Justia Energy, Oil & Gas Law Opinion Summaries

The Supreme Court vacated the judgment of the court of appeals in this case involving the question of deed construction within the oil and gas context as to whether a royalty interest was fixed or floating, holding that further proceedings were required to evaluate this case in light of the framework articulated in Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023).The 1956 deed at issue expressly reserved an undivided 3/32's interest "(same being three-fourths (3/4's) of the usual one-eighth (1/8th) royalty)" in the oil, gas, and other minerals. The question before the Supreme Court was whether the reservation was a floating 3/4 interest of the royalty rather than a fixed 3/32 interest. The court of appeals concluded that the reservation was a floating 3/4 interest. Because the court of appeals' decision preceded Van Dyke, the Court's most recent double-fraction case, the Supreme Court granting the petition for review and vacated the lower court's decision, holding that this case must be remanded this case for further proceedings in light of Van Dyke. View "Thomson v. Hoffman" on Justia Law

EEE Minerals, LLC, and a Trustee for The Vohs Family Revocable Living Trust, sued the State of North Dakota, the Board of University and School Lands, and the Board’s commissioner in a dispute over mineral interests in McKenzie County, North Dakota. Plaintiffs alleged that state law related to mineral ownership was preempted by federal law and that the defendants had engaged in an unconstitutional taking of the plaintiffs’ mineral interests. Plaintiffs sought damages, an injunction, and declaratory relief. The district court dismissed the action.   The Eighth Circuit affirmed. Plaintiffs contend that the Flood Control Act impliedly preempts the North Dakota statute because the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The court explained that it is not convinced that the State’s determination of a high-water mark, and the attendant settling of property rights under state law, stands as an obstacle to accomplishing the objectives of the Flood Control Act. The court wrote that the interests of the United States and the goals of the Flood Control Act are unaffected by a dispute between the State and a private party over mineral rights that were not acquired by the federal government.   Further, the court explained that Plaintiffs have not established that the United States will be prevented from flooding or inundating any land covered by the 1957 deed in which the State claims ownership of mineral interests under state law. The Flood Control Act would not dictate that property rights be assigned to Plaintiffs. View "EEE Minerals, LLC v. State of North Dakota" on Justia Law

The Supreme Court affirmed the decision of the Board of Equalization upholding the final determinations of the Department of Revenue (DOR) increasing the taxable value of Jonah Energy LLC's natural gas liquids (NGL) production for 2014 through 2016, holding that Jonah was not entitled to relief on its allegations of error.On appeal, Jonah argued that the Board misinterpreted the NGL purchase agreement between Jonah and the purchaser of its NGL, Enterprise Products Operating LLC, by refusing to account for deficiency fees Jonah paid to Enterprise in determining the NGL's taxable value. The Supreme Court affirmed, holding (1) the Board did not misinterpret the NGL purchase agreement at issue; and (2) the Board did not err by failing to take the facts and circumstances surrounding execution of the purchase agreement into account when interpreting it because there was no basis for losing outside the four corners of the purchase agreement to determine its meaning. View "Jonah Energy LLC v. Wyo. Dep't of Revenue" on Justia Law

The Nuclear Regulatory Commission has asserted that it has authority under the Atomic Energy Act to license temporary, away from reactor storage facilities for spent nuclear fuel. Based on that claim of authority, the Commission issued a license for Interim Storage Partners, LLC, to operate a temporary storage facility on the Permian Basin.Fasken Land and Minerals, Ltd., and Permian Basin Land and Royalty Owners (“PBLRO”) petitioned for review of the license. As did the State of Texas, arguing that the Atomic Energy Act doesn’t confer authority on the Commission to license such a facility.The Fifth Circuit granted Texas’ petition for review and vacated the license, finding that the Atomic Energy Act does not confer on the Commission the broad authority it claims to issue licenses for private parties to store spent nuclear fuel away from the reactor. And the Nuclear Waste Policy Act establishes a comprehensive statutory scheme for dealing with nuclear waste generated from commercial nuclear power generation, thereby foreclosing the Commission’s claim of authority. View "State of Texas v. NRC" on Justia Law

After the Department of the Interior amended regulations in 2016, the American Petroleum Institute (API) challenged several of the regulations that governed the calculation of royalties for oil and natural gas produced on federal lands. The district court rejected these challenges at summary judgment, and API appealed. Because API did not show that the agency acted arbitrarily and capriciously in enacting the challenged provisions of the 2016 regulations, the Tenth Circuit Court of Appeals affirmed. View "American Petroleum, et al. v. U.S. Department of Interior, et al." on Justia Law

The Ninth Circuit affirmed the district court’s order denying Vitol, Inc.’s motion to dismiss, as untimely under the applicable statute of limitations, a complaint filed by the Federal Energy Regulatory Commission (FERC) that sought an order affirming the assessment of a civil penalty against Vitol and one of its traders for making unlawful manipulative trades in the California energy market.   The court explained that in measuring the limitations period, the critical question is when FERC’s claim “accrues.” Vitol contended that FERC’s federal district court action was untimely because FERC’s claim accrued as soon as the allegedly unlawful trading occurred. The panel rejected Vitol’s contention and held that FERC’s claim accrued on the date that FERC assessed a civil penalty. The panel reasoned that FERC’s claim arises under 16 U.S.C. Section 823b(d)(3)(B), which gives the agency a cause of action in federal court for “affirming the assessment of the civil penalty,” and that claim does not accrue until FERC has assessed a penalty. The panel also agreed with the district court’s conclusion that FERC’s administrative process for assessing a civil penalty is itself a “proceeding” that is subject to the five-year statute of limitations in 28 U.S.C. Section 2462, and therefore FERC must initiate the proceeding by issuing a notice of proposed penalty within five years of any alleged wrongdoing. View "FERC V. VITOL INC., ET AL" on Justia Law

Vistra Corporation, joined by several other electricity suppliers, petitioned the DC Circuit to review three underlying orders of the Federal Energy Regulatory Commission. These orders involve the sale of electricity in capacity markets. In response to periodic concerns, the Commission has adjusted the market’s features to ensure that it remains competitive.   Vistra and accompanying suppliers (collectively, Petitioners) brought three arguments challenging the discontinuance of the default offer cap. The court explained that the Commission adequately explained its choice to rely on unit-specific review rather than a default offer cap, including that Petitioners’ recalibrated alternative would not have sufficiently mitigated anti-competition concerns. The court explained that the Commission also addressed its accounting of the risks associated with acquiring a capacity commitment, risks that it explained are limited to participation in a capacity market. Finally, Petitioners’ Section 205 rights remain intact. The Commission reasonably interpreted supplier offers in capacity markets to be merely input into obtaining the market-clearing price. These inputs are not the ultimate rates that come out of the market, which are, in turn, subject to Section 205. View "Vistra Corp. v. FERC" on Justia Law

These consolidated cases present weighty and important questions involving the separation of powers as it relates to a project of national interest. Petitioners are environmental groups challenging federal agency actions that will enable the final construction and initial operation of the Mountain Valley Pipeline, a 300-plus-mile underground pipeline that will transport natural gas from West Virginia to Virginia. But during the pendency of this matter before the Fourth Circuit, Congress proactively intervened by legislation and enacted the Fiscal Responsibility Act of 2023. Section 324 of that Act purports to ratify the agencies’ actions regarding the Mountain Valley Pipeline and remove our jurisdiction over the underlying petitions. Respondents—the federal agencies and the Mountain Valley Pipeline—moved in for the dismissal of the petitions.   The Fourth Circuit granted Respondents’ motions to dismiss. In sum, with Section 324, Congress removed our jurisdiction in a way that mandates the dismissal of the underlying petitions, which challenge agency actions that grant necessary approvals for the completion of the Mountain Valley Pipeline. The court explained that “no court” has jurisdiction to review these approvals, including the DC Circuit, whose jurisdiction is limited to “claims alleging the invalidity of [Section 324] or that an action is beyond the scope of authority conferred by [Section 324].” But Congress left in place the general grant of jurisdiction to this Court under the Natural Gas Act over challenges to future pipelines or other natural gas facilities in this circuit, as well as future challenges to operations of the Mountain Valley Pipeline not covered by the express terms of Section 324. View "Appalachian Voices v. United States Department of the Interior" on Justia Law

Petitioner Fairless Energy, LLC (Fairless Energy) contends that it pays too much for the transportation of natural gas to fuel its electric power generating plant located in Fairless Hills, Pennsylvania (the Fairless plant). In these consolidated petitions for review of orders of the Federal Energy Regulatory Commission (the Commission), Fairless Energy maintains that the Commission acted arbitrarily and capriciously, and contrary to reasoned decision-making, when it exercised primary jurisdiction over Fairless Energy’s natural gas transportation rate dispute with intervenor Transcontinental Gas Pipe Line Company, LLC (Transco), and determined that the appropriate rate was the incremental rate for pipeline expansion under Transco’s Tariff.   The DC Circuit denied the petitions for review. The court held that Fairless Energy fails to demonstrate that either the Commission’s exercise of primary jurisdiction over the Transco-Fairless Energy natural gas transportation rate dispute or its decision regarding the appropriate rate was arbitrary and capricious. The court explained that the Commission reasonably started its evaluation with the 2018 Agreement’s Exhibit C and determined that it unambiguously “did not establish a negotiated rate” because it stated “None” in the location for the specification of a negotiated rate. After reaching this decision, the Commission was appropriately able to decline to consider extrinsic evidence. View "Fairless Energy, LLC v. FERC" on Justia Law

Alliance Pipeline L.P. (“Alliance”) entered into contracts with four states (“State Agreements”) as well as contracts with individual landowners in order to build a natural gas pipeline. The contracts with landowners provide easements for the pipeline right-of-way. In 2018, some landowners on the pipeline right-of-way filed a class-action lawsuit against Alliance. After the class was certified, Alliance moved to compel arbitration for the approximately 73 percent of plaintiffs whose easements contain arbitration provisions. Alliance appealed, arguing the district court erred by not sending all issues to arbitration for the plaintiffs whose easements contain arbitration provisions.   The Eighth Circuit affirmed in part and reversed in part. The court explained that the district court that the damages issues are subject to arbitration for the plaintiffs whose easements contain an arbitration provision. Plaintiffs make two arguments against sending any issues to arbitration: (1) Plaintiffs’ claims cannot be within the scope of the arbitration provisions because the claims allege lack of compensation for “ongoing yield losses,” not “damages to crops” and (2) Plaintiffs’ claims arise under the State Agreements, which do not have arbitration provisions. The court found the arbitration agreements to be enforceable and to cover all issues. The court held that as to the arbitration class members, the claims should be dismissed without prejudice. As to the members of the class without arbitration provisions, the court saw no reason why these class members cannot proceed with the lawsuit in the normal course at the district court. View "H&T Fair Hills, Ltd. v. Alliance Pipeline L.P." on Justia Law