Justia Energy, Oil & Gas Law Opinion Summaries

The case revolves around the ownership of mineral rights beneath a dedicated street in Greeley, Colorado. The dispute arose between Great Northern Properties, LLLP (GNP) and Extraction Oil and Gas, Inc., Richmark Energy Partners, LLC, and Richmark Royalties, LLC (collectively, Extraction) over who is entitled to receive certain oil and gas royalty payments. The issue at hand was how to determine who holds title to the mineral estate under a dedicated right-of-way when a grantor, who has an interest in the mineral rights under that right-of-way, executes a conveyance of the land abutting the right-of-way that is silent as to those rights.The district court agreed with Extraction, concluding that the centerline presumption could be applied to a conveyance of the mineral estate beneath a right-of-way. The court of appeals affirmed the district court’s determination of law. However, the court of appeals also concluded that the centerline presumption should not apply if the grantor retains ownership of any property abutting the right-of-way.The Supreme Court of the State of Colorado affirmed the court of appeals' decision that a conveyance of land abutting a right-of-way is presumed to carry title to the centerline of both the surface and mineral estates beneath a dedicated right-of-way to the owners of land abutting that right-of-way. However, the Supreme Court reversed the court of appeals' conclusion that the centerline presumption cannot apply if a grantor retains ownership of any property abutting the subject right-of-way. The Supreme Court held that the centerline presumption applies if the party claiming ownership to land abutting a dedicated right-of-way establishes that the grantor conveyed ownership of land abutting a right-of-way, the grantor owned the fee to both the surface estate and the mineral rights underlying the right-of-way at the time of conveyance, and no contrary intent appears on the face of the conveyance document. View "Great Northern Properties v. Extraction Oil and Gas" on Justia Law

This case concerns the interpretation of two oil and gas leases negotiated in Boulder County, Colorado in the 1980s. In 2014, during the secondary terms of the leases, necessary repairs to a third party’s sales pipeline forced the lessee to shut in otherwise commercially viable wells on the leased properties for approximately four months. The question before the Colorado Supreme Court in this case was whether this four-month shut-in caused the leases to terminate under their respective cessation-of-production clauses. Examining the specific leases at issue here, the Supreme Court concluded the four-month shut-in did not trigger termination under their cessation-of-production clauses. Accordingly, the Court affirmed the judgment of the court of appeals, but vacated the division’s opinion to the extent it adopted the commercial discovery rule to universally define the term “production” in Colorado oil and gas leases as “capable of production.” View "Board of County Commissioners v. Crestone Peak Resources" on Justia Law

This matter arose out of disputes between Antero Resources Corporation (“Antero”) and Airport Land Partners, Ltd (“Airport Land”) and other royalty owners (collectively, “Royalty Owners”) over whether Antero could deduct certain post-production costs from royalty payments under the applicable leases’ royalty clauses. Royalty Owners alleged that Antero has underpaid royalties in violation of their respective lease contracts. Royalty Owners filed individual breach-of-contract suits against Antero for dates between December 2016 and April 2017. Antero moved to dismiss the suits, arguing that the claims should have been brought before the Colorado Oil and Gas Conservation Commission (“COGCC” or “the Commission”) in the first instance. Statutorily, COGCC lacked jurisdiction under section 34-60-118.5(5), C.R.S. (2022), to engage in contract interpretation to resolve a bona fide dispute between parties under an oil and gas lease. But in 2017, without any intervening change to explain the shift, two district courts changed course, asserting that COGCC had responsibility for resolving contract disputes on the theory either that the contract terms were unambiguous or that settled law compelled a certain interpretation. The Colorado Supreme Court returned to the longstanding statutory mandate that COGCC lacked jurisdiction to resolve bona fide disputes of contract interpretation and held that such a dispute exists where the parties disagree in good faith about the meaning or application of a relevant contract term. View "Antero Resources v. Airport Land Partners" on Justia Law

CO2 Committee, Inc. (“CO2”) was a nonprofit corporation whose membership was comprised of nonoperating owners of fractional interests in the McElmo Dome unit, a consolidation of working interests in a large deposit of pure carbon dioxide in Montezuma County and Dolores County, near the Four Corners area of Colorado. Kinder Morgan CO2 Company, L.P. (“Kinder Morgan”) was the operator of the unit. Following an audit for the 2008 tax year, Montezuma County determined that Kinder Morgan had underreported the value of gas produced at the unit’s leaseholds by improperly deducting certain costs that it, as the unit operator, was not entitled to deduct. The county ultimately increased its valuation of the entire unit by approximately $57 million. The Montezuma County assessor then imposed a retroactive tax assessment on the unit totaling more than $2 million based on that increased value. That prompted Kinder Morgan to challenge—ultimately unsuccessfully—the county’s authority to impose the retroactive tax. The issue this case presented for the Colorado Supreme Court's review centered on whether CO2 had standing to independently challenge the county's retroactive property tax increase. Finding that it did not, the Court dismissed its appeal. View "Colorado Property Tax Administrator v. CO2 Committee, Inc." on Justia Law

William Danks appealed a district court judgment affirming the Public Utilities Commission’s (“PUC’s” or “Commission’s”) decision that a gas-gathering system operated by DCP Operating Company, L.P. (“DCP”) did not meet the statutory definition of a public utility and therefore was not subject to the PUC’s jurisdiction. After review, the Colorado Supreme Court concluded the PUC regularly pursued its authority in reaching this decision, that the decision was just and reasonable, and that the PUC’s conclusions were in accordance with the evidence. View "Danks v. Colorado Public Utilities Commission" on Justia Law

In 2015, the owners of a 13,000-acre tract of land known as 70 Ranch successfully petitioned to include their tract in a special district. After 70 Ranch was incorporated into the district, the district began taxing the leaseholders of subsurface mineral rights, Bill Barrett Corporation, Bonanza Creek Energy, Inc., and Noble Energy, Inc. for the oil and gas they produced at wellheads located on 70 Ranch. The Lessees, however, objected to being taxed, arguing the mineral interests they leased could not be included in the special district because neither they nor the owners of the mineral estates consented to inclusion, which they asserted was required by section 32-1-401(1)(a), C.R.S. (2019), of the Special District Act. The Colorado Supreme Court determined that section 401(1)(a) permitted the inclusion of real property covered by the statute into a special taxing district when (1) the inclusion occurred without notice to or consent by the property’s owners and (2) that property was not capable of being served by the district. The Court answered "no," however, 32-1-401(1)(a) required the assent of all of the surface property owners to an inclusion under that provision, and inclusion was only appropriate if the surface property could be served by the district. "Section 32-1-401(1)(a) does not require assent from owners of subsurface mineral estates because those mineral estates, while they are real property, are not territory. Thus, Lessees’ consent was not required for the inclusion of 70 Ranch in the special district." The Court therefore affirmed the court of appeals on alternate grounds. View "Barrett Corp. v. Lembke" on Justia Law

The issue this case presented for the Colorado Supreme Court's review centered on whether the Colorado Oil and Gas Conservation Commission properly declined to engage in rulemaking to consider a rule by Respondents, a group of youth activists who proposed a rule that, among other things, would have precluded the Commission from issuing any permits for drilling oil and gas wells “unless the best available science demonstrates, and an independent, third-party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change.” The Commission declined to engage in rulemaking to consider this proposed rule because, among other things: (1) the rule would have required the Commission to readjust the balance purportedly crafted by the General Assembly under the Act and conditioned new oil and gas drilling on a finding of no cumulative adverse impacts, both of which the Commission believed to be beyond its statutory authority; and (2) the Commission was already working with the Colorado Department of Public Health and Environment (“CDPHE”) to address the concerns to which the rule was directed and other Commission priorities took precedence over the proposed rulemaking at this time. Respondents challenged the Commission’s ruling in the Denver District Court, but that court ultimately upheld the Commission’s decision. Respondents appealed, and, in a split, published decision, a division of the court of appeals reversed the district court’s order. The Supreme Court concluded the Commission properly declined to engage in rulemaking to consider Respondents' proposed rule: (1) deferring to the agency's decision; (2) finding the Commission correctly determined that, under the applicable language of the Act, it could not properly adopt the rule proposed by Respondents; and (3) the Commission reasonably relied on the facts that it was already working with the CDPHE to address the concerns underlying Respondents’ proposed rule and that other Commission priorities took precedence at this time. View "Colorado Oil & Gas Conservation Commission v. Martinez" on Justia Law

This case arose from respondent Public Service Company of Colorado’s (“Xcel’s”) challenge to the City of Boulder’s attempt to create a light and power utility. Xcel argued that the ordinance establishing the utility, Ordinance No. 7969 (the “Utility Ordinance”), violated article XIII, section 178 of Boulder’s City Charter. Xcel thus sought a declaratory judgment deeming the Utility Ordinance “ultra vires, null, void, and of no effect.” Petitioners, the City of Boulder, its mayor, mayor pro tem, and city council members (collectively, “Boulder”), argued Xcel’s complaint was, in reality, a C.R.C.P. 106 challenge to a prior ordinance, Ordinance No. 7917 (the “Metrics Ordinance”), by which Boulder had concluded that it could meet certain metrics regarding the costs, efficiency, and reliability of such a utility. Boulder contended this challenge was untimely and thereby deprived the district court of jurisdiction to hear Xcel’s complaint. The district court agreed with Boulder and dismissed Xcel’s complaint. Xcel appealed, and in a unanimous, published decision, a division of the court of appeals vacated the district court’s judgment. As relevant here, the division, like the district court, presumed that Xcel was principally proceeding under C.R.C.P. 106. The division concluded, however, that neither the Metrics Ordinance nor the Utility Ordinance was final, and therefore, Xcel’s complaint was premature. The division thus vacated the district court’s judgment. Although the Colorado Supreme Court agreed with Boulder that the division erred, contrary to Boulder’s position and the premises on which the courts below proceeded, the Supreme Court agreed with Xcel that its complaint asserted a viable and timely claim seeking a declaration that the Utility Ordinance violated Boulder’s City Charter. Accordingly, the Supreme Court concluded the district court had jurisdiction to hear Xcel’s declaratory judgment claim challenging the Utility Ordinance, and remanded this case to allow that claim to proceed. View "City of Boulder v. Public Service Company of Colorado" on Justia Law

In 2011, OXY USA Inc. (“Oxy”), made a mistake that caused it to overpay its property taxes on oil and gas produced from leaseholds. Oxy failed to deduct certain costs it was entitled to deduct. By the time it realized the mistake, the protest period had expired. The company nonetheless contended it was entitled to abatement and refund of the overpayment pursuant to section 39-10-114(1)(a)(I)(A), C.R.S. (2017). The county board of commissioners maintained that the abatement-and-refund provision did not apply because Oxy was the sole source of the error. Relying on Colorado Supreme Court precedent, the court of appeals held that Oxy couldn't receive abatement and refund for overpayment due to its own mistake. The Supreme Court held section 39-10-114(1)(a)(I)(A) gave taxpayers the right to seek abatement and refund for erroneously or illegally levied taxes resulting from overvaluation caused solely by taxpayer mistake. Therefore, Oxy was entitled to abatement and refund for its overpayment of taxes in the tax year at issue in this appeal. View "OXY USA Inc. v. Mesa County Board of Commissioners" on Justia Law

The Colorado Supreme Court concluded that the statutory scheme property taxation of oil and gas leaseholds authorized the retroactive tax assessment in this case. Petitioner Kinder Morgan CO2 Company, L.P., operated oil and gas leaseholds in Montezuma County, Colorado. In 2009, the assessor for Montezuma County issued a corrective tax assessment on these leaseholds for the previous tax year, retroactively assessing over $2 million in property taxes, after an auditor concluded that Kinder Morgan underreported the value of gas produced at the leaseholds. Kinder Morgan appealed, arguing the assessor lacked authority to retroactively assess these taxes because Colorado law did not authorize a retroactive assessment when an operator has correctly reported the volume of oil and gas sold but has underreported the selling price at the wellhead. In affirming the court of appeals in this matter, the Supreme Court further concluded that the Board of Assessment Appeals did not err in determining that Kinder Morgan underreported the selling price by claiming excess transportation deductions, given Kinder Morgan’s relationship to the owner of the pipeline through which the gas was transported. View "Kinder Morgan CO2 Co., L.P. v. Montezuma Cty. Bd. of Comm'rs" on Justia Law