Justia Energy, Oil & Gas Law Opinion Summaries

Appellants, the New Mexico Attorney General and New Mexico Industrial Energy Consumers, asked the Supreme Court to vacate and annul the final order in PRC Case No. 11-00308-UT (Case 308 Final Order) because it permitted Public Service Company of New Mexico (PNM) to earn returns on the operating expenses incurred from energy efficiency programs. Appellants argue that such returns are inconsistent with New Mexico law. Upon review, the Supreme Court held that Case 308 Final Order was consistent with the PRC’s ratemaking authority under the New Mexico Public Utility Act, the New Mexico Efficient Use of Energy Act, and with the Court's holding in "Attorney General v. New Mexico Public Regulation Commission" (258 P.3d 453). Furthermore, the Court held that Case 308 Final Order was supported by substantial evidence and was neither arbitrary nor capricious. Accordingly, the Court affirmed the Case 308 Final Order.View "NMAG v. NMPRC" on Justia Law

In 2010, Irene and John Moerman each signed an oil and gas lease with Prairie Rose Resources. In 2011, the Moermans filed a complaint for declaratory judgment claiming that their leases with Prairie had expired because, inter alia, Prairie had failed to establish oil production until after the expiration of the primary term of the lease. Prairie counterclaimed for a declaration that the lease remained in effect. The district court entered judgment in favor of Prairie and awarded Prairie its attorney fees and costs. The Supreme Court affirmed, holding (1) the district court correctly concluded that the parties' oil and gas leases remained in effect; and (2) because the Moermans failed to establish that the leases had been forfeited, Prairie's attorney fees in defending the action were recoverable.View "Moerman v. Prairie Rose Res., Inc." on Justia Law

In assessing the value of electric power plants for purposes of property taxation, assessors may not include the value of intangible assets and rights in the value of taxable property. An electric company purchased "emission reduction credits" (ERCs), which the company had to purchase to obtain authorization to construct an electric power plant and to operate it at certain air-pollutant emission levels. These ERCs constituted intangible rights for property taxation purposes. In assessing the value of the power plant using the replacement cost method, the State Board of Equalization (Board) estimated the cost of replacing the ERCs. In also using an income approach in assessing the plant, the Board failed to attribute a portion or the plant's income stream to the ERCs and to deduct that value from the plant's projected income stream prior to taxation. In analyzing the Board's valuation of the power plant, the Supreme Court held (1) the Board improperly taxed the power company's ERCs when it added their replacement cost to the power plant's taxable value; and (2) the Board was not required to deduct a value attributable to the ERCs under an income approach. Remanded.View "Elk Hills Power, LLC v. Bd. of Equalization" on Justia Law

Until 2007, petroleum refinery property was assessed by separately assessing the value of land and improvements separately from the value of fixtures, including machinery and equipment. In light of evidence that petroleum refinery property, including land, improvements, and fixtures, was generally sold as a unit, the Board of Equalization enacted Cal. Code Regs. tit. 18, 474 (Rule 474), which provides that, for purposes of determining Proposition 8 declines in the value of petroleum refinery property, petroleum refinery property is rebuttably presumed to constitute a single appraisal unit - unlike most industrial property. The Western States Petroleum Association sought to invalidate the regulation. The trial court and court of appeal held that Rule 474 was both substantively and procedurally invalid. The Supreme Court affirmed, holding (1) the court of appeal erred in finding that Rule 474 was substantively invalid, as the board was not statutorily or constitutionally prohibited from appraising refinery land and fixtures as a single unit; but (2) because the Board failed to provide an adequate assessment of the rule's economic impact, the rule was procedurally deficient under the Administrative Procedures Act. View "W. States Petroleum Ass'n v. Bd. of Equalization" on Justia Law

South Alabama Gas District (SAG) appealed a circuit court order enjoining it from selling liquified petroleum ("LP") gas and related appliances outside its member cities. Four individual taxpayers and Fletcher Smith Butane Co., Inc., sued SAG seeking both an injunction and damages for SAG's alleged violation of 11-50-266, as made applicable to gas districts by 11-50-399. The trial court bifurcated the claim for injunctive relief and the damages claim, and held a bench trial on the claim for injunctive relief. SAG argued that the notice and buy-out provisions did not apply to it because LP gas is not a "manufactured gas" within the terms of the statute. The trial court found otherwise and enjoined SAG from selling LP gas if it did not comply with 11-50-266. The circuit court found that the taxpayers lacked standing to challenge SAG's appliance sales. With regard to Fletcher Smith, SAG argued (among other things), that Fletcher Smith lacked standing because it sold its assets and was no longer engaging in the LP gas business. As proof, SAG cited Fletcher Smith's to "Requests for Admissions of Fact." After review of the circuit court record and the admissions cited by SAG in its appeal brief, the Supreme Court found that Fletcher Smith's claims for prospective relief became moot. "Because mootness goes to justiciability, this Court will not consider the merits of a claim that is moot." View "South Alabama Gas District v. Knight" on Justia Law

Atmos Energy Corporation, a local distributing company, contracted with independent gas marketing companies to purchase natural gas then delivered gas to customers through local pipelines. Following an audit, Missouri Public Service Commission (PSC) staff indicated that Atmos had failed to comply with affiliate transaction rules by failing to document properly the fair market value and fully distributed cost of its transactions with its affiliate, Atmos Energy Marketing LLC (AEM). The staff then proposed a disallowance regarding Atmos' transactions with AEM. After an evidentiary hearing, the PSC found compliance with the affiliate transaction rules and rejected the proposed disallowances. The Office of Public Counsel (OPC) appealed, and the court of appeals affirmed. The Supreme Court reversed, holding that the PSC erred in relying upon a presumption of prudence in rejecting staff and OPC's proposed disallowance regarding Atmos's transactions with AEM. Remanded.View "Office of Pub. Counsel v. Mo. Pub. Serv. Comm'n" on Justia Law

In 2001, Union Oil Company of California entered into a contract to sell its oil to Tesoro Alaska Company. Under the contract the Tesoro took title at the North Slope, but agreed to use a pipeline company associated with Union to transport oil through the Trans-Alaska Pipeline. The price per barrel was calculated as the West Coast market price less marine transport and pipeline tariff. The contract made no mention of whether the pipeline tariff was tied to the ultimate destination of the oil. At the time, the interstate and intrastate pipeline tariffs were the same. Tesoro shipped the oil to an in-state refinery and paid the tariff to the pipeline company. Union subtracted the tariff amount from the market price of the oil less marine transport and sent invoices to the buyer. Meanwhile, Tesoro successfully challenged the intrastate tariff as unjust and unreasonable and the pipeline company issued a refund, including 10.5% interest. Union claimed that it was entitled to the tariff refund under the contract. The superior court, on motions for summary judgment, awarded the principal amount of the refund to Union and the interest to Tesoro. Both parties appealed. Upon review of the dispute, the Supreme Court held that the contract's pricing term was a netback price to the Los Angeles market referencing the interstate tariff. Accordingly, the Court reversed the superior court's grant of summary judgment to Union and remanded for entry of judgment in favor of Tesoro.View "Tesoro Alaska Company v. Union Oil Company of California" on Justia Law

Portland General Electric Company (PGE) appealed a Court of Appeals decision that reversed and remanded a trial court order that denied Lexington Insurance Company's motion to set aside a default judgment entered in PGE's favor. Specifically, the issues were: (1) whether a default judgment awarding monetary relief violated ORCP 67C if the complaint did not specify amount of damages sought; and (2) if so, whether that omission rendered the judgment voidable or void. The Supreme Court held the judgment in question here did not violate ORCP 67C and that the judgment was not void. The case was remanded to the Court of Appeals for further proceedings.View "PGE v. Ebasco Services, Inc." on Justia Law

Plaintiffs owned an undivided five-sixths interest of land on which they executed an oil and gas lease to Prestige Exploration, Inc. Plaintiffs ownership interests were managed by Regions Bank who helped negotiate the terms of the lease. Prestige acquired the lease on behalf of Defendant Matador Resources Company. The issue before the Supreme Court centered on the extension of that lease. Plaintiffs sought to rescind or reform the extension agreement to make it applicable only to a portion of their property. After several preliminary partial summary judgment rulings, a jury found in favor of Defendant for the extension to cover the entirety of Plaintiffs' land interest. The appellate court affirmed in part, reversed in part, and reformed the lease to extend only to the portion of land for which Plaintiffs asked. Upon review, the Supreme Court found that Plaintiffs were precluded from rescinding the agreement on "excusable error." Further, the Court found no manifest error in the district court proceedings. The Court reversed the appellate court's judgment and reinstated the trial court's judgment in its entirety.View "Peironnet v. Matador Resources Co." on Justia Law

The Hernandezes (Hernandez) entered into a real-estate contract to buy 100 acres of land in Van Buren County from the Humphries (Humphries). The sales contract included the mineral rights to the property. However, Humphries subsequently leased the oil-and-gas rights to New Century, which assigned the rights to SEECO. Humphries then sold the oil-and-gas rights to Paraclifta and Claughton. Therafter, Hernandez entered into a contract for sale of the property to the Walls (Walls). Hernandez and Walls (Appellants) filed suit against New Century, SEECO, Paraclifta, and Claughton (Appellees), alleging that Appellees were not innocent purchasers the oil-and-gas rights and seeking cancellation of the lease issued to New Century and the assignment to SEECO, as well as the deed conveying the rights to Paraclifta and Claughton. The circuit court granted Appellees' motions for summary judgment and Appellees' requested attorney fees. The Supreme Court reversed and remanded, holding (1) a question of fact remanded as to whether Hernandez was in exclusive possession of the property, thus imputing notice of Hernandez's interest in the property; and (2) the circuit court abused its discretion in awarding attorneys' fees.View "Walls v. Humphries" on Justia Law