Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in Supreme Court of Ohio
State ex rel. Kerns v. Simmers
The Supreme Court denied the petition for a writ of mandamus filed by a group of landowners (“Landowners”) seeking an order compelling the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management (“the Division”) and its chief to commence appropriation proceedings to compensate Landowners for their land that was included in an oil and gas drilling unit. Landowners objected an an order issued by the chief requiring that a reservoir of oil and gas underlying multiple tracts of land be operated as a unit to recover the oil and gas, arguing that the order amounted to a taking of their property for which they must be compensated. The Supreme Court denied Landowners’ petition for a writ of mandamus, holding that Landowners had an adequate remedy by way of appeal to the county court of common pleas. View "State ex rel. Kerns v. Simmers" on Justia Law
Alford v. Collins-McGregor Operating Co.
The 74-acre Washington County parcel, near the Ohio River, is subject to a 1980 oil and gas lease between the then-owners and Collins-McGregor, to permit “mining and operating for oil and gas and laying pipe lines, and building tanks, powers, stations, and structures thereon, to produce, save and take care of said products.” Collins-McGregor committed to make royalty payments based on the gas produced and to deliver a portion of the oil produced from the land to the lessors. The lease “shall remain in force for a term of One (1) years from [the effective] date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee.” A well was drilled in 1981 and has produced oil and gas in paying quantities since then from the “Gordon Sand” formation. The Landowners contend that production of oil and gas has occurred near their property from below that formation but Collins-McGregor has not explored deep formations for lack of equipment or financial resources. They sought a judgment that the portion of the lease covering depths below the Gordon Sand has terminated because it has expired or been abandoned and that Collins-McGregor has breached implied covenants, including implied covenants of reasonable development and to explore further. The Supreme Court of Ohio affirmed dismissal. Ohio law does not recognize an implied covenant to explore further separate from the implied covenant of reasonable development. View "Alford v. Collins-McGregor Operating Co." on Justia Law
Bohlen v. Anadarko E&P Onshore, LLC
At issue was a lessor’s right to terminate an oil and gas lease when a lessee fails to make minimum annual rental or royalty payments. The trial court granted summary judgment in favor of the lessors in this case and ordered forfeiture of the lease at issue, declaring that the lease had terminated under its own terms because the lessees had failed to a minimum annual rental of $5,500 under the lease and that the lease was void as against public policy. The court of appeals reversed. The Supreme Court affirmed, holding (1) the provision in the lease requiring the lessee to pay $5,500 annually did not invoke the termination provision in the unrelated delay-rental clause; and (2) the lease did not qualify as a no-term, perpetual lease, and therefore, the lease was not void as against public policy. View "Bohlen v. Anadarko E&P Onshore, LLC" on Justia Law
Lutz v. Chesapeake Appalachia, L.L.C.
Respondents, landowner-lessors, filed a putative class action in federal court claiming that Petitioner, the lessee, underpaid gas royalties under the terms of their leases. Under each lease, the lessee must bear all the production costs. The federal court certified to the Ohio Supreme Court a question regarding whether the lessee was permitted to deduct postproduction costs from the lessors’ royalties and, if so, how those costs were to be calculated. Specifically, the federal court asked the Supreme Court whether Ohio follows the “at the well” rule, which permits the deduction of post-production costs, or whether it follows some version of the “marketable product” rule, which limits the deduction of post-production costs under certain circumstances. The Supreme Court declined to answer the certified question and dismissed the cause, holding (1) under Ohio law, an oil and gas lease is a contract that is subject to the traditional rules of contract construction; and (2) therefore, the rights and remedies of the parties in this case are controlled by the specific language of their lease agreement. View "Lutz v. Chesapeake Appalachia, L.L.C." on Justia Law
Walker v. Shondrick-Nau
Plaintiff filed a declaratory-judgment action against Defendant, seeking to quiet title to a mineral interest. At issue between the parties was whether the 1989 version of the Dormant Mineral Act or the 2006 version of the Act applied in this case. The trial court granted summary judgment in favor of Plaintiff. The court of appeals affirmed, concluding that the 1989 version of the Act applied, and therefore, Defendant, the owner of the severed mineral estate, did not preserve his rights. The Supreme Court reversed, holding (1) pursuant to Corban v. Chesapeake Exploration, LLC, the 2006 version of the Act applied in this case; and (2) based on Dodd v. Croskey, Defendant preserved his mineral rights. View "Walker v. Shondrick-Nau" on Justia Law
Albanese v. Batman
Nile and Katheryn Batman claimed to hold an interest in minerals underlying the properties owned by Wayne Lipperman and the estate of James Albanese (“Albanese”). Albanese and Lipperman filed separate actions seeking to quiet title to their respective properties, claiming that the severed mineral interests held by the Batmans had been abandoned. Albanese and Lipperman also sought to cancel any oil and gas leases executed in relation to the Batmans’ interests in their properties. The trial court granted summary judgment against Albanese and Lipperman. The court of appeals affirmed in both cases. The Supreme Court affirmed, holding (1) the Ohio Dormant Mineral Act (ODMA) applies in these cases; and (2) because neither Albanese nor Lipperman complied with the notice and affidavit requirements in the ODMA, the mineral interests are preserved in favor of their holder, the Batmans. View "Albanese v. Batman" on Justia Law
Corban v. Chesapeake Exploration, LLC
Plaintiff filed this action against Defendants seeking to quiet title to oil and gas rights under his surface lands and requesting a declaratory judgment, a permanent injunction, and compensation for conversion. The federal district court concluded that its ruling on the parties’ motions for summary judgment required a clarification of two areas of Ohio law and certified these questions to the Supreme Court. The Supreme Court answered (1) the 2006 version of the Dormant Mineral Act, rather than the 1989 version of the Act, applies to all claims asserted after June 30, 2006 alleging that the rights to minerals vested in the surface land holder prior to the 2006 amendments as a result of abandonment; and (2) a payment of a delay rental during the primary of an oil and gas lease is neither a title transaction nor a savings event under the Act. View "Corban v. Chesapeake Exploration, LLC" on Justia Law
In re Application of Buckeye Wind, LLC
In 2012, the Supreme Court affirmed an order of the Ohio Power Siting Board granting a certificate to Buckeye Wind, LLC to construct a wind farm in Champaign County. Buckeye subsequently filed an application to amend the certificate in part so that the wind farm could share portions of its facilities with another authorized wind farm. After a hearing, the Board approved Buckeye’s amendment. Champaign County and associated townships (collectively, the County) appealed, contending that the Board unlawfully approved the requested amendment without holding a hearing on all of the proposed changes in the amendment application. The Supreme Court affirmed, holding (1) the County forfeited its right to challenge the scope of the hearing on appeal; and (2) the Board acted reasonably and lawfully in limiting the scope of the hearing. View "In re Application of Buckeye Wind, LLC" on Justia Law
In re Application of Columbus S. Power Co.
This appeal arose from the Public Utilities Commission’s modification and approval of the second electric-security plan of the American Electric Power operating companies, Ohio Power Company and Columbus Southern Power Company (collectively, AEP). In the proceedings below, the Commission authored new generation rates for the companies. Five parties appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) the Commission’s order was unlawful or unreasonable because it allowed AEP to collect unlawful transition revenue or its equivalent through the Retail Stability Rider; and (2) the Commission erred in failing to explain its decision setting the significantly-excessive-earnings test threshold. Remanded. View "In re Application of Columbus S. Power Co." on Justia Law
In re Comm’n Review of the Capacity Charges of Ohio Power Co.
The Public Utilities Commission approved a capacity charge for the American Electric Power operating companies - Ohio Power Company and Columbus Southern Power (collectively, AEP) - and authorized AEP to implement a new cost-based charge for capacity service that AEP offers to competitive retail electric service (CRES) providers. The Ohio Consumers’ Counsel (OCC) appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) OCC’s propositions of law failed; and (2) AEP identified one instance where the Commission committed reversible error. Remanded. View "In re Comm’n Review of the Capacity Charges of Ohio Power Co." on Justia Law