Justia Energy, Oil & Gas Law Opinion Summaries
Claude C. Arnold Non-Operated Royalty Interest Properties v. Cabot Oil & Gas Corp.
The dispute in this case centered on two oil-and-gas-producing formations known as the Chester and the Marmaton, located in Beaver County, Oklahoma. In 1973, Arnold Petroleum, Inc., the predecessor in interest to plaintiffs (collectively, "Arnold") obtained six oil-and-gas leases covering land in Beaver County. Over the course of 1973 and 1974, Arnold Petroleum assigned its leases to Dyco Petroleum Corporation, expressly reserving an overriding royalty interest in any oil and gas produced under the leases. Dyco assigned the leases to Harold Courson, the predecessor in interest of defendant Cabot Oil & Gas Corporation. This assignment, too, was expressly subject to Arnold's overriding royalty interest. Two wells drilled in the Chester formation produced "mostly gas with some oil" continuously since the mid-1970s, and at no point since then did Arnold ever stop receiving payments on its overriding royalty interest in those producing wells. In 1984, Courson obtained several new leases from the mineral owners who had granted the 1973 leases. The 1984 leases purported to cover the same rights as the original 1973 leases, but were silent as to any particular geologic formation or zone. Arnold did not become aware of the 1984 leases until 1999 when it and other royalty holders received a letter from Courson explaining he had recompleted a well in the Chester formation that had originally been drilled into the separate Lower Chester formation by Natural Gas Anadarko, Inc. (NGA). In the 1999 conversation, a Courson employee told the Arnold landman the 1984 leases covered only "deep rights" or "lower depths" that had expired under the 1973 leases. This assertion would exclude the Marmaton. For the next 13 years, the matter of the Marmaton formation would remain dormant. Courson assigned his leases to Cabot in August 2011, and Cabot drilled and completed several horizontal wells in the Marmaton. Cabot rejected Arnold's request for payment, and Arnold sued in October 2012, seeking damages for nonpayment of royalties. Cabot argued Arnold's claims were barred because the applicable statute of limitations began to run with the filing of the new leases in 1984, which event (in Cabot's view) should have put Arnold on notice of an adverse claim to the Marmaton. The issue presented for the Oklahoma Supreme Court's review was whether plaintiffs waited too long in asserting their right to payment of the overriding royalty interest. The Court of Civil Appeals reversed the trial court's judgment in favor of plaintiffs on those grounds. The Supreme Court disagreed: this litigation could not have arisen until defendant first developed the disputed formation in 2012, and then refused plaintiffs' request for payment of royalties from that production. "Nothing preceding that sequence of events could reasonably have foreclosed plaintiffs' ability to press their claim for the payments to which they were entitled under valid mineral leases." View "Claude C. Arnold Non-Operated Royalty Interest Properties v. Cabot Oil & Gas Corp." on Justia Law
Standing Rock Sioux Tribe v. United States Army Corps of Engineers
The DC Circuit held that the Corps violated the National Environmental Policy Act (EPA) by issuing an easement allowing the Dakota Access Pipeline to transport crude oil through federally owned land at the Lake Oahe crossing site without preparing an environmental impact statement despite substantial criticisms from the Tribes.The court rejected the Corps' and Dakota Access' contention that the district court applied the wrong standard by relying on National Parks Conservation Association v. Semonite, 916 F.3d at 1083, which emphasized the important role played by entities other than the federal government. The court explained that the Tribes' unique role and their government-to-government relationship with the United States demand that their criticisms be treated with appropriate solicitude. The court concluded that several serious scientific disputes in this case means that the effects of the Corps' easement decision are likely to be "highly controversial." The court also noted that, although the risk of a pipeline leak may be low, that risk is sufficient that a person of ordinary prudence would take it into account in reaching a decision to approve the pipeline's placement, and its potential consequences are therefore properly considered. The court affirmed the district court's order vacating the easement while the Corps prepares an environmental impact statement. However, the court reversed the district court's order to the extent it directed that the pipeline be shut down and emptied of oil. View "Standing Rock Sioux Tribe v. United States Army Corps of Engineers" on Justia Law
Aircraft Service International, Inc. v. Federal Energy Regulatory Commission
The DC Circuit denied a petition for review challenging FERC's determination that fuel transported by pipeline to Orlando's airport—after being delivered to the Port of Tampa—moves intrastate. The court upheld the ALJ's finding, under the three Northville factors, that the stop in Tampa broke the continuity of interstate transportation, and so the jet fuel moved intrastate through the Central Florida Pipeline. Therefore, FERC lacked jurisdiction to regulate the pipeline rates. The court rejected petitioners' claims that FERC misapplied the Northville factors; the Northville factors are inadequate to make the determination; the Commission misinterpreted the teachings of old Supreme Court cases: Texas & New Orleans R.R. Co. v. Sabine Tram Co., 227 U.S. 111 (1913); Carson Petrol. Co. v. Vial, 279 U.S. 95 (1929); United States v. Erie R.R. Co., 280 U.S. 98 (1929); and the Airlines' overarching intent to transport the fuel from ships through Tampa to Orlando means the pipeline movement is interstate in nature. View "Aircraft Service International, Inc. v. Federal Energy Regulatory Commission" on Justia Law
PBS Coals, et al v. PennDOT
The Pennsylvania Supreme Court granted the Pennsylvania Department of Transportation (“PennDOT”)’s petition seeking review of a Commonwealth Court holding that a de facto taking of an unmined coal estate, owned by Penn Pocahontas and leased to PBS Coals, Inc. (collectively “the Coal Companies”), occurred under the Eminent Domain Code, 26 Pa.C.S. sections 101-1106 (“Code”), when PennDOT’s construction of Highway 219 on an adjoining parcel destroyed options for constructing rights-of-ways to the coal estate’s surface. In reaching that conclusion, the Commonwealth Court held that the feasibility of mining the coal, as measured by the probability of obtaining a legally required permit from the Department of Environmental Protection (“DEP”), was relevant only to damages. The Supreme Court reversed the Commonwealth Court’s decision, agreeing with PennDOT that the legality of extracting the coal went directly to the trial court’s duty to determine whether a taking occurred. Furthermore, the Court held the Commonwealth Court erred by failing to remand the case for consideration of whether consequential damages are available to the Coal Companies. The matter was remanded to the Commonwealth Court with instructions to remand to the trial court with respect to the Coal Companies’ consequential damages claim. View "PBS Coals, et al v. PennDOT" on Justia Law
In re Petition of Acorn Energy Solar 2, LLC (Therese & Timothy Holmes, Appellants)
Therese and Timothy Holmes appealed a Vermont Public Utility Commission (PUC) decision granting Acorn Energy Solar 2 a certificate of public good (CPG) to build and operate a solar net-metering system. The Holmeses argued the PUC erred in concluding that: (1) Acorn’s application was complete under the PUC Rules; (2) several proposed changes constituted minor amendments; (3) the project would be located on a preferred site; (4) the project would comply with setback requirements; and (5) the project would not have an undue adverse effect on aesthetics, orderly development, wetlands, air pollution, greenhouse gases, and traffic. Finding no reversible error, the Vermont Supreme Court affirmed the PUC's decision. View "In re Petition of Acorn Energy Solar 2, LLC (Therese & Timothy Holmes, Appellants)" on Justia Law
Columbia Gas Transmission, LLC v. Ohio Valley Coal Co.
In this dispute between a coal mining company and the owner of a natural gas pipeline over whether the pipeline owner may recover for damage caused to the pipeline as a result of mining the Supreme Court reversed the judgment of the court of appeals and reinstated the judgment of the trial court in favor of the mining company, holding that surface damage liability waivers in the relevant property deeds were valid and enforceable.The mining company held its interest in the coal underneath the lands through property deeds that severed the surface estate from the mineral interest. The deeds included provisions waiving liability for damage to the land's surface caused by mining activities. The trial court entered judgment for the mining company. On appeal, the pipeline owner asserted that the surface damage liability waivers were rendered invalid by an administrative agency's regulation requiring mining operators to pay for damage to surface structures from mining activities. The court of appeals reversed. The Supreme Court reversed, holding (1) the administrative agency lacked authority to enact a regulation requiring mining operators to pay damages irrespective of common law property rights to the extent those rights have not been limited by federal law; and (2) the surface damage liability waivers at issue remained valid and enforceable. View "Columbia Gas Transmission, LLC v. Ohio Valley Coal Co." on Justia Law
Endeavor Energy Resources, LP v. Energen Resources Corp.
In this dispute over the meaning of an oil and gas lease covering an 11,300-acre tract in Howard County, the Supreme Court reversed the judgment of the court of appeals affirming the trial court's grant of summary judgment for Energen Resources Corp. and John Quinn, holding that the contested provision of the lease in this case was ambiguous.The lease at issue allowed Endeavor Energy Resources, L.P. to retain its leasehold interest in the parcel only by drilling a new well every 150 days, with the exception that Endeavor could "accumulate unused days in any 150-day term...in order to extend the next allowed 150-day term between the completion of one well and the drilling of a subsequent well." At issue on appeal was how to calculate the number of "unused days." Energen and Quinn argued that the contested provision unambiguously allowed unused days earned in any term to be carried forward only once to the next 150-day term. The trial court agreed, and the court of appeals affirmed. The Supreme Court reversed, holding that the disputed provision was ambiguous. View "Endeavor Energy Resources, LP v. Energen Resources Corp." on Justia Law
Gerrity v. Chervenak
The Supreme Court affirmed the judgment of the court of appeals affirming the trial court's decision granting summary judgment for John Chervenak, trustee of the Chervenak Family Trust, and declaring the trust the owner of the disputed mineral rights in this case, holding that the Chervenaks satisfied the notice requirements of the Ohio Dormant Mineral Act.Timothy Gerrity filed this action to quiet title and for a declaratory judgment, claiming that he was the rightful owner of severed mineral rights under the Chervenak property. At issue was whether the Chervenaks satisfied the notice requirements that the Ohio Dormant Mineral Act, Ohio Rev. Code 5301.56(E)(1), imposes as prerequisites to deeming a severed mineral interest abandoned and vested in the owner of the land subject to the mineral interest. The lower courts rendered judgment for Chervenak. The Supreme Court affirmed, holding (1) application of the Dormant Mineral Act is not limited to circumstances in which every holder of a severed mineral interest has been identified; and (2) a surface owner must use reasonable diligence to identify and locate holders of a severed mineral interest, but what constitutes reasonable diligence will vary based on the facts of each case. View "Gerrity v. Chervenak" on Justia Law
West v. Bode
The Supreme Court held that there is no irreconcilable conflict between the general provisions of the Ohio Marketable Title Act, Ohio Rev. Code 5301.47 et seq., as applied to severed mineral interests, and the Ohio Dormant Mineral Act, Ohio Rev. Code 5301.56.Appellants claimed they were the owners of a portion of a severed royalty interest in oil and gas underlying about sixty-six acres of land in Monroe County. Appellees filed this action for a declaratory judgment that the Marketable Title Act had extinguished the severed royalty interest and had vested that previously severed interest in Appellees. Appellants argued that the Dormant Mineral Act supersedes and controls over the original Marketable Title Act due to a conflict between the two acts. The trial court declared Appellants the owners of a 1/16 royalty interest, holding that the Dormant Mineral Act irreconcilably conflicts with the general provisions of the Marketable Title Act and that the more specific Dormant Mineral Act controls. The court of appeals reversed. The Supreme Court affirmed, holding that there is no irreconcilable conflict between the two acts, and therefore, they are applied as independent, alternative statutory mechanisms that may be used to reunite severed mineral interests with the surface property subject to those interests. View "West v. Bode" on Justia Law
Young v. Equinor USA Onshore Properties, Inc.
The Fourth Circuit vacated the district court's grant of summary judgment in favor of plaintiffs in an action brought against Equinor and SWN, challenging the deduction of post-production costs from royalties paid to plaintiffs pursuant to an oil and gas lease between the parties. The district court held that the lease failed to properly provide for the method of calculating post-production costs.The court held, however, that the lease provisions regarding royalty payments satisfy Estate of Tawney v. Columbia Natural Resources, LLC, 633 S.E.2d 22 (W. Va. 2006), and are otherwise consistent with West Virginia law. In this case, the lease suffices under Tawney to indicate the method for calculating the amount of post-production costs to be deducted when calculating plaintiffs' royalties; that method is simply to add up all of the identified, reasonable, and actually incurred post-production costs, and deduct them from SWN and Equinor's gross proceeds; and the amount is then adjusted for plaintiffs' fractional share of the total pooled acreage and their royalty rate. Especially in light of Leggett v. EQT Production Co., 800 S.E.2d 850 (W. Va. 2017), the court concluded that West Virginia law demands nothing more. The court found it unnecessary to certify any issue of law. View "Young v. Equinor USA Onshore Properties, Inc." on Justia Law