Justia Energy, Oil & Gas Law Opinion Summaries
Articles Posted in Kansas Supreme Court
The Supreme Court reversed the judgment of the district court granting summary judgment against Northern Natural Gas Company, holding that certification from the Federal Energy Regulatory Commission (FERC) permitting Northern to expand the authorized boundaries of its underground storage field to encompass nearby wells changed the right-to-produce analysis for gas taken before June 2, 2010. Some of the storage gas owned by Northern migrated beneath the earth to nearby wells in areas that Northern did not control through eminent domain or contract. The wells' operators extracted that gas and sold it. In a previous appeal, the Supreme Court applied the common-law rule of capture to rule that the operators lawfully produced and sold Northern's storage gas taken before June 2, 2010, the date when Northern received its certificate from FERC. At issue in this appeal was whether the producers could take Northern's migrated storage gas from wells located within the newly certified boundaries for the storage field after June 2, 2010. The district court ruled on summary judgment that the producers had that right under the common-law rule of capture. The Supreme Court disagreed, holding that once the new boundaries were certified Northern's identifiable storage gas within that designated area was no longer subject to the rule of capture. View "Northern Natural Gas Co. v. ONEOK Field Services Co., LLC" on Justia Law
In this quiet title action involving the mineral interests in two tracts of real estate, the Supreme Court affirmed the judgment of the district court finding that the grantees' successors in interest obtained ownership of minerals when twenty years expired without production on the property, holding that the common-law rule against perpetuities (the rule) should not be applicable to the circumstances of this case. The tracts at issue were conveyed by deeds in which the grantor excepted the mineral interests for a "period of 20 years or as long thereafter" as minerals may be produced. The grantor's successors in interest claimed full ownership of the mineral interest in both tracts, arguing that the future ownership of the minerals when the grantor's excepted term interest ended violated the rule, thereby voiding those conveyances ab initial and preventing them from devolving to the grantees' successors in interest. The district court concluded that the grantees' heirs obtained ownership of the minerals when twenty years expired without production on the property. The Supreme Court affirmed on different grounds, holding that the rule did not apply under these circumstances. View "Jason Oil Co. v. Littler" on Justia Law
In 2010, The Kansas Department of Health and Environment (KDHE) issued a prevention of significant deterioration (PSD) construction permit to Sunflower Electric Power Corporation that authorized Sunflower to build a coal-fired electric generating unit at a site where Sunflower already operates a coal-fired station. In Sierra Club I, the Supreme Court held that KDHE had failed to comply with the federal Clean Air Act and remanded the permit to KDHE. On remand, KDHE issued an addendum to the 2010 permit. Sierra Club sought judicial review of that action, arguing, inter alia, that KDHE was required to conduct an entirely new permitting process rather than simply crafting an addendum to the 2010 permit. The Supreme Court affirmed, holding (1) KDHE did not err in adding an addendum to the 2010 permit; and (2) Sierra Club failed to establish any other basis for invalidating Sunflower’s PSD permit. View "Sierra Club v. Mosier" on Justia Law
The Board of County Commissioners of Wabaunsee County amended its zoning regulations to permit small wind energy conversion systems. The regulations, however, prohibited the placement of commercial wind energy conversion systems in the county. Plaintiffs and Intervenors, landowners and owners of wind rights in the county, sued the Board, seeking a judicial declaration that the Board's action be null and void. The district court granted the Board's various dispositive motions. The Supreme Court affirmed in part and reversed in part, holding, inter alia, that (1) the district court did not err by disposing of a Takings Clause claim as a matter of law, and because there was no taking, the court did not err in also disposing of Intervenors' related takings-based claim under 42 U.S.C. 1983 and their claim for inverse condemnation; (2) the district court did not err in dismissing a Commerce Clause claim as a matter of law, but a claim alleging the Board's decision placed incidental burdens on interstate commerce that outweighed the benefits was remanded for analysis under Pike v. Bruce Church; and (3) because Intervenors also made a burden-based claim under the Commerce Clause in their 42 U.S.C. 1983 contention, that specific claim was also remanded. View "Zimmerman v. Bd. of County Comm'rs" on Justia Law
Posted in: Constitutional Law, Energy, Oil & Gas Law, Kansas Supreme Court, Zoning, Planning & Land Use
Pursuant to an oil and gas lease with Appellee Trees Oil Company (Trees), Appellant Arthur Hockett had a 1/8-royalty interest in the production from a Haskell County well that produced natural gas. Trees operated the well, and sold the gas produced to âfirst purchasers.â Before paying Trees for production, the first purchasers deduct taxes and fees imposed by the state. Trees then pays Appellant 1/8 of the net sales proceeds. In 2009, Appellant filed a complaint against Trees, seeking recovery of the amount in tax deducted from the sales proceeds from the first purchasers. Trees moved to dismiss the suit, arguing that it could not be held liable for complying with state law by paying the sales taxes. The district court held that the taxes and fees were to be imposed on all owners in the venture, including royalty owners. Appellant appealed. The Supreme Court found that state law does not require royalty owners pay the oil and gas taxes and fees if they do not operate the well. The fees withheld by the first purchaser are an expense attributable to the oil company as the well operator. In computing Appellantâs royalties, Trees was not permitted to deduct the amount of its fees expenses from the gross sale price under contract with the first purchaser. Accordingly, the Court held that the district court erred in ruling in favor of Trees. The Court remanded the remanded the case for further proceedings.