Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Energy, Oil & Gas Law
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The Supreme Court affirmed in part and reversed in part the judgment of the district court which partially affirmed and partially reversed two earlier orders on reconsideration issued by the Montana Public Service Commission, holding that the district court erred in affirming the Commission's orders as related to interconnection costs associated with a certain transmission line.Specifically, the Supreme Court held that the district court (1) erred in upholding the Commission's determination assigning $267 million in network upgrade costs to Appellants; (2) correctly upheld the Commission's decision to calculate avoided energy costs using a proxy model; (3) properly upheld the Commission's decision to calculate ancillary service deductions based on NorthWestern Energy Corporation's proposed rates; and (4) properly upheld the Commission's determination that fifteen-year contract lengths were appropriate for all three of Appellant's projects. View "CED Wheatland Wind, LLC v. Montana Department of Public Service Regulation" on Justia Law

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In this oil and gas case, the Supreme Court reversed the judgment of the court of appeals reversing the trial court's summary judgment, holding that a fact issue remained on Plaintiffs' claim for breach of the lease and that Plaintiffs' argument was not barred by res judicata but that the court of appeals erred by reversing a take-nothing summary judgment as to Plaintiffs' tort and statutory claims.At issue was the meaning and application of an express covenant to protect against drainage that appeared in a lease addendum that expressly limited the location of wells that may trigger Defendant-Lessee's obligation to protect against drainage but did not directly address the location of wells that may cause drainage. Plaintiffs-Lessors argued that the covenant allowed for separate triggering and draining wells and that Defendant breached the covenant by failing to protect against drainage from a non-triggering well. In response, Defendant argued that it had a duty to protect only against drainage from the limited class of triggering wells. The Supreme Court held (1) the addendum was ambiguous because both interpretations of the covenant were reasonable; (2) the court of appeals improperly reversed the trial court's take-nothing summary judgment on Plaintiffs' tort and statutory claims; and (3) remand was required for further proceedings on Plaintiffs' claim for breach of the lease. View "Rosetta Resources Operating, LP v. Martin" on Justia Law

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The United States District Court for the Western District of Oklahoma certified two questions of law to the Oklahoma Supreme Court relating to the Oklahoma Consumer Protection Act, and whether it applied to conduct outside of Oklahoma. The matter concenred a dispute between Continental Resources, Inc. (Continental), an oil and gas producer headquartered in Oklahoma, and Wolla Oilfield Services, LLC (Wolla), a North Dakota limited liability company that operated as a hot oil service provider in North Dakota. Continental alleged the parties entered into an agreement for Wolla to provide hot oil services at an hourly rate to Continental's wells in North Dakota. As part of the contract, Wolla agreed to submit its invoices through an "online billing system" and to bill accurately and comprehensively for work it performed. A whistleblower in Wolla's accounting department notified Continental about systematic overbilling in connection with this arrangement. Continental conducted an audit and concluded Wolla's employees were overbilling it for time worked. Wolla denies these allegations. The Oklahoma Supreme Court concluded: (1) the Oklahoma Consumer Protection Act does not apply to a consumer transaction when the offending conduct that triggers the Act occurs solely within the physical boundaries of another state; and (2) the Act also does not apply to conduct where, even if the physical location is difficult to pinpoint, such actions or transactions have a material impact on, or material nexus to, a consumer in the state of Oklahoma. View "Continental Resources v. Wolla Oilfield Services" on Justia Law

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OXY USA, Inc. appealed a decision of the U.S. Department of the Interior’s Office of Natural Resources Revenue (“ONRR”) ordering it to pay an additional $1,820,652.66 in royalty payments on federal gas leases that were committed to the Bravo Dome Unit (“the Unit”). The owner of the leases OXY subsequently acquired - Amerada Hess Corporation (“Hess”) - used almost all of the CO2 it produced in the Unit for its own purposes rather than sale. ONRR rejected Hess’s valuation method and established its own. Hess appealed, and ONRR’s Director issued a decision reducing the amount Hess owed but affirming the remainder of ONRR’s order. Hess appealed to the Interior Board of Land Appeals, but the Board did not issue a final merits decision prior to the 33-month limitations period. On appeal to the United States District Court for the District of New Mexico, the district court rejected OXY’s challenge to the amount of royalties owed and affirmed the Director’s decision. Finding ONRR's interpretation and application of the marketable-condition rule to this case was not plainly erroneous or inconsistent with the applicable regulations, the Tenth Circuit Court of Appeals affirmed. View "OXY USA v. DOI, et al." on Justia Law

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Energy Transfer LP and Dakota Access LLC (collectively, “Energy Transfer”) appealed an order and judgment affirming the North Dakota Private Investigative and Security Board’s (“Board”) order denying Energy Transfer’s petition to intervene in an administrative action against TigerSwan, LLC. Energy Transfer argued the district court erred by concluding it lacked standing to appeal the Board’s decision denying its petition to intervene, and that the Board erred in denying its petition to intervene. TigerSwan contracted with Energy Transfer to provide services related to the Dakota Access Pipeline. The Board commenced administrative proceedings against TigerSwan alleging it provided investigative and security services in North Dakota without a license. TigerSwan was compelled to disclose documents to the Board, some of which were the focus of this appeal. Energy Transfer filed a motion to intervene for the purpose of compelling the return of the documents and to obtain a protective order. After review, the North Dakota Supreme Court reversed the court order concluding Energy Transfer lacked standing to appeal the Board’s order, and reversed the Board’s order denying intervention. The matter was remanded to the Board for further proceedings. View "Energy Transfer, et al. v. ND Private Investigative and Security Bd., et al." on Justia Law

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Energy Transfer LP and Dakota Access LLC (collectively, “Energy Transfer”) appealed an order for partial summary judgment certified as final by a district court. The court held documents the North Dakota Private Investigative and Security Board received in response to discovery requests in an administrative proceeding against TigerSwan, LLC fell within the N.D.C.C. ch. 44-04 and 54-46 provisions dealing with government records. TigerSwan contracted with Energy Transfer to provide services related to the Dakota Access Pipeline. The Board commenced administrative proceedings against TigerSwan alleging it provided investigative and security services in North Dakota without a license. TigerSwan was compelled to disclose documents to the Board, some of which were the focus of this appeal. Energy Transfer filed a motion to intervene in the administrative proceedings claiming roughly 16,000 documents TigerSwan disclosed were confidential. Energy Transfer sought to intervene for the purpose of compelling the return of the documents and to obtain a protective order. After review, the North Dakota Supreme Court concluded the court did not abuse its discretion in certifying the partial summary judgment as final under N.D.R.Civ.P. 54(b), and it did not err in granting partial summary judgment. View "Energy Transfer, et al. v. ND Private Investigative and Security Bd., et al." on Justia Law

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Downstream fuel producers pay an excise tax, 26 U.S.C. 4081(a)(1)(A). Revenues from the tax fund the Highway Trust Fund. In 2004, Congress sought to incentivize renewable fuels without undermining highway funding. Under the American Jobs Creation Act, a fuel producer can earn the “Mixture Credit” by mixing alcohol or biodiesel into its products. The Mixture Credit applies “against the [excise] tax imposed by section 4081,” section 6426(a)(1). Under section 6427(e), a producer can also receive the Mixture Credit as direct, nontaxable payments, to the extent the Mixture Credit exceeds the excise tax liability. The Highway Revenue Act now appropriates the full amount of a producer’s section 4081 excise tax to the Highway Trust Fund “without reduction for credits under section 6426,” section 9503(b)(1).In 2010-2011, Delek claimed $64 million in Mixture Credits and subtracted that amount from its cost of goods sold, increasing Delek’s gross income and its income tax burden. In 2015, Delek filed a refund claim (more than $16 million), arguing that its Mixture Credits were “payments” that could only satisfy, but not reduce, the excise tax amount, so that subtracting the Mixture Credit from its cost of goods sold was a mistake. The IRS denied the claim. The Sixth Circuit affirmed summary judgment in the government’s favor, rejecting Delek’s “novel theory: The credit is a “payment” that satisfies, but does not reduce, its excise tax liability.” View "Delek US Holdings, Inc. v. United States" on Justia Law

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In this second appeal in a class action case alleging a breach of the implied duty to market gas and underpaid royalties the Supreme Court affirmed the decision of the district court denying a class's motion to amend its petition and granting partial summary judgment for Oil Producers Inc. of Kansas (OPIK) on the class's breach of duty to market gas as it related to the marketable condition rule, holding that there was no error.In the first appeal in this case, the Supreme Court listed the conditions under which a well operator may satisfy its duty to market raw gas production. On remand, the class of royalty owners moved to amend the petition to clarify that its original claim of breach of implied duty to market implicated the implied duty of good faith and fair dealing. The district court denied the motion and granted summary judgment for OPIK. The Supreme Court affirmed, holding (1) the law of the case doctrine precluded thecClass from relitigating its claim that OPIK breached its implied duty of faith and fair dealing as alleged in the motion to amend the petition; (2) the class was not entitled to prejudgment interest; and (3) the lower courts appropriately denied OPIK's statute of limitations defense to the class's conservation fee claim. View "L. Ruth Fawcett Trust v. Oil Producers Inc. of Kansas" on Justia Law

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The Supreme Court affirmed the judgments of the court of appeals reversing the trial court's decisions in these two cases consolidated for appeal, holding that owners of the surface rights to land did not comply with the requirements of the Dormant Mineral Act, Ohio Rev. Code 5301.56, in seeking to have mineral interests in that land deemed abandoned.Plaintiffs filed complaints for declaratory judgment and seeking to quiet title, alleging that the surface owners had failed to exercise reasonable due diligence in attempting to locate holders of the mineral interests before commencing the abandonment process. The trial court granted summary judgment in favor of Defendants in both cases. The court of appeals reversed in both cases, ruling that Defendants' searches were unreasonable and that they had failed to comply with the relevant notice requirements. The Supreme Court affirmed, holding that Defendants failed to exercise reasonable diligence in these cases. View "Fonzi v. Brown" on Justia Law

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The Supreme Court held that an action seeking a determination that an oil and gas lease has expired by its own terms is a controversy "involving the title to or the possession of real estate" so that the action is exempt from arbitration under Ohio Rev. Code 2711.01(B)(1).Appellants brought an action for declaratory judgment alleging that oil and gas leases between the parties had terminated because Appellee failed to produce oil or gas or to commence drilling operations within the terms of the lease. Appellee moved to stay pending arbitration. The trial court denied the request, concluding that Appellants' claims involved the title to or the possession of real property, and therefore, were exempt from arbitration under Ohio Rev. Code 2711.01(B)(1). The court of appeals reversed. The Supreme Court reversed, holding the trial court correctly declined to stay the action in this case pending arbitration. View "French v. Ascent Resources-Utica, LLC" on Justia Law