Justia Energy, Oil & Gas Law Opinion Summaries

In this consolidated appeal of the Federal Energy Regulatory Commission’s (FERC) orders, two utility companies argue that Attachment Z2 plainly requires utilizing the N-1 Contingency Analysis (N-1) methodology. And they assert that FERC erred in concluding that the Tariff was ambiguous, relying on extrinsic evidence to interpret that the Reservation Stack Analysis (RSA) was the appropriate methodology. Second, they claim that the Regional Operator violated the filed rate doctrine because the filed rate was unclear about how much they would be charged. Finally, Petitioners contend that their charges offend Attachment Z1 because the Regional Operator neither identified the upgrade facilities that would accommodate their requests nor provided them with an estimate of the costs of such upgrades.   The DC Circuit dismiss in part the petitions for review related to the filed rate doctrine because that issue was not exhausted at the rehearing stage below. The court otherwise denied in part the petitions for review. The court explained that FERC appropriately noted that the purpose of Attachment Z1 is to identify new transmission facilities or new upgrades to existing facilities, while Attachment Z2 is designed to calculate a customer’s obligation to pay for its use of existing Creditable Upgrades funded by others. The court explained that because the difference between Attachment Z1 and Attachment Z2 arises out of their plain texts, and FERC’s orders acknowledged that difference, FERC “would clearly have acted on [this] ground even if the other [grounds] were unavailable.” Therefore, denying the petitions for review on this issue is consistent with precedents. View "Xcel Energy Services Inc. v. FERC" on Justia Law

In this challenge to "Measure Z," a Monterey County ordinance, the Supreme Court affirmed the decision of the court of appeal affirming the judgment of the trial court in favor of Plaintiffs on preemption grounds, holding that Cal. Pub. Res. Code 3106 preempts Measure Z.Plaintiffs - Chevron U.S.A. Inc. and other oil producers and mineral rights holders - brought six actions against the County challenging Measure Z, a local ordinance banning oil and gas wastewater injection and impoundment and the drilling of new oil and gas wells in the County's unincorporated areas. The trial court issued a writ of mandate directing the County to invalidate two prohibitions in the measure that applied to the County's unincorporated areas. The court of appeal affirmed on grounds of state preemption. The Supreme Court affirmed, holding that Measure Z contradicts, and therefore conflicts with and is preempted by, section 3106. View "Chevron U.S.A., Inc. v. County of Monterey" on Justia Law

Seven years ago, the Fifth Circuit court vacated d, as arbitrary and capricious, the Federal Energy Regulatory Commission’s (“FERC”) cost allocation scheme for electrical grid improvements in the WestConnect region, which covers utility service to much of the American West. On remand, FERC was instructed to provide a more complete justification for its orders. The petition under review asserts that the reasons FERC gave on remand remain insufficient.   The Fifth Circuit granted the petition and reversed the orders. The court explained that FERC’s orders violate the Federal Power Act as a matter of law and, alternatively, the agency has again inadequately explained its actions. The cost causation principle that binds FERC does not authorize it to force its regulated jurisdictional utilities to assume the costs of providing service to non-jurisdictional utilities. The court explained that FERC’s compliance orders cannot “satisfy its statutory mandate—except by ignoring the benefits the non-jurisdictional utilities would receive.” View "El Paso Electric v. FERC" on Justia Law

Defendants GADECO, LLC, and Continental Resources, Inc. appealed a judgment quieting title in oil and gas leasehold interests in Zavanna, LLC. Zavanna and the Defendants made competing claims to oil and gas leasehold interests covering 1,280 gross acres in Williams County, North Dakota. These interests were located in the Golden Unit; the Golden Well was the only well producing oil and gas from the subject leasehold within the Golden Unit. GADECO operated the Golden Well. Zavanna was the lessee by assignment of the “Top Leases” and GADECO and Continental were the lessees of the “Bottom Leases.” The Top Leases and Bottom Leases covered the same lands and leasehold interests. The Bottom Leases automatically terminated upon cessation of production unless certain express conditions were met. The Bottom Leases stated that a cessation of production after the lease’s primary term would not terminate the lease if the lessee restores production or commences additional drilling or reworking operations within 90 days (or 120 days in the case of the Parke Energy Leases) from the date of cessation of production. After a bench trial, the district court quieted title in Zavanna, concluding the Bottom Leases terminated by their own terms when production ceased and GADECO failed to timely commence drilling or reworking operations. The court found three periods of production cessation. The court concluded Defendants bore the burden to prove that production did not cease or reworking operations were timely commenced. The North Dakota Supreme Court affirmed, concluding the district court did not err in concluding Defendants’ leases terminated under their terms when production ceased and Defendants failed to timely commence reworking operations, and in concluding Defendants failed to show a force majeure condition saved the leases from termination. View "Zavanna v. Gadeco, et al." on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the Ohio Board of Tax Appeals (BTA) that some of Taxpayer's equipment used in fracking was subject to Ohio's sales and use tax, holding most of the equipment at issue was exempt from taxation.While Ohio law generally exempts from taxation equipment used direction in oil and gas production not everything in the production of oil and gas qualifies for the exemption. After Taxpayer purchased equipment for use in its fracking operations the tax commissioner issued use-tax assessments, one for each piece of equipment. The commissioner then canceled about half the assessments. The BTA affirmed. The Supreme Court reversed in part, holding that equipment consisting of blenders, hydration units, chemical-additive units, t-belts, and sand kings are tax exempt. View "Stingray Pressure Washing, L.L.C. v. Harris" on Justia Law

The Federal Energy Regulatory Commission must ensure that the rules for funding new transmission facilities are just and reasonable. A funding regime is not just and reasonable if it makes one party foot the bill for a project with broad benefits. Old Dominion Electric Cooperative v. FERC, 898 F.3d 1254, 1255 (D.C. Cir. 2018). Here, two transmission owners and a utility company say FERC approved an unjust and unreasonable change to the transmission-funding regime in a region managed by Southwest Power Pool. The new regime, the Petitioners say, will likely force transmission owners to pay for projects that benefit the entire power grid. They petitioned for judicial review.   The DC Circuit denied the petitions for judicial review. But the Petitioners oversell the risk that the new regime will foist the costs of new projects on individual owners. For that to happen, the regime’s primary mechanisms for allocating costs would have to fail. In any case, FERC may balance the need to ensure that transmission owners bear perfectly proportional costs and benefits with other policy goals. Consolidated Edison Co. v. FERC, 45 F.4th 265, 286 (D.C. Cir. 2022). It did that here by approving a regime that allows participants in regional transmission zones to collaborate on selecting and funding new projects. View "Evergy Kansas Central, Inc. v. FERC" on Justia Law

MSHA’s jurisdiction, the Federal Mine Safety and Health Review Commission (“Commission”) held that for the list of items in Section 802(h)(1)(C) to be considered a “mine,” the items had to be located at an extraction site, or the roads appurtenant thereto.  Because neither the trucks nor the facility associated with the citations at issue were located on land covered under subsections (A)–(B), the Commission found they failed to constitute a “mine” and vacated the citations. The Commission also found that, as an independent contractor not engaged in servicing a mine at the time of the citation, KC Transport failed to qualify as an “operator” under Section 802(d) of the Mine Act. The Secretary of Labor (“the Secretary”), acting through MSHA, appealed the Commission’s decision and asked the court to uphold the two citations as an appropriate exercise of the Secretary’s jurisdiction under the Mine Act. In the Secretary’s view, subsection (C) of the “mine” definition covers KC Transport’s facility and trucks because they were “used in” mining activity.   The DC Circuit vacated and remanded the Commission’s decision, allowing the Secretary to interpret the statute’s ambiguous language. The court explained that given the Mine Act’s language, context, and the court’s binding precedent, it finds that the Commission erred in its interpretation of the “mine” and “operator” definitions. And we generally defer to the Secretary’s reasonable interpretation of an ambiguous statute—even when the Commission disagrees. But here, the Secretary’s position treats subsection (C) as 4 unambiguous and makes no meaningful effort to address the numerous practical concerns that would arise under such an interpretation. View "Secretary of Labor v. KC Transport, Inc." on Justia Law

Dakota Energy Power Cooperative, Inc., a member of East River Electric Power Cooperative, Inc., sought to withdraw from East River and to terminate the parties’ long-term power contract so that it could purchase electricity from another source. When East River resisted, Dakota Energy sued for anticipatory breach of contract and sought a declaratory judgment providing that it had a contractual right to withdraw from East River by way of a buyout. The district court granted summary judgment in favor of East River, and Dakota Energy appealed.   The Eighth Circuit affirmed. The court explained that under the UCC, the terms of a written contract “may be explained or supplemented” by certain extrinsic evidence, including “usage of trade.” Dakota Energy’s proffered trade usage evidence would effectively add an entirely new provision to the WPC. Moreover, under the UCC, “the express terms of an agreement and any applicable . . . usage of trade must be construed whenever reasonable as consistent with each other.” Here, the express terms of the WPC—which provide that the agreement will “remain in effect” until December 31, 2075, and which contain no provision allowing for an early buyout—are inconsistent with any trade usage evidence suggesting something to the contrary. Therefore, the court concluded that the WPC unambiguously requires Dakota Energy to purchase all of its electricity from East River until December 31, 2075, and that no provision in the WPC or East River’s Bylaws allows for an earlier termination of that obligation. View "Dakota Energy Coop, Inc. v. East River Electric Power Coop., Inc." on Justia Law

The Supreme Court affirmed the judgment of the superior court in favor of the Town of Exeter in this action seeking injunctive and declaratory relief challenging the Town's decision to amend its zoning ordinance, which prevented Plaintiff from developing three commercial solar-field projects in Exeter, holding that Plaintiff was not entitled to relief on its allegations of error.On appeal, Plaintiff challenged several aspects of the superior court's judgment denying Plaintiff's request to enjoin enforcement of an emergency moratorium ordinance preventing review of Plaintiff's solar-field projects and to declare that Plaintiff's solar-field projects were vested pursuant to R.I. Gen. Laws 45-24-44. The Supreme Court affirmed, holding that, under this Court's understanding of the relevant law, the trial court properly entered judgment in favor of the Town. View "Green Development, LLC v. Town of Exeter" on Justia Law

Petitioner Green Development, LLC (Green Development) sought interconnection with the distribution system of Narragansett Electric Company (Narragansett), a public utility. Accommodation of the increased flows of electricity required certain upgrades to the transmission system owned by Respondent-Intervenor New England Power Company d/b/a National Grid (NE Power). NE Power assigned the costs of the transmission system upgrades directly to Narragansett. The newly assigned costs were reflected in a revised transmission service agreement (TSA) that NE Power and Narragansett filed for approval by the Federal Energy Regulatory Commission (Commission or FERC). Green Development protested the revised TSA. The Commission denied Green Development’s protest.  Green Development petitions for review contending that the Commission (1) erroneously concluded that Green Development’s arguments in the underlying section 205 proceeding operated as a “collateral attack” on the Complaint Order; (2) improperly applied the governing seven-factor test; (3) misinterpreted the Tariff’s definition of “direct assignment facilities”; and (4) erroneously failed to apply the filing procedures of Schedule 21-Local Service of the Tariff.   The DC Circuit denied the petitions. First, the court held that Commission has cured any purportedly erroneous ruling that Green Development’s section 205 protest constituted a collateral attack on the Complaint Order. The court rejected Green Development’s fourth claim. The court wrote that the issue with Green Development’s contention is that it presumes that the procedures in Schedule 21-Local Service are “mandatory processes” that applied to the filing of the TSA. But, the SIS and associated technical arrangements “pertain to initiating transmission service” and “do not demonstrate that Narragansett as an existing transmission customer was required to request new transmission service” under the Tariff. View "Green Development, LLC v. FERC" on Justia Law