Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Constitutional Law
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The plaintiff, Great Northern Properties, L.P. ("GNP"), filed a lawsuit against the United States, alleging a Fifth Amendment taking of its coal leases on the Otter Creek property in Montana. GNP claimed that the federal government, through the Montana state regulatory authority, denied the necessary permits for coal mining. The United States Court of Appeals for the Federal Circuit affirmed the decision of the Court of Federal Claims, which dismissed the case for lack of subject matter jurisdiction. The court held that GNP could not establish that Montana's actions were coerced by the federal government or that Montana acted as an agent of the federal government. The court also noted that the federal government did not dictate the outcome in individual permitting cases and that state law governed the permitting process. Therefore, the federal government was not responsible for the permit denial, as Montana was not coerced to enact its own regulatory program following the passage of the Surface Mining Control and Reclamation Act. Furthermore, the court rejected GNP's claim that the existence of federal standards created an agency relationship between the federal government and Montana. View "GREAT NORTHERN PROPERTIES, L.P. v. US " 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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EEE Minerals, LLC, and a Trustee for The Vohs Family Revocable Living Trust, sued the State of North Dakota, the Board of University and School Lands, and the Board’s commissioner in a dispute over mineral interests in McKenzie County, North Dakota. Plaintiffs alleged that state law related to mineral ownership was preempted by federal law and that the defendants had engaged in an unconstitutional taking of the plaintiffs’ mineral interests. Plaintiffs sought damages, an injunction, and declaratory relief. The district court dismissed the action.   The Eighth Circuit affirmed. Plaintiffs contend that the Flood Control Act impliedly preempts the North Dakota statute because the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The court explained that it is not convinced that the State’s determination of a high-water mark, and the attendant settling of property rights under state law, stands as an obstacle to accomplishing the objectives of the Flood Control Act. The court wrote that the interests of the United States and the goals of the Flood Control Act are unaffected by a dispute between the State and a private party over mineral rights that were not acquired by the federal government.   Further, the court explained that Plaintiffs have not established that the United States will be prevented from flooding or inundating any land covered by the 1957 deed in which the State claims ownership of mineral interests under state law. The Flood Control Act would not dictate that property rights be assigned to Plaintiffs. View "EEE Minerals, LLC v. State of North Dakota" on Justia Law

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The Supreme Court quashed the order of the district court granting the motion to dismiss filed by the State of Rhode Island, acting by and through the Division of Taxation (Division), in this appeal stemming from a series of transactions for the purchase and sale of gasoline, holding that the district court erred in granting the Division's motion to dismiss based on Plaintiff's failure to exhaust its administrative remedies.The tax at issue was levied on a transaction between Plaintiff and another party and was the subject of several transactions between various entities. Plaintiff reimbursed a third-party for the tax assessed on the sale of 300,000 barrels of gasoline and then initiated this action alleging constitutional violations and violations of the Motor Fuel Tax. The trial judge dismissed the case for Plaintiff's failure to exhaust administrative remedies. The Supreme Court reversed, holding that the trial judge erroneously dismissed the action based on Plaintiff's failure to exhaust its administrative remedies. View "Gunvor USA, LLC v. State, ex rel. Division of Taxation" on Justia Law

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The Supreme Court quashed the order of the district court dismissing two actions challenging the State Division of Taxation's denial of Plaintiff's claim for a refund of $4,280,039 paid for Motor Fuel Tax assessed on the purchase and sale of 300,000 barrels of gasoline, holding that the the district court erred.Plaintiff purchased 300,000 barrels of gasoline from Defendant. The Division imposed a motor fuel taxes on the gasoline that was charged to Defendant, as the seller of the gas. Defendant sought reimbursement from Plaintiff, which sought a refund from the Division under R.I. Gen. Stat. 31-36-13. The Division denied Plaintiff's claim for a refund on the grounds that Plaintiff did not have a right to pursue a refund. Plaintiff then filed a complaint alleging constitutional violations and violations of the Motor Fuel Tax, among other claims. Plaintiff then appealed the Division's denial of its request for a refund. The hearing officer concluded that Plaintiff's claim was barred by both res judicata and administrative finality. Ultimately, both cases were dismissed. The Supreme Court quashed the decisions below, holding (1) Plaintiff had standing; (2) the trial judge erred in concluding that res judicata barred Plaintiff's appeal; and (3) the doctrine of administrative finality did not apply to bar Plaintiff's claims. View "Apex Oil Co. v. State, ex rel. Division of Taxation" on Justia Law

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This case was one of many lawsuits concerning Act 13 of 2012, which amended Pennsylvania’s Oil and Gas Act. Act 13 included the grant of authority by the General Assembly to the Agencies to promulgate regulations for unconventional gas wells. In October 2016, the Marcellus Shale Coalition (the “MSC”) filed a Petition seeking declaratory and injunctive relief, raising seven counts, only one of which was at issue in this appeal. That count pertained to portions of the regulations set forth at Sections 78a.1 and 78a.15. Each challenged regulatory provision interacted to some degree with Section 3215 of the Oil and Gas Act of 2012, titled “Well location restrictions.” In this appeal as of right, the Pennsylvania Supreme Court was asked to pass upon the breadth of the legislative rulemaking authority given to the Department of Environmental Protection (the “Department”) and the Environmental Quality Board (the “Board”) (collectively, the “Agencies”) by the General Assembly in the Pennsylvania Oil and Gas Act of 1984. The Agencies contended the Commonwealth Court erroneously concluded that they exceeded their authority and consequently struck down certain regulations designed to aid the Agencies in information gathering attendant to the issuance of permits for new unconventional gas wells. The Supreme Court found the General Assembly intended to give the Agencies the leeway to promulgate the challenged regulations and that those regulations were reasonable. The Court therefore reversed the Commonwealth Court. View "Marcellus Shale Coalition v. Dept. of Environmental Protection, et al." on Justia Law

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The Energy Policy and Conservation Act (“EPCA”), expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens. Instead of directly banning those appliances in new buildings, the City of Berkeley took a more circuitous route to the same result. It enacted a building code that prohibits natural gas piping into those buildings, rendering the gas appliances useless. The California Restaurant Association (“CRA”), whose members include restaurateurs and chefs, challenged Berkeley’s regulation, raising an EPCA preemption claim. The district court dismissed the suit.   The Ninth Circuit reversed the district court’s dismissal. The panel held that the CRA demonstrated that (1) at least one of its members had suffered an injury in fact, that was (a) concrete and particularized and (b) actual or imminent rather than conjectural or hypothetical; (2) the injury was fairly traceable to the challenged action; and (3) it was likely, not merely speculative, that the injury would be redressed by a favorable decision. The panel held that, by its plain text and structure, the Act’s preemption provision encompasses building codes that regulate natural gas use by covered products. By preventing such appliances from using natural gas, the Berkeley building code did exactly that. The panel reversed and remanded for further proceedings. View "CRA V. CITY OF BERKELEY" on Justia Law

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The Supreme Court affirmed the judgment of the district court affirming the decision of the Board of County Commissioners of Albany County approving ConnectGen Albany County LLC's application for a Wind Energy Conversion System (WECS) permit to construct a wind farm on Albany County land, holding that Appellants were not entitled to relief.Specifically, the Supreme Court held (1) contrary to Appellants' argument on appeal, ConnectGen was not required to obtain a conditional use permit in addition to the WECS special use permit; (2) the Board's approval of the WECS special use permit was not arbitrary or capricious; and (3) Appellants failed to establish that the Board's approval of the WECS special use permit was a taking of private property in violation of Wyo. Const. art. 1, 32. View "Aanonsen v. Bd. of County Commissioners of Albany County" on Justia Law

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Alaska Venture Capital Group, LLC (AVCG) owned interests in oil and gas leases on state lands. AVCG sought the State’s approval to create overriding royalty interests on the leases. The Alaska Department of Natural Resources, Division of Oil and Gas denied AVCG’s requests, explaining that the proposed royalty burdens jeopardized the State’s interest in sustained oil and gas development. AVCG appealed. Five years later the DNR Commissioner affirmed. The superior court then affirmed the Commissioner’s decisions. AVCG appealed to the Alaska Supreme Court, arguing primarily that the decisions improperly adopted a new regulation that did not undergo the rulemaking procedures of Alaska’s Administrative Procedure Act (APA). AVCG maintained that DNR’s reliance on specific factors - in particular, the fact that the proposed ORRIs would create a total royalty burden of over 20% on the leases - amounted to adopting a regulation. AVCG also argued that the decisions lacked a reasonable basis in fact and law and that, for some of its leases, no agency approval was required at all. The Supreme Court rejected these arguments, and rejected AVCG's constitutional claim: that delay and an "ad hoc" decision-making process violated its procedural due process rights. View "AVCG, LLC v. Alaska Department of Natural Resources" on Justia Law

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Minnesota sued a litany of fossil fuel producers1 (together, the Energy Companies) in state court for common law fraud and violations of Minnesota’s consumer protection statutes. In doing so, it joined the growing list of states and municipalities trying to hold fossil fuel producers responsible for alleged misrepresentations about the effects fossil fuels have had on the environment. The Energy Companies removed to federal court. The district court granted Minnesota’s motion to remand, and the Energy Companies appealed.   The Eighth Circuit affirmed. The court held that Congress has not acted to displace the state-law claims, and federal common law does not supply a substitute cause of action, the state-law claims are not completely preempted. The court reasoned that because the “necessarily raised” element is not satisfied, the Grable exception to the well-pleaded complaint rule does not apply to Minnesota’s claims. Further, the court wrote that the connection between the Energy Companies’ marketing activities and their OCS operations is even more attenuated. Thus, neither requirement is met, there is no federal jurisdiction under Section 1349. View "State of Minnesota v. American Petroleum Institute" on Justia Law