Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Constitutional Law
by
Texas recently enacted such a ban on new entrants in a market with a more direct connection to interstate commerce than the drilling of oil wells: the building of transmission lines that are part of multistate electricity grids. The operator of one such multistate grid awarded Plaintiff NextEra Energy Capital Holdings, Inc. the right to build new transmission lines in an area of east Texas that is part of an interstate grid. But before NextEra obtained the necessary construction certificate from the Public Utilities Commission of Texas, the state enacted the law, SB 1938, that bars new entrants from building transmission lines. NextEra challenges the new law on dormant Commerce Clause grounds. It also argues that the law violates the Contracts Clause by upsetting its contractual expectation that it would be allowed to build the new lines   The Fifth Circuit concluded that the dormant Commerce Clause claims should proceed past the pleading stage. But the Contracts Clause claim fails as a matter of law under the modern, narrow reading of that provision. The court explained that limiting competition based on the existence or extent of a business’s local foothold is the protectionism that the Commerce Clause guards against. Thus, the court reversed the Rule 12(b)(6) dismissal of the claim that the very terms of SB 1938 discriminate against interstate commerce. Further, the court held that SB 1938 did not interfere with an existing contractual right of NextEra. NextEra did not have a concrete, vested right that the law could impair. It thus fails at the threshold question for proving a modern Contracts Clause violation. View "NextEra, et al v. D'Andrea, et al" on Justia Law

by
On interlocutory appeal in this case involving the New England Clean Energy Connect project (Project), the Supreme Judicial Court held that retroactive application of legislation enacted by voters (the Initiative) to the Project, as required by section 6 of the Initiative, was unconstitutional.On November 2, 2021, fifty-nine percent of Maine voters approved a ballot question through a public referendum that would result in legislation effectively precluding the Project, which is designed to transmit power generated in Quebec through Maine and into Massachusetts. Plaintiff filed a complaint for declaratory relief alleging that retroactive application of the Initiative to the Project was unconstitutional. The trial court reported the case to the Supreme Judicial Court. The Supreme Judicial Court held that section 6 of the Initiative, as applied retroactively to the certificate of public convenience and necessity (CPCN) issued for the Project, would infringe on Plaintiff's constitutionally-protected vested rights if Plaintiff can demonstrate that it engaged in substantial construction of the Project in good-faith reliance on the authority granted by the CPCN before Maine voters approved the initiated bill by public referendum. View "NECEC Transmission LLC v. Bureau of Parks & Lands" on Justia Law

by
The Pennsylvania Environmental Defense Foundation (“PEDF”) challenged for the third time, the use of proceeds from oil and gas leasing on the Commonwealth’s forest and park lands as violative of Article I, Section 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment. (“Section 27” or “ERA”). In previous trips before the Pennsylvania Supreme Court, PEDF challenged several 2009-2025 budgetary provisions enacted challenging the use of proceeds from oil and gas leasing on the Commonwealth’s forest and park lands as violative of Article I, Section 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment. (“Section 27” or “ERA”). In the first two cases, PEDF challenged several 2009-2015 budgetary provisions enacted in the wake of dramatic increases in oil and gas revenue resulting from Marcellus Shale exploration in Pennsylvania. Applying trust principles, the Pennsylvania Supreme Court held that the budgetary provisions violated Section 27 by utilizing the oil and gas revenue for non-trust purposes via transfers to the General Fund. PEDF v. Commonwealth, 161 A.3d 911 (Pa. 2017) (“PEDF II”); PEDF v. Commonwealth, 255 A.3d 289 (Pa. 2021) (“PEDF V”). The underlying case here was one for a declaratory judgment, and named the Commonwealth and Governor as parties. Here, PEDF raised numerous constitutional challenges to provisions of the General Appropriations Act of 2017 and 2018, as well as the 2017 Fiscal Code amendments, all of which were enacted after the Supreme Court’s decision in PEDF II. After review , the Supreme Court affirmed the Commonwealth Court, whilst rejecting that court;s analysis derived from PEDF III. View "PA Enviro Defense Fdn, Aplt. v. Commonwealth" on Justia Law

by
Defendants, ERR, LLC; Evergreen Resource Recovery, LLC (collectively “ERR”), owns and operates a wastewater treatment facility. One of ERR’s spill contractors, Oil Mop, performed oil removal and soil remediation. Oil Mop submitted a claim to the National Pollution Funds Center (“NPFC”) for reimbursement of removal costs after ERR refused to pay. The NPFC reimbursed Oil Mop and billed ERR for what it paid Oil Mop.   ERR refused to pay and the Government then sued ERR for what it paid Oil Mop. The Government moved to strike ERR’s demand for a jury trial.  The district court held a bench trial after concluding that the Government’s Oil Pollution Act (“OPA”) claims sound not in law but in equity.   On appeal, the Fifth Circuit addressed ERR’s Seventh Amendment challenge and held that the Seventh Amendment guarantees ERR’s right to a jury trial of the Government’s OPA claims. The court explained that it must consider two factors when determining whether a right of action requires a jury trial. First, the court compared the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, the court examined the remedy sought and determined whether it is legal or equitable in nature.   Here, the court concluded that the Recoupment Claim sounds in law and hence triggers ERR’s Seventh Amendment right to a jury. Next, the court held that both the nature of the Government’s action and the type of remedy sound in law. View "USA v. E.R.R." on Justia Law

by
The district court dismissed a suit alleging that a price plan adopted by Salt River Project Agricultural Improvement and Power District (SRP) unlawfully discriminated against customers with solar-energy systems and was designed to stifle competition in the electricity market.The Ninth Circuit affirmed in part, applying Arizona’s notice-of-claim statute, which provides that persons who have claims against a public entity, such as SRP, must file with the entity a claim containing a specific amount for which the claim can be settled.The district court erred in dismissing plaintiffs’ equal protection claim as barred by Arizona’s two-year statute of limitations. The claim did not accrue when SRP approved the price plan, but rather when plaintiffs received a bill under the new rate structure. The plaintiffs alleged a series of violations, each of which gave rise to a new claim and began a new limitations period.Monopolization and attempted monopolization claims under the Sherman Act were not barred by the filed-rate doctrine, which bars individuals from asserting civil antitrust challenges to an entity’s agency-approved rates. SRP was not entitled to state-action immunity because Arizona had not articulated a policy to displace competition.The Local Government Antitrust Act shielded SRP from federal antitrust damages because SRP is a special functioning governmental unit but the Act does not bar declaratory or injunctive relief. The district court erred in concluding that plaintiffs failed to adequately allege antitrust injury based on the court’s finding that the price plan actually encouraged competition in alternative energy investment. View "Ellis v. Salt River Project Agricultural Improvement and Power District" on Justia Law

by
The Supreme Court affirmed the judgment of the court of appeal concluding that a municipality does not violate Ohio Const. art. XVIII, 6 by selling a surplus of electricity to customers outside the municipality's boundaries, holding that the court of appeals did not err.The City of Cleveland sold outside its boundaries approximately four percent of the electricity it sold inside its boundaries. Cleveland Electric Illuminating Company (CEI) brought this complaint arguing that the electricity the City sold extraterritorially as surplus violated this Court's decision in Toledo Edison Co. v. Bryan, 737 N.E.2d 529 (2000) and the Ohio Constitution. The trial court granted summary judgment for the City. The court of appeals reversed, determining (1) Article XVIII, Section 6 does not require a municipality to buy the precise amount of electricity required by its inhabitants at any given time, and (2) questions of material fact existed as to whether the City obtained surplus electricity for the sole purpose of selling it to a neighboring city. The Supreme Court affirmed, holding that while a municipality may not acquire excess capacity for the sole purpose of reselling it outside the municipality's territorial boundaries, the municipality is not required to purchase the exact amount of electricity necessary to satisfy the current needs of its territorial customers. View "Cleveland Electric Illuminating Co. v. Cleveland" on Justia Law

by
In consolidated appeals, the issue presented for the Pennsylvania Supreme Court's review centered on the Commonwealth Court’s holding that, to be held liable for damages under Pennsylvania’s inverse condemnation statute, an entity had to be "clothed with the power of eminent domain" to the property at issue. In 2009, Appellee, UGI Storage Company filed an application with the Federal Energy Regulatory Commission (the “Commission” or “FERC”), seeking a certificate of public convenience and necessity to enable it to acquire and operate certain natural gas facilities. Appellee wished to acquire and operate underground natural gas storage facilities, which the company referred to as the Meeker storage field. Appellee also sought to include within the certificated facilities a 2,980-acre proposed "buffer zone." FERC ultimately granted the application for Appellee to acquire and assume the operation of the Meeker storage field, but denied Appellee’s request to certificate the buffer zone. Appellants petitioned for the appointment of a board of viewers to assess damages for an alleged de facto condemnation of their property, alleging that though their properties had been excluded by FERC from the certificated buffer zone, they interpreted Appellee’s response to the Commission’s order as signaling its intention to apply for additional certifications to obtain property rights relative to the entire buffer zone. The common pleas court initially found that a de facto taking had occurred and appointed a board of viewers to assess damages. Appellee lodged preliminary objections asserting Appellants’ petition was insufficient to support a de facto taking claim. The Supreme Court reversed the Commonwealth Court: "we do not presently discern a constitutional requirement that a quasi-public entity alleged to have invoked governmental power to deprive landowners of the use and enjoyment of their property for a public purpose must be invested with a power of eminent domain in order to be held to account for a de facto condemnation. ... a public or quasi-public entity need not possess a property-specific power of eminent domain in order to implicate inverse condemnation principles." The case was remanded for the Commonwealth Court to address Appellants’ challenge to the common pleas court’s alternative disposition (based upon the landowners’ purported off-the-record waiver of any entitlement to an evidentiary hearing), which had been obviated by the intermediate court’s initial remand decision and that court’s ensuing affirmance of the re-dismissal of Appellants’ petitions. View "Albrecht, et al. v. UGI Storage Co. et al." on Justia Law

by
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

by
The issue this case presented for the Alaska Supreme Court's review centered on a challenge to the lieutenant governor’s decision that the sponsors of an initiative, “An Act changing the oil and gas production tax for certain fields, units, and nonunitized reservoirs on the North Slope,” had collected enough signatures to allow the initiative to appear on the ballot in the 2020 general election. Entities opposed to the initiative argued that signatures should not have been counted because the signature gatherers (the circulators) falsely certified that their compensation complied with Alaska election law. The statute governing circulator compensation allows them to be paid no more than “$1 a signature.” The superior court decided that this statute was unconstitutional because it imposed an unreasonable burden on core political speech — “interactive communication concerning political change.” It therefore concluded that the lieutenant governor properly counted the challenged signatures and properly certified the initiative petition for the ballot. The entities opposed to the initiative filed this appeal. The Supreme Court heard oral argument in August 2020, and on August 31 issued a summary order affirming the superior court’s judgment. This opinion explained the Court's decision. View "In re Resource Development Council for Alaska, Inc., et al." on Justia Law

by
Under the Natural Gas Act, to build an interstate pipeline, a natural gas company must obtain from the Federal Energy Regulatory Commission (FERC) a certificate of "public convenience and necessity,” 15 U.S.C. 717f(e). A 1947 amendment, section 717f(h), authorized certificate holders to exercise the federal eminent domain power. FERC granted PennEast a certificate of public convenience and necessity for a 116-mile pipeline from Pennsylvania to New Jersey. Challenges to that authorization remain pending. PennEast sought to exercise the federal eminent domain power to obtain rights-of-way along the pipeline route, including land in which New Jersey asserts a property interest. New Jersey asserted sovereign immunity. The Third Circuit concluded that PennEast was not authorized to condemn New Jersey’s property.The Supreme Court reversed, first holding that New Jersey’s appeal is not a collateral attack on the FERC order. Section 717f(h) authorizes FERC certificate holders to condemn all necessary rights-of-way, whether owned by private parties or states, and is consistent with established federal government practice for the construction of infrastructure, whether by government or through a private company.States may be sued only in limited circumstances: where the state expressly consents; where Congress clearly abrogates the state’s immunity under the Fourteenth Amendment; or if it has implicitly agreed to suit in “the structure of the original Constitution.” The states implicitly consented to private condemnation suits when they ratified the Constitution, including the eminent domain power, which is inextricably intertwined with condemnation authority. Separating the two would diminish the federal eminent domain power, which the states may not do. View "PennEast Pipeline Co. v. New Jersey" on Justia Law