Justia Energy, Oil & Gas Law Opinion Summaries

In this case's previous trip to the Court of Appeal, the Court reversed the trial court’s judgment overturning a cleanup order issued by the California Regional Water Quality Control Board, Central Valley Region (Regional Board). The cleanup order directed Atlantic Richfield Company (ARCO) to remediate hazardous waste associated with an abandoned mine in Plumas County. The mine was owned by the Walker Mining Company, a subsidiary of ARCO’s predecessors in interest, International Smelting and Refining Company and Anaconda Copper Mining Company (International/Anaconda). The Court of Appeal held the trial court improperly applied the test articulated in United States v. Bestfoods, 524 U.S. 51 (1998) for determining whether a parent company is directly liable for pollution as an operator of a polluting facility owned by a subsidiary. On remand, the trial court entered judgment in favor of the Regional Board, concluding “[t]he record supported a determination of eccentric control of mining ‘operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste.’ ” ARCO appealed, contending: (1) the trial court improperly applied Bestfoods to the facts of this case, resulting in a finding of liability that was unsupported by substantial evidence; (2) the Regional Board abused its discretion by failing to exclude certain expert testimony as speculative; (3) the Regional Board’s actual financial bias in this matter required invalidation of the cleanup order for violation of due process; and (4) the cleanup order erroneously imposed joint and several liability on ARCO. Finding no reversible error to this order, the Court of Appeal affirmed the trial court. View "Atlantic Richfield Co. v. California Regional Water Quality etc." on Justia Law

Ordinances banning “land uses in support of” new oil and gas wells and “land uses in support of” wastewater injection in unincorporated areas of Monterey County were enacted as part of Measure Z, an initiative sponsored by PMC and passed by Monterey County voters.The trial court upheld, in part, a challenge to Measure Z by oil companies and other mineral rights holders. The court of appeal affirmed. Components of Measure Z are preempted by state laws. Public Resources Code section 3106 explicitly provides that the State of California’s oil and gas supervisor has the authority to decide whether to permit an oil and gas drilling operation to drill a new well or to utilize wastewater injection in its operations. Those operational aspects of oil drilling operations are committed by section 3106 to the state’s discretion and local regulation of these aspects would conflict with section 3106. View "Chevron U.S.A., Inc. v. County of Monterey" on Justia Law

Malekeh Khosravan appealed the denial of her motion to strike or tax costs with respect to the expert witness fees incurred by defendants Chevron Corporation, Chevron U.S.A. Inc., and Texaco Inc. (Chevron defendants) following the trial court’s granting of the Chevron defendants’ motion for summary judgment. Malekeh and her husband Gholam Khosravan brought claims for negligence, premises liability, loss of consortium, and related claims, alleging Khosravan contracted mesothelioma caused by exposure to asbestos while he was an Iranian citizen working for the National Iranian Oil Company (NIOC) at the Abadan refinery the Khosravans alleged was controlled by the predecessors to the Chevron defendants, Exxon Mobil Corporation, and ExxonMobil Oil Corporation (Exxon defendants). The trial court concluded the Chevron and Exxon defendants did not owe a duty of care to Khosravan, and the California Court of Appeal affirmed. The trial court awarded the Chevron defendants their expert witness fees as costs based on the Khosravans’ failure to accept the Chevron defendants’ statutory settlement offers made to Khosravan and Malekeh under Code of Civil Procedure section 998. On appeal, Malekeh contended the trial court erred in denying the motion to strike or tax costs because the settlement offers required the Khosravans to indemnify the Chevron defendants against possible future claims of nonparties, making the offers impossible to value; the Khosravans obtained a more favorable judgment than the offers in light of the indemnity provisions; and the offers were “token” settlement offers made in bad faith. The Court of Appeal concurred with this reasoning and reversed: "We recognize the desire by defendants to reach a settlement that protects them from all liability for the conduct alleged in the complaint, whether as to the plaintiffs or their heirs in a wrongful death action. But if defendants seek that protection through indemnification, they may well need to give up the benefit of section 998." View "Khosravan v. Chevron Corp." on Justia Law

Environmental groups challenged the constitutionality of Public Resources Code section 25531, which limits judicial review of decisions by the Energy Resources Conservation and Development Commission on the siting of thermal power plants. Section 25531(a) provides that an Energy Commission siting decision is “subject to judicial review by the Supreme Court of California.” The plaintiffs contend this provision abridges the original jurisdiction of the superior courts and courts of appeal over mandate petitions, as conferred by California Constitution Article VI, section 10. Section 25531(b) provides that findings of fact in support of a Commission siting determination “are final,” allegedly violating the separation of powers doctrine by depriving courts of their essential power to review administrative agency findings (Cal. Const., Art. III, section 3; Art. VI, section 1).The court of appeal affirmed summary judgment in favor of the plaintiffs. The Article VI grant of original jurisdiction includes the superior courts and courts of appeal and may not be circumscribed by statute, absent some other constitutional provision. Legislative amendments to section 25531 have broken the once-tight link between the regulatory authority of the Public Utilities Commission (PUC) and Energy Commission power plant siting decisions, such that the plenary power Article XII grants the Legislature over PUC activities no longer authorizes section 25531(a). Section 25531(b) violates the judicial powers clause by preventing courts from reviewing whether substantial evidence supports the Commission’s factual findings. View "Communities for a Better Environment v. Energy Resources Conservation & Development Commission" on Justia Law

The California State Lands Commission and Aspen American Insurance Company filed suit against Plains Pipeline and its affiliate, alleging that when Plains's negligent maintenance of a pipeline resulted in disrupting the flow of oil, it also disrupted the payment of royalty income to the Commission, and caused damage to improvements on the Commission's land.The Court of Appeal reversed the trial court's judgment in favor of Plains, holding that Plains is not exempt from liability for the interruption in service. The court explained that no statute grants immunity to public utilities and whether immunity applies is a question of judicial policy. In this case, Plains does not deliver essential municipal services to members of the general public and, although it is called a public utility, it is a private business, entitled to no more immunity from liability than any ordinary private business. The court also held that the complaint alleges sufficient facts to show a special relationship between the parties that allows the Commission to recover purely economic damages. As for the reverse condemnation claim raised for the first time on appeal, the court noted that the proper procedure is to make any motion to amend in the trial court in the first instance. View "State Lands Commission v. Plains Pipeline, L.P." on Justia Law

A tax sale of real property described in the deed as pertaining to surface rights does not include oil and gas rights which are "restrictions of record" in a previously recorded oil and gas lease. The Court of Appeal held that defendant was the surface owner of the property at issue, but he did not own an interest in the oil and gas under the property. The court modified the judgment to show that upon termination of the oil and gas lease, any remaining oil and gas rights described in the 1939 Memorandum of Oil and Gas Lease revert to the surface owner. View "Leiper v. Gallegos" on Justia Law

Vaquero filed suit challenging provisions of a new zoning ordinance requiring permits for new oil and gas exploration, drilling, and production. The ordinance imposed a wide range of environmental and other standards on permit applicants, adopting two procedural pathways for obtaining permits when the proposed activity would be conducted on split-estate land zoned for agriculture. Vaquero alleged that the new provisions violated its constitutional rights to equal protection and due process. The trial court rejected Vaquero's claims and the company appealed.Based on its interpretation of a line of relevant United States Supreme Court cases, the Court of Appeal held that the new ordinance did not violate Vaquero's right to due process because the owner of the surface rights does not have final control over how an owner of mineral rights uses those rights. Rather, the final authority over permits is retained by the County. In regard to the equal protection claim, the court applied the deferential rational basis test and held that the board of supervisors rationally could have decided the availability of an expedited seven-day pathway would promote cooperation between owners of mineral rights and owners of surface rights and reduce conflicts, which is a legitimate public purpose. View "Vaquero Energy v. County of Kern" on Justia Law

Plaintiff Atlantic Richfield Company (ARCO) filed a petition in June 2014 to overturn a March 2014 order of defendant Central Valley Regional Water Quality Control District1 (Water Board) that sought to impose liability for remediation of metallic and acidic water pollution from an abandoned mine, the owner of which was the subsidiary of ARCO’s predecessors in interest. The trial court granted the petition in January 2018. The Water Board appealed, contending the trial court applied the wrong legal standard to determine whether the ARCO predecessors incurred direct liability for control over activities resulting in the hazardous waste that the mine discharges. The Court of Appeal agreed the trial court employed too restrictive a standard in evaluating the evidence, and therefore reversed and remanded for reconsideration of the record under the proper standard. View "Atlantic Richfield v. Central Valley Regional Water Quality etc." on Justia Law

In the November 2014 election, a majority of the City of Rialto’s (the City) voters approved Measure U, a ballot measure adopted by the City which imposed an “annual business license tax” of “up to One Dollar [($1.00)] per year for each One (1) cubic foot of liquid storage capacity” on “[a]ny person engaged in the business of owning[,] operating, leasing, supplying[,] or providing a wholesale liquid fuel storage facility” in the City. The four plaintiffs-appellants in these actions, Tesoro Logistic Operations, LLC (Tesoro), Equilon Enterprises, LLC (Equilon), SFPP, L.P. (SFPP), and Phillips 66 Company (P66), owned all of the wholesale liquid fuel storage facilities, also known as tank farms or terminals, in the City. Plaintiffs were engaged in the business of “refining and marketing fuel nationwide.” Gasoline and other fuels were transported from refineries to plaintiffs’ facilities in the City, where the fuels were placed in large storage tanks and mixed with additives before they were are transported to gasoline stations or other purchasers for retail sale. Beginning in 2015, the City assessed Measure U taxes on plaintiffs based on the liquid fuel storage capacity of plaintiffs’ wholesale liquid fuel storage tanks in the City. Plaintiffs paid the taxes under protest and filed these actions challenging Measure U’s validity on statutory and constitutional grounds. Plaintiffs moved for judgments on the pleadings, and for summary judgment or summary adjudication, then the City filed its own motions for judgments on the pleadings. Following a hearing, the trial court concluded there were no disputed issues of fact, that all of the motions presented the same questions of law, and that the Measure U tax was a valid business license tax. The court thus denied plaintiffs’ motions, granted the City’s motions, and entered judgments in favor of the City. In these appeals, plaintiffs renewed their legal challenges to Measure U. After review, the Court of Appeal concluded the Measure U tax was an invalid real property tax. Thus, the Court reversed judgments in favor of the City, and remanded to the trial court with directions to grant plaintiffs’ motions for judgments on the pleadings and to enter judgments in favor of plaintiffs on plaintiffs’ complaints. View "Tesoro Logistic Operations, LLC v. City of Rialto" on Justia Law

The Court of Appeal affirmed the trial court's order and judgment upholding the Water Board's determination that Barclay was jointly and severally responsible with real party in interest Shell Oil for the cleanup and abatement of petroleum hydrocarbon compounds and other contaminants (the petroleum residue or waste) at the former Shell tank farm in Carson, California.The court rejected Barclay's claims that the Water Board failed to hold the type of hearing required by the Administrative Procedure Act and its Administrative Bill of Rights; the payments Shell made to the Water Board constituted a conflict of interest tainting the proceedings and the RCAO; Barclay's actions are protected by the safe harbor of Water Code section 13304, subdivision (j); Barclay did not cause or permit a discharge of waste because its actions were not performed with the required knowledge of the hazards created; and the trial court erred in refusing to admit and consider additional evidence proffered by Barclay. View "Barclay Hollander Corp. v. California Regional Water Quality Control Board" on Justia Law