Justia Energy, Oil & Gas Law Opinion Summaries

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law

In 2012, Monongahela Power Company (“Mon Power”) filed a petition with the Public Service Commission of West Virginia ("Commission") to approve a generation resource transaction between it and Allegheny Energy Supply, LLC (“AE Supply”). The transaction consisted of Mon Power’s acquisition of AE Supply’s interest in the Harrison Power Station (“the plant”) and Mon Power’s recovery of a portion of its investment in that acquisition. The Commission approved a $257 million acquisition adjustment in the purchase price of the plant and allowed Mon Power, under certain conditions, to pass the acquisition adjustment to its customers in the rates that customers pay for electricity. The Supreme Court affirmed the Commission’s order, holding that the Commission’s findings were not contrary to or unsupported by the evidence and were not arbitrary, and the Commission’s application of the law was consistent with Commission precedent. View "W. Va. Citizen Action Group v. Pub. Serv. Comm’n of W. Va." on Justia Law

In 2012, the Montana Board of Oil and Gas Conservation (MBOGC) adopted special statewide temporary spacing units for certain wells. Petitioners = filed a petition for judicial review of MBOGC’s order, stating that it was filed pursuant to Mont. Code Ann. 82-11-144 and Mont. Code Ann. 2-4-702. The district court dismissed Petitioners’ proceeding, stating that the “sole remedy for a person aggrieved by an order of the MBOGC was a challenge under Montana Code Ann. 82-11-144.” The Supreme Court reversed, holding that the district court erred in dismissing the action, as Petitioners’ allegations, coupled with their express reliance upon section 82-11-144 as a legal basis for their petition, should have been sufficient to save their petition from dismissal on the ground that they had not pursued their “sole remedy” of proceeding under that statute. View "Ostby v. Bd. of Oil & Gas Conservation" on Justia Law

The Clean Air Act requires permits for stationary sources, such as factories and powerplants. The Act’s “Prevention of Significant Deterioration” (PSD) provisions make it unlawful to construct or modify a “major emitting facility” in “any area to which [PSD program] applies” without a permit, 42 U.S.C. 7475(a)(1), 7479(2)(C). A “major emitting facility” is a stationary source with the potential to emit 250 tons per year of “any air pollutant” (or 100 tons per year for certain sources). Facilities seeking a PSD permit must comply with emissions limitations that reflect the “best available control technology” (BACT) for “each pollutant subject to regulation under” the Act and it is unlawful to operate any “major source,” wherever located, without a permit. A “major source” is a stationary source with the potential to emit 100 tons per year of “any air pollutant,” under Title V of the Act. In response to the Supreme Court decision, Massachusetts v. EPA, the EPA promulgated greenhouse-gas (GHG) emission standards for new vehicles, and made stationary sources subject to the PSD program and Title V, based on potential GHG emissions. Recognizing that requiring permits for all sources with GHG emissions above statutory thresholds would render the programs unmanageable, EPA purported to “tailor” the programs to accommodate GHGs by providing that sources would not become newly subject to PSD or Title V permitting on the basis of their potential to emit GHGs in amounts less than 100,000 tons per year. The D.C. Circuit dismissed some challenges to the tailoring rule for lack of jurisdiction and denied the rest. The Supreme Court affirmed in part and reversed in part, finding that the Act does not permit an interpretation requiring a source to obtain a PSD or Title V permit on the sole basis of potential GHG emissions. The Massachusetts decision held that the Act-wide definition of “air pollutant” includes GHGs, but with respect to PSD and Title V permitting provisions, EPA has employed a narrower, context-appropriate meaning. Massachusetts did not invalidate the long-standing constructions. “The Act-wide definition is not a command to regulate, but a description of the universe of substances EPA may consider regulating.” The presumption of consistent usage yields to context and distinct statutory objects call for different implementation strategies. EPA has repeatedly acknowledged that applying PSD and Title V permitting requirements to GHGs would be inconsistent with the Act’s structure and design, which concern “a relative handful of large sources capable of shouldering heavy substantive and procedural burdens.” EPA lacked authority to “tailor” the Act’s unambiguous numerical thresholds to accommodate its GHG-inclusive interpretation. EPA reasonably interpreted the Act to require sources that would need permits based on emission of conventional pollutants to comply with BACT for GHGs. BACT, which has traditionally been about end-of-stack controls, may be fundamentally unsuited to GHG regulation, but applying BACT to GHGs is not "disastrously unworkable," and need not result in a dramatic expansion of agency authority. View "Util. Air Regulatory Grp. v. Envtl. Prot. Agency" on Justia Law

Plaintiffs, several states, the city of New York, and three private land trusts, sued defendants, four private power companies and the federal Tennessee Valley Authority, alleging that defendants' emissions substantially and unreasonably interfered with public rights in violation of the federal common law of interstate nuisance, or in the alternative, of state tort law. Plaintiffs sought a decree setting carbon-dioxide emissions for each defendant at an initial cap to be further reduced annually. At issue was whether plaintiffs could maintain federal common law public nuisance claims against carbon-dioxide emitters. As a preliminary matter, the Court affirmed, by an equally divided Court, the Second Circuit's exercise of jurisdiction and proceeded to the merits. The Court held that the Clean Air Act, 42 U.S.C. 7401, and the Environmental Protection Act ("Act"), 42 U.S.C. 7411, action the Act authorized displaced any federal common-law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants. The Court also held that the availability vel non of a state lawsuit depended, inter alia, on the preemptive effect of the federal Act. Because none of the parties have briefed preemption or otherwise addressed the availability of a claim under state nuisance law, the matter was left for consideration on remand. Accordingly, the Court reversed and remanded for further proceedings. View "American Elec. Power Co., et al. v. Connecticut, et al." on Justia Law

The Clean Air Act requires permits for stationary sources, such as factories and powerplants. The Act’s “Prevention of Significant Deterioration” (PSD) provisions make it unlawful to construct or modify a “major emitting facility” in “any area to which [PSD program] applies” without a permit, 42 U.S.C. 7475(a)(1), 7479(2)(C). A “major emitting facility” is a stationary source with the potential to emit 250 tons per year of “any air pollutant” (or 100 tons per year for certain sources). Facilities seeking a PSD permit must comply with emissions limitations that reflect the “best available control technology” (BACT) for “each pollutant subject to regulation under” the Act and it is unlawful to operate any “major source,” wherever located, without a permit. A “major source” is a stationary source with the potential to emit 100 tons per year of “any air pollutant,” under Title V of the Act. In response to the Supreme Court decision, Massachusetts v. EPA, the EPA promulgated greenhouse-gas (GHG) emission standards for new vehicles, and made stationary sources subject to the PSD program and Title V, based on potential GHG emissions. Recognizing that requiring permits for all sources with GHG emissions above statutory thresholds would render the programs unmanageable, EPA purported to “tailor” the programs to accommodate GHGs by providing that sources would not become newly subject to PSD or Title V permitting on the basis of their potential to emit GHGs in amounts less than 100,000 tons per year. The D.C. Circuit dismissed some challenges to the tailoring rule for lack of jurisdiction and denied the rest. The Supreme Court affirmed in part and reversed in part, finding that the Act does not permit an interpretation requiring a source to obtain a PSD or Title V permit on the sole basis of potential GHG emissions. The Massachusetts decision held that the Act-wide definition of “air pollutant” includes GHGs, but with respect to PSD and Title V permitting provisions, EPA has employed a narrower, context-appropriate meaning. Massachusetts did not invalidate the long-standing constructions. “The Act-wide definition is not a command to regulate, but a description of the universe of substances EPA may consider regulating.” The presumption of consistent usage yields to context and distinct statutory objects call for different implementation strategies. EPA has repeatedly acknowledged that applying PSD and Title V permitting requirements to GHGs would be inconsistent with the Act’s structure and design, which concern “a relative handful of large sources capable of shouldering heavy substantive and procedural burdens.” EPA lacked authority to “tailor” the Act’s unambiguous numerical thresholds to accommodate its GHG-inclusive interpretation. EPA reasonably interpreted the Act to require sources that would need permits based on emission of conventional pollutants to comply with BACT for GHGs. BACT, which has traditionally been about end-of-stack controls, may be fundamentally unsuited to GHG regulation, but applying BACT to GHGs is not "disastrously unworkable," and need not result in a dramatic expansion of agency authority. View "Util. Air Regulatory Grp. v. Envtl. Prot. Agency" on Justia Law

Petitioners, owners and operators of electrical power generation facilities, challenged several of the Commission's orders relating to the creation of the 2011-2014 "demand curves." NYISO holds monthly auctions to set the price of electrical power capacity in New York utilizing administratively determined demand curves. The court concluded that the Commission reasonably imposed the maximum suspension period; the Commission did not act arbitrarily by ignoring petitioners' argument that the Compliance Curves would necessarily exceed the Proposed Curves; the Commission did not exceed its section 205(e) authority under the Federal Power Act, 16 U.S.C. 824d(e), by suspending the Proposed Rates for longer than the five-month statutory maximum when it accepted the NYISO's voluntarily decision to delay implementation of the new curves; and the court rejected petitioners' challenge to the Commission's approval of NYISO's March 28 filing. The court also rejected petitioners' challenge to several technical aspects of the proposed curves. Accordingly, the court denied the petitions for review. View "TC Ravenswood, LLC v. FERC" on Justia Law

APAC petitioned for review of a settlement agreement between the BPA and a large number of its customers. The settlement set terms for refunding customers who were previously over-charged, as well as setting terms for the next seventeen years. APAC alleged that the settlement violated several provisions of the Pacific Northwest Power Planning and Conservation Act (NWPA), 16 U.S.C. 839c(c), 839e(b); the Bonneville Project Act, 16 U.S.C. 832d(a); regulations of the Federal Energy Commission, 18 C.F.R. 300.1(b)(6), 300.21(e)(1); and the court's decision in Portland Gen. Elec. Co. v. BPA and Golden NW. Aluminum, Inc. v. BPA. As a preliminary matter, the court concluded that APAC had standing to challenge the settlement because of the "pass-through" contracts under which its members pay rates that directly reflect the rates BPA charged its direct customers. On the merits, the court concluded that the settlement complied with the relevant statutory requirements and with the court's prior decisions. Accordingly, the court denied the petition for review. View "APAC v. BPA" on Justia Law

This matter arose from efforts by Wasatch Wind Intermountain, LLC to establish two wind energy projects. These efforts drew the ire of the Northern Laramie Range Alliance, which objected to Wasatch’s certification to sell the energy. The Federal Energy Regulatory Commission (FERC) rejected the objections, and the Alliance appealed FERC’s decision. The threshold issue for the Tenth Circuit was whether the Alliance has established standing, which requires traceability and redressability. For both, the Alliance relied on increases in electricity rates. But the wind projects had not been completed, Wasatch had not found a buyer for the anticipated wind power, and it was unknown whether sales of wind energy would increase or decrease Northern Laramie's costs. With the uncertainties surrounding the effect of Wasatch’s certification or decertification on electricity rates, the Court concluded the Alliance did not show either traceability or redressability. The Court therefore dismissed the petition for lack of standing. View "N. Laramie Range Alliance v. FERC" on Justia Law

Under a Power Sales Agreement, the Authorities granted Entergy the right to oversee the generation of power and to purchase the generated power. Plaintiffs filed suit against Entergy after their properties were flooded and eroded after the Authorities and Entergy opened spillway gates during certain times. Because the state law property damages claims at issue here infringed on FERC's operational control, the court held that they were conflict preempted. Accordingly, the court held that the district court properly concluded that the Federal Power Act, 16 U.S.C. 791-828c, preempted plaintiffs' claim for negligence. The court affirmed the district court's judgment in its entirety. View "Simmons, et al. v. Sabine River Authority, et al." on Justia Law