Justia Energy, Oil & Gas Law Opinion Summaries

SFPP and several shippers challenged aspects of three of FERC's orders related to filings by SFPP for cost-of-service tariffs on its pipelines. SFPP disputes FERC’s choice of data for calculating SFPP’s return on equity and the Commission’s decision to grant only a partial indexed rate for the 2009 index year. Shippers claim that FERC’s tax allowance policy for partnership pipelines, such as SFPP, is arbitrary or capricious and results in unjust and unreasonable rates. The court concluded that FERC's choice of data for assessing SFPP's real return on equity was arbitrary or capricious under the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A), because the Commission provided no reasoned basis to justify its decision to rely on the September 2008 data. Therefore, the court granted SFPP's petition on this issue. The court concluded that FERC's indexing analysis was not arbitrary or capricious where FERC complied with the plain text of its regulations when it found that granting SFPP a full indexed rate adjustment would result in unjust and unreasonable rates. Finally, the court also concluded that FERC must demonstrate that there is no double recovery of taxes for partnership pipelines. Accordingly, the court granted SFPP's petition in part and denied the petition in part. The court granted Shippers' petition and vacated FERC's orders with respect to the double recovery issue, and remanded to FERC. View "United Airlines, Inc. v. FERC" on Justia Law

Department of Environmental Protection (DEP) regulations require that those deemed to be liable after a spill of hazardous materials within a specified radius of a public water supply undertake cleanup and monitoring to ensure the spill does not pose a danger to that water supply, 310 Code Mass. Regs. 40.0801, 40.0810, 40.0993(3)(a), 40.1030(2)(e). A 2007 modification exempts "oil" from some requirements when specific conditions are met, 310 Code Mass. Regs. 40.0924(2)(b)(3)(a). Peterborough owns a now-vacant Athol property, within a protection area, where it operated a gasoline station for more than 10 years. In 1994, a release of leaded gasoline from a subterranean gasoline storage tank was detected in soil on the site. DEP required Peterborough to undertake supervised cleanup and monitoring activities. In 2008, after the oil exemption was established, Peterborough submitted a revised plan, stating that further remediation was not required because the entirety of the spill fell within the exemption's definition of "oil." DEP responded that the meaning of "oil" in the exemption does not include gasoline additives such as lead, but refers only to petroleum hydrocarbons naturally occurring in oils, so that a spill of leaded gasoline could not be completely excluded from further remediation. The trial court, on summary judgment, and the Massachusetts Supreme Judicial Court, upheld the DEP interpretation of the regulation as reasonable. View "Peterborough Oil Co., LLC v. Dep't of Envtl. Prot." on Justia Law

Sarah Vogel appealed a district court judgment dismissing without prejudice her complaint against Marathon Oil Company. Marathon operated the Elk USA 11-17H well in Mountrail County. The well began producing in 2011 and continued through at least January 2014. Vogel owned mineral interests and received royalties from the oil or gas produced and sold from the well. Vogel, individually and on behalf of those similarly situated, sued Marathon seeking declaratory relief as well as money damages for failure to pay royalties on flared gas. Vogel argued her claims should not have been dismissed by the district court because she had a private right of action for violations of the statute restricting the flaring of gas produced with crude oil from an oil well, N.D.C.C. 38-08-06.4, and she was not required to exhaust administrative remedies. Finding no reversible error, the Supreme Court affirmed the district court. View "Vogel v. Marathon Oil Corporation" on Justia Law

The issue this interlocutory appeal presented for the Vermont Supreme Court's review centered on whether 12 V.S.A. 462 created an exemption from the general six-year limitation for Vermont’s claims against a host of defendants for generalized injury to state waters as a whole due to groundwater contamination from gasoline additives. On the basis of the statute of limitations, the trial court dismissed the State’s claims insofar as they were predicated on generalized injury to state waters as a whole. On appeal, the State argued that section 462 exempted the State’s claims from the statute of limitations, and, alternatively, that the State’s claims arising under 10 V.S.A. 1390, a statute that established a state policy that the groundwater resources of the state are held in trust for the public, were not time barred because that statute became effective less than six years before the State filed its complaint. The Supreme Court affirmed. View "Vermont v. Atlantic Richfield Company, et al." on Justia Law

The PSC approved the recovery of FPL's costs incurred through its joint venture with an oil and natural gas company to engage in the acquisition, exploration, drilling, and development of natural gas wells in Oklahoma. The court agreed with appellants that the PSC lacks the authority to allow FPL to recover the capital investment and operations costs of its partnership in the Woodford gas reserves through the rates it charges consumers. Because the PSC exceeded its statutory authority when approving recovery of FPL’s costs and investment in the Woodford Project, the court reversed the judgment. View "Citizens of the State of Florida v. Art Graham, etc." on Justia Law

Nelson Industrial Steam Company (“NISCO”) was in the business of generating electric power in Lake Charles. In order to comply with state and federal environmental regulations, NISCO introduces limestone into its power generation process; the limestone acts as a “scrubbing agent.” The limestone chemically reacts with sulfur to make ash, which NISCO then sells to LA Ash, for a profit of roughly $6.8 million annually. LA Ash sells the ash to its customers for varying commercial purposes, including roads, construction projects, environmental remediation, etc. NISCO appealed when taxes were collected on its purchase of limestone over four tax periods. NISCO claimed its purchase of limestone was subject to the “further processing exclusion” of La. R.S. 47:301(10)(c)(i)(aa), which narrowed the scope of taxable sales. The Louisiana Supreme Court granted NISCO’s writ application to determine the taxability of the limestone. The trial court ruled in the Tax Collectors' favor. After its review, the Supreme Court found that NISCO’s by-product of ash was the appropriate end product to analyze for purposes of determining the “further processing exclusion’s” applicability to the purchase of limestone. Moreover, under a proper “purpose” test, the third prong of the three-part inquiry enunciated in "International Paper v. Bridges," (972 So.2d 1121(2008)) was satisfied, "as evidenced by NISCO’s choice of manufacturing process and technology, its contractual language utilized in its purchasing of the limestone, and its subsequent marketing and sale of the ash." Therefore the Court reversed the trial court and ruled in favor of NISCO. View "Bridges v. Nelson Industrial Steam Co." on Justia Law

Under an Alaska Department of Revenue regulation, all appeals of oil and gas property tax valuation must be heard by the State Assessment Review Board (SARB), while appeals of oil and gas property taxability must be heard by the Department of Revenue (Revenue). Three municipalities challenged this regulation, arguing that it contradicted a statute that grants SARB exclusive jurisdiction over all appeals from Revenue’s “assessments” of oil and gas property. The superior court upheld the regulation as valid, concluding that it was a reasonable interpretation of the statute. But after its review, the Alaska Supreme Court concluded that the regulation was inconsistent with the plain text, legislative history, and purpose of the statute; therefore, the Supreme Court reversed the superior court’s judgment. View "City of Valdez v. Alaska" on Justia Law

The Town of Rutland and five adjoining landowners (“neighbors”) appealed the Vermont Public Service Board’s grant of a certificate of public good (“CPG”) to Rutland Renewable Energy, LLC (“RRE”) for construction of the Cold River Solar Project (“Project”), a 2.3 megawatt (Mw) solar photovoltaic electric generation facility. The Town and neighbors argued that the Board incorrectly held that the project will not unduly interfere with the orderly development of the region, would not have an undue adverse effect on aesthetics, and would not have an undue adverse impact on historic sites. Finding no reversible error, the Vermont Supreme Court affirmed. View "In re Petition of Rutland Renewable Energy, LLC" on Justia Law

Under the 1887 General Allotment Act and the 1934 Indian Reorganization Act, the U.S. is the trustee of Indian allotment land. A 1996 class action, filed on behalf of 300,000 Native Americans, alleged that the government had mismanaged their Individual Indian Money accounts by failing to account for billions of dollars from leases for oil extractions and logging. The litigation’s 2011 settlement provided for “historical accounting claims,” tied to that mismanagement, and “land administration claims” for individuals that held, on September 30, 2009, an ownership interest in land held in trust or restricted status, claiming breach of trust and fiduciary mismanagement of land, oil, natural gas, mineral, timber, grazing, water and other resources. Members of the land administration class who failed to opt out were deemed to have waived any claims within the scope of the settlement. The Claims Resolution Act of 2010 ratified the settlement and funded it with $3.4 billion, The court provided notice, including of the opt-out right. Challenges to the opt-out and notice provisions were rejected. Indian allotees with interests in the North Dakota Fort Berthold Reservation, located on the Bakken Oil Shale (contiguous deposits of oil and natural gas), cannot lease their oil-and-gas interests unless the Secretary approves the lease as “in the best interest of the Indian owners,” 122 Stat. 620 (1998). In 2013, allotees sued, alleging that, in 2006-2009, a company obtained Fort Berthold allotment leases at below-market rates, then resold them for a profit of $900 million. The Federal Circuit affirmed summary judgment for the government, holding that the allotees had forfeited their claims by failing to opt out of the earlier settlement. View "Two Shields v. United States" on Justia Law

The issue this case presented for the Supreme Court's review centered on whether 39-29-105(1)(a) permitted a deduction for the “cost of capital” associated with natural gas transportation and processing facilities. In general terms, the cost of capital was defined as the amount of money that an investor could have earned on a different investment of similar risk. In this case, the cost of capital was the amount of money that BP America Production Company’s (“BP”) predecessors could have earned had they invested in other ventures rather than in building transportation and processing facilities. BP claimed it could deduct the cost of capital because it was a cost associated with transportation and processing activity. Respondent Colorado Department of Revenue argued that the cost of capital was not a deductible cost because it was not an actual cost. The court of appeals held that the cost of capital as not a deductible cost under the statute. BP appealed, and the Colorado Supreme Court reversed, holding that the plain language of section 39-29-102(3)(a) authorized a deduction for any transportation, manufacturing, and processing costs and that the cost of capital was a deductible cost that resulted from investment in transportation and processing facilities. The appellate court was reversed and the case remanded back to the district court for further proceedings. View "BP Am. v. Colo. Dept. of Revenue" on Justia Law