Justia Energy, Oil & Gas Law Opinion Summaries

Venture Global CP2 LNG and Venture Global CP Express sought authorization from the Federal Energy Regulatory Commission (FERC) to construct and operate a liquefied natural gas (LNG) export terminal and an 85-mile pipeline in Louisiana. FERC’s review included extensive environmental analysis in compliance with the National Environmental Policy Act (NEPA), resulting in an Environmental Impact Statement (EIS) and a Supplemental EIS (SEIS). Both assessments concluded that, with recommended mitigation measures, the project’s environmental impacts, including those on air quality and the commercial fishing industry, would not be significant.Individuals and advocacy groups challenged FERC’s authorization, raising eleven alleged errors under the Natural Gas Act (NGA) and NEPA. After FERC’s initial order in 2024, the challengers sought rehearing. FERC partially granted rehearing to address concerns raised by recent D.C. Circuit decisions and directed additional environmental review, which led to the SEIS. The SEIS found no exceedances of relevant air quality standards for the terminal and compressor station. FERC reaffirmed its authorization in 2025, and subsequent rehearing requests were denied. The challengers then petitioned the United States Court of Appeals for the District of Columbia Circuit for review.The United States Court of Appeals for the District of Columbia Circuit held that FERC’s interpretation and application of the NGA was lawful and not arbitrary, emphasizing the presumption in favor of terminal authorization under Section 3, absent an affirmative showing of inconsistency with the public interest. The court found FERC’s NEPA analysis reasonable, deferring to FERC’s use of established air quality standards and its reliance on expert agency data. The court also upheld FERC’s treatment of cumulative impacts and harm to commercial fisheries as sufficiently addressed and explained. The petitions for review were denied in full. View "For a Better Bayou v. FERC" on Justia Law

Six landowners in Western Pennsylvania, believing that XTO Energy, Inc. was underpaying royalties owed under oil and gas leases, brought a class action in the U.S. District Court for the Western District of Pennsylvania. None of the named plaintiffs’ leases included arbitration clauses, but the proposed class definitions were broad enough to cover leaseholders whose leases did contain arbitration clauses. The plaintiffs sought damages on behalf of themselves and similarly situated landowners.After the suit was filed, the District Court oversaw extensive class discovery and certified classes that included some members whose leases had arbitration clauses. XTO did not assert arbitration as a defense in its answers or move to compel arbitration before class certification or before the expiration of the class opt-out period. It only moved to compel arbitration against those unnamed class members with arbitration clauses after the opt-out period closed. Relying in part on the then-controlling district court decision in Valli v. Avis Budget Rental Car Group, LLC, a Magistrate Judge found that XTO had waived its right to arbitrate by demonstrating a preference for litigation over arbitration, and the District Court adopted that ruling.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s waiver determination de novo as to legal conclusions and for clear error as to factual findings. The Third Circuit held that, under its intervening precedential decision in Valli v. Avis Budget Group, Inc., a defendant does not waive its right to compel arbitration against unnamed class members with arbitration clauses in their leases merely by litigating prior to class certification, where none of the named plaintiffs are subject to arbitration. The court found XTO’s conduct did not constitute an implied waiver. The Third Circuit vacated the District Court’s order denying XTO’s motion to compel arbitration and remanded for further proceedings. View "Salvatora v. XTO Energy Inc" on Justia Law

A company operating a gas station in Washington entered into a series of agreements with a petroleum refiner and a logistics company. The agreements allowed the company to rebrand its station and market motor fuel under the refiner’s trademarks, even though the refiner did not supply the actual fuel. Instead, the logistics company served as an intermediary, and fuel was sourced from a third party. Later, the refiner and logistics company claimed the agreements were terminated, demanding the removal of the trademarks. The gas station operator refused, alleging that the termination violated the Petroleum Marketing Practices Act (PMPA), which regulates the termination and nonrenewal of petroleum marketing franchises.The United States District Court for the Western District of Washington dismissed the gas station operator’s PMPA claim. The court held that no PMPA franchise existed because the refiner did not supply the fuel to either the operator or the logistics company. The court reasoned that the statute required the refiner to be the supplier of the fuel for a franchise relationship to exist under the PMPA.The United States Court of Appeals for the Ninth Circuit reviewed the dismissal de novo. It held that the PMPA does not require the refiner to supply the actual fuel; rather, a franchise exists if there is a contract authorizing the use of the refiner’s trademark in connection with the sale of motor fuel. The court determined that the operator plausibly alleged franchise relationships with both the refiner and the logistics company, based on the mutual obligations in the agreements and the statutory definitions. The Ninth Circuit reversed the district court’s dismissal of the PMPA claims and remanded the case for further proceedings. View "CAN-AM FUEL DISTRIBUTION, LLC V. SINCLAIR OIL, LLC" on Justia Law

LUMA Energy, LLC and LUMA Energy ServCo, LLC entered into a long-term contract to operate and maintain Puerto Rico’s electric power transmission and distribution system, previously managed by the Puerto Rico Electric Power Authority (PREPA), a Title III debtor under PROMESA. The agreement included a liability waiver provision, which was subsequently approved with modifications by the Puerto Rico Energy Bureau (PREB). After LUMA invoked the waiver to deny numerous consumer claims, the Puerto Rico Department of Consumer Affairs (DACO) brought suit in Puerto Rico’s courts against LUMA, PREPA, and PREB, challenging the constitutionality of the waiver. The Supreme Court of Puerto Rico accepted the case for review.While the DACO action was pending, LUMA, without participation from PREPA or the Financial Oversight and Management Board (the Board), sought an order from the United States District Court for the District of Puerto Rico (acting as the Title III court) to enforce the automatic bankruptcy stay and halt the DACO litigation. The Title III court denied LUMA’s motion, finding the police and regulatory power exception to the automatic stay applicable because DACO’s action was an exercise of governmental authority to protect consumers. LUMA appealed this order.The United States Court of Appeals for the First Circuit reviewed the case. The main holding was that LUMA lacked statutory standing to appeal the Title III court’s denial of its motion to enforce the automatic stay. The First Circuit clarified that LUMA was not a “person aggrieved” for purposes of appellate standing under the Bankruptcy Code as incorporated by PROMESA, because LUMA did not show it suffered a direct and adverse pecuniary injury of the type the automatic stay is meant to prevent. Accordingly, the First Circuit dismissed the appeal for lack of appellate jurisdiction. View "LUMA Energy LLC v. Puerto Rico Dep't of Consumer Affairs" on Justia Law

Several states challenged a federal agency’s attempt to set new energy efficiency standards for consumer cooking appliances, including gas stoves. The Department of Energy (DOE) had initially tried to implement these standards through the standard notice-and-comment rulemaking process, but after facing substantial opposition, including critical comments from industry groups and states, it abandoned that effort. Subsequently, the DOE used a “Direct Final Rule” (DFR) process to impose similar standards, bypassing the usual public comment period by relying on a joint statement from selected stakeholders. The new rule included a ban on certain power supplies and set limits on annual energy consumption for appliances.After the DFR was published, the DOE solicited public comments as required by statute. Several states, led by Nebraska, Utah, and Montana, submitted timely adverse comments on the last day of the comment period, arguing that the joint statement did not fairly represent all stakeholders, particularly states opposed to the rule. They also asserted that the DOE failed to properly consider the impact on product reliability and lifespan. The DOE later issued a notice confirming it would not withdraw the DFR, despite these objections.The case was then reviewed by the United States Court of Appeals for the Fifth Circuit. The court first held that it had authority to review the petition, determining that the rule became “prescribed” for purposes of judicial review only when the DOE confirmed its adherence to the DFR after considering comments. On the merits, the Fifth Circuit found that the DOE failed to meet statutory requirements for using the DFR process, especially by excluding key stakeholders and not adequately addressing concerns about reliability and economic justification. The court granted the states’ petition for review, set aside the rule, and remanded the matter to the DOE for further proceedings. View "State of Mississippi v. DOE" on Justia Law

Four electric transmission facilities located in the Sunflower Zone of central and western Kansas had their costs primarily allocated to local customers under the existing regional cost allocation method, known as the Highway/Byway framework. Over time, due to the growth of wind generation in the Sunflower Zone, these facilities increasingly served customers outside the local zone, transmitting surplus wind-generated electricity to other areas within the Southwest Power Pool (SPP) region. SPP, the regional transmission organization, determined that these facilities were functioning more like regional “Highway” facilities, which typically have their costs spread across the entire SPP region, rather than “Byway” facilities, whose costs are mostly local.SPP initially attempted to institute a process that would allow for waivers from the voltage-based cost allocation on a facility-by-facility basis, but the Federal Energy Regulatory Commission (FERC) rejected these proposals due to concerns over discretion and transparency. Subsequently, SPP made a more targeted filing under Section 205 of the Federal Power Act, seeking prospective reclassification of the four facilities as Highway assets based on specific studies and criteria. FERC approved this reclassification, finding that the facilities primarily benefited customers outside the Sunflower Zone, and reaffirmed its decision on rehearing.The United States Court of Appeals for the District of Columbia Circuit reviewed FERC’s orders under the arbitrary-and-capricious standard. The court held that FERC’s decision was supported by substantial evidence and was adequately reasoned. The court found that FERC was not required to conduct zone-by-zone benefit analysis or adhere strictly to the existing allocation method when evidence showed that the facilities’ benefits were primarily regional. The court denied the petitions for review and upheld FERC’s orders. View "City Utilities of Springfield, Missouri v. FERC" on Justia Law

Owners of mineral interests in Arkansas leased their interests to various oil and gas companies through private agreements. These leases required the companies to pay royalties based on gross proceeds, meaning royalties should be calculated without deducting post-production costs. In 2019, Flywheel, the operator for these leases, began deducting post-production costs from the first 1/8 royalty payment, relying on Ark. Code Ann. § 15-72-305, which refers to “net proceeds.” This change reduced the royalty amounts paid to the lessors, who then filed suit alleging breach of lease obligations.The United States District Court for the Eastern District of Arkansas reviewed the claims and granted summary judgment in favor of the oil and gas companies. The district court interpreted Ark. Code Ann. § 15-72-305 to permit deductions of post-production expenses from the first 1/8 royalty, regardless of lease terms. It relied on its own prior rulings and declined to follow an Arkansas Court of Appeals decision stating that the statute does not require deduction of post-production expenses. The district court also considered but ultimately rejected the impact of a legislative amendment, Act 1024, passed during the appeal, which clarified the meaning of “net proceeds.”The United States Court of Appeals for the Eighth Circuit reviewed the district court’s interpretation of Arkansas law de novo. The appellate court held that Ark. Code Ann. § 15-72-305(a)(3) is ambiguous regarding permissible deductions and determined, based on legislative clarification and the Arkansas Court of Appeals’ interpretation, that deductions from the royalty are not allowed beyond those specifically permitted by the lease. The court concluded that Act 1024 clarified the original legislative intent. It reversed the district court’s summary judgment and remanded for further proceedings consistent with its interpretation. View "Pennington v. BHP Billiton Petrol" on Justia Law

The case centers on reforms to the process by which new energy generators, particularly renewable energy sources, connect to the nation’s power grid. At the end of 2023, a significant backlog existed, with about 2,600 gigawatts of proposed generation and storage capacity awaiting interconnection studies, mainly from solar, wind, and energy storage projects. The Federal Energy Regulatory Commission (FERC) determined that delays and inefficiencies in the existing interconnection process were creating unjust and unreasonable conditions in wholesale energy markets, hindering timely development and competition.FERC responded by issuing Order 2023, acting under its remedial authority in Section 206 of the Federal Power Act. Order 2023 mandated nationwide reforms for transmission providers, replacing the prior serial study model with a clustered study approach, requiring more substantial deposits, imposing withdrawal fines, establishing firm study deadlines, and implementing automatic late fees for missed deadlines. FERC also standardized affected-system study procedures and adopted energy-service modeling as the default. Following thirty-two rehearing and clarification requests, FERC issued Order 2023-A, reaffirming its findings and adjustments.Petitioners challenged three major aspects: the withdrawal fines, study deadlines backed by late fees, and the energy-service modeling requirement. The United States Court of Appeals for the District of Columbia Circuit found that FERC acted within its statutory authority, reasonably explained its reforms, and provided adequate process and safeguards. The court denied all petitions, holding that FERC’s nationwide interconnection regime and rulemaking under Order 2023 were lawful, not arbitrary or capricious, and did not unduly discriminate or violate constitutional protections. The court also affirmed that FERC reasonably balanced competing interests and that its reforms were supported by substantial evidence. View "Advanced Energy United v. FERC" on Justia Law

A company operates a pipeline transporting oil and natural gas liquids between the United States and Canada. A portion of this pipeline crosses twelve miles of land within a Native American reservation in northern Wisconsin. In 2013, the company’s rights-of-way over certain parcels of reservation land expired. During the intervening years, the tribal band acquired ownership interests in a number of these parcels. The company continued to operate the pipeline without securing the tribal band’s renewed consent for the necessary easements. Following a breakdown in negotiations, the tribal band filed suit, alleging trespass and public nuisance. The band also pointed to the risk of a pipeline rupture near a river bend where erosion threatened pipeline safety.The United States District Court for the Western District of Wisconsin granted summary judgment for the tribal band on its trespass and unjust enrichment claims, and against the company on its breach-of-contract counterclaim. After a bench trial, the district court awarded the band restitution for past trespass, ordered future disgorgement of profits, and issued an injunction requiring the company to cease operations across the affected parcels within three years and to implement a monitoring and shutdown protocol to abate the alleged nuisance. Both parties appealed; the district court stayed the shutdown portion of the injunction while the appeal was pending.The United States Court of Appeals for the Seventh Circuit affirmed the finding that the company was trespassing on the parcels at issue and that restitution and injunctive relief are appropriate remedies. However, the court vacated the district court’s restitution calculation and the three-year shutdown deadline, remanding for a new determination of remedies that accounts for the public interest and ongoing pipeline reroute efforts. The court also held that federal statutory law displaced the band’s federal common law nuisance claim and vacated the related injunction. View "Bad River Band of the Lake Superior Tribe of Chippewa v Enbridge Energy Company, Inc." on Justia Law

A non-profit river conservation and recreation organization, whose members include kayakers and canoers in Missouri, sought to intervene out of time in a Federal Energy Regulatory Commission (FERC) license surrender proceeding for the Niangua Hydroelectric Project in Missouri. The project, completed in 1930, impounded the Niangua River and created Lake Niangua. After decades of operation and relicensing, the licensee decided not to pursue relicensing, proposing to decommission the project but leave the dam in place. The organization argued its members would be directly affected and that its participation would represent public interest, but it missed the intervention deadline due to lack of awareness of the proceeding.FERC denied the organization’s unopposed motion to intervene out of time, finding it failed to demonstrate good cause for late filing under its procedural rules. FERC also denied rehearing, reiterating that lack of awareness of a publicly noticed proceeding did not constitute good cause and that, per its precedent, failure to show good cause was sufficient to deny intervention without considering other factors. The Commission subsequently approved the license surrender with the dam left in place, rejecting the organization’s comments.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. It held that FERC did not err in interpreting its rule to require a late intervenor to show good cause for the late filing, but concluded that FERC acted arbitrarily and capriciously by inconsistently applying its precedent on late intervention without providing a reasoned explanation. The court vacated FERC’s orders and remanded the case for reconsideration and a reasoned explanation consistent with FERC’s precedent. View "American Whitewater v. FERC" on Justia Law