Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Civil Procedure
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The case involves a group of 214 plaintiffs who filed a lawsuit against Devon Energy Production Company, L.P. in a Texas state court, alleging that Devon had underpaid them over $100 million in oil-and-gas royalties. Devon, a citizen of Oklahoma, removed the case to federal court under the Class Action Fairness Act (CAFA). The plaintiffs sought to have the case remanded to the state court based on CAFA’s “local controversy” exception. The district court agreed and ordered the case to be remanded.On appeal, the United States Court of Appeals for the Fifth Circuit disagreed with the district court's interpretation of the statute. The appellate court found that not all plaintiffs had incurred their "principal injuries" (financial harm from Devon's alleged underpayment of royalties) in Texas, as required under the "local controversy" exception of CAFA.Accordingly, the appellate court vacated the district court's judgment remanding the case to state court and directed that the case be reinstated on the district court's docket. This ruling signifies that the case will proceed in federal court, not state court. The court's ruling also clarified an important aspect of the CAFA's "local controversy" exception, specifically that all plaintiffs must have incurred their "principal injuries" in the state where the action was originally filed for the exception to apply. View "Cheapside Minerals v. Devon Energy" on Justia Law

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The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision to remand two lawsuits back to Maryland state court. The lawsuits were brought by the City of Annapolis and Anne Arundel County against more than 20 energy companies, including BP P.L.C. The local governments accused the companies of misrepresenting and concealing information about the environmental impact of their fossil fuel products in violation of Maryland's Consumer Protection Act and various state tort laws. The companies tried to remove the cases to federal court, arguing that because they had acted under federal authority in their operations, the court had federal question jurisdiction. However, the appeals court found that the company's activities related to fossil fuel production were not relevant to the claims brought by the local governments, which were based on alleged concealment or misrepresentation of information about fossil fuel products. The court also rejected the companies' argument that the First Amendment question related to their right to free speech provided a basis for federal jurisdiction, as this question was a defense rather than a necessary element of the plaintiffs' state-law claims. View "Anne Arundel County v. BP P.L.C." on Justia Law

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The case involves KEM Resources, LP and Ryvamat, Inc., who both own a fifty percent interest in the oil, gas, and mineral rights of a property located in Wyoming County. Ryvamat entered into a gas lease covering the entirety of the property’s oil and gas rights, including the half owned by KEM, receiving a substantial monetary payment. KEM's predecessors in interest filed a claim for an accounting, requesting Ryvamat account for the portion of the lease payment it received attributable to KEM’s fifty percent interest. Ryvamat argued that KEM’s action was barred by the statute of limitations. The Superior Court disagreed and found that the applicable statute of limitations for KEM’s accounting claim is six years, and the original complaint was timely filed. The Supreme Court of Pennsylvania agreed with the Superior Court, affirming its holding. The court ruled that KEM's accounting claim is properly considered a statutory claim for an accounting between co-tenants under Section 101. The court further found that the statute of limitations for such a claim is six years. Therefore, KEM filed its accounting claim within the statute of limitations for a claim under Section 101. View "KEM Resources, LP v. Ryvamat, Inc." on Justia Law

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In this case, the United States Court of Appeals for the District of Columbia Circuit was asked to review a decision by the Federal Energy Regulatory Commission (FERC) regarding the regulatory jurisdiction over a proposed liquefied natural gas (LNG) facility in Port St. Joe, Florida. The facility was being planned by Nopetro LNG, LLC, which sought a ruling from the FERC that the facility fell outside of its regulatory jurisdiction under Section 3 of the Natural Gas Act. FERC agreed, issuing a declaratory order to this effect, which it upheld on rehearing. Public Citizen, a nonprofit consumer advocacy group, sought review of the FERC's decision.However, before the appeal was heard, the FERC informed the court that Nopetro had abandoned its plans to build the facility due to market conditions. In light of this, the court found that the case was moot and dismissed Public Citizen's petition for review. The court also vacated the FERC's orders, stating that since the appeal was moot, it would exercise its equitable authority to vacate the orders at issue. The court noted that no party argued against vacatur and it would further the public interest by precluding any potential reliance on the challenged orders the court lacked authority to review. View "Public Citizen, Inc. v. FERC" on Justia Law

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In the case before the United States Court of Appeals for the Fourth Circuit, plaintiffs Scott Sonda and Brian Corwin, both mineral rights owners in West Virginia, challenged Senate Bill 694, which amended the State's oil and gas conservation law to permit the unitization of interests in horizontal well drilling units, even for nonconsenting mineral rights owners. The plaintiffs claimed that this law constituted a taking of their property and deprived them of property without due process, in violation of the Fifth and Fourteenth Amendments of the U.S. Constitution. The West Virginia Oil and Gas Conservation Commission filed a motion to dismiss, asserting that the plaintiffs lacked standing, that the Commission was immune under the Eleventh Amendment, and that the complaint failed to state a claim upon which relief could be granted.However, the district court abstained from ruling on the federal constitutional claims, citing the Pullman abstention doctrine, and ordered the proceeding stayed pending the outcome of a state court action that the plaintiffs may file. The Commission appealed the district court's abstention order.The Fourth Circuit Court of Appeals reversed the district court's order and remanded for further proceedings, noting that the district court had erred by applying the Pullman abstention doctrine without first ensuring it had jurisdiction. The court directed the district court to first address the Commission's argument challenging the plaintiffs' Article III standing. The court did not express an opinion about the merits of the standing issue or any others before the district court. View "Sonda v. West Virginia Oil & Gas Conservation Commission" on Justia Law

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In this case from the Supreme Court of North Dakota, Fonda Jo Powell and Mary T. Henke, as co-personal representatives of the Estate of June A. Slagle, alongside Helen Verhasselt, the trustee of the June Slagle Family Mineral Trust, filed an appeal against Statoil Oil & Gas LP (now known as Equinor Energy LP). The plaintiffs appealed from a judgment of dismissal entered after the district court granted Statoil's motion for summary judgment, concluding that a dispute of title allowed Statoil to suspend royalty payments and that the plaintiffs were not entitled to statutory interest. The plaintiffs argued that the district court erred in concluding there was a title dispute, while Statoil argued that this action was barred by the statute of limitations.The Supreme Court of North Dakota reversed the decision of the district court, concluding that the action was not barred by the statute of limitations and that the court erred in concluding that Statoil lawfully suspended royalty payments. The court determined that a ten-year statute of limitations applied to the claim for untimely payment of royalties under the oil and gas lease, as per N.D.C.C. § 28-01-15(2). Furthermore, the court concluded that, when a dispute is between the mineral developer and the mineral owner, notice of the dispute is required under N.D.C.C. § 47-16-39.4. As Statoil did not provide evidence that it had notified June Slagle of a title dispute, it was required to pay interest on the unpaid royalties at a rate of 18% per annum. The case was remanded for further proceedings consistent with this opinion. View "Powell v. Statoil Oil & Gas" on Justia Law

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In 2016 Watchous Enterprises, LLC contracted with one of the five individual defendant companies, Pacific National Capital, paying it a $7,600 nonrefundable deposit to secure help finding a lender or a joint-venture partner. Pacific introduced Watchous to companies affiliated with Waterfall Mountain LLC (collectively referred to as "Waterfall"). Watchous and Waterfall eventually executed a letter of intent to enter into a joint venture to which Waterfall would contribute more than $80 million. As part of the arrangement, Watchous paid Waterfall a $175,000 refundable deposit. Waterfall said that it would fund the venture through proceeds of loans backed by billions of dollars in Venezuelan sovereign bonds in the name of Waterfall or its lender (RPB Company). But Waterfall never funded Watchous, and Watchous was never refunded the $175,000. Watchous then filed suit under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and common-law claims under Kansas law against Pacific and Waterfall as well as against the five Appellants sued individually. The district court granted partial summary judgment in favor of Watchous on its fraud claims (leaving damages for the jury to decide), essentially on the ground that Appellants misrepresented and failed to disclose “the historic and contemporary facts about Waterfall’s dubious finances, loan defaults, and consistent lack of success in funding similar projects.” Watchous’s remaining claims proceeded to trial, where a jury found that Appellants engaged in a civil conspiracy to defraud Watchous, and had violated RICO. Appellants appealed, but finding no reversible error, the Tenth Circuit affirmed. View "Watchous Enterprises v. Mournes, et al." on Justia Law

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Plaintiffs filed this action as unleased mineral owners whose interests are situated within forced drilling units formed by the Louisiana Office of Conservation and operated by Chesapeake. Plaintiffs have not made separate arrangements to dispose of their shares of production, so the unit operator can sell the shares but must pay the owners a pro rata share of the proceeds within one hundred eighty days of the sale. Chesapeake timely removed this action to the district court, based on diversity jurisdiction. The district court certified its ruling for interlocutory appeal pursuant to 28 U.S.C. Section 1292(b).   The Fifth Circuit explained that this case concerns the interplay between Louisiana’s relatively new conservation laws and its deeply rooted negotiorum gestio doctrine. The court wrote that because it cannot make a reliable Erie guess as to the applicability of Louisiana’s negotiorum gestio doctrine. Accordingly, the court certified the following determinative question of law to the Louisiana Supreme Court: 1) Does La. Civ. Code art. 2292 applies to unit operators selling production in accordance with La. R.S. 30:10(A)(3)? View "Johnson v. Chesapeake Louisiana, L.P." on Justia Law

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Plaintiff Oil Valley Petroleum, LLC and defendant Clay Moore (Moore) sought equitable relief to adjudicate title based upon two oil and gas leases. Plaintiff requested the trial court to quiet title, cancel an oil and gas lease, and declare its top-lease to be in force and effect. Both parties moved for summary judgment. The district court granted defendant's motion and denied plaintiff's motion. Plaintiff appealed and the Court of Civil Appeals reversed the district court and directed judgment for plaintiff. Defendant sought certiorari to review the Court of Civil Appeals' opinion. The Oklahoma Supreme Court held: (1) exhibits presented during summary judgment proceedings were insufficient to show a material fact that a well was commercially profitable for the purpose of the habendum clause of an oil and gas lease; (2) an overriding royalty interest may be extinguished by an extinguishment of the working interest from which it was carved by a lessee's surrender of the lease in substantial compliance with the lease, unless the surrender is the result of fraud or breach of a fiduciary relationship; and (3) prevailing party status for the purpose of an attorney fee is determined by the trial court when not determined on appeal. The opinion of the Court of Civil Appeals was vacated and the Court reversed the order granting Moore a partial summary judgment and remanded for additional proceedings. View "Oil Valley Petroleum v. Moore" on Justia Law

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This case involves rules adopted by the Federal Energy Regulatory Commission to implement the Public Utility Regulatory Policies Act of 1978 (PURPA). Congress enacted PURPA to encourage the development of a new class of independent, non-utility-owned energy producers known as “Qualifying Facilities,” or “QFs.” PURPA tasks FERC with promulgating rules to implement the statute. In 2020, FERC revised its rules to alter which facilities qualify for PURPA’s benefits and how those facilities are compensated. The new rules make it more difficult to qualify for treatment as a QF, and they also make QF status less advantageous.The Ninth Circuit granted in part and denied in part a petition for review brought by the Solar Energy Industries Association and several environmental organizations challenging Orders 872 and 872-A (collectively, “Order 872”). The panel rejected Petitioners’ argument that Order 872 as a whole is inconsistent with PURPA’s directive that FERC “encourage” the development of QFs. Applying the two-step framework of Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 (1984), the panel held that (1) PURPA on its face gives FERC broad discretion to evaluate which rules are necessary to encourage QFs and which are not, and (2) FERC’s interpretation was not unreasonable. Next, the panel rejected Petitioners’ challenges to four specific provisions of Order 872. First, the panel held that the modified Site Rule—which modified the rules for determining when facilities are deemed to be located at the same or separate sites—survives Chevron, is not arbitrary and capricious under the Administrative Procedure Act (APA), and is not unlawfully retroactive. View "SEIA V. FERC" on Justia Law