Justia Energy, Oil & Gas Law Opinion Summaries

Dayton Power & Light Company, along with other utilities, sought an RTO adder from the Federal Energy Regulatory Commission (FERC) as an incentive for joining a Regional Transmission Organization (RTO). Ohio law mandates that utilities join an RTO, which led FERC to deny Dayton Power's application, arguing that the adder is meant to incentivize voluntary actions, not those required by law. The Ohio Consumers’ Counsel (OCC) challenged the existing RTO adders for other Ohio utilities, leading FERC to remove the adder for AEP but not for Duke and FirstEnergy, citing the latter's comprehensive settlement agreements.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court first addressed whether the utilities could challenge the voluntariness requirement of Order 679, concluding that they could because FERC's past practices did not clearly indicate a strict voluntariness requirement. The court then interpreted Section 219(c) of the Federal Power Act, agreeing with FERC that the best reading of the statute supports the requirement that RTO membership must be voluntary to qualify for the adder.The court also considered the utilities' preemption argument, which claimed that federal law should override Ohio's mandate for RTO membership. The court held that the Federal Power Act does not preempt Ohio law, as Congress did not intend to prevent states from mandating RTO participation, especially when such mandates align with federal goals of increasing RTO membership.Finally, the court found FERC's differential treatment of AEP, Duke, and FirstEnergy to be arbitrary and capricious. It noted that all three utilities' rates included a 50-basis-point RTO adder, whether explicitly approved or impliedly included in settlements. The court affirmed FERC's denial of Dayton Power's application and the removal of AEP's adder but reversed the decision to retain the adders for Duke and FirstEnergy, remanding for further proceedings. View "Dayton Power & Light Co. v. Federal Energy Regulatory Commission" on Justia Law

The case involves Michigan's electricity market regulations, specifically the Individual Local Clearing Requirement (ILCR), which mandates that electricity retailers in Michigan's lower peninsula procure a certain percentage of their capacity from within that region. Plaintiffs, including Energy Michigan and the Association of Businesses Advocating Tariff Equity (ABATE), challenged the ILCR on the grounds that it violates the dormant Commerce Clause by discriminating against interstate commerce.The United States District Court for the Eastern District of Michigan initially dismissed the Michigan Public Service Commission (MPSC) on Eleventh Amendment grounds but allowed the case to proceed against individual commissioners. The court denied summary judgment motions from both sides, finding that there were factual disputes regarding whether the ILCR discriminated against interstate commerce. After a three-day bench trial, the district court concluded that the ILCR did not violate the Commerce Clause.The United States Court of Appeals for the Sixth Circuit reviewed the case and determined that the ILCR is facially discriminatory because it requires electricity to be generated within a specific geographic region, effectively favoring in-state over out-of-state electricity. The court held that this discrimination necessitates strict scrutiny, which the district court did not properly apply. The Sixth Circuit reversed the district court's judgment and remanded the case for further proceedings to determine if the ILCR can survive strict scrutiny by proving it is the only means to achieve the state's goal of ensuring a reliable energy supply. View "Energy Michigan, Inc. v. Public Service Commission" on Justia Law

Aclara Meters LLC owned the license for the Somersworth Hydroelectric Project on the Salmon Falls River between New Hampshire and Maine from 2016 to 2023. In 2019, Aclara sought to surrender its license to the Federal Energy Regulatory Commission (FERC). After conducting an environmental assessment, FERC authorized the surrender in 2023. American Whitewater, a conservation organization, requested a rehearing, arguing that two dams from the Project should be removed as a condition of surrender. FERC denied the request, leading Whitewater to petition the United States Court of Appeals for the District of Columbia Circuit for relief, claiming that FERC acted arbitrarily and capriciously under the Federal Power Act (FPA) and the National Environmental Policy Act (NEPA).The Commission's environmental assessment concluded that approving the surrender as proposed would not significantly affect the environment, thus an Environmental Impact Statement (EIS) was unnecessary. FERC found that removing the dams was unfeasible due to the local municipalities' reliance on the reservoir for water supply and other needs. The Commission also determined that the benefits of keeping the dams outweighed the environmental and recreational benefits of their removal. FERC's decision was based on the public interest, considering the water supply, firefighting needs, and potential impacts on local infrastructure.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and denied Whitewater's petition for review. The court held that FERC's analysis was neither arbitrary nor capricious. The Commission reasonably determined that dam removal was unfeasible and appropriately assessed the public interest. The court found that FERC's decision to approve the license surrender without dam removal was supported by substantial evidence and consistent with its policies and precedents. View "American Whitewater v. FERC" on Justia Law

Petitioners sought review of the Federal Energy Regulatory Commission's (FERC) grant of an abandonment incentive to ITC Midwest, LLC (ITC). This incentive allows ITC to recover 100% of its prudently incurred costs if a planned transmission project is abandoned for reasons beyond its control. Petitioners, a group of organizations whose members purchase electricity, argued that ITC's ownership of the project was uncertain due to ongoing litigation challenging the Iowa Right of First Refusal statute.The Federal Energy Regulatory Commission approved ITC's request for the abandonment incentive, finding that the project met the necessary criteria, including enhancing reliability and reducing congestion. Petitioners filed a protest, which FERC rejected, stating that regulatory or litigation uncertainty does not preclude granting an abandonment incentive. Petitioners then sought rehearing, which FERC also denied, reiterating that the approval was consistent with its precedent.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court determined that petitioners lacked Article III standing because they failed to show imminent injury from FERC's orders. The court noted that petitioners' claims of potential future higher rates were speculative and not concrete or imminent. The court also found that petitioners' interest in the proper application of the law and potential collateral estoppel effects did not constitute a cognizable injury. Consequently, the court dismissed the petition for lack of jurisdiction. View "Industrial Energy Consumers of America v. FERC" on Justia Law

The case involves a dispute over the construction of a substation by Park City Wind LLC (PCW) that will connect an offshore wind farm to the New England electric grid. Jacqueline Johnson, the petitioner, lives near the proposed substation site and raised concerns about the noise impact from the substation, which includes loud step-up transformers. PCW presented expert testimony and reports to the Energy Facilities Siting Board (the board) indicating that design features would mitigate the noise impact, keeping it within the allowable increase of ten A-weighted decibels (dBA) set by the Department of Environmental Protection (DEP).The board approved PCW's petition to construct the substation, subject to several conditions, including preconstruction and postconstruction reviews to ensure the noise levels at Johnson's home would not exceed an eight dBA increase. Johnson was allowed to participate fully in the administrative process, including discovery, briefing, and cross-examination of PCW's experts. The board required PCW to confirm that the predicted noise levels would not be exceeded once the equipment specifications were known and to implement additional noise mitigation measures if necessary.The Supreme Judicial Court of Massachusetts reviewed the case. Johnson argued that the board's decision was not supported by substantial evidence because it relied on aggressive sound level design specifications for yet-to-be-manufactured equipment. The court concluded that Johnson failed to meet the heavy burden required to overturn the board's decision, which was supported by substantial evidence, including expert testimony and industry-standard sound modeling. The court also found that the board's conditional approval, requiring preconstruction and postconstruction compliance filings, was lawful and within the board's statutory authority. The court affirmed the board's decision. View "Johnson v. Energy Facilities Siting Board" on Justia Law

Sentinel Energy Center, LLC owns a power plant in North Palm Springs and hired DGC Operations, LLC (OPS) to manage and operate the plant. In 2017, during annual maintenance, five OPS employees failed to follow the new depressurization protocol for the fuel filter skid, leading to an explosion that killed Daniel Collins. Collins's family sued Diamond Generating Corporation (DGC), which has a 50% indirect ownership in Sentinel and is the parent company of OPS, claiming DGC's negligence in safety oversight led to Collins's death.The Superior Court of Riverside County denied DGC's request to instruct the jury on the Privette doctrine, which generally shields a hirer from liability for injuries to an independent contractor's employees. The jury found DGC 97% at fault and awarded the plaintiffs over $150 million. DGC's motions for nonsuit and judgment notwithstanding the verdict, based on the Privette doctrine, were also denied.The Court of Appeal of the State of California, Fourth Appellate District, Division Three, reviewed the case. The court declined to grant judgment notwithstanding the verdict to DGC, citing unresolved factual questions about whether DGC retained control over the plant and negligently exercised that control. However, the court found that the trial court erred in not instructing the jury on the Privette doctrine and its exceptions, which could have led to a more favorable outcome for DGC. Consequently, the appellate court reversed the judgment and remanded the case for a new trial with instructions to include the Privette doctrine and its exceptions. View "Collins v. Diamond Generating Corp." on Justia Law

The State of Indiana approved a plan to retire a coal-fired facility and replace it with wind and solar energy sources, supplemented by two new natural gas turbines to ensure grid reliability. The Federal Energy Regulatory Commission (FERC) approved a natural gas pipeline to serve these turbines. The Citizens Action Coalition of Indiana challenged FERC’s approval, arguing that FERC’s environmental analysis was unreasonable and inconsistent with the National Environmental Policy Act (NEPA) and the Natural Gas Act (NGA). The core claim was that FERC should have analyzed non-gas alternatives before approving the pipeline.The Indiana Utility Regulatory Commission initially denied CenterPoint Energy’s proposal for an 850-megawatt natural gas unit due to inadequate consideration of alternatives. CenterPoint then modified its plan to include wind generation and applied to build two smaller gas-fired turbines, which the Indiana Commission approved. CenterPoint contracted with Texas Gas Transmission for a 24-mile pipeline to supply natural gas to the new units. Citizens Action intervened in the FERC proceeding, raising environmental concerns. FERC prepared an environmental impact statement and approved the pipeline. Citizens Action’s request for rehearing was denied by operation of law, leading to the current petition for review.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court held that FERC acted lawfully and reasonably in its environmental analysis and public convenience and necessity determination. FERC was not required to consider non-gas alternatives outside its jurisdiction and properly identified the project’s purpose as supporting CenterPoint’s new natural gas units. The court also found that FERC’s use of emissions percentages and the absence of a significance label were reasonable and consistent with NEPA. The petition for review was denied. View "Citizens Action Coalition of Indiana, Inc. v. FERC" on Justia Law

NorthWestern Corporation and the Montana Department of Environmental Quality (DEQ) appealed a District Court order vacating an air quality permit granted to NorthWestern for a natural-gas-fueled power plant near Laurel, Montana. The District Court found DEQ's analysis under the Montana Environmental Policy Act (MEPA) inadequate regarding the project's lighting impacts and greenhouse gas emissions.The Thirteenth Judicial District Court vacated the permit, ruling that DEQ's noise analysis was not arbitrary or capricious but failed to take a "hard look" at the facility's lighting impacts and greenhouse gas emissions. The court also found that DEQ did not comply with MEPA requirements in its environmental assessment (EA) and remanded the EA to DEQ for further analysis.The Supreme Court of the State of Montana reviewed the case. It affirmed the District Court's ruling that DEQ's noise analysis was adequate but agreed that DEQ failed to properly analyze the lighting impacts. The Supreme Court also held that DEQ must analyze greenhouse gas emissions within Montana as part of its MEPA review, despite the absence of specific regulatory standards for greenhouse gases under the Clean Air Act of Montana.However, the Supreme Court reversed the District Court's vacatur of the permit, citing the need for specific findings under § 75-1-201(6)(c)(ii), MCA, before granting such equitable relief. The case was remanded to DEQ for further MEPA analysis in accordance with the Supreme Court's opinion, with the permit reinstated pending this additional review. View "MEIC v. DEQ" on Justia Law

Phelps Oil and Gas, LLC, leased land to Noble Energy, Inc., which produces natural gas and pays royalties to Phelps. Phelps filed a class action lawsuit against Noble, alleging underpayment of royalties. The dispute centers on the interpretation of a prior settlement agreement, the Holman Settlement, which outlines the royalty calculation method. Phelps claims Noble failed to pay royalties on $34 million from a DCP Midstream, LP audit and $17.5 million that DCP promised to invest in infrastructure.The United States District Court for the District of Colorado granted summary judgment in favor of Noble. The court found that Noble was not obligated to pay royalties on the $34 million because DCP never returned those proceeds to Noble. Regarding the $17.5 million, the court held that Phelps failed to show that the promise had value to Noble beyond increased production and resulting revenues.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court's decision, agreeing that Phelps did not present evidence that DCP returned any proceeds to Noble related to the $34 million. The court also upheld the summary judgment on the $17.5 million claim, finding that Phelps could not demonstrate that the promise provided any additional benefit to Noble aside from increased production and revenues, which Noble had already accounted for in its royalty payments.The Tenth Circuit concluded that Phelps failed to create a genuine issue of material fact regarding Noble's obligation to pay additional royalties under the Holman Settlement. The court affirmed the district court's judgment in favor of Noble Energy, Inc. View "Phelps Oil and Gas v. Noble Energy" on Justia Law

Kenneth Hahn, who owns a non-participating royalty interest (NPRI) in a mineral estate leased by ConocoPhillips, disputed the amount of royalty owed to him. Hahn's NPRI was initially set at a fixed 1/8 share of production. The case centered on whether this share was reduced when Hahn ratified a subsequent lease by the mineral estate owner, which included its own royalty term, or when he signed a stipulation and cross-conveyance agreeing to accept a different royalty.The trial court denied Hahn's motion for partial summary judgment and granted the Gipses' motion, declaring that Hahn's NPRI was a floating fraction of the landowner's royalty. Hahn appealed, and the Court of Appeals reversed, holding that Hahn's NPRI was a fixed 1/8 share and that the stipulation could not alter this interest. The case was remanded for further proceedings. On remand, the trial court again ruled in favor of ConocoPhillips, declaring that Hahn's ratification of the lease subjected his NPRI to the lease's royalty provision. Hahn appealed again.The Supreme Court of Texas reviewed the case and agreed with the Court of Appeals that Hahn's ratification of the lease did not reduce his NPRI from a fixed to a floating fraction. However, the Supreme Court disagreed with the Court of Appeals regarding the stipulation and cross-conveyance. The Court held that the stipulation did effectively reduce Hahn's NPRI by conveying part of it to the mineral fee owner. Consequently, the Supreme Court reversed the Court of Appeals' judgment in part and rendered judgment that ConocoPhillips correctly calculated Hahn's share of proceeds from the production on the pooled unit. View "CONOCOPHILLIPS COMPANY v. HAHN" on Justia Law