Justia Energy, Oil & Gas Law Opinion Summaries

Alaska Venture Capital Group, LLC (AVCG) owned interests in oil and gas leases on state lands. AVCG sought the State’s approval to create overriding royalty interests on the leases. The Alaska Department of Natural Resources, Division of Oil and Gas denied AVCG’s requests, explaining that the proposed royalty burdens jeopardized the State’s interest in sustained oil and gas development. AVCG appealed. Five years later the DNR Commissioner affirmed. The superior court then affirmed the Commissioner’s decisions. AVCG appealed to the Alaska Supreme Court, arguing primarily that the decisions improperly adopted a new regulation that did not undergo the rulemaking procedures of Alaska’s Administrative Procedure Act (APA). AVCG maintained that DNR’s reliance on specific factors - in particular, the fact that the proposed ORRIs would create a total royalty burden of over 20% on the leases - amounted to adopting a regulation. AVCG also argued that the decisions lacked a reasonable basis in fact and law and that, for some of its leases, no agency approval was required at all. The Supreme Court rejected these arguments, and rejected AVCG's constitutional claim: that delay and an "ad hoc" decision-making process violated its procedural due process rights. View "AVCG, LLC v. Alaska Department of Natural Resources" on Justia Law

The Renewable Fuel Standard (RFS) program requires gasoline and diesel fuel refiners, blenders, and importers to ensure that a certain portion of their annual transportation fuel production consists of renewable fuels, 42 U.S.C. 7545(o)). United, a small Pennsylvania refinery, has periodically received hardship exemptions from those requirements, including in the 2017 and 2018 compliance years. In 2019, United sought an exemption. Rather than accepting United's data at face value—as in previous years—EPA asked how United had accounted for the financial benefit of its 2018 RFS exemption. United's amended financial statement explained that revenue from selling its renewable fuel credits (RINS) generated in a particular year was included in net revenues for that year, even if the RINs actually were sold in a later calendar year. United’s amended figures showed a three-year refining margin that was higher than the margin in United’s original submission and higher than the industry average. The Department of Energy (DOE) evaluated United’s submission and initially recommended that United not receive an exemption. DOE later changed its recommendation to account for the effects of COVID-19 and suggested a 50 percent exemption for 2019.EPA denied United any exemption, declining to consider events “that did not emerge until 2020, the year after the petition in question.” The Third Circuit denied a petition for review, rejecting United’s argument that EPA arbitrarily relied on an “accounting trick” that artificially inflated United’s running average net refining margin. View "United Refining Co v. Environmental Protection Agency" on Justia Law

In 2018, ONEOK Arbuckle II Pipeline, LLC began construction of a natural gas liquid pipeline to transport Oklahoma production to the interstate market. The pipeline required electricity to operate a series of pump stations, including the Binger II Pump Station. The location for the proposed Binger II was in the certified territory of CKenergy Electric Cooperative, Inc., which has exclusive rights to provide electricity in the area pursuant to the Retail Electric Supplier Certified Territory Act. Relying on the large-load exception to the RESCTA, OG&E submitted a bid to provide service to the Binger II, which ONEOK accepted, and the parties contracted for service. CKenergy appealed this contract to the Oklahoma Corporation Commission asserting that it was a violation of its exclusive rights under the RESCTA. The Commission enjoined OG&E's service, concluding that the meaning of "extending its service" in section 158.25(E) limited the manner or mechanism which OG&E could use to provide service under the large-load exception. OG&E and ONEOK appealed, the Oklahoma Supreme Court retained both appeals, and consolidated the cases. The Supreme Court held that section 158.25(E) allowed OG&E to extend its service to large loads in the manner proposed. Therefore, the Commission's order enjoining OG&E was vacated and remanded for further proceedings. View "Okla. Gas & Electric Co. v. State ex rel. Okla. Corp. Comm'n" on Justia Law

This matter arose out of disputes between Antero Resources Corporation (“Antero”) and Airport Land Partners, Ltd (“Airport Land”) and other royalty owners (collectively, “Royalty Owners”) over whether Antero could deduct certain post-production costs from royalty payments under the applicable leases’ royalty clauses. Royalty Owners alleged that Antero has underpaid royalties in violation of their respective lease contracts. Royalty Owners filed individual breach-of-contract suits against Antero for dates between December 2016 and April 2017. Antero moved to dismiss the suits, arguing that the claims should have been brought before the Colorado Oil and Gas Conservation Commission (“COGCC” or “the Commission”) in the first instance. Statutorily, COGCC lacked jurisdiction under section 34-60-118.5(5), C.R.S. (2022), to engage in contract interpretation to resolve a bona fide dispute between parties under an oil and gas lease. But in 2017, without any intervening change to explain the shift, two district courts changed course, asserting that COGCC had responsibility for resolving contract disputes on the theory either that the contract terms were unambiguous or that settled law compelled a certain interpretation. The Colorado Supreme Court returned to the longstanding statutory mandate that COGCC lacked jurisdiction to resolve bona fide disputes of contract interpretation and held that such a dispute exists where the parties disagree in good faith about the meaning or application of a relevant contract term. View "Antero Resources v. Airport Land Partners" on Justia Law

Petitioners sought the Oregon Supreme Court's review of an order of the Energy Facility Siting Council (EFSC) that approved an Idaho Power Company (Idaho Power) application for a site certificate to construct a high-voltage electrical transmission line from Boardman, Oregon, to Hemingway, Idaho. Petitioner STOP B2H Coalition (Stop B2H) contended that EFSC erred by : (1) denying Stop B2H’s request for full party status in the contested case proceedings; (2) granting an exception or variance to noise level requirements; (3) modifying the governing rule to limit the noise assessment to landowners within one-half mile of the transmission line; and (4) misapplying EFSC’s rules on the visual impacts from the transmission line. Petitioner Michael McAllister contended EFSC erred by failing to require Idaho Power to include in its application an “environmentally preferable” location for a segment of the transmission line in Union County. Petitioner Irene Gilbert contended EFSC erred by: (1) denying Gilbert’s request for full party status; (2) failing to document the impacts on historic properties and mitigation measures; (3) delegating future approval of mitigation plans to the Oregon Department of Energy (ODOE); (4) relying on federal standards to determine mitigation requirements for historic properties; and (5) modifying a mandatory site certificate condition without rulemaking. Applying the governing standard of review, the Supreme Court affirmed EFSC’s final order approving the site certificate for this transmission line. View "Stop B2H Coalition v. Dept. of Energy" on Justia Law

The Supreme Court affirmed the decision of the Public Utilities Commission (PUC) rejecting the power purchase agreement between Hu Honua and the Hawai'i Electric light Company, Inc., holding that there was no error in the PUC's decision to reject the power purchase agreement between the parties.At issue was the denial of Hua Honua's request for regulatory approval to supply energy to Hawai'i Island using a biomass power plant. In declining to approve the project on remand, the PUC found that the project would produce massive greenhouse gas (GHG) emissions and significantly increase costs for rate-payers. The Supreme Court affirmed, holding that the PUC understood its public interest-minded mission and properly followed this Court's remand instructions to consider the reasonableness of the proposed project's costs in light of its GHG emissions and the impact on Intervenors' right to a clean and healthful environment. View "In re Haw. Electric Light Co., Inc." on Justia Law

The Supreme Court dismissed the Episcopal Diocese or Rhode Island's challenge to an order of the Rhode Island Public Utilities Commission (PUC) that permitted the Narragansett Electric Company to charge the diocese for electricity transmission costs associated with a proposed solar development project on diocese property in Glocester, holding that the matter was moot.On appeal, the diocese argued that the PUC's order was unlawful and unreasonable for several reasons, including the assertion that the PUC subjected the diocese to a biased proceeding in violation of state law. After the Supreme Court remanded the matter to the PUC for consideration of newly discovered evidence Narragansett determined that the diocese was not subject to the challenged interconnection costs. The Supreme Court declined to address the merits of the diocese's appeal, holding that the matter was moot. View "In re Petition of the Episcopal Diocese of R.I. for Declaratory Judgment" on Justia Law

The Edison Electric Institute and NorthWestern Corporation, d/b/a NorthWestern Energy (collectively, “Utilities”) petition for review of an order by the Federal Energy Regulatory Commission (“Commission”) in which the Commission granted Broadview Solar’s application to become a qualifying facility under the Public Utility Regulatory Policies Act of 1978 (“PURPA”). The Solar Energy Industries Association (“SEIA”) petitions for review of the Commission’s denial of its motion to intervene in the adjudication of Broadview’s application.   The DC Circuit concluded that the Commission’s interpretation of the statute is entitled to deference and that the Commission did not act arbitrarily or capriciously and accordingly denied the Utilities’ petitions. The court explained that the Utilities challenge the Commission’s decision to look at Broadview’s instantaneous net power output and not its power output over time. The statute measures “power production capacity” in “megawatts.” But power production over time is measured in “megawatt-hours.” Rather than being arbitrary and capricious, the Commission’s focus on instantaneous power production adhered to the statutory language.   Further, the court dismissed SEIA’s petitions because it lacks Article III standing. The court explained that SEIA’s failure to timely intervene is the result of its own mistaken judgment. The effect of that mistake—SEIA’s inability to participate in the Commission’s proceedings—does not give rise to an Article III injury. View "Solar Energy Industries Association v. FERC" on Justia Law

The Kentucky Public Service Commission's “fuel adjustment” regulation allows utilities to adjust the rates they charge customers to account for fluctuating fuel costs. Unreasonable charges are disallowed. The Commission considers the price the utility paid for raw materials, like coal. Kentucky utilities are encouraged to buy cheaper coal. Kentucky coal producers, however, pay a severance tax. Compared to states with no severance tax, Kentucky coal is expensive. The Kentucky House of Representatives encouraged the Commission to consider all costs, including fossil fuel-related economic impacts within Kentucky, when analyzing coal purchases under the regulation. The Commission issued a new regulation under which it would artificially discount a utility’s fuel costs by the amount of the severance tax paid to any jurisdiction.Foresight, an Illinois coal producer, challenged the regulation under the Commerce Clause. The district court denied a preliminary injunction. While an appeal was pending, the Commission rescinded the regulation. A subsequent statute required the Commission to evaluate the reasonableness of fuel costs based on the cost of the fuel less any severance tax imposed by any jurisdiction. Foresight sued; the district court again denied the preliminary injunction. The Sixth Circuit remanded. Foresight is likely to be able to show that the law discriminates against interstate commerce. The Commission proffered no explanation for the statute except that it is designed to nullify the competitive disadvantages created by Kentucky’s severance tax. Illinois coal is worse off as a matter of basic economics and Supreme Court precedent; the law is purposefully discriminatory. View "Foresight Coal Sales, LLC. v. Chandler" on Justia Law

Citizen groups challenged the Bureau of Land Management’s (“BLM”) environmental assessments (“EAs”) and environmental assessment addendum analyzing the environmental impact of 370 applications for permits to drill (“APDs”) for oil and gas in the Mancos Shale and Gallup Sandstone formations in the San Juan Basin of New Mexico. These challenges came after a separate but related case in which the Tenth Circuit Court of Appeals remanded to the district court with instructions to vacate five EAs analyzing the impacts of APDs in the area because BLM had failed to consider the cumulative environmental impacts as required by the National Environmental Policy Act (“NEPA”). BLM prepared an EA Addendum to remedy the defects in those five EAs, as well as potential defects in eighty-one other EAs that also supported approvals of APDs in the area. Citizen Groups argued these eighty-one EAs and the EA Addendum violated NEPA because BLM: (1) improperly predetermined the outcome of the EA Addendum; and (2) failed to take a hard look at the environmental impacts of the APD approvals related to greenhouse gas (“GHG”) emissions, water resources, and air quality. BLM disagreed, contending the challenges to some of the APDs were not justiciable because the APDs had not yet been approved. The district court affirmed the agency action, determining: (1) Citizen Groups’ claims based on APD’s that had not been approved were not ripe for judicial review; (2) BLM did not unlawfully predetermine the outcome of the EA Addendum; and (3) BLM took a hard look at the environmental impacts of the APD approvals. The Tenth Circuit agreed with BLM and the district court that the unapproved APDs were not ripe and accordingly, limited its review to the APDs that had been approved. Turning to Citizen Groups’ two primary arguments on the merits, the appellate court held: (1) BLM did not improperly predetermine the outcome of the EA Addendum, but, even considering that addendum; (2) BLM’s analysis was arbitrary and capricious because it failed to take a hard look at the environmental impacts from GHG emissions and hazardous air pollutant emissions. However, the Court concluded BLM’s analysis of the cumulative impacts to water resources was sufficient under NEPA. View "Dine Citizens Against Ruining Our Environment, et al. v. Haaland, et al." on Justia Law