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This case involved an implied covenant to market gas. Energen owned and operated oil and gas wells in the San Juan Basin in northwestern New Mexico and southern Colorado. Its wells were subject to leases and other agreements (many of which were quite old) requiring it to pay a monthly royalty or overriding royalty on production to the Anderson Living Trust, the Pritchett Living Trust, the Neely-Robertson Revocable Family Trust (N-R Trust), and the Tatum Living Trust. Believing Energen was systematically underpaying royalties, the Trusts filed a putative class action complaint against it. The New Mexico Trusts claimed Energen was improperly deducting from their royalties their proportionate share of (1) the costs it incurs to place the gas produced from the wells in a marketable condition (postproduction costs) and (2) a privilege tax the State of New Mexico imposes on natural gas processors (the natural gas processors tax). They also alleged Energen had not timely paid royalties or interest thereon, as required by the New Mexico Oil and Gas Proceeds Payments Act. Both the New Mexico Trusts and the Tatum Trust further claimed Energen was wrongfully failing to pay royalty on the gas it used as fuel. The district judge dismissed the New Mexico Trusts’ marketable condition rule claim for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and entered summary judgment in favor of Energen on the remaining claims. All of the Trusts appealed those judgments. For the most part, the Tenth Circuit agreed with the district court. The Tenth Circuit’s analysis differed from that of the district court relating to: (1) the fuel gas claims made by the N-R Trust and Tatum Trust; and (2) the New Mexico Trusts’ claim under the New Mexico Oil and Gas Proceeds Payments Act. As to the former, the N-R Trust’s overriding royalty agreement required royalty to be paid on all gas produced, including that gas used as fuel. And the Tatum Trust’s leases explicitly prohibited Energen from deducting post-production costs (Energen treats its use of the fuel gas as an in-kind postproduction cost). Moreover, the “free use” clauses and royalty provisions in the Tatum Trust’s leases limited the free use of gas to that occurring on the leased premises. Because use of the fuel gas occurred off the leased premises, Energen owed royalty on that gas. With regard to the latter, the district court was right in permitting Energen to hold funds owed to the N-R Trust in a suspense account until a title issue concerning a well was resolved in favor of that Trust. However, the district court did not address whether the N-R Trust was entitled to statutory interest on those funds. It was so entitled, yet the current record (at least in the Tenth Circuit’s analysis) did not show interest to have been paid on the funds. View "Anderson Living Trust v. Energen Resources" on Justia Law

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The Ninth Circuit granted CPUC's petition for review of FERC's determination that PG&E was eligible for an incentive adder for remaining a member of the California Independent System Operator Corporation (Cal-ISO) when state law prevented PG&E's departure without authorization. The panel held that FERC's determination that PG&E was entitled to incentive adders for remaining in the Cal-ISO was arbitrary and capricious, because FERC did not reasonably interpret Order 679 as justifying summary grants of adders for remaining in a transmission organization. The panel explained that, because FERC's interpretation was unreasonable, FERC's grants of adders to PG&E were an unexplained departure from longstanding policy. Furthermore, FERC created a generic adder in violation of the order. View "CPUC V. FERC" on Justia Law

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At issue was whether this case presented a justiciable issue when the Supreme Court could not render a decision binding on a federal agency and could only offer an advisory opinion that may or may not ultimately bind the parties. Berenergy Corporation, which produced oil from several sites under oil and gas leases granted by the United States Department of the Interior, Bureau of Land Management (BLM), sought a declaratory judgment that the terms of its BLM oil leases provided it with rights superior to any obtained by Peabody Energy Corporation through its coal leases. The district court granted in part and denied in part both parties’ motions for summary judgment. Both parties appealed. The Supreme Court remanded the case for further proceedings before the district court, holding (1) Congress intended that the issues raised by Berenergy be decided by the Secretary of the Interior or its BLM designees; (2) there was no express consent by the federal government for the Secretary or the BLM to be made a party to suits such as this for the purpose of informing a congressionally approved decision by the district court; but (3) the court nonetheless remands this case for an evaluation of whether a federal agency may participate in this suit. View "Berenergy Corp. v. BTU Western Resources, Inc." on Justia Law

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The 74-acre Washington County parcel, near the Ohio River, is subject to a 1980 oil and gas lease between the then-owners and Collins-McGregor, to permit “mining and operating for oil and gas and laying pipe lines, and building tanks, powers, stations, and structures thereon, to produce, save and take care of said products.” Collins-McGregor committed to make royalty payments based on the gas produced and to deliver a portion of the oil produced from the land to the lessors. The lease “shall remain in force for a term of One (1) years from [the effective] date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee.” A well was drilled in 1981 and has produced oil and gas in paying quantities since then from the “Gordon Sand” formation. The Landowners contend that production of oil and gas has occurred near their property from below that formation but Collins-McGregor has not explored deep formations for lack of equipment or financial resources. They sought a judgment that the portion of the lease covering depths below the Gordon Sand has terminated because it has expired or been abandoned and that Collins-McGregor has breached implied covenants, including implied covenants of reasonable development and to explore further. The Supreme Court of Ohio affirmed dismissal. Ohio law does not recognize an implied covenant to explore further separate from the implied covenant of reasonable development. View "Alford v. Collins-McGregor Operating Co." on Justia Law

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Petitioner Atlantic Richfield Company (“ARCO”) petitioned the Montana Supreme Court seeking reversal of five district court orders. Relevant here, the underlying action concerned a claim for restoration damages brought by property owners in and around the town of Opportunity, Montana. As part of ARCO’s cleanup responsibility relating to the Anaconda Smelter, EPA required ARCO to remediate residential yards within the Smelter Site harboring levels of arsenic exceeding 250 parts per million in soil, and to remediate all wells used for drinking water with levels of arsenic in excess of ten parts per billion. The Property Owners, a group of ninety-eight landowners located within the bounds of the Smelter Site, sought the opinion of outside experts to determine what actions would be necessary to fully restore their properties to pre-contamination levels. The experts recommended the Property Owners remove the top two feet of soil from affected properties and install permeable walls to remove arsenic from the groundwater. Both remedies required restoration work in excess of what the EPA required of ARCO in its selected remedy. The Property Owners sued, seeking restoration damages. ARCO conceded that the Property Owners could move forward on their first four claims, but contended that the claim for restoration damages was preempted by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”). The Supreme Court agreed with the district court that the Property Owners’ claims for restoration damages was barred by CERCLA. View "Atlantic Richfield v. 2nd Jud. Dist" on Justia Law

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The unconstitutional legislative veto embedded in section 204(c)(1) of the Federal Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. 1714, is severable from the large-tract withdrawal authority delegated to the Secretary in that same subsection. Invalidating the legislative veto provision does not affect the Secretary's withdrawal authority. The Ninth Circuit affirmed the district court's decision rejecting challenges to the decision of the Secretary to withdraw from new uranium mining claims, up to twenty years, over one million acres of land near Grand Canyon National Park. In this case, the panel held that the environmental impact statement (EIS) did take existing legal regimes into account but reasonably concluded that they were inadequate to meet the purposes of the withdrawal; the Establishment Clause challenge failed under Lemon v. Kurtzman, 403 U.S. 602, 612–13 (1971); and the panel rejected challenges under the National Environmental Policy Act (NEPA), 42 U.S.C. 4332, and the National Forest Management Act, 16 U.S.C. 1604(e). View "National Mining Ass'n v. Zinke" on Justia Law

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The Ninth Circuit affirmed the district court's decision rejecting challenges to the Forest Service's determination that EFR had a valid existing right to operate a uranium mine on land within a withdrawal area of public lands around Grand Canyon National Park that the Secretary of the Interior withdrew from new mining claims. The panel held that the Mineral Report was a major federal action under the National Environmental Policy Act (NEPA), 42 U.S.C. 4332, and that the district court correctly held that Center for Biological Diversity v. Salazar, 706 F.3d 1085 (9th Cir. 2013), not Pit River Tribe v. U.S. Forest Service, 469 F.3d 768 (9th Cir. 2006), governed this case; that action was complete when the plan was approved; resumed operation of Canyon Mine did not require any additional government action; and thus the EIS prepared in 1988 satisfied NEPA. The panel also held that the Mineral Report approved an "undertaking" under the National Historic Preservation Act of 1966 (NHPA), 54 U.S.C. 306108; the Mineral Report did not permit, license, or approve resumed operations at Canyon Mine; and the original approval was the only "undertaking" requiring consultation under the NHPA. Finally, the environmental groups did not have prudential standing to challenge the Mineral Report. View "Havasupai Tribe v. Provencio" on Justia Law

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Herndon sued Whiteside, doing business as Beam Oil, for breach of contract and conversion because defendant refused to pay plaintiff royalties arising from an oil and gas lease. The Macon County circuit court dismissed, finding that plaintiff did not own the claimed overriding royalty interest but defendant did. The Fourth District affirmed the dismissal of the conversion claim but remanded the breach of contract claim. Defendant appealed. The Illinois Supreme Court reinstated the dismissal. The instrument of assignment, signed after a series of transactions, unambiguously transferred all of plaintiff’s interest to defendant, so defendant’s refusal to pay plaintiff royalties was not a breach. Plaintiff and third parties each assigned to defendant “all of [their] right, title and interest in and to the oil, gas and mineral leases *** together with a like interest in and to all personal property located therein.” The instrument has no inconsistency or ambiguity that needs clarification. View "Ramsey Herndon LLC v. Whiteside" on Justia Law

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SPP, a regional transmission organization (RTO), filed with FERC revisions to its tariff that reflected an agreement with Integrated System entities to integrate their facilities. Pursuant to the requirements of section 205 of the Federal Power Act, 16 U.S.C. 824d, SPP filed with FERC revisions to its tariff that reflected the parties' agreement. FERC approved the revisions over the objections of Kansas. The DC Circuit denied Kansas' petition for review, holding that FERC accurately described the agreement as reciprocal; Kansas misread various precedents and the court rejected its contention that the arrangement violated critical norms of ratemaking; the court saw no basis for a claim of undue discrimination; and the court rejected Kansas' arguments regarding SPP's reliance on a study commissioned by the IS Parties. Finally, FERC did not abuse its discretion by deciding not to hold an evidentiary hearing on the disputed features of the record underlying its approval of the merger. View "State Corp. Commission of KS v. FERC" on Justia Law

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AOPL petitioned for review of FERC's issuance of an order adopting the index formula to govern oil pipeline rates for the 2016 to 2021 period. The DC Circuit denied the petition for review, holding that there was no merit to AOPL's claim that FERC impermissibly relied solely on the middle 50 percent of pipeline cost-change data and failed to incorporate the middle 80 percent of cost-change data, and that FERC impermissibly used "Page 700" cost-of-service data to calculate the index level. The court held that the record makes it plain that the Commission adequately and reasonably explained its decision not to consider the middle 80 percent of pipelines' cost-change data; nothing in any of FERC's past index review orders bound the agency to use the middle 80 percent of pipelines' cost-change data; the Commission's rationale for utilizing the cost-of-service data from Page 700 was clear and reasonable; and there was nothing in the record to support AOPL's claim that FERC's decision to use Page 700 data indicates an unexplained shift in its measurement objective. View "Association of Oil Pipe Lines v. FERC" on Justia Law