Justia Energy, Oil & Gas Law Opinion Summaries

The case revolves around Equinor Energy LP's appeal against the North Dakota State Tax Commissioner's denial of sales tax refunds. Equinor, an oil and gas producer, had purchased and paid North Dakota sales tax on oilfield equipment, including separators, for several facilities. The company applied for a refund, arguing that the equipment was installed into a system used to compress, process, gather, collect, or refine gas, thus qualifying for a tax refund. The Tax Commissioner approved a portion of the claim but denied the remaining refund claim related to the purchase of separators.The Tax Commissioner issued an administrative complaint requesting denial of the remaining requested refund amount. The Commissioner argued that initial separators used during production do not qualify for the exemption, which applies only to equipment installed downstream of the wellsite transfer meter, i.e., off the wellsite. An administrative law judge (ALJ) upheld the denial of the refund claim, and the Commissioner adopted the ALJ’s findings of fact and conclusions of law. Equinor appealed to the district court, which reversed the Commissioner’s order. However, on remand, the ALJ again recommended the denial of Equinor’s refund. The district court affirmed the final order of the Commissioner, leading to this appeal.The Supreme Court of North Dakota affirmed the district court's judgment. The court concluded that the Commissioner's interpretation was in accordance with the language of the relevant statute. The court found that the separators merely isolated the three component parts of the well stream and did not gather or compress gas. Therefore, they did not qualify for the tax exemption. The court also noted that the legislature's intent in using the phrases “recovered from,” “a system to compress gas,” or “a system to gather gas” was clear, and it was unnecessary to apply “the rule of last resort” and construe the ambiguity in favor of the taxpayer. View "Equinor Energy v. State" on Justia Law

This case involves a dispute between Dorchester Minerals, L.P. (Dorchester) and Hess Bakken Investments II, LLC (Hess) over unpaid royalties and statutory interest. Dorchester, an unleased mineral interest owner, claimed that Hess failed to pay royalties from oil and gas production from the Hueske well between May 2008 and February 2011 due to a title issue. Dorchester sought statutory interest under N.D.C.C. § 47-16-39.1 for the unpaid royalties. Hess argued that Dorchester's claim was time-barred.The District Court initially dismissed Dorchester's claim regarding the Johnson well but denied the motion to dismiss the claim regarding the Hueske well. Both parties moved for summary judgment on the Hueske well claim, and the court granted Dorchester's motion. Dorchester then moved for statutory attorney’s fees, which the court denied, concluding no single “prevailing party” existed within the meaning of N.D.C.C. § 47-16-39.1. The court awarded Dorchester $75,166.07 in statutory interest on its Hueske well claim and dismissed both parties’ claims for attorney’s fees.The Supreme Court of North Dakota reversed the lower court's decision. The court held that Dorchester's claim for statutory interest under N.D.C.C. § 47-16-39.1 was time-barred. The court concluded that the six-year limitation period provided in N.D.C.C. § 28-01-16(2) applied to Dorchester’s claims. The court found that Dorchester had actual knowledge of the material facts necessary for it to understand it had a claim under N.D.C.C. § 47-16-39.1 regarding the Hueske well by 2013 at the latest. Therefore, Dorchester’s claim for statutory interest under N.D.C.C. § 47-16-39.1 regarding the Hueske well was barred by the six-year statute of limitations provided in N.D.C.C. § 28-01-16(2). The court remanded the case for the district court to award attorney’s fees and costs to Hess as the “prevailing party.” View "Dorchester Minerals v. Hess Bakken Investments II" on Justia Law

The case involves SCS Carbon Transport LLC ("Summit") and a group of landowners. Summit plans to construct an interstate pipeline to transport carbon dioxide to sequestration sites in North Dakota and four other states. To determine the appropriate pipeline route, Summit needs to access the landowners' properties. However, the landowners denied Summit permission to enter their lands. Consequently, Summit filed lawsuits against the landowners, seeking a court order confirming its right under North Dakota law to enter the lands to conduct pre-condemnation surveys and examinations. The landowners counterclaimed, arguing that the statute authorizing entry is unconstitutional.The district courts granted summary judgment to Summit, concluding that the statute does not constitute an unconstitutional per se taking, Summit is a common carrier authorized to exercise eminent domain, and the proposed surveys and examinations are the type of minimally invasive surveys and examinations allowed under the statute. The courts confirmed Summit's right to enter the lands to complete civil, environmental, and archaeological/cultural surveys and examinations, including any necessary geotechnical/soil borings, archaeological/cultural resource surveys and examinations, and including any necessary core or water sampling activities subject to any conditions.The landowners appealed the judgments and order granting summary judgment, arguing that the statute is unconstitutional on its face and as applied to them under the Takings Clause of the Fifth Amendment and article I, § 16 of the North Dakota Constitution.The Supreme Court of North Dakota affirmed the lower courts' decisions. The court concluded that the landowners have not established a constitutional violation on the face of the entry statute or as applied to them, and the judgments and order do not exceed the scope of the entry statute. The court also found that the district court's judgment does not grant Summit an indefinite or perpetual right of access. The court held that a constitutionally permissible entry may not be longer or more invasive than necessary to complete the examination or survey needed to confirm and minimize the scope of the anticipated taking of private property. View "SCS Carbon Transport v. Malloy" on Justia Law

The case revolves around a lawsuit filed by Kyle Harris against Oasis Petroleum, Inc., and other parties, alleging negligence, gross negligence, intentional infliction of emotional distress, and negligent infliction of emotional distress. Harris claimed that he was injured in an explosion on an oil rig operated by Oasis while he was working as an employee of Frontier Pressure Testing, LLC. The district court dismissed the other parties from the action, leaving Oasis as the sole defendant.The case proceeded to a jury trial, where the jury found Oasis, Frontier, and Harris each at fault for and a proximate cause of Harris’s injuries. The jury apportioned the fault as follows: Oasis 15%; Frontier 65%; Harris 20%. The jury found $5,012,500 in monetary damages would compensate Harris for his injuries. The district court entered an order for judgment, applying N.D.C.C. § 32-03.2-02, and deducted 85% of fault attributable to Frontier and Harris from the total damages.Harris filed a statement of costs and disbursements, arguing he should be awarded certain costs and disbursements because he was the prevailing party under the special verdict of the jury. Oasis objected to Harris’s statement of costs and disbursements, challenging the amount of expert fees and that the testimony did not lead to a successful result. The district court approved Harris’s amended statement of costs and disbursements, concluding that Harris was the prevailing party and was entitled to costs and disbursements undiminished by the percentage of negligence attributed to him.Oasis appealed to the Supreme Court of North Dakota, arguing that the district court erred as a matter of law in determining Harris was a prevailing party and abused its discretion in awarding Harris costs and disbursements. The Supreme Court affirmed the district court's decision, agreeing with Harris that he was the prevailing party. The court held that Harris was the prevailing party, and the court had the discretion to award Harris costs and disbursements under N.D.C.C. § 28-26-06, without reduction by his percentage of fault. View "Harris v. Oasis Petroleum" on Justia Law

The case revolves around a dispute over oil and gas interests between Spottie, Inc., a Nevada corporation, and several other Nevada corporations and a limited liability company. Spottie alleged that the defendants had wrongfully claimed title to these interests, which were once owned by Edward Davis, who had formed Spottie as a holding company. The defendants countered that they had entered into an agreement with Davis to acquire these interests, and that Davis and Spottie had transferred the disputed interests to one of the defendants via an assignment in 2016.The district court dismissed several of Spottie's claims, leaving only a quiet title claim and a claim for unjust enrichment. After a three-day bench trial, the court ruled in favor of the defendants, finding that the assignment from Davis and Spottie to one of the defendants was valid. The court also found that Spottie had erroneously received revenue from the disputed interests and awarded damages to the defendants.Spottie appealed the decision, arguing that the district court had erred in its ownership determination, its rejection of Spottie's laches defense, its binding of a non-party to the judgment, and its award of attorney fees and costs. The Supreme Court of North Dakota affirmed in part, concluding that the district court did not err in its ownership determination and its award of attorney fees. However, it reversed in part, finding that the court had erred in awarding costs for non-legal expenses. The case was remanded for the court to recalculate its cost award and to consider the defendants' request for additional attorney fees and legal costs. View "SPOTTIE v. BAIUL-FARINA" on Justia Law

Whitetail Wave LLC, a Montana Limited Liability Company, sued XTO Energy, Inc., a Delaware corporation, the Board of University and School Lands of the State of North Dakota, the State of North Dakota, and the Department of Water Resources and its Director. Whitetail Wave claimed ownership of certain property in McKenzie County, North Dakota, and alleged that XTO Energy had breached their lease agreement by failing to make required royalty payments. Whitetail Wave also claimed that the State's assertion of an interest in the mineral interests associated with the property constituted an unconstitutional taking without just compensation.The District Court of McKenzie County granted summary judgment in favor of the State and XTO Energy. The court concluded that the State owned certain mineral interests within the ordinary high watermark as defined by North Dakota law. The court also found that XTO Energy was within the safe harbor provision provided by North Dakota law and did not breach the parties’ lease agreement when it withheld the royalty payments. The court awarded XTO Energy recovery of its attorney’s fees.On appeal, the Supreme Court of North Dakota affirmed the judgment of the district court. The Supreme Court found that the district court did not err in dismissing Whitetail Wave's claim of an unconstitutional taking against the State, as the State's actions were limited to a title dispute. The Supreme Court also found that the district court did not err in dismissing Whitetail Wave's claim against XTO Energy for the non-payment of royalties, as XTO Energy fell within the safe harbor provision of North Dakota law. Finally, the Supreme Court found that the district court did not err in awarding XTO Energy a recovery of its attorney’s fees as the prevailing party. View "Whitetail Wave v. XTO Energy" on Justia Law

This case involves a dispute over the ownership of mineral royalty interests in land in McKenzie County, North Dakota. The plaintiff, Petro-Hunt, L.L.C., operates several oil and gas wells on pooled spacing units, which include land owned by the defendant, Greggory Tank. Tank argued that Petro-Hunt had wrongly distributed less than the full well revenues due to him and other defendants based on five assignments executed in 1937.The Supreme Court of North Dakota upheld the district court's decision, concluding that the court correctly determined that the five 1937 assignments burdened Tank’s southwest quarter mineral interest in the subject property. The court further concluded that Tank was not entitled to an accounting under N.D.C.C. § 38-08-09.4(3) and failed to establish that Petro-Hunt was a fiduciary. The court also concluded that Tank did not provide any basis for holding a fiduciary duty exists under the facts and circumstances of this case.The court rejected Tank's argument that he has a statutory right to an accounting under N.D.C.C. § 38-08-08(1) and N.D.C.C. § 38-08-09.4(3), stating that these provisions do not apply to this case. The court further noted that Tank did not demonstrate the Industrial Commission unitized his interests under sections 38-08-09.1 through 38-08-09.16. Therefore, N.D.C.C. § 38-08-09.4(3) and its accounting requirements for a unitized area do not apply in this case.The court's decision affirmed the judgment of the district court. View "Petro-Hunt v. Tank" on Justia Law

The case involved David Papenhausen, who sustained an injury when his foot fell through a hole concealed by a layer of ice and snow on an oil well site operated by ConocoPhillips Company and Burlington Resources Oil & Gas Company LP. Papenhausen sued the companies under North Dakota law, alleging negligence and premises liability due to the existence of an unreasonably dangerous hole concealed by ice and snow due to the defendants' negligent maintenance of the well site.The Supreme Court of North Dakota answered two certified questions from the United States District Court for the District of North Dakota concerning the state's natural accumulation rule, which generally precludes liability for injuries caused by natural accumulations of snow and ice. The questions asked whether the rule applies to an oil well site in a rural area and if it still applies if it conceals a condition substantially more dangerous than one typically associated with ice and snow.The court answered the first question in the affirmative, ruling that the natural accumulation rule does apply to a rural oil well site. The court reasoned that it is unreasonable to expect property owners to continually monitor and clear snow or ice from remote areas. For the second question, the court answered in the negative, stating that the concealment of a dangerous condition by snow or ice is outside the scope of the natural accumulation rule. The court held that when snow or ice conceals a separate danger, the question of the owner's duty is considered differently - focusing on the obviousness of that danger and whether the owner knew or should have known about it. View "Papenhausen v. ConocoPhillips Co." on Justia Law

In this case, Jonathan Garaas and David Garaas, serving as co-trustees of multiple family trusts, appealed a dismissal of their complaint against Petro-Hunt, L.L.C., an oil company operating on land in which the trusts own mineral interests. The trusts claimed that Petro-Hunt had decreased their royalty interest without proper basis and sought both a declaratory judgment affirming their higher royalty interest and damages for underpayment. The district court dismissed the complaint without prejudice, stating that the trusts had failed to exhaust their administrative remedies before the North Dakota Industrial Commission.The North Dakota Supreme Court affirmed the lower court's decision, stating that the trusts needed to exhaust their administrative remedies before bringing their claims to the court. The court reasoned that the issues raised by the trusts involved factual matters related to the correlative rights of landowners within the drilling unit, which fall within the jurisdiction of the Industrial Commission. The court held that the commission should first consider these issues, make findings of fact, and develop a complete record before the case proceeds to the district court. It further noted that, after exhausting their administrative remedies, the trusts could then bring an appropriate action for declaratory relief or damages in district court. View "Garaas v. Petro-Hunt" on Justia Law

In this case from the Supreme Court of North Dakota, Fonda Jo Powell and Mary T. Henke, as co-personal representatives of the Estate of June A. Slagle, alongside Helen Verhasselt, the trustee of the June Slagle Family Mineral Trust, filed an appeal against Statoil Oil & Gas LP (now known as Equinor Energy LP). The plaintiffs appealed from a judgment of dismissal entered after the district court granted Statoil's motion for summary judgment, concluding that a dispute of title allowed Statoil to suspend royalty payments and that the plaintiffs were not entitled to statutory interest. The plaintiffs argued that the district court erred in concluding there was a title dispute, while Statoil argued that this action was barred by the statute of limitations.The Supreme Court of North Dakota reversed the decision of the district court, concluding that the action was not barred by the statute of limitations and that the court erred in concluding that Statoil lawfully suspended royalty payments. The court determined that a ten-year statute of limitations applied to the claim for untimely payment of royalties under the oil and gas lease, as per N.D.C.C. § 28-01-15(2). Furthermore, the court concluded that, when a dispute is between the mineral developer and the mineral owner, notice of the dispute is required under N.D.C.C. § 47-16-39.4. As Statoil did not provide evidence that it had notified June Slagle of a title dispute, it was required to pay interest on the unpaid royalties at a rate of 18% per annum. The case was remanded for further proceedings consistent with this opinion. View "Powell v. Statoil Oil & Gas" on Justia Law