which of two oil and gas leases controls the royalty payments for nine wells collectively called the Bernhardt Wells. The Supreme Court of the State of Oklahoma affirmed the trial court's summary judgment in favor of defendant, Devon Energy Production Company, L.P. The plaintiffs, trustees of The Eunice S. Justice Amended, Revised, and Restated 1990 Revocable Trust Agreement, argued that a 1978 Lease entitles them to a 3/16 royalty, while Devon maintained that a 1973 Lease, entitling the Trust to a 1/8 royalty, controls. The court found that the dispute over which lease controls is best characterized as a quiet title claim, subject to a 15-year statute of limitations, which began when the injury occurred in 1978. Thus, the Trust's quiet title claim, filed more than 15 years later, was time-barred. The court also held that the trial court did not err in denying the Trust's motion to compel the production of various title opinions in Devon's possession. View "BASE v. DEVON ENERGY PRODUCTION" on Justia Law

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In the case before the United States Court of Appeals for the Fourth Circuit, plaintiffs Scott Sonda and Brian Corwin, both mineral rights owners in West Virginia, challenged Senate Bill 694, which amended the State's oil and gas conservation law to permit the unitization of interests in horizontal well drilling units, even for nonconsenting mineral rights owners. The plaintiffs claimed that this law constituted a taking of their property and deprived them of property without due process, in violation of the Fifth and Fourteenth Amendments of the U.S. Constitution. The West Virginia Oil and Gas Conservation Commission filed a motion to dismiss, asserting that the plaintiffs lacked standing, that the Commission was immune under the Eleventh Amendment, and that the complaint failed to state a claim upon which relief could be granted.However, the district court abstained from ruling on the federal constitutional claims, citing the Pullman abstention doctrine, and ordered the proceeding stayed pending the outcome of a state court action that the plaintiffs may file. The Commission appealed the district court's abstention order.The Fourth Circuit Court of Appeals reversed the district court's order and remanded for further proceedings, noting that the district court had erred by applying the Pullman abstention doctrine without first ensuring it had jurisdiction. The court directed the district court to first address the Commission's argument challenging the plaintiffs' Article III standing. The court did not express an opinion about the merits of the standing issue or any others before the district court. View "Sonda v. West Virginia Oil & Gas Conservation Commission" on Justia Law

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The United States Court of Appeals for the Third Circuit denied petitions from energy generators and state utility commissions challenging the Federal Energy Regulatory Commission's (FERC) acceptance of a tariff filed by PJM Interconnection, L.L.C. The court held that FERC's constructive acceptance of the tariff was neither arbitrary nor capricious and was supported by substantial evidence in the record. The tariff, filed under Section 205 of the Federal Power Act (FPA), sought to change the Minimum Offer Price Rule (MOPR) used in interstate capacity auctions. The MOPR is designed to prevent the exercise of monopsony power by net buyers in the market. The new tariff would mitigate offers only where a capacity resource has the ability and incentive to exercise buyer-side market power or where a capacity resource receives state subsidies under a state program that is likely preempted by the FPA. The petitioners argued that the tariff was unjust, unreasonable, and discriminatory. They also argued that the FERC failed to adequately address potential reliance interests and unlawfully discriminates against competitive power suppliers. The court rejected these claims and upheld FERC's acceptance of the tariff. View "PJM Power Providers Group v. Federal Energy Regulatory Commission" on Justia Law

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The Supreme Court of the State of Montana affirmed a lower court's ruling in a tax dispute between Bluebird Energy LLC and the State of Montana Department of Revenue. Bluebird Energy acquired three oil wells that had previously qualified for a tax incentive known as the New Well Tax Incentive, which provides a reduced tax rate for the first 18 months of production from a well. After acquiring the wells, Bluebird Energy invested in permanent production facilities and resumed oil production, believing that it would qualify for the New Well Tax Incentive. However, the Department of Revenue determined that the wells were not eligible for the incentive because the initial 18-month incentive period had already expired under the previous ownership. Bluebird Energy appealed this decision.The Supreme Court held that, according to the statutes governing the New Well Tax Incentive, the 18-month period for the reduced tax rate begins when production begins and runs contiguously, regardless of whether production is continuous. The court found that the Department of Revenue's interpretation of the statutes was correct and consistent with the legislative intent. The court also held that the relevant administrative rules were consistent with and reasonably necessary to carry out the purpose of the Oil and Gas Production Tax statutes. Therefore, Bluebird Energy was not entitled to the reduced tax rate. View "Bluebird Energy v. DOR" on Justia Law

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In a consolidated action before the United States Court of Appeals for the Third Circuit, several parties, including PJM Power Providers Group, Electric Power Supply Association, and Pennsylvania Public Utility Commission, challenged a tariff filed by PJM Interconnection, L.L.C., concerning energy resources subject to price mitigation in interstate capacity auctions. The revised tariff, which took effect by operation of law in 2021, was the outcome of a deadlock between the Federal Energy Regulatory Commission (FERC) commissioners. The court found that the deadlock was to be treated as an affirmative order by the FERC, allowing for judicial review under Section 205(g) of the Federal Power Act (FPA). The court held that it was required to review the FERC order under the same deferential standards set forth in the FPA and the Administrative Procedure Act. The court’s review included the entire record, including the deadlock commissioners' written statements explaining their reasoning. Upon review, the court denied all three petitions, holding that FERC’s acceptance of PJM’s tariff was neither arbitrary nor capricious and was supported by substantial evidence in the record. View "Electric Power Supply Associat v. FERC" on Justia Law

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In this consolidated action, the United States Court of Appeals for the Third Circuit reviewed a case concerning the Federal Energy Regulatory Commission's (FERC) acceptance of a tariff filed by PJM Interconnection, L.L.C. (PJM), which took effect by operation of law in 2021. The tariff was at the center of a dispute over whether state-subsidized energy resources should be subject to price mitigation in interstate capacity auctions. Petitioners – the PJM Power Providers Group (P3), the Electric Power Supply Association (EPSA), and the Pennsylvania Public Utility Commission and Public Utilities Commission of Ohio (State Entities) – sought review under Section 205(g) of the Federal Power Act (FPA), a provision allowing for review of FERC's action by inaction. The court held that its review of FERC action, whether actual or constructive, proceeds under the same deferential standards set forth in the FPA and Administrative Procedure Act. The court further held that its review properly encompasses the Commissioners’ statements setting forth their reasons for approving or denying the tariff filing. After reviewing the petitions, the court denied all three, finding FERC’s acceptance of PJM’s tariff was neither arbitrary nor capricious and was supported by substantial evidence in the record. View "Pennsylvania Public Utility Co v. FERC" on Justia Law