Justia Energy, Oil & Gas Law Opinion Summaries

This case involves TRC Operating Co., Inc. and TRC Cypress Group, LLC (collectively TRC) and Chevron U.S.A., Inc. (Chevron), oil producers operating adjacent well fields in Kern County, California. Both companies pump from a shared underground oil reservoir and engage in a process known as “cyclic steaming” to make oil extraction more efficient. In 1999, a “surface expression” formed near a Chevron well, which occurs when the steaming process causes a lateral fracture from the wellbore, allowing oil and other effluent to escape to the surface. Despite Chevron’s attempts at remediation, in 2011, an eruption occurred in the area of the well, causing a sinkhole to form, which killed a Chevron employee. The state oil and gas regulator issued various orders preventing steaming in the area, which lasted four years. TRC sued Chevron, claiming Chevron’s negligent maintenance and operation of its property led to dangerous conditions which made it unsafe to perform cyclic steaming operations. These conditions led to the regulator's shut-down orders, and to TRC’s harm and damages. Chevron countersued, claiming TRC’s failure to adequately maintain its own wells was the cause of the surface expression, the eruptions, and damages suffered by Chevron. The jury found in favor of TRC, awarding approximately $120 million in damages against Chevron. Nothing was awarded to Chevron. Chevron filed motions for a new trial and for judgment notwithstanding the verdict (JNOV). The trial court denied the JNOV, but granted a new trial based on misconduct by a juror. TRC appealed the granting of this motion. The Court of Appeal reversed the grant of a new trial, finding that the juror was not ineligible and no prejudice resulted from the juror’s failure to disclose his prior criminal conviction or the previous civil lawsuit. Chevron also filed a protective cross-appeal, in the event the Court of Appeal found against it on TRC’s appeal. Chevron appealed the denial of its JNOV, arguing that the regulator's orders to stop steaming were the superseding cause of any harm suffered by TRC and precludes it from bearing any liability. The Court of Appeal concluded sufficient evidence was introduced to sustain the verdict, demonstrating TRC did not stop any of its steaming operations solely because of the regulator's orders, which were therefore not a superseding cause. The Court of Appeal reversed the trial court’s order granting a new trial, and remanded with instructions to reinstate the judgment against Chevron. View "TRC Operating Co. v. Chevron USA, Inc." on Justia Law

The case revolves around an oil spill caused by Plains All American Pipeline, L.P. (Plains). The spill resulted in the unlawful discharge of over 142,000 gallons of crude oil into the ocean and onto a beach. The trial court considered restitution for four groups of claimants who alleged losses due to the spill. The People of the State of California appealed the denial of restitution for claimants in two of these groups.The trial court had previously ruled that oil industry claimants were not direct victims of Plains' crimes and accepted mediated settlements in lieu of restitution. It also denied restitution to fishers based on a pending class action lawsuit, declined to consider aggregate proof presented by fishers, and refused to consider Plains' criminal conduct.The Court of Appeal of the State of California Second Appellate District Division Six held that restitution could not be denied based on mediated civil settlements or a class action lawsuit. However, it upheld the trial court's decision to deny restitution to fishers and oil industry workers, stating that they were not direct victims of the pipeline shutdown after the spill. The court remanded the case for consideration of restitution for four fisher claims, but in all other respects, it affirmed the trial court's decision and denied the writ petition. View "People v. Plains All American Pipeline, L.P." on Justia Law

The case involves a request for calendar entries of the Governor's former senior advisor for energy, Alice Reynolds, under the California Public Records Act (PRA). The request was made by the Energy and Policy Institute (EPI) and sought entries reflecting meetings with 10 specified entities, including the California Public Utilities Commission (CPUC), electric utilities, and unions representing energy workers, during the year prior to Reynolds' appointment to the presidency of the CPUC. The Governor's office denied the request, citing the deliberative process privilege, which protects the decision-making process of government agencies from public scrutiny.The trial court ruled in favor of EPI, finding that the public interest in access to these calendar entries outweighed the deliberative process privilege. The Governor appealed this decision to the Court of Appeal of the State of California, Second Appellate District, Division One.The appellate court upheld the trial court's decision, concluding that EPI's request was sufficiently specific, focused, and limited, and the public interest in disclosure was sufficiently compelling when measured against the minimal impact on government decision-making, to override the deliberative process privilege. The court found that the entities specified in EPI's request were entities with which the Governor's senior energy advisor would be expected to meet regardless of the Governor's particular policy priorities. Therefore, disclosure of records that those meetings took place, without any information as to the substance of those meetings, would reveal little if anything about the Governor's or his senior advisor's policy positions or thought processes. The court also concluded that the public has a substantial interest in knowing the extent to which the current CPUC president interacted with the CPUC and the entities the CPUC regulates when she was the Governor's senior advisor for energy. View "State v. Superior Court" on Justia Law

The case involves the California Geologic Energy Management Division (CalGEM) and TRC Operating Company, an oil operator. CalGEM, tasked with overseeing the state's drilling operations, enacted new regulations requiring oil operators to cease operations when a "surface expression" exists, or when there is reason to believe a specific operation is causing a surface expression. The operations must remain dormant until CalGEM authorizes their resumption in writing.TRC, having been issued a regulatory notice to cease operations, complied but never received authorization to resume. TRC sought an administrative appeal, which went unheard. Consequently, TRC sought judicial review, arguing that the regulations were invalid and CalGEM's actions were arbitrary and capricious.The trial court agreed with TRC, ruling the regulations were invalid, and granted declaratory relief. CalGEM appealed, arguing the regulations were valid and did not abuse its discretion in issuing the notice to TRC. The court concluded that the regulations were valid as they were consistent with the overall statutory scheme and were supported by substantial evidence. The court vacated the trial court's writ, and remanded the matter to the trial court to consider in the first instance whether CalGEM's actions in this case were arbitrary or capricious. View "TRC Operating Co. v. Shabazian" on Justia Law

In the case of Maryann Jones v. Solgen Construction, LLC and GoodLeap, LLC, the Court of Appeal of the State of California Fifth Appellate District affirmed the trial court's decision not to compel arbitration. The case concerned a business relationship involving the installation of home solar panels. The appellants, Solgen Construction and GoodLeap, had appealed the trial court's denial of their separate motions to compel arbitration, arguing that the court had erred in several ways, including by concluding that no valid agreement to arbitrate existed.Jones, the respondent, had filed a lawsuit alleging fraudulent misrepresentation, fraudulent concealment, negligence, and violations of various consumer protection laws. She contended that she had been misled into believing she was signing up for a free government program to lower her energy costs, not entering into a 25-year loan agreement for solar panels. The appellants argued that Jones had signed contracts containing arbitration clauses, but the court found that the appellants had failed to meet their burden of demonstrating the existence of a valid arbitration agreement. The court also held that the contract was unenforceable due to being unconscionable.The appellate court affirmed the trial court's decision, rejecting the appellants' arguments that an evidentiary hearing should have been held and that the court had erred in its interpretation of the evidence and the law. It found that the trial court had not abused its discretion and that its finding that the appellants failed to meet their burden of proof was not erroneous as a matter of law. View "Jones v. Solgen Construction" on Justia Law

In this case, the Court of Appeal of the State of California First Appellate District reviewed a decision by the Public Utilities Commission (PUC) to adopt a new net energy metering (NEM) tariff. The PUC was required by the Legislature to create a successor tariff to the existing NEM scheme, which utilities argued overcompensated owners of renewable energy systems for their exported energy, raising electricity costs for customers without such systems.The petitioners, Center for Biological Diversity, Inc., Environmental Working Group, and The Protect our Communities Foundation, contended that the successor tariff did not comply with various requirements of section 2827.1 of the Public Utilities Code. The petitioners argued that the tariff failed to consider the social benefits of customer-generated power, improperly favored the interests of utility customers who did not own renewable systems, failed to promote sustainable growth of renewable energy, and neglected alternatives to promote the growth of renewable systems among customers in disadvantaged communities.The court affirmed the PUC's decision. It held that the PUC had appropriately balanced the various objectives set out by the Legislature in section 2827.1. The court found that the successor tariff was designed to reduce the financial advantage previously given to owners of renewable energy systems under the NEM tariff, which the court said was consistent with the Legislature's aim of balancing costs and benefits to all customers. The court also noted that the PUC had adopted programs to make renewable energy systems more accessible to low-income customers, satisfying the requirement to ensure growth among residential customers in disadvantaged communities.Lastly, the court concluded that the PUC's decision to apply the same tariff to both residential and nonresidential customers was justified, as the nonresidential NEM 2.0 tariff, while cost-effective for the electrical system as a whole, did not balance costs and benefits among all customers. View "Center for Biological Diversity v. Public Utilities Com." on Justia Law

This case involves a dispute over a tariff adopted by the Public Utilities Commission (Commission) of the State of California that affects the compensation utilities provide to customers for excess electricity generated by renewable energy systems. The tariff, known as the net energy metering (NEM) tariff, previously required utilities to purchase excess electricity from renewable systems at the same price customers pay for electricity. However, utilities complained that this overcompensated the owners of renewable systems and raised the cost of electricity for customers without renewable systems. In response, the California Legislature enacted a law requiring the Commission to adopt a successor tariff that promotes the continued sustainable growth of renewable power generation while balancing costs and benefits to all customers.Several environmental groups challenged the Commission's newly adopted successor tariff, asserting that it did not comply with various statutory requirements. The Court of Appeal of the State of California First Appellate District upheld the Commission's tariff. The court found that the Commission's successor tariff adequately served the various objectives of the law and was based on a reasonable interpretation of its statutory mandate. The court also found that the Commission's decision to value exported energy from renewable systems based on the marginal cost of energy to the utilities was a reasonable approach to fulfilling the law's requirement to balance the equities among all customers. The court rejected the plaintiffs' arguments that the Commission had failed to properly account for the costs and benefits of renewable energy, and that it had improperly favored the interests of utility customers who do not own renewable systems. The court also found that the Commission had properly fulfilled the law's requirement to include specific alternatives designed for growth among residential customers in disadvantaged communities. The court affirmed the decision of the Commission. View "Center for Biological Diversity v. Public Utilities Com." on Justia Law

This appeal was the second relating to a suit brought by the City of Hesperia (the City) against respondents Lake Arrowhead Community Services District and the Board of Directors of Lake Arrowhead Community Services District (jointly, the District) regarding a proposed 0.96-megawatt solar photovoltaic project (the Solar Project) that the District had been planning to develop on six acres of a 350-acre property it owned, known as the Hesperia Farms Property. The Hesperia Farms Property was located within the City’s municipal boundary and was generally subject to the City’s zoning regulations. The District first approved its Solar Project in December 2015, after determining that the project was either absolutely exempt from the City’s zoning regulations under Government Code section 53091, or qualifiedly exempt under Government Code section 53096. The City sought a writ of mandate prohibiting the District from further pursuing the Solar Project. In Hesperia I, the Court of Appeal determined the District’s Solar Project was not exempt from the City’s zoning regulations under Government Code section 53091’s absolute exemption, or under Government Code section 53096’s qualified exemption. The Court concluded, however, that Government Code section 52096’s qualified exemption did not apply to the District’s approval of the Solar Project only because the District had failed to provide substantial evidence to support its conclusion that there was no other feasible alternative to its proposed location for the Solar Project. This result left open the possibility that the District could undertake further analyses and show that there was no feasible alternative to the Solar Project’s proposed location in order to avoid application of the City’s zoning ordinances. A few months after the District made its second no-feasible-alternative determination with respect to the Solar Project, the City filed a second petition for writ of mandate and complaint challenging the Solar Project. The trial court ultimately denied the City’s second petition. When the City appealed, the Court of Appeal concluded the trial court did not err in rejecting the City’s petition for writ of mandate. View "City of Hesperia v. Lake Arrowhead Community Services Dist." on Justia Law

These original proceedings involve efforts by the Public Utilities Commission (PUC or the Commission) to discover whether the political activities of Southern California Gas Company (SCG) are funded by SCG’s shareholders, which is permissible, or ratepayers, which is not. The Commission propounded several discovery requests (called “Data Requests”) on SCG, and when SCG failed fully to comply, moved to compel further responses that ultimately resulted in an order to comply or face substantial penalties. SCG seeks a writ of mandate directing the Commission to rescind its order on the ground that the discovery requests infringe on SCG’s First Amendment rights.   The Second Appellate District granted the petition and held that SCG has shown that disclosure of the requested information will impact its First Amendment rights, and the Commission failed to show that its interest in determining whether SCG’s political efforts are impermissibly funded outweighs that impact. The court reasoned that because SCG demonstrated that a threat to its constitutional rights exists, the burden shifted to the Commission to demonstrate that the data requests serve and are narrowly tailored to a compelling governmental interest. However, the PAO’s discovery inquiries into all sources of funding for SCG’s lobbying activities go beyond ratepayer expenditures. Insofar as the requests seek information about shareholder expenditures, they exceed the PAO’s mandate to obtain the lowest possible costs for ratepayers and its authority to compel disclosure of information necessary for that task. The requests, therefore, are not carefully tailored to avoid unnecessary interference with SCG’s protected activities. View "So. Cal. Gas Co. v. P.U.C." on Justia Law

The original proceedings involve efforts by the Public Utilities Commission (PUC or the Commission) to discover whether the political activities of Southern California Gas Company (SCG) are funded by SCG’s shareholders, which is permissible, or ratepayers, which is not. The Commission propounded several discovery requests (called “Data Requests”) on SCG, and when SCG failed fully to comply, moved to compel further responses that ultimately resulted in an order to comply or face substantial penalties. SCG seeks a writ of mandate directing the Commission to rescind its order on the ground that the discovery requests infringe on SCG’s First Amendment rights.   The Second Appellate District granted the petition. The court held that SCG has shown that disclosure of the requested information will impact its First Amendment rights, and the Commission failed to show that its interest in determining whether SCG’s political efforts are impermissibly funded outweighs that impact. The court explained that the Commission argues that sometimes SCG misclassifies expenditures, and has at times moved expenditures from ratepayer to shareholder accounts. But this just shows that a less invasive discovery process is working, and the PAO can confirm that no funds have been misclassified to ratepayer accounts by reviewing above-the-line accounts. Further, because the court will vacate Resolution ALJ-391 insofar as it compels disclosure of shareholder expenditures, no basis for sanctions exists. View "So. Cal. Gas Co. v. P.U.C." on Justia Law