Justia Energy, Oil & Gas Law Opinion Summaries

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

The Fifth Circuit affirmed the district court's denial of partial summary judgment in an action brought by Vitol against the United States, seeking an $8.8 million tax refund. The court concluded that the plain language of the statute, taken in context, excludes butane from the definition of a liquefied petroleum gas (LPG) under 26 U.S.C. 6426(d)(2).In this case, the court applied the standard tools of statutory interpretation in their proper order, and the court need not consider legislative history or abstract congressional purpose. The court explained that, although the common meaning of LPG includes butane, section 6426(d)(2) is a subsidiary part of a broader statutory framework that treats a given fuel as either a taxable fuel or an alternative fuel, but not both. Therefore, the statutory context of section 6426 provides sound reason to depart from butane's common meaning. Furthermore, section 4083 defines butane as a taxable fuel for purposes of the excise tax imposed at section 4081. The court reasoned that, if butane is a taxable fuel, it cannot be an alternative fuel and thus it is not an LPG under section 6426(d)(2). View "Vitol, Inc. v. United States" on Justia Law

Plaintiff Magnum Energy, Inc. appealed a Board of Adjustment for the City of Norman (Board) decision denying Plaintiff's application for a variance from the City's business licensing requirement that oil and gas operators maintain two million dollars in umbrella liability coverage. The trial court granted summary judgment in Plaintiff's favor, finding that the requirement conflicted with State law and was therefore unenforceable. The Board appealed the trial court's order; the Court of Civil Appeals reversed the order, finding no conflict between the requirement and State law. The Oklahoma Supreme Court reversed the appellate court, finding the requirement conflicted with 52 O.S.Supp.2015 section 137.1, rendering the requirement invalid and unenforceable. View "Magnum Energy v. Bd. of Adjustment for the City of Norman" on Justia Law

LSP, an independent electric transmission developer, bids on proposals to build transmission projects throughout the U.S. LSP sought judicial review of a Federal Energy Regulatory Commission (FERC) decision under 16 U.S.C. 824e concerning ISO New England’s compliance with Commission Order 1000, which required “the removal from Commission-jurisdictional tariffs and agreements” of rights of first refusal to construct transmission facilities and directed incumbent transmission providers to engage in competitive selection of developers. FERC recognized an exception if the time needed to solicit and conduct competitive bidding would delay the project and thereby threaten system “reliability.” FERC found “insufficient evidence” that ISO was incorrectly implementing Order 1000.The D.C. Circuit denied LSP’s petition for judicial review, first holding that FERC’s ruling bears all the indicia of a substantive decision produced after a contested proceeding involving ISO and numerous intervenors and is subject to judicial review. The court found nothing irrational in FERC’s response to LSP’s general criticism of ISO’s use of more conservative assumptions regarding its system capacity and future management in determining when to apply the exception. Although the number of reliability projects exempted from competitive bidding exceeded those open to competition, the appropriate balance between competitive procurement and quick redress of reliability needs is a policy judgment for FERC. View "LSP Transmission Holdings II, LLC v. Federal Energy Regulatory Commission" on Justia Law

The Federal Energy Regulatory Commission (FERC) awarded “incentive adders,” upward adjustments to utilities’ rate of return on equity, to three California-based public utilities. FERC regulations allow for incentive adders to induce voluntary membership in independent system operators. The Ninth Circuit previously concluded that FERC improperly awarded incentive adders to PG&E without considering the California Public Utilities Commission’s (CPUC) assertion that PG&E’s membership in the California independent system operator (CAISO) is mandated. The court directed FERC to “inquire into PG&E’s specific circumstances, i.e., whether it could unilaterally leave the C[AISO].” On remand, FERC concluded that membership in CAISO is voluntary.The Ninth Circuit upheld the decision, holding that its previous decision did not resolve whether California law prevented the utilities from leaving CAISO without approval. FERC did not deviate from the mandate on remand. There was no error in FERC’s conclusion that membership in CAISO was voluntary despite a contrary suggestion in a CPUC 1998 Decision. FERC was not required to apply the Erie doctrine and defer to California’s interpretation. The incentive adder and its requirements arose from federal law. The California Supreme Court has not decided whether membership in CAISO is voluntary; no California Code provision mandates CAISO membership, and no case law discusses whether CAISO members must remain such. California courts would not defer to the CPUC’s 1998 Decision because it was inconsistent with the statute. View "California Public Utilities Commission v. Federal Energy Regulatory Commission" on Justia Law

The Supreme Court reversed the judgment of the court of appeals affirming the decision of the trial court dismissing this complaint brought by the Attorney General alleging that Defendants, including Rover Pipeline, LLC, had illegally discharged millions of gallons of drilling fluids into Ohio's waters, causing pollution and degrading water quality, holding that the lower courts erred.Rover sought a license to construct an interstate pipeline that cross several counts in Ohio. As required by 33 U.S.C. 1341(a)(1) - section 401 of the Clean Water Act - Rover applied for certification for the state that any discharge into the state's navigable waters would comply with federal law. The state later brought this action against Rover and other companies involved in building the pipeline. The Supreme Court reversed the dismissal of this lawsuit, holding (1) the state waived its ability to participate in the certification process when it did not respond to Rover's application within one year; but (2) the waiver applies only to issues that are related to the section 401 certification, and therefore, remand was required for a determination of whether any of the state's allegations address issues outside the contours of the section 401 certification. View "State ex rel. Yost v. Rover Pipeline, L.L.C." on Justia Law

The Fifth Circuit affirmed the bankruptcy court's judgment and held that, under the particular circumstances presented here, Ultra Resources is not subject to a separate public-law obligation to continue performance of its rejected contract, and that 11 U.S.C. 1129(a)(6) did not require the bankruptcy court to seek FERC's approval before it confirmed Ultra Resource's reorganization plan.Applying In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004), the court concluded that the power of the bankruptcy court to authorize rejection of a filed-rate contract does not conflict with the authority given to FERC to regulate rates; rejection is not a collateral attack upon the contract's filed rate because that rate is given full effect when determining the breach of contract damages resulting from the rejection; and in ruling on a rejection motion, bankruptcy courts must consider whether rejection harms the public interest or disrupts the supply of energy, and must weigh those effects against the contract's burden on the bankrupt estate. Because Mirant clearly holds that rejection of a contract is not a collateral attack on the filed rate, the court concluded that FERC does not have the authority to compel continued performance and continued payment of the filed rate after a valid rejection. The court rejected any further arguments to the contrary. View "Federal Energy Regulatory Commission v. Ultra Resources" on Justia Law

Petitioners sought review of the Commission's decision to authorize a new natural gas pipeline and compressor station in Agawam, Massachusetts. One of the petitioners, Berkshire, has failed to establish standing to challenge the Commission's decision. The other petitioner, Food & Water Watch, has raised challenges related to the Commission's compliance with the National Environmental Policy Act.The DC Circuit mainly rejected Food & Water Watch's claims, but agreed with its contention that the Commission's environmental assessment failed to account for the reasonably foreseeable indirect effects of the project—specifically, the greenhouse-gas emissions attributable to burning the gas to be carried in the pipeline. Accordingly, the court granted Food & Water Watch's petition for review on that basis and remanded for preparation of a conforming environmental assessment. View "Food & Water Watch v. Federal Energy Regulatory Commission" on Justia Law

In this premises-defect case, the Supreme Court denied the petition for writ of mandamus brought by Eagleridge Operating, LLC seeking relief from a trial court order striking its responsible-third-party designation under Chapter 33 of the Texas Civil Practice and Remedies Code, holding that Eagleridge failed to establish that it was entitled to the writ.In this action, Eagleridge argued that a former well site owner-operator bore continuing responsibility for injuries caused by a burst gas pipeline because the former owner acted as an independent contractor in constructing, installing, and maintaining the pipeline. The lower courts concluded that Occidental Chemical Corp. v. Jenkins, 478 S.W.3d 640 (Tex. 2016), was controlling and that the former owners' responsibility for premises defects did not survive the conveyance of its ownership interest. The Supreme Court agreed, holding that an agreement between tenants in common to allocate expenses, assign responsibilities, and compensate for disparate efforts in a joint endeavor does not create an exception to Occidental as to improvements each party would otherwise have been free to construct without the consent of the other. View "In re Eagleridge Operating, LLC" on Justia Law

The Supreme Court reversed a portion of the utility regulatory commission's order that approved in part Duke Energy's request to increase its rates for retail consumers, holding that, absent specific statutory authorization, a utility cannot recoup its past costs adjudicated under a prior rate case by treating the costs as a capitalized asset.In 2020, the commission granted Duke's petition for a rate increase in part permitting Duke to recover about $212 million for coal-ash site closures, remediation, and financing costs, with the bulk of the costs having been incurred from 2015 to 2018. At issue was whether the commission could approve reimbursement for a deferred asset without violating the statutory bar against retroactive ratemaking. The Supreme Court answered in the negative, holding that the commission acted without statutory authority in re-adjudicating expenses already governed by a prior rate order. View "Indiana Office of Utility Consumer Counselor v. Duke Energy Indiana, LLC" on Justia Law