Justia Energy, Oil & Gas Law Opinion Summaries

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law

Respondents filed claims against Petitioners relating to certain oil and gas ventures. At issue in this case was Respondents’ assignment claim, which an involved an agreement between Respondents and Petitioners for Respondents to pay a portion of drilling and operating costs in exchange for an assignment of a partial working interest in producing wells. After a bench trial, the trial court largely ruled for Respondents and awarded them $35,000 in attorney’s fees. The Supreme Court modified Respondents’ recovery on appeal and remanded for the trial court to redetermine the attorney’s fee award. On remand, the trial court awarded Respondents $30,000 in attorney’s fees. The Supreme Court reversed, holding that no legally sufficient evidence supported the amount of the attorney’s fee award because Respondents offered no evidence of the time expended on particular tasks as required via the lodestar method. Remanded. View "Long v. Griffin" on Justia Law

In 2012, Monongahela Power Company (“Mon Power”) filed a petition with the Public Service Commission of West Virginia ("Commission") to approve a generation resource transaction between it and Allegheny Energy Supply, LLC (“AE Supply”). The transaction consisted of Mon Power’s acquisition of AE Supply’s interest in the Harrison Power Station (“the plant”) and Mon Power’s recovery of a portion of its investment in that acquisition. The Commission approved a $257 million acquisition adjustment in the purchase price of the plant and allowed Mon Power, under certain conditions, to pass the acquisition adjustment to its customers in the rates that customers pay for electricity. The Supreme Court affirmed the Commission’s order, holding that the Commission’s findings were not contrary to or unsupported by the evidence and were not arbitrary, and the Commission’s application of the law was consistent with Commission precedent. View "W. Va. Citizen Action Group v. Pub. Serv. Comm’n of W. Va." on Justia Law

In 2012, the Montana Board of Oil and Gas Conservation (MBOGC) adopted special statewide temporary spacing units for certain wells. Petitioners = filed a petition for judicial review of MBOGC’s order, stating that it was filed pursuant to Mont. Code Ann. 82-11-144 and Mont. Code Ann. 2-4-702. The district court dismissed Petitioners’ proceeding, stating that the “sole remedy for a person aggrieved by an order of the MBOGC was a challenge under Montana Code Ann. 82-11-144.” The Supreme Court reversed, holding that the district court erred in dismissing the action, as Petitioners’ allegations, coupled with their express reliance upon section 82-11-144 as a legal basis for their petition, should have been sufficient to save their petition from dismissal on the ground that they had not pursued their “sole remedy” of proceeding under that statute. View "Ostby v. Bd. of Oil & Gas Conservation" on Justia Law

In 1967, Severt Kvalheim conveyed certain real property to Gordon Holsti by warranty deed. Kvalheim reserved fifty percent of the mineral rights for himself. That same year, Kvalheim executed a will devising to each of his heirs a one-eighth interest in his estate. Kvalheim died in 1969. In 2007, Gordon Holsti conveyed the surface estate to his sons (the Holstis). Believing Kvalheim’s mineral interest had lapsed and been abandoned because of nonuse, the Holstis published a notice of lapse of mineral interest in the official county newspaper. When no one filed a statement of claim asserting ownership of the mineral interest severed from the property, the Holstis brought a quiet title action. The circuit court ruled that the Holstis were the owners of the entire mineral interest, concluding (1) Kvalheim’s mineral interest had been abandoned under section S.D. Codified Laws 43-30A-2, -3; and (2) the Holstis gave proper notice of the lapse of the mineral interest even though they did not serve notice of the lapse on Kvalheim’s heirs. The Supreme Court reversed, holding that the mineral interests were not abandoned under section 43-30A-2. Remanded. View "Holsti v. Kimber" on Justia Law

The Smith brothers and others operated Target Oil, which conducted speculative resource drilling in Kentucky, Tennessee, Texas, and West Virginia. Wells they represented as sure-fire investments often produced virtually no oil and many wells were never completed. From 2003 to 2008, Target Oil received about $15,800,000 in investor funds but, according to the postal inspector, distributed only $460,000 in royalties. The brothers were arrested and accused of conspiring with others to defraud investors of millions of dollars. Michael was convicted of conspiracy to commit mail fraud, 18 U.S.C. 1349, and of 11 substantive counts of mail fraud, 18 U.S.C. 1341, and sentenced to 120 months in prison and ordered to pay $5,506,917 in restitution. Christopher was convicted by the same jury on seven counts of mail fraud and was sentenced to 60 months in prison and ordered to pay $1,652,075 in restitution. The Seventh Circuit affirmed, rejecting arguments that: the evidence was insufficient to support their convictions; the government offered evidence that constructively amended or varied the indictment; their sentences are procedurally and substantively unreasonable; one of the forfeiture judgments was excessive; the district court erred in excluding a defense expert witness; and items of evidence relating to the alleged fraud were erroneously admitted. View "United States v. Smith" on Justia Law

The Clean Air Act requires permits for stationary sources, such as factories and powerplants. The Act’s “Prevention of Significant Deterioration” (PSD) provisions make it unlawful to construct or modify a “major emitting facility” in “any area to which [PSD program] applies” without a permit, 42 U.S.C. 7475(a)(1), 7479(2)(C). A “major emitting facility” is a stationary source with the potential to emit 250 tons per year of “any air pollutant” (or 100 tons per year for certain sources). Facilities seeking a PSD permit must comply with emissions limitations that reflect the “best available control technology” (BACT) for “each pollutant subject to regulation under” the Act and it is unlawful to operate any “major source,” wherever located, without a permit. A “major source” is a stationary source with the potential to emit 100 tons per year of “any air pollutant,” under Title V of the Act. In response to the Supreme Court decision, Massachusetts v. EPA, the EPA promulgated greenhouse-gas (GHG) emission standards for new vehicles, and made stationary sources subject to the PSD program and Title V, based on potential GHG emissions. Recognizing that requiring permits for all sources with GHG emissions above statutory thresholds would render the programs unmanageable, EPA purported to “tailor” the programs to accommodate GHGs by providing that sources would not become newly subject to PSD or Title V permitting on the basis of their potential to emit GHGs in amounts less than 100,000 tons per year. The D.C. Circuit dismissed some challenges to the tailoring rule for lack of jurisdiction and denied the rest. The Supreme Court affirmed in part and reversed in part, finding that the Act does not permit an interpretation requiring a source to obtain a PSD or Title V permit on the sole basis of potential GHG emissions. The Massachusetts decision held that the Act-wide definition of “air pollutant” includes GHGs, but with respect to PSD and Title V permitting provisions, EPA has employed a narrower, context-appropriate meaning. Massachusetts did not invalidate the long-standing constructions. “The Act-wide definition is not a command to regulate, but a description of the universe of substances EPA may consider regulating.” The presumption of consistent usage yields to context and distinct statutory objects call for different implementation strategies. EPA has repeatedly acknowledged that applying PSD and Title V permitting requirements to GHGs would be inconsistent with the Act’s structure and design, which concern “a relative handful of large sources capable of shouldering heavy substantive and procedural burdens.” EPA lacked authority to “tailor” the Act’s unambiguous numerical thresholds to accommodate its GHG-inclusive interpretation. EPA reasonably interpreted the Act to require sources that would need permits based on emission of conventional pollutants to comply with BACT for GHGs. BACT, which has traditionally been about end-of-stack controls, may be fundamentally unsuited to GHG regulation, but applying BACT to GHGs is not "disastrously unworkable," and need not result in a dramatic expansion of agency authority. View "Util. Air Regulatory Grp. v. Envtl. Prot. Agency" on Justia Law

This case concerned three rivers which flow through Montana and then beyond its borders. At issue was whether discrete, identifiable segments of these rivers in Montana were nonnavigable, as federal law defined that concept for purposes of determining whether the State acquired title to the riverbeds underlying those segments, when the State entered the Union in 1989. Montana contended that the rivers must be found navigable at the disputed locations. The Court held that the Montana Supreme Court's ruling that Montana owned and could charge for use of the riverbeds at issue was based on an infirm legal understanding of the Court's rules of navigability for title under the equal-footing doctrine. The Montana Supreme Court erred in its treatment of the question of river segments and portage and erred as a matter of law in relying on evidence of present-day primarily recreational use of the Madison River. Because this analysis was sufficient to require reversal, the Court declined to decide whether the State Supreme Court also erred as to the burden of proof regarding navigability. Montana's suggestion that denying the State title to the disputed riverbeds would undermine the public trust doctrine underscored its misapprehension of the equal-footing and public trust doctrines. Finally, the reliance by petitioner and its predecessors in title on the State's long failure to assert title to the riverbeds was some evidence supporting the conclusion that the river segments over those beds were nonnavigable for purposes of the equal-footing doctrine. Accordingly, the judgment was reversed. View "PPL Montana, LLC v. Montana" on Justia Law

Respondent, widow of an employee of Pacific Operators Offshore, sought benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. 901 et seq., pursuant to the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1333(b), which extended LHWCA coverage to injuries "occurring as the result of operations conducted on the [OCS]" for the purpose of extracting natural resources from the shelf. The ALJ dismissed her claim, reasoning that section 1333(b) did not cover the employee's fatal injury because his accident occurred on land, not on the OCS. The Labor Department's Benefits Review Board affirmed, but the Ninth Circuit reversed. The Court concluded that the Ninth Circuit's "substantial-nexus" test was more faithful to the text of section 1333(b). The Court understood the Ninth Circuit's test to require the injured employee to establish a significant causal link between the injury that he suffered and his employer's on-OCS operations conducted for the purpose of extracting natural resources from the OCS. View "Pacific Operators Offshore, LLP v. Valladolid" on Justia Law

Plaintiffs, several states, the city of New York, and three private land trusts, sued defendants, four private power companies and the federal Tennessee Valley Authority, alleging that defendants' emissions substantially and unreasonably interfered with public rights in violation of the federal common law of interstate nuisance, or in the alternative, of state tort law. Plaintiffs sought a decree setting carbon-dioxide emissions for each defendant at an initial cap to be further reduced annually. At issue was whether plaintiffs could maintain federal common law public nuisance claims against carbon-dioxide emitters. As a preliminary matter, the Court affirmed, by an equally divided Court, the Second Circuit's exercise of jurisdiction and proceeded to the merits. The Court held that the Clean Air Act, 42 U.S.C. 7401, and the Environmental Protection Act ("Act"), 42 U.S.C. 7411, action the Act authorized displaced any federal common-law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants. The Court also held that the availability vel non of a state lawsuit depended, inter alia, on the preemptive effect of the federal Act. Because none of the parties have briefed preemption or otherwise addressed the availability of a claim under state nuisance law, the matter was left for consideration on remand. Accordingly, the Court reversed and remanded for further proceedings. View "American Elec. Power Co., et al. v. Connecticut, et al." on Justia Law