Justia Energy, Oil & Gas Law Opinion Summaries

Several individuals and organizations, including landowners and agricultural groups, challenged North Dakota statutes governing the underground storage of carbon dioxide and oil or gas, as well as laws permitting pre-condemnation surveys on private property. The plaintiffs own or represent owners of “pore space” in underground geological formations, which is used for carbon dioxide sequestration projects overseen by the North Dakota Industrial Commission (NDIC). The plaintiffs argued that the statutes authorizing amalgamation of pore space and pre-condemnation surveys violate constitutional protections against uncompensated takings and due process, and that certain statutory provisions constitute an improper delegation of legislative power.The District Court of Bottineau County granted summary judgment for the defendants, holding that most of the plaintiffs’ claims were barred by a six-year statute of limitations, as the claims were facial challenges to statutes enacted more than six years prior. The court also found that the plaintiffs’ challenge to the oil and gas storage law was not viable as a facial challenge because it depended on future actions and factual circumstances. The court did not reach the merits of the constitutional claims.The Supreme Court of North Dakota reviewed the case and held that the plaintiffs lacked standing to challenge the constitutionality of the provision allowing the NDIC to grant exceptions (N.D.C.C. § 38-22-03(7)) and the oil and gas storage amalgamation law (N.D.C.C. ch. 38-25), as they had not shown actual or threatened injury. However, the court found that the plaintiffs did have standing to challenge the carbon dioxide storage amalgamation provisions (N.D.C.C. ch. 38-22). The court ruled that the district court erred in dismissing these claims as time-barred, as the claims accrued when the NDIC acted under the statutes, not when the statutes were enacted. The court affirmed dismissal of the pre-condemnation survey law claims, but on the basis of binding precedent, not the statute of limitations. The case was affirmed in part, reversed in part, and remanded for further proceedings. View "Northwest Landowners Association v. State" on Justia Law

This case concerns a dispute over the calculation of nonparticipating royalty interests (NPRI) in oil and gas produced from a tract of land in McKenzie County, North Dakota. The plaintiffs, as trustees of three family trusts, each hold an undivided one-third interest in a 2% royalty on all oil and gas produced from the NW¼NE¼ of Section 31-154-97, based on a 1951 royalty deed. The land in question abuts the Missouri River, and a portion of it lies below the ordinary high-water mark, which is owned by the State of North Dakota. Continental Resources, Inc. operates an oil well on a spacing unit that includes this tract, while third-party defendants own the minerals above the high-water mark, subject to the trusts’ royalty interests.The District Court of McKenzie County previously found that the trusts’ NPRI did not include State-owned acreage below the high-water mark, and adopted Continental’s calculation of the royalty payment factor, which excluded the State’s acreage and included an upward adjustment for equitable distribution. The court also held that Continental’s suspension of royalty payments was permissible under the “safe harbor” provision of N.D.C.C. § 47-16-39.1, denied the trusts’ request for an accounting, and awarded costs to Continental, concluding the trusts were not the prevailing party. The trusts appealed, arguing errors in the NPRI calculation, the application of the safe harbor provision, and the determination of the prevailing party.The Supreme Court of North Dakota reversed the district court’s amended judgment. It held that the 1951 royalty deed unambiguously grants the trusts a 2% royalty on all oil and gas produced from the entire described tract, including State-owned acreage. The court remanded for recalculation of the NPRI, reconsideration of the safe harbor provision, determination of outstanding royalties and accounting, and proper allocation of costs and disbursements, finding the trusts to be the prevailing party. View "Garaas v. Continental Resources" on Justia Law

A company constructed and operated a large interstate natural gas pipeline running through Ohio, which was completed in late 2018. The project’s actual construction costs significantly exceeded initial estimates due to unusually heavy rainfall causing delays and an environmental incident that led to regulatory actions and further delays. During construction, an investment firm acquired a substantial indirect ownership interest in the pipeline’s parent company, paying a price that implied a high valuation for the pipeline.For the 2019 tax year, the Ohio Tax Commissioner assessed the taxable value of the Ohio portion of the pipeline using a statutory cost-based method, resulting in a valuation that the company believed was excessive. The company challenged the assessment, arguing that the pipeline’s true value was much lower, citing alternative appraisal methods and the impact of construction delays and overruns. The Tax Commissioner rejected these arguments, maintaining that the statutory method produced the correct value.The company appealed to the Ohio Board of Tax Appeals, where both parties presented expert appraisals. The company’s appraiser used a unit appraisal approach and arrived at a lower value, while the Tax Commissioner’s appraiser, using both cost and income approaches, opined a higher value. The Board found the Tax Commissioner’s appraisal more credible, especially in light of the investment firm’s transaction and the actual construction costs, and ordered the pipeline to be valued according to that appraisal.On further appeal, the Supreme Court of Ohio reviewed whether the Board’s decision was reasonable and lawful. The court held that the Board has broad discretion in weighing competing appraisals and evidence, and that its adoption of the Tax Commissioner’s appraisal was supported by the record. The court affirmed the Board’s decision, upholding the higher valuation for tax purposes. View "Rover Pipeline, L.L.C. v. Harris" on Justia Law

Columbia Gas Transmission operates a natural gas pipeline that crosses a parcel of land owned by RDFS, LLC. Columbia holds an easement to operate and maintain the pipeline on this parcel. When a coal company planned to mine beneath the parcel, Columbia sought access to mitigate potential harm to its pipeline. RDFS denied access, leading Columbia to file a lawsuit. The district court granted a preliminary injunction allowing Columbia to proceed with its mitigation efforts.The United States District Court for the Northern District of West Virginia first considered Columbia's motion for a preliminary injunction. The court applied the four factors from Winter v. Natural Resources Defense Council, Inc., concluding that Columbia was likely to succeed on the merits, would suffer irreparable harm without access, and that the balance of equities and public interest favored Columbia. The court also granted Columbia's motion for partial summary judgment to condemn a temporary easement under the Natural Gas Act, finding that Columbia met all necessary requirements.The United States Court of Appeals for the Fourth Circuit reviewed the district court's grant of the preliminary injunction for abuse of discretion. The appellate court found that Columbia's easement provided broad authority to access the entire parcel for maintenance, including mitigation work. The court rejected RDFS's argument that the easement was vague and limited by Columbia's prior use. The court affirmed the district court's ruling, concluding that Columbia's right to access the parcel for mitigation was consistent with maintaining the pipeline and did not unreasonably burden RDFS's property. The ruling of the district court was affirmed. View "Columbia Gas Transmission, LLC v. RDFS, LLC" on Justia Law

John and Stacy Bang own several parcels of real property in Dunn County, including the subject property in this dispute. They own both the surface and mineral estates. In May 2004, John Bang executed an oil and gas lease agreement with Diamond Resources, Inc., whose successor, Continental Resources, Inc., is the operator and holds the mineral lease. Continental notified the Bangs of its intent to install oil and gas facilities on the property, which the Bangs objected to. Continental subsequently constructed various facilities on the property.The Bangs filed a lawsuit against Continental in 2022, alleging trespass, seeking an injunction, and claiming damages under North Dakota law. The district court denied the Bangs' motions for a temporary restraining order and preliminary injunction. Continental filed a separate action seeking a declaratory judgment and an injunction against John Bang, which was consolidated with the Bangs' case. In January 2024, the district court granted Continental partial summary judgment, declaring Continental had the right to install a pipeline corridor and denied the Bangs' claims for trespass and permanent injunction. The court also denied Continental summary judgment on damages. A jury trial in February 2024 awarded the Bangs $97,621.90 for their compensation claims. The Bangs' motions for a new trial and other relief were denied.The North Dakota Supreme Court reviewed the case and affirmed the district court's amended judgment and order denying a new trial. The court held that the lease was unambiguous and provided Continental the authority to install pipeline facilities on the subject property. The court also upheld the district court's evidentiary rulings, including the exclusion of certain expert testimony and evidence of settlement agreements, and the exclusion of speculative evidence of future agricultural damages. The court found no error in the jury instructions and concluded that the district court did not abuse its discretion in denying the Bangs' motions under N.D.R.Civ.P. 59 and 60. View "Bang v. Continental Resources" on Justia Law

In the oilfields of West Texas, a dispute arose over the ownership of "produced water," a byproduct of oil-and-gas production. COG Operating, LLC, a hydrocarbon lessee, claimed ownership of the produced water under its oil-and-gas leases, arguing that the right to produce oil and gas includes the right to handle and dispose of the resulting liquid waste. Cactus Water Services, LLC, a surface-estate lessee, countered that once hydrocarbons are separated, the remaining produced water belongs to the surface estate unless expressly conveyed otherwise.The trial court ruled in favor of COG, declaring that COG owns the produced water and has exclusive rights to its possession, custody, control, and disposition. The court of appeals affirmed this decision, holding that produced water is oil-and-gas waste that belongs to the mineral lessee, not groundwater that belongs to the surface estate. The court emphasized that the leases did not suggest an intent to reserve rights to oil-and-gas waste for the surface owner.The Supreme Court of Texas reviewed the case and affirmed the lower courts' decisions. The Court held that under Texas law, a conveyance of oil-and-gas rights includes the right to handle and dispose of produced water, which is considered oil-and-gas waste. The Court noted that produced water is inherently part of hydrocarbon production and must be managed by the operator. The Court rejected Cactus's argument that produced water should be treated as surface estate water, emphasizing that produced water is distinct from groundwater and is subject to specific regulatory requirements for waste disposal. The Court concluded that the leases conveyed the right to produced water to COG, and any reservation of rights to produced water by the surface owner must be expressly stated in the conveyance. View "CACTUS WATER SERVICES, LLC v. COG OPERATING, LLC" on Justia Law

Continental Resources, Inc., an oil and gas production company, leases minerals from both the North Dakota Board of University and School Lands (Land Board) and the United States. The dispute centers on the entitlement to royalties from minerals extracted from the bed of Lake Sakakawea in North Dakota, which depends on the location of the Ordinary High Water Mark (OHWM). If North Dakota law and the state survey govern the OHWM, the Land Board is entitled to a larger percentage of the royalties; if the federal survey controls, the United States is entitled to a larger percentage.The United States removed the interpleader action to federal court and moved to dismiss based on sovereign immunity. The United States District Court for the District of North Dakota denied the motion, holding that under 28 U.S.C. § 2410(a)(5), the United States waived sovereign immunity because North Dakota law created a lien in favor of the United States upon Continental severing the minerals. The district court granted summary judgment in favor of the United States for lands retained since North Dakota's admission to the Union, applying federal law and the Corps Survey. It granted summary judgment in favor of the Land Board for lands reacquired by the United States, applying North Dakota law and the Wenck survey.The United States Court of Appeals for the Eighth Circuit reviewed the case. It affirmed the district court's denial of the motion to dismiss, agreeing that the United States had a lien on the disputed minerals under North Dakota law. The court also affirmed the summary judgment in favor of the Land Board, holding that North Dakota law governs the current location of the OHWM for lands reacquired by the United States. The court denied the United States' motion for judicial notice of additional documents. View "Continental Resources, Inc. v. United States" on Justia Law

In 2021, Contango Resources, LLC purchased oil and gas production and processing facilities in Fremont and Sweetwater Counties, Wyoming. In 2022, the Fremont County Assessor assessed the taxable value of the property located in Fremont County. Contango appealed the assessment to the Fremont County Board of Equalization, arguing that the County Assessor and her expert consultant failed to properly use the purchase price of the property in their valuations and used improper trending and depreciation factors. The County Board upheld the valuation.The State Board of Equalization and the district court both affirmed the County Board's decision. Contango then appealed to the Wyoming Supreme Court. The main issues on appeal were whether the County Board’s decision to uphold the County Assessor’s rejection of the property’s purchase price as a starting point for valuation was supported by substantial evidence and in accordance with law, and whether the County Board’s decision to uphold the County Assessor’s application of trending and depreciation factors in the valuation was in accordance with law.The Wyoming Supreme Court affirmed the lower court's decision. The Court held that the County Assessor was justified in rejecting the purchase price as a starting point for valuation due to the lack of detailed information and the complexity of the Purchase and Sale Agreement (PSA). The Court also found that the Assessor’s use of trending and depreciation factors outside those recommended by the Department of Revenue was permissible under the Department’s rules, as long as the sources were credible. The Court concluded that the County Board’s rulings were supported by substantial evidence and in accordance with law. View "Contango Resources, LLC v. Fremont County" on Justia Law

In January 2017, Bruce Higgins, Rebekka Higgins, the Estate of Judy Devney, and John L. Devney sought a judgment to quiet title to mineral interests in Williams County and recover oil and gas proceeds. The defendants, Maynard Lund, Kjersti Eide, Don Eide, and Jennifer Eide, denied the allegations and counterclaimed for quiet title. XTO Energy, Inc., Continental Resources, Inc., and Whiting Petroleum, Corp. requested dismissal of the complaint.The District Court of Williams County held a bench trial in April 2018 to interpret a 1964 warranty deed. The court found that the deed reserved Milton Higgins' entire interest in the top parcel and quieted title accordingly, resulting in a 50/50 split of the partnership mineral acres between the successors of Milton Higgins and Howard Lund. The court awarded the plaintiffs $237,000 in royalty damages plus fees and costs. In 2021, the court granted summary judgment motions by the plaintiffs, determining that the 1952 royalty deed conveyed a floating royalty rather than a fixed royalty. Final judgment was entered in January 2024.The North Dakota Supreme Court reviewed the case and affirmed the lower court's decisions. The court held that the 1964 warranty deed was ambiguous, allowing for extrinsic evidence to determine the parties' intent, and concluded that the reservation applied to both the top and bottom parcels. The court also found no valid stipulation regarding the interpretation of the 1952 royalty deed and determined that the deed conveyed a floating royalty. The court affirmed the district court's interpretation of the deeds and the division of the suspended oil and gas proceeds. View "Higgins v. Lund" on Justia Law

Kenneth Hahn, who owns a non-participating royalty interest (NPRI) in a mineral estate leased by ConocoPhillips, disputed the amount of royalty owed to him. Hahn's NPRI was initially set at a fixed 1/8 share of production. The case centered on whether this share was reduced when Hahn ratified a subsequent lease by the mineral estate owner, which included its own royalty term, or when he signed a stipulation and cross-conveyance agreeing to accept a different royalty.The trial court denied Hahn's motion for partial summary judgment and granted the Gipses' motion, declaring that Hahn's NPRI was a floating fraction of the landowner's royalty. Hahn appealed, and the Court of Appeals reversed, holding that Hahn's NPRI was a fixed 1/8 share and that the stipulation could not alter this interest. The case was remanded for further proceedings. On remand, the trial court again ruled in favor of ConocoPhillips, declaring that Hahn's ratification of the lease subjected his NPRI to the lease's royalty provision. Hahn appealed again.The Supreme Court of Texas reviewed the case and agreed with the Court of Appeals that Hahn's ratification of the lease did not reduce his NPRI from a fixed to a floating fraction. However, the Supreme Court disagreed with the Court of Appeals regarding the stipulation and cross-conveyance. The Court held that the stipulation did effectively reduce Hahn's NPRI by conveying part of it to the mineral fee owner. Consequently, the Supreme Court reversed the Court of Appeals' judgment in part and rendered judgment that ConocoPhillips correctly calculated Hahn's share of proceeds from the production on the pooled unit. View "CONOCOPHILLIPS COMPANY v. HAHN" on Justia Law