Justia Energy, Oil & Gas Law Opinion Summaries

An individual asserted interests in six oil leases that were proposed for inclusion in an oil exploration and development unit on Alaska’s North Slope. The Alaska Division of Oil and Gas initially approved two of these leases for unit inclusion but later reversed its position and denied inclusion for all six. During the administrative appeal process, the leases expired because the lessees failed to pay the required rental payments, as mandated by a Department of Natural Resources (DNR) regulation. The individual did not pay the rent necessary to reinstate the leases, and the Division confirmed their termination.The individual appealed both the termination of the leases and the denial of their inclusion in the unit to the Commissioner of Natural Resources. The Commissioner affirmed the terminations and denied the inclusion request. Separate appeals were filed in the Alaska Superior Court: one challenging the lease terminations (raising the validity of the rent-during-appeal regulation) and one challenging the denial of unit inclusion (alleging agency overreach, unreasonableness, and due process violations). The Superior Court affirmed the termination of five leases and remanded the sixth for further proceedings regarding its production capabilities. It also affirmed the denial of unit inclusion, finding no violation of due process or agency overreach.The Supreme Court of the State of Alaska held that the DNR regulation requiring rental payments during the pendency of an appeal is constitutional and a reasonable exercise of DNR’s authority. Because the lessees failed to pay rent, the terminations of five leases were affirmed, rendering the unitization appeal for those leases moot. The dispute over the sixth lease was found to remain live, but the Commissioner’s denial of its inclusion in the unit was affirmed as neither arbitrary, unreasonable, nor a violation of due process. The award of attorney’s fees against the appellant was also affirmed. View "Donkel v. State of Alaska" on Justia Law

A family group brought claims in Oklahoma state court against an energy company, alleging underpayment of oil and gas royalties over several decades. These claims overlapped with those in a separate class action brought by another party against the company and its related entities, also concerning underpayment of royalties. The class action was removed to federal court, where a settlement was reached and approved by the United States District Court for the Eastern District of Oklahoma. The settlement covered claims for a defined period, and included a permanent injunction barring class members from pursuing similar claims. The family did not opt out of the settlement and received compensation under its terms.Later, the energy company sought summary judgment in the family’s original state case, arguing that the federal settlement released the company from liability for claims during the covered period. When summary judgment was denied, the company returned to the federal district court, seeking enforcement of the settlement’s injunction against further pursuit of those claims by the family in state court. The federal court declined to issue a new injunction but found that the family’s ongoing litigation of released claims violated the original injunction. The court ordered the family to either show cause for their violation or agree to abide by the injunction and dismiss the released claims. The family appealed this order to the United States Court of Appeals for the Tenth Circuit.The Tenth Circuit determined that it lacked appellate jurisdiction over the order. The court held that a post-judgment civil contempt or enforcement order is not final and appealable unless the district court both finds contempt and imposes a specific, unavoidable sanction. Because the district court’s order did neither, and because no alternative grounds for appellate jurisdiction applied, the Tenth Circuit dismissed the appeal. View "Fischer v. XTO Energy" on Justia Law

A natural gas company operating in multiple states applied to the Federal Energy Regulatory Commission (FERC) for permission to build new pipeline facilities and abandon some existing ones, requesting that the costs of these improvements be included in future customer rates. The company’s customers, a group of retail natural gas distributors, challenged the application, arguing that less costly alternatives existed, that the improvements were not justified by customer needs, and that FERC should not pre-determine the rate treatment for the project. The core dispute arose when the customers requested access to specific pipeline flow data, designated as sensitive Critical Energy Infrastructure Information, which was withheld from the public docket. FERC eventually released the requested data, but the customers claimed that the delay impaired their ability to participate meaningfully in the proceedings.FERC granted the company’s application, issuing a Certificate of Public Convenience and Necessity and permitting facility abandonment. The Commission found that the evidence, including flow data, demonstrated the necessity of the project and justified the proposed rate treatment, noting that objections to rates could be addressed in future proceedings. The customers filed a rehearing request, alleging that FERC’s decision was premature and unsupported by substantial evidence due to delayed data access. FERC denied rehearing, later provided the requested data, and solicited comments, but the customers maintained that the timing was inadequate and refused to comment.The United States Court of Appeals for the District of Columbia Circuit reviewed the consolidated petitions. The court found the customers had standing, the case was not moot, and limited its review to arguments raised in the rehearing request. Applying the arbitrary and capricious standard, the court held that FERC’s procedures and consideration of the record, including flow data, were sufficient and did not violate due process. The petitions for review were denied. View "East Tennessee Group v. FERC" on Justia Law

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