Justia Energy, Oil & Gas Law Opinion Summaries

Lion Oil, a small Arkansas refinery, petitioned the Environmental Protection Agency for an exemption from the 2013 Renewable Fuel Standard program, 42 U.S.C. 7545(o), under which refineries must blend their share of renewable fuel or buy credits from those who exceed blending requirements. Congress exempted “small” refineries—75,000 barrels of crude oil or less per day—from RFS obligations until 2011. The exemption can be extended. Lion cited disruption to a key supply pipeline and argued that RFS compliance would cause disproportionate economic hardship. Before EPA considered the petition, the Department of Energy determined that Lion Oil did not score high enough on the viability index to show disproportionate economic hardship. EPA “independently” analyzed the pipeline disruption and Lion Oil’s blending capacity, projected RFS-compliance costs, and financial position. EPA denied the petition. The Eighth Circuit affirmed, first holding that it could consider the matter because EPA had not “published” a determination of nationwide scope or effect. The denial was not arbitrary or inadequately explained. View "Lion Oil Co. v. Envt'l Protction Agency" on Justia Law

The City of Osceola purchases wholesale energy from Entergy Arkansas under an agreement filed with and approved by the Federal Energy Regulatory Commission (FERC). Osceola sued Entergy in Arkansas state court, seeking reimbursement for charges allegedly in violation of their agreement. Entergy removed the case to the federal district court which denied Osceola's motion to remand, granted summary judgment to the defendant energy providers, and dismissed the case. The Eighth Circuit affirmed, finding that FERC has primary jurisdiction to determine the appropriate treatment of the bandwidth payments under the parties' agreement. View "City of Osceola v. Entergy Ark., Inc." on Justia Law

The Clean Air Act (CAA) directs the Environmental Protection Agency (EPA) to regulate emissions of hazardous air pollutants from stationary sources, such as refineries and factories, 42 U.S.C. 7412; it may regulate power plants under this program only if it concludes that “regulation is appropriate and necessary” after studying hazards to public health. EPA found power-plant regulation “appropriate” because power plant emissions pose risks to public health and the environment and because controls capable of reducing these emissions were available. It found regulation “necessary” because other CAA requirements did not eliminate those risks. EPA estimated that the cost of power plant regulation would be $9.6 billion a year, but that quantifiable benefits from the reduction in hazardous-air-pollutant emissions would be $4-$6 million a year. The D. C. Circuit upheld EPA’s refusal to consider costs. The Supreme Court reversed and remanded. EPA interpreted section 7412(n)(1)(A) unreasonably when it deemed cost irrelevant to the decision to regulate power plants. “’Appropriate and necessary’ is a capacious phrase.” It is not rational, nor “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. That other CAA provisions expressly mention cost indicates that section 7412(n)(1)(A)’s broad reference to appropriateness encompasses multiple relevant factors, including cost. The possibility of considering cost at a later stage, when deciding how much to regulate power plants, does not establish its irrelevance at the earlier stage. Although the CAA makes cost irrelevant to the initial decision to regulate sources other than power plants, the point of having a separate provision for power plants was to treat power plants differently. EPA must decide how to account for cost. View "Michigan v. Envtl. Prot. Agency" on Justia Law

Shields and Wilson are Indians with interests on the Bakken Oil Shale Formation in the Fort Berthold Reservation in North Dakota, allotted to them under the Dawes Act of 1887. Such land is held in trust by the government, but may be leased by allottees. Shields and Wilson leased oil and gas mining rights on their allotments to companies and affiliated individuals who won a sealed bid auction conducted by the Board of Indian Affairs in 2007. After the auction, the women agreed to terms with the winning bidders, the BIA approved the leases, and the winning bidders sold them for a large profit. Shields and Wilson filed a putative class action, claiming that the government had breached its fiduciary duty by approving the leases for the oil and gas mining rights, and that the bidders aided, abetted, and induced the government to breach that duty. The district court concluded that the United States was a required party which could not be joined, but without which the action could not proceed in equity and good conscience, and dismissed. The Eighth Circuit affirmed. The United States enjoys sovereign immunity for the claims and can decide itself when and where it wants to intervene. View "Two Shields v. Wilkinson." on Justia Law

Movant-Appellant Kit Carson Electric Cooperative, Inc. (KCEC) appealed the district court’s denial of its motion seeking intervention as of right or permissive intervention in a pending case. Tri-State Generation and Transmission Association, Inc. (Tri-State), a Colorado non-profit regional cooperative that provides wholesale electric power, filed suit against the New Mexico Public Regulation Commission (NMPRC) seeking declaratory and injunctive relief under 42 U.S.C. 1983. Tri-State argued that the NMPRC’s exercise of jurisdiction and suspension of Tri-State’s wholesale electric rates in New Mexico violated the Commerce Clause of the United States Constitution. In September 2013, Tri-State approved a wholesale rate increase for 2014 and filed an Advice Notice with the NMPRC. After rate protests by KCEC and three others, the NMPRC proceeded to suspend Tri-State’s 2014 rate increases as well. The NMPRC consolidated the proceedings on both the 2013 and 2014 wholesale rates. These proceedings remained pending before the NMPRC. In February 2014, Tri-State filed an amended complaint adding factual allegations regarding the NMPRC’s suspension of its 2014 wholesale rate. Tri-State’s amended complaint asserted Tri-State was entitled to declaratory and injunctive relief because “[t]he Commission’s exertion of jurisdiction to suspend and subsequently review and establish Tri-State’s rates in New Mexico constituted economic protectionism and imposed a burden on interstate commerce in violation of the Commerce Clause.” KCEC sought to intervene as of right pursuant to Federal Rule of Civil Procedure 24(a)(2) and permissively pursuant to Rule 24(b). Tri-State opposed intervention, but the NMPRC did not. Though not a party to the litigation, KCEC filed an answer to Tri-State’s complaint in which it asserted essentially the same affirmative defenses to Tri-State’s claims as had the NMPRC. The only unique defense KCEC presented was that Tri-State’s complaint failed to state a claim upon which relief could be granted. Prior to the district court’s ruling on KCEC’s motion, the NMPRC moved for summary judgment, arguing both that: (1) Tri-State was estopped from challenging the NMPRC’s rate-making jurisdiction given its agreement to the earlier Stipulation; and (2) the NMPRC’s order did not violate either New Mexico law or the Commerce Clause of the United States Constitution. Though still not a party to the litigation, KCEC filed a proposed response to the NMPRC’s motion for summary judgment, presenting essentially the same arguments as the NMPRC and providing no additional evidence. The district court then denied KCEC’s motion to intervene, finding that neither intervention as of right nor permissive intervention was appropriate. The Tenth Circuit affirmed the district court, finding that KCEC did not show that the district court’s denial of permissive intervention was “arbitrary, capricious, whimsical, or manifestly unreasonable.” View "Tri-State Generation v. NM Public Regulation Comm." on Justia Law

Oneida Seven Generations Corporation proposed a renewable energy facility and sought a conditional use permit to install the facility in the City of Green Bay. The City voted to approve the conditional use permit but later voted to rescind the permit on the grounds that it was obtained through misrepresentation. The circuit court affirmed the City’s decision to rescind. The court of appeals reversed, concluding that the City’s decision that the permit was obtained through misrepresentation was not supported by substantial evidence. The Supreme Court affirmed, holding that, based on the evidence presented, the City could not reasonably conclude that the statements by Oneida Seven’s representative regarding the facility’s operations were misrepresentations. View "Oneida Seven Generations Corp. v. City of Green Bay" on Justia Law

Appellant was the owner of gas, oil, and other minerals situated within the Ozark Highlands Unit (OHU). SEECO, Inc. applied to create a drilling unit in the OHU and to integrate all unleased and uncommitted mineral interests within the unit. The Arkansas Oil and Gas Commission established the unit and integrated all unleased and uncommitted mineral interests within the unit with the exception of Appellant’s unleaded mineral interests. At a hearing before the Commission to hear evidence related to SEECO’s request to integrate Appellant’s unleaded mineral interests into the drilling unit, Appellant asserted that the Commission’s forced-integration procedures amounted to a taking of his property. The Commission subsequently integrated Appellant’s unleaded mineral interests into the drilling unit. The circuit court affirmed the Commission’s decision. The Supreme Court affirmed, holding (1) the forced integration procedures do not amount to an unconstitutional taking; and (2) the Commission’s order did not deprive Appellant of his constitutional right to a jury trial to determine just compensation for his property. View "Gawenis v. Ark. Oil & Gas Comm'n" on Justia Law

Linda Golden owned a fifty percent mineral interest that was within a “spacing unit” in which Luff Exploration Company desired to drill for oil. Golden declined Luff’s offer to lease her mineral interest or participate with Luff in the cost of the drilling. After Luff decided to proceed with drilling, it filed a petition with the South Dakota Board of Minerals and Environment (Board) seeking to “compulsory pool” the mineral interests in the spacing unit and seeking “risk compensation” from Golden. The Board issued a compulsory pooling order and found that Golden should pay 100 percent risk compensation. The circuit court affirmed. The Supreme Court reversed, holding that the Board failed to comply with the plain language of S.D. Codified Laws 45-9-32 by granting a pooling order that contained no provision specifying a time and manner for Golden to elect to participate in the well by paying her proportionate share of the cost of drilling, equipping, and operating the well. View "In re Petition of Luff Exploration Co." on Justia Law

In 2004, the Ninth Circuit decided California ex rel. Lockyer v. FERC, which held that FERC may authorize market-based energy tariffs so long as that regulatory framework incorporates both an ex ante market power analysis and enforceable post-approval transaction reporting. In the instant case, Petitioners, the people of the state of California and related parties, sought review of a series of orders issued by the Federal Energy Regulatory Commission (FERC) on remand following the Court’s decision in Lockyer, arguing that FERC failed to follow Lockyer and violated the Federal Power Act by requiring proof of excessive market share as a necessary condition for relief for transaction reporting violations. The Ninth Circuit granted the petition for judicial review, holding that FERC structured the remand proceedings in a manner contrary to the terms of the Lockyer decision. Remanded to FERC for further proceedings. View "People of State of Cal. v. FERC" on Justia Law

The Federal Energy Regulatory Commission (FERC) has regulatory authority over interstate aspects of the nation’s electric power system, but not over “facilities used in local distribution or only for the transmission of electric energy in intrastate commerce,” 16 U.S.C. 824(a). FERC entered orders adopting standards and procedures for determining which power distribution facilities are subject to the agency’s regulatory jurisdiction and which facilities fall within the statutory exception for local distribution of electric energy. The state and the Public Service Commission of the State of New York challenged the standards and procedures as an unreasonable interpretation of the agency’s statutory grant of jurisdiction and as arbitrary and capricious under the Administrative Procedure Act. The Second Circuit upheld the orders as reasonably interpreting the agency’s regulatory jurisdiction under the Federal Power Act as amended by the Electricity Modernization Act of 2005 and supported by sufficient explanation and substantial evidence as required by the Administrative Procedure Act. View "New York v. Fed. Energy Regulatory Comm'n" on Justia Law