Justia Energy, Oil & Gas Law Opinion Summaries

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

This appeal arose from the Public Utilities Commission’s modification and approval of the second electric-security plan of the American Electric Power operating companies, Ohio Power Company and Columbus Southern Power Company (collectively, AEP). In the proceedings below, the Commission authored new generation rates for the companies. Five parties appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) the Commission’s order was unlawful or unreasonable because it allowed AEP to collect unlawful transition revenue or its equivalent through the Retail Stability Rider; and (2) the Commission erred in failing to explain its decision setting the significantly-excessive-earnings test threshold. Remanded. View "In re Application of Columbus S. Power Co." on Justia Law

The Public Utilities Commission approved a capacity charge for the American Electric Power operating companies - Ohio Power Company and Columbus Southern Power (collectively, AEP) - and authorized AEP to implement a new cost-based charge for capacity service that AEP offers to competitive retail electric service (CRES) providers. The Ohio Consumers’ Counsel (OCC) appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) OCC’s propositions of law failed; and (2) AEP identified one instance where the Commission committed reversible error. Remanded. View "In re Comm’n Review of the Capacity Charges of Ohio Power Co." on Justia Law

The Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over interstate wholesale electricity sales. States regulate retail sales. In states that have deregulated their energy markets, “load serving entities” (LSEs) purchase wholesale electricity from generators for delivery to retail consumers. PJM, which manages segments of the electricity grid, operates an auction to identify need for new generation and to accommodate long-term contracts. PJM predicts demand for three years and assigns a share of that demand to each participating LSE. Producers enter bids. PJM accepts bids until it purchases enough capacity to satisfy anticipated demand. All accepted sellers receive the highest accepted rate (clearing price). LSEs then must purchase, from PJM, electricity to satisfy their assigned share. FERC regulates the auction to ensure a reasonable clearing price. Concerned that the auction was not encouraging development of sufficient new in-state generation, Maryland enacted a program, selected CPV to construct a new power plant and required LSEs to enter into 20-year contracts with CPV. Under the contract, CPV sells its capacity to PJM through the auction, but—through mandated payments from LSEs—receives the state price rather than the clearing price. The district court issued a declaratory judgment holding that Maryland’s program improperly sets CPV's rate for interstate wholesale capacity sales to PJM. The Fourth Circuit and Supreme Court affirmed. Maryland’s program is preempted because it disregards the rate FERC requires under its exclusive authority over interstate wholesale sales, 16 U.S.C. 824(b)(1). FERC has approved PJM’s capacity auction as the sole rate-setting mechanism for those sales. Maryland attempts to guarantee CPV a rate distinct from the clearing price, contrary to the Federal Power Act’s division of authority; states may not seek to achieve ends, however legitimate, through regulatory means that intrude on FERC’s authority. View "Hughes v. Talen Energy Mktg., LLC" on Justia Law

MISO, a regional association, monitors and manages the electricity transmission grid in several midwestern and southern states, plus Manitoba, Canada, balancing the load, setting competitive prices for transmission services, and planning and supervising expansion of the system. Until 2011, if MISO decided that another transmission facility was needed in the region, the MISO member that served the area in which the facility would be built had the right of first refusal to build it, pursuant to the contract among the MISO members. Federal Energy Regulatory Commission (FERC) Order No. 1000 required transmission providers to participate in regional transmission planning to identify worthwhile projects, and to allocate the costs of the projects to the parts of the region that would benefit the most from the projects. To facilitate its implementation, the order directed providers “to remove provisions from [FERC] jurisdictional tariffs and agreements that grant incumbent transmission providers a federal right of first refusal to construct transmission facilities selected in a regional transmission plan for purposes of cost allocation.” FERC believed that competition would result in lower rates to consumers of electricity. The Seventh Circuit denied petitions for review of the order. The electric companies did not show that the right of first refusal was in the public interest View "MISO Transmission Owners v. Fed. Energy Regulatory Comm'n" on Justia Law

Capital Electric Cooperative, Inc. appealed a judgment affirming a Public Service Commission order granting Montana-Dakota Utilities Company ("MDU") a certificate of public convenience and necessity to extend its electric service in Burleigh County. Because the Commission's order was in accordance with the law, its findings of fact were supported by a preponderance of the evidence and sufficiently addressed the evidence presented, and those findings supported the conclusions of law, the North Dakota Supreme Court affirmed the judgment. View "Capital Electric Cooperative, Inc. v. N.D. Public Service Commission" on Justia Law