Justia Energy, Oil & Gas Law Opinion Summaries

A private company specializing in the disposal of wastewater from oil and gas fracking leased land in an urban area and constructed two saltwater-injection wells. After two earthquakes were recorded near the wells, the State of Ohio determined the company’s activities caused the seismic events and temporarily suspended operations at both wells. One well was later permitted to resume limited operations, but the suspension of the second well remained until 2021. The company had been aware of seismicity risks before acquiring its leasehold and warned investors of possible regulatory shutdowns.After the suspension, the company pursued administrative and judicial challenges, including an appeal to the Ohio Oil and Gas Commission and the Tenth District Court of Appeals, both of which upheld the State’s actions. The company then filed a petition for a writ of mandamus in the Eleventh District Court of Appeals, claiming a regulatory taking of its property. The Eleventh District initially denied relief, but following multiple remands from the Supreme Court of Ohio, it ultimately found no total taking but did find a compensable partial regulatory taking under the Penn Central analysis, ordering the State to initiate eminent-domain proceedings.On appeal, the Supreme Court of Ohio reviewed whether the suspension order constituted a total or partial regulatory taking. The court held that the company failed to prove it was deprived of all economically beneficial use, rejecting the total taking claim. The court further held that, under a proper balancing of the Penn Central factors, the State’s actions did not amount to a compensable partial taking. The Supreme Court of Ohio affirmed the Eleventh District’s denial of the total takings claim, reversed its partial takings finding, and denied the writ of mandamus. View "State ex rel. AWMS Water Solutions, L.L.C. v. Mertz" on Justia Law

Devon Energy Production Company, L.P. was engaged in gas production from two New Mexico units under a federal lease, which required payment of royalties to the federal government. State officials, acting under federal authority, audited Devon Energy’s operations and disallowed certain deductions related to the treatment and transportation of natural gas over a four-year period. The charges for these services were bundled, making it difficult to separate deductible from non-deductible costs. A related Devon entity had previously resolved a similar dispute with the government through a settlement agreement, which established formulas for calculating allowable deductions.The Office of Natural Resources Revenue, a federal agency, reviewed Devon Energy’s objections to the audit and upheld the disallowance, ordering payment of the contested royalties or further documentation. Devon Energy sought review in the United States District Court for the Western District of Oklahoma, arguing that the agency acted arbitrarily and capriciously by not considering the prior settlement agreement. The district court affirmed the agency’s decision, reasoning that the agreement did not cover all disputed royalties.The United States Court of Appeals for the Tenth Circuit reviewed the case de novo, applying the arbitrary-and-capricious standard. The Tenth Circuit found that the agency erred by failing to consider the prior settlement agreement, which may have had significant legal and factual implications for the calculation of deductions. The court also found that the record was insufficient to support the government’s alternative arguments for affirmance, such as the identity of the contracting entity and the expiration of the agreement’s terms. The Tenth Circuit reversed the district court’s judgment and remanded the case for the district court to determine the appropriate remedy—whether vacatur of the agency’s decision or a remand to the agency is warranted. View "Devon Energy Production Company v. DOI" on Justia Law

A group of residents opposed the construction of energy and telecommunications projects in Vermont by seeking to intervene in proceedings before the Vermont Public Utility Commission (PUC). The PUC granted certificates of public good (CPG) for both projects—one for a solar project and the other for a telecommunications tower. After these decisions, the intervenors filed timely motions under PUC Rule 2.221 to alter or amend the PUC’s orders. The PUC denied both motions, finding that Rule 2.221 incorporated the language of Vermont Rule of Civil Procedure 59 and that the intervenors had not met the necessary standard for relief. The intervenors then appealed the denials to the Vermont Supreme Court.The developers moved to dismiss the appeals, arguing that the notices of appeal were filed more than thirty days after the PUC’s final decisions and were therefore untimely. They contended that PUC Rule 2.221 motions did not toll the time to appeal under Vermont Rule of Appellate Procedure 4(b), as those rules reference only motions filed in the superior court and not with the PUC.The Vermont Supreme Court held that a timely motion to alter or amend filed with the PUC under Rule 2.221 is substantively the same as a Vermont Rule of Civil Procedure 59 motion. The Court explained that, under Vermont Rule of Appellate Procedure 4(b)(5), such motions toll the time for filing an appeal from a PUC decision. The Court distinguished prior cases involving appeals from municipal panels, where the rules did not allow for tolling. Because the intervenors’ motions were timely and tolled the appeal period, the Court denied the motions to dismiss, allowing the appeals to proceed. View "In re Petition of VT Real Estate Holdings 1 LLC" on Justia Law

KC Transport, an independent trucking company, provides hauling services for mining and other companies. It operates a maintenance facility for its haul trucks about a mile from one of its primary client’s active mines. During an inspection, a Mine Safety and Health Administration (MSHA) inspector observed two KC Transport trucks at the facility undergoing maintenance in conditions that violated federal safety standards—specifically, the trucks were raised and unblocked, with one worker standing underneath. The inspector issued citations for these violations.In an administrative proceeding, KC Transport contested the citations, arguing that MSHA lacked jurisdiction over its facility and trucks since they were not located at an extraction site or on an appurtenant road. An administrative law judge (ALJ) found that MSHA had jurisdiction, reasoning that the facility and trucks were “used in” mining-related activities and thus constituted a “mine” under the Federal Mine Safety and Health Amendments Act. KC Transport appealed, and the Federal Mine Safety and Health Review Commission reversed the ALJ, holding that only facilities or equipment located at extraction sites or appurtenant roads qualify as “mines” under the Act and vacated the citations.The Secretary of Labor, acting through MSHA, petitioned the United States Court of Appeals for the District of Columbia Circuit for review. After an intervening Supreme Court decision overruled Chevron deference, the D.C. Circuit independently interpreted the relevant statutory provisions. The court held that a “facility” constitutes a “mine” under the Mine Act when it is necessarily connected with the use and operation of extracting, milling, or processing minerals, even if not located directly at an extraction site or appurtenant road. Concluding that KC Transport’s facility met this definition, the court vacated the Commission’s decision and affirmed the Secretary’s citations. View "Secretary of Labor v. KC Transport, Inc." on Justia Law

The case involves a dispute between holders of a nonparticipating royalty interest and an oil and gas operator concerning how royalties should be calculated under the terms of a 1960 deed. The deed reserved for the royalty owners an undivided one-sixteenth interest in all oil, gas, and other minerals produced from a specified tract, “free of cost forever.” The operator, as the successor to the original grantee, produced, transported, treated, and processed oil and gas, then sold the products downstream. Historically, the operator deducted postproduction costs from the downstream sales price to determine the value of the raw minerals at the wellhead for calculating the royalty.In 2021, the royalty owners brought suit, arguing that their royalty should be calculated on the downstream sales price for processed gas without deduction of postproduction costs, except severance taxes. The 49th District Court of Webb County granted summary judgment for the royalty owners and certified an interlocutory appeal of whether the “free of cost forever” language precluded deduction of postproduction costs. The Fourth Court of Appeals affirmed, reasoning that the deed’s language reflected an intent to free the royalty from such costs under Texas law.The Supreme Court of Texas granted review and reversed. The Court held that, by its plain language, the deed reserves a royalty on minerals “produced from the above described acreage,” not on minerals transported, processed, or enhanced for downstream sale, and contains no language indicating a valuation point other than at the wellhead. The phrase “free of cost forever” merely clarifies the royalty is free of exploration and production costs, not postproduction costs. Therefore, the royalty owners bear postproduction costs incurred after production. The Court rendered partial summary judgment for the operator and remanded for further proceedings. View "FASKEN OIL AND RANCH, LTD. v. PUIG" on Justia Law

Several oil refineries with average daily crude oil throughput below 75,000 barrels in 2024 applied to the Environmental Protection Agency (EPA) in 2025 for exemptions from their obligations under the Renewable Fuel Standard (RFS) program for the 2024 compliance year. The RFS program, established under the Clean Air Act, requires refineries to blend renewable fuels into transportation fuels. The Act provides for a “small refinery” exemption for facilities that do not exceed the 75,000-barrel threshold in a calendar year. The petitioning refineries did not seek exemptions for 2023 and based their applications solely on their 2024 throughput.After the refineries submitted their applications, the EPA informed them that, under its 2014 regulation, eligibility required a refinery to meet the “small refinery” definition both for "the most recent full calendar year prior to seeking an extension" and for "the year or years for which an exemption is sought." The EPA interpreted this to mean petitioners needed to satisfy the throughput limit in both 2023 and 2024. Since the refineries exceeded the threshold in 2023, the EPA denied the exemption requests. The refineries then sought review in the United States Court of Appeals for the District of Columbia Circuit.The D.C. Circuit held that the EPA’s interpretation of its 2014 regulation was contrary to the regulation’s plain text. The court found that, because the applications were filed in 2025 for the 2024 compliance year, both the “most recent full calendar year prior to seeking an extension” and “the year for which an exemption is sought” referred to 2024. Since the petitioners met the threshold in 2024, they were eligible under the regulation. The court vacated the EPA’s denial orders and remanded for further proceedings. View "Alon Refining Krotz Springs, Inc. v. EPA" on Justia Law

Missouri River Energy Services provides electricity to municipal utilities in several Midwest states and joined the Southwest Power Pool, an independent regional transmission organization, in October 2015. Prior to Missouri River’s integration, Southwest Power Pool had already allocated all available long-term firm transmission rights, which are financial instruments designed to protect load-serving entities from congestion charges on the transmission grid. Since joining, Missouri River has requested long-term transmission rights but has not received any, because existing rights holders had already claimed the available capacity.After repeatedly receiving no long-term rights, Missouri River filed a complaint with the Federal Energy Regulatory Commission (FERC) in 2023. Missouri River argued that the allocations by Southwest Power Pool violated both the governing tariff and FERC’s Order No. 681, and that FERC’s rejection of its complaint was arbitrary and capricious. FERC denied the complaint, finding no violation of the tariff or Order No. 681, and determined that Missouri River was not entitled to a specific allocation of long-term rights under federal law or the tariff.Missouri River then sought review in the United States Court of Appeals for the Eighth Circuit. The court held that the Federal Power Act and Order No. 681 require that long-term transmission rights be made available to the class of load-serving entities, but do not guarantee individual entities such as Missouri River a specific allocation. The court further concluded that Southwest Power Pool had properly implemented its tariff, including the simultaneous feasibility test and procedures for handling parallel flows and shift factors, and that FERC’s decision was supported by substantial evidence. The Eighth Circuit denied Missouri River’s petition for review, upholding FERC’s order. View "Missouri River Energy Services v. FERC" on Justia Law

Minority shareholders of an Argentine oil and gas company, previously privatized in 1993, became involved in litigation after the Argentine government expropriated a majority stake in the company in 2012. The government’s acquisition of shares was conducted without making a public tender offer to minority shareholders, a process that was explicitly required by the company’s bylaws to protect such shareholders in the event of a takeover. The plaintiffs, consisting of Spanish entities and a New York hedge fund, had acquired significant stakes in the company, and after the expropriation, they claimed that they suffered substantial financial losses due to the government’s failure to comply with the tender offer requirement.The plaintiffs sued in the United States District Court for the Southern District of New York, asserting breach of contract and promissory estoppel claims under Argentine law against both the Argentine Republic and the company. After extensive litigation, the district court found in favor of the plaintiffs on their breach of contract claims against the Argentine Republic, awarding over $16 billion in damages, but granted summary judgment to the company, finding it had no obligation to enforce the tender offer provision. The court also dismissed the promissory estoppel claims.On appeal, the United States Court of Appeals for the Second Circuit held that the plaintiffs' breach of contract damages claims against the Argentine Republic and the company were not cognizable under Argentine law, reasoning that the bylaws did not create enforceable bilateral obligations between shareholders and that Argentine public law governing expropriation precluded such claims. The court affirmed the dismissal of the promissory estoppel claims and judgment in favor of the company, but reversed the judgment against the Argentine Republic, remanding for further proceedings consistent with its opinion. View "Petersen Energía v. Argentine Republic" on Justia Law

A renewable energy developer was awarded a standard-offer contract in 2014 to build a solar facility in Bennington, Vermont, with a requirement to commission the project by 2016. The developer repeatedly sought and received extensions to this deadline, while simultaneously pursuing a certificate of public good (CPG), which is also required for construction. The Public Utility Commission (PUC) granted the CPG in 2018, but it was appealed, reversed, and ultimately denied on remand due to violations of local land conservation measures and adverse impacts on aesthetics. The Vermont Supreme Court affirmed the final CPG denial in 2023.While litigation over the CPG was ongoing, the developer continued to seek extensions of its standard-offer contract’s commissioning milestone. The fifth extension request, filed in 2021, asked for a deadline twelve months after the Supreme Court’s mandate in the CPG appeal. The hearing officer recommended granting it, but the PUC did not act on the request until 2024, by which time the developer’s CPG had been finally denied. The PUC dismissed the fifth extension request as moot, finding the contract had expired by its own terms. The PUC also denied the developer’s motion for reconsideration and a sixth extension request, on the same grounds.On appeal, the Vermont Supreme Court reviewed the PUC’s actions with deference, upholding its factual findings unless clearly erroneous and its discretionary decisions unless there was an abuse of discretion. The Court held that the PUC properly concluded the requested extension was moot, the contract was null and void by its terms, and there was no abuse of discretion. The Court also rejected arguments that the PUC’s actions were inconsistent with other cases or violated constitutional rights. The orders of the PUC were affirmed. View "In re Petition of Apple Hill Solar LLC" on Justia Law

In 1951, a deed was executed conveying an undivided 1/128 interest in oil, gas, and other minerals in certain Reeves County land. For nearly seventy years, the grantees and their successors received fixed 1/128 royalty payments without dispute. In 2020, a successor grantee, Johnson, asserted a different interpretation, claiming the deed provided a floating 1/16 nonparticipating royalty interest rather than the fixed 1/128 royalty everyone had understood and paid for decades.The 143rd District Court in Reeves County denied Johnson’s motion for summary judgment and granted summary judgment in favor of the Cliftons and other parties, confirming that the deed conveyed a fixed 1/128 royalty interest. Johnson appealed to the Court of Appeals for the Eighth District of Texas, which relied heavily on Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023). The appellate court applied the “double-fraction” presumption from Van Dyke, concluding that the deed conveyed a floating 1/16 royalty and reversed the trial court’s judgment. It also declined to remand the case to consider the presumed-grant doctrine, holding the Cliftons had forfeited that argument.The Supreme Court of Texas reviewed the case. It held that while the Van Dyke double-fraction presumption applied, the plain language of the deed rebutted the presumption, demonstrating that “1/8” was used for its ordinary numerical value, not as a term of art. The Court concluded the deed conveyed a fixed 1/128 royalty interest, not a floating 1/16 royalty. The Court reversed the appellate court’s judgment and reinstated the trial court’s summary judgment. The Court did not reach the presumed-grant doctrine issue, as its textual interpretation of the deed resolved the dispute. View "Clifton v. Johnson" on Justia Law