Justia Energy, Oil & Gas Law Opinion Summaries

The First Circuit affirmed the decision of the district court ruling that the Town of Weymouth’s local ordinance, as applied to a project in which Algonquin Gas Transmission, LLC sought to build a natural gas compressor station in Weymouth, was preempted by the Federal Energy Regulatory Commission's (FERC) issuance of a certificate of public convenience and necessity (CPCN) authorizing construction of the Weymouth Compressor Station.Algonquin received a CPCN from FERC authorizing the project, but that certificate was conditioned upon the receipt of a consistency determination from the Commonwealth of Massachusetts pursuant to the Coastal Zone Management Act (CZMA). To complete its CZMA review the Commonwealth required Algonquin to furnish a permit from Massachusetts Department of Environmental Protection, which, in turn, refused to issue such a permit until the Town of Weymouth approved the project under its local ordinance. Wemouth denied Algonquin’s permit applications. Algonquin ultimately commenced this action against Weymouth arguing that the local ordinance, as it applied to the compressor station, was preempted under federal law. The district court granted summary judgment for Algonquin. The First Circuit affirmed, holding that application of Weymouth’s ordinance to the proposed compressor station was foreclosed by federal law under the theory of conflict preemption. View "Algonquin Gas Transmission v. Weymouth Conservation Commission" on Justia Law

The DC Circuit denied a petition for review of FERC's decision upholding charges assessed by the Southwest Power Pool. The court held that FERC's decision was not arbitrary and capricious and rejected Missouri River's argument that the tariff unambiguously confers carve-out eligibility on its transmission reservation under the 1977 Contract; rejected Missouri River's argument that FERC improperly changed course by relying on extrinsic evidence in this case; and rejected Missouri River's undue discrimination claim. The court also held that there was no reason to reject FERC's conclusion that the congestion and marginal loss charges paid for new services not provided for in the 1977 Contract. Finally, the court rejected Missouri River's argument, to the extent it was not forfeited, that the Pool should be equitably estopped from imposing congestion and marginal loss charges against Missouri River. View "Missouri River Energy Services v. FERC" on Justia Law

In an action arising from a condemnation proceeding, the Fourth Circuit affirmed the district court's partial grant of summary judgment to MVP based on its right to condemn certain temporary and permanent easements on the properties of several landowners, including WPPLP. In this case, MVP was authorized by FERC to exercise its rights of eminent domain to construct a natural gas pipeline. The court also affirmed the district court's grant of MVP's motion for a preliminary injunction allowing MVP immediate access to the easements described in MVP's complaint.The court held that the district court did not abuse its discretion in excluding evidence regarding potential damage to WPPLP and WPPLLC's coal as a result of the pipeline; the district court did not err by declining to join WPPLLC as an indispensable party; there was no genuine dispute of material fact as to MVP's claim to invoke eminent domain powers; and the district court did not abuse its discretion in finding that the Winter factors favored a grant of a preliminary injunction to MVP. View "Mountain Valley Pipeline, LLC v. Western Pocahontas Properties" on Justia Law

The Supreme Court affirmed the district court’s order on summary judgment motions and order after bench trial in this dispute arising from an ill-conceived business conveyance plan during a downturn in the oil market, holding that the district court did not err or abuse its discretion in any respect.Three Garland brothers, who had separate entities providing specialized services to the oil industry, formed a company with their companies as members and the Garlands individually as members. Alex Mantle was president of the company. Mantle and the Garlands later entered into a memorandum of understanding (MOU) providing that Mantle and his wife would buy the company, but Mantle backed out of the deal. The Garlands liquidated the company, and this litigation followed. The district court disposed of some claims on summary judgment and resolved the remainder after a bench trial. The Supreme Court affirmed, holding (1) the Garlands and their entities did not abandon their counterclaims; (2) the MOU was an enforceable contract; (3) the district court correctly dismissed the Mantles’ fraud claim; (4) the district court correctly concluded that some conveyances by the Garlands fit the definitions of a fraudulent conveyance; (5) the elements for LLC veil-piercing were absent; and (6) the Garlands did not owe Mantle a duty of good faith. View "Garland v. Mantle" on Justia Law

In early 2013, CITGO Petroleum Corp. Sunline Commercial Carriers, Inc., to ship its product through a Master Agreement, which was to be implemented by another agreement, a Term Agreement. The Master was set to expire on December 31, 2014, but could be terminated by either party on 60 days’ notice. The Term “remain[ed] in effect until the Master Agreement is expired or terminated” but also contained another sentence stating that it was a “1 Year agreement with a start date of April 1, 2013.” The Term required that CITGO ship a monthly minimum to Sunline, or compensate Sunline for failing to do so. Not long into their relationship, CITGO breached the agreement by failing to ship the monthly minimum, creating a “shortfall.” After breaching, CITGO used its leverage to obtain concessions that allowed it to make up the shortfall at the end of the parties’ contractual relationship. On March 31, 2014, CITGO sent Sunline a termination notice. Over the next two months, all of the Term Agreement’s specific provisions seemed to govern the parties’ relationship. During this time, CITGO shipped enough product to Sunline to meet its previously accrued shortfalls. But if the Term Agreement’s minimum monthly requirement remained in place, CITGO failed meet the minimum and generated additional shortfalls. At the end of May, CITGO stopped using Sunline to ship oil. Sunline sued and eventually moved for summary judgment, arguing that the Term Agreement remained in effect until May 31, 2014; CITGO was therefore still liable for the shortfalls generated before the termination notice; and CITGO generated shortfalls in April and May. In response, CITGO argued that the Term Agreement ended on March 31, 2014, the day CITGO sent its termination notice; that only the Master Agreement continued through May 31, 2014; and as a result, CITGO had no obligation to meet the Term Agreement’s minimum barrel requirements. The Superior Court held, as a matter of law, that the Term Agreement ended on March 31, 2014. Sunline appealed, arguing that the Superior Court’s contractual interpretation was inconsistent with the Term Agreement’s text, and that, in the alternative, the Term Agreement was ambiguous and parol evidence had to be considered. The Delaware Supreme Court reversed, finding the Term Agreement was meant to continue in force as long as the Master Agreement did. The Term Agreement contained conceivably conflicting terms, which could not be indisputably reconciled on the face of the contract, and was therefore ambiguous. The Court also reversed the Superior Court holding the oil shipped in April and May satisfied CITGO’s shortfall liability. The Superior Court failed to consider parol evidence because of its earlier finding that the Term Agreement expired, as a matter of law, on March 31, 2014. The parol evidence made summary judgment inappropriate as it supported the reasonableness of Sunline’s interpretation. View "Sunline Commercial Carriers, Inc. v. Citgo Petroleum Corporation" on Justia Law

The Bill Barrett Corporation and YMC Royalty Company were oil and gas companies who held mineral rights in northeastern Colorado. In 2013, they had the opportunity to jointly develop two oil wells. To facilitate the drilling operations, YMC executed documents authorizing joint expenditures, accepting responsibility for costs, and electing to participate and share in the revenues. But after depositing nearly $150,000 in revenues, YMC asserted it had never entered into an enforceable joint operating agreement with Barrett and declined to pay its share of the costs. Barrett sued for breach of contract. A jury ultimately found in favor of Barrett. The district court denied YMC’s motions for judgment as a matter of law and for a new trial. After its review of the matter, the Tenth Circuit concluded the parties formed an enforceable contract under Colorado law and a reasonable jury could conclude the parties should be held to their bargain. The Court also found no reversible error in the district court's administration of trial, and affirmed that court's judgment. View "Bill Barrett Corporation v. YMC Royalty Company" on Justia Law

The parties dispute whether the obligation to "spud" three wells on a tract of land in West Virginia was an obligation only to begin drilling or to complete the wells to the point of mineral production. The Fourth Circuit affirmed the district court's holding that the Purchase Sale Agreement executed between the parties contained no requirement that the spudded wells be completed to production. The court also affirmed the district court's conclusion that Pine Resources failed to prove that it sustained any damages. View "Equinor USA Onshore Properties, Inc. v. Pine Resources, LLC" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this case involving the construction of an “opaquely worded oil and gas agreement,” holding that Burlington Resources may deduct post-production costs when calculating royalty payments due to Amber Harvest on its oil and gas leases.Amber Harvest, an affiliate of Texas Crude Energy, owned overriding royalty interests in the oil and gas leases operated by Burlington. Texas Crude sued Burlington, alleging that the parties’ agreements prohibited Burlington from charging post-production costs to the royalty holder. All parties agreed that the contracts at issue were unambiguous. After construing the agreements based on the language the parties chose the Supreme Court held that Burlington’s construction of the parties’ contracts was correct and that Burlington may deduct post-production costs when calculating royalty payments. View "Burlington Resources Oil & Gas Co. v. Texas Crude Energy, LLC" on Justia Law

Electrical utilities entered into agreements for the purchase and transmission of energy from a hydroelectric project to utilities in distant service areas. Legislation exempted the agreements from the review or approval of the Regulatory Commission of Alaska (RCA); any disputes were to be resolved instead by a contractually established committee. A substation leased by Homer Electric Association (HEA) to Chugach Electric Association (Chugach) and used by Chugach for the transmission of the distant utilities’ electricity was along the transmission pathway. When the lease expired, HEA filed tariff applications with the RCA, seeking approval of rates for its own transmission of the other utilities’ energy. The other utilities objected to the RCA’s jurisdiction, citing their agreements and the legislation exempting the agreements from regulatory review. The RCA determined that it had the authority to consider the tariff applications. The affected utilities appealed to the superior court, which held that the RCA did not have that authority. HEA and the RCA petitioned the Alaska Supreme Court for review, challenging both the superior court’s appellate jurisdiction and the merits of its decision regarding the RCA’s authority. The Supreme Court rejected the challenges to the superior court’s jurisdiction, and concluded that the intent of the original agreements and of the governing statute was to exclude disputes like this one from the RCA’s jurisdiction. The Court therefore affirmed the decision of the superior court reversing the RCA’s order. View "Regulatory Commission of Alaska v. Matanuska Electric Association, Inc." on Justia Law

The DC Circuit granted a petition for review of FERC's orders finding that California and Oregon had not waived their water quality certification authority under Section 401 of the Clean Water Act (CWA) and that PacifiCorp had diligently prosecuted its relicensing application for the Klamath Hydroelectric Project. At issue was whether states waive Section 401 authority by deferring review and agreeing with a licensee to treat repeatedly withdrawn and resubmitted water quality certification requests as new requests. The court held that the withdrawal-and-resubmission of water quality certification requests did not trigger new statutory periods of review. Therefore, California and Oregon have waived their Section 401 authority with regard to the Project. Furthermore, the court disagreed that a finding of waiver was futile. View "Hoopa Valley Tribe v. FERC" on Justia Law