Justia Energy, Oil & Gas Law Opinion Summaries

The case involves KEM Resources, LP and Ryvamat, Inc., who both own a fifty percent interest in the oil, gas, and mineral rights of a property located in Wyoming County. Ryvamat entered into a gas lease covering the entirety of the property’s oil and gas rights, including the half owned by KEM, receiving a substantial monetary payment. KEM's predecessors in interest filed a claim for an accounting, requesting Ryvamat account for the portion of the lease payment it received attributable to KEM’s fifty percent interest. Ryvamat argued that KEM’s action was barred by the statute of limitations. The Superior Court disagreed and found that the applicable statute of limitations for KEM’s accounting claim is six years, and the original complaint was timely filed. The Supreme Court of Pennsylvania agreed with the Superior Court, affirming its holding. The court ruled that KEM's accounting claim is properly considered a statutory claim for an accounting between co-tenants under Section 101. The court further found that the statute of limitations for such a claim is six years. Therefore, KEM filed its accounting claim within the statute of limitations for a claim under Section 101. View "KEM Resources, LP v. Ryvamat, Inc." on Justia Law

This case was one of many lawsuits concerning Act 13 of 2012, which amended Pennsylvania’s Oil and Gas Act. Act 13 included the grant of authority by the General Assembly to the Agencies to promulgate regulations for unconventional gas wells. In October 2016, the Marcellus Shale Coalition (the “MSC”) filed a Petition seeking declaratory and injunctive relief, raising seven counts, only one of which was at issue in this appeal. That count pertained to portions of the regulations set forth at Sections 78a.1 and 78a.15. Each challenged regulatory provision interacted to some degree with Section 3215 of the Oil and Gas Act of 2012, titled “Well location restrictions.” In this appeal as of right, the Pennsylvania Supreme Court was asked to pass upon the breadth of the legislative rulemaking authority given to the Department of Environmental Protection (the “Department”) and the Environmental Quality Board (the “Board”) (collectively, the “Agencies”) by the General Assembly in the Pennsylvania Oil and Gas Act of 1984. The Agencies contended the Commonwealth Court erroneously concluded that they exceeded their authority and consequently struck down certain regulations designed to aid the Agencies in information gathering attendant to the issuance of permits for new unconventional gas wells. The Supreme Court found the General Assembly intended to give the Agencies the leeway to promulgate the challenged regulations and that those regulations were reasonable. The Court therefore reversed the Commonwealth Court. View "Marcellus Shale Coalition v. Dept. of Environmental Protection, et al." on Justia Law

The Pennsylvania Environmental Defense Foundation (“PEDF”) challenged for the third time, the use of proceeds from oil and gas leasing on the Commonwealth’s forest and park lands as violative of Article I, Section 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment. (“Section 27” or “ERA”). In previous trips before the Pennsylvania Supreme Court, PEDF challenged several 2009-2025 budgetary provisions enacted challenging the use of proceeds from oil and gas leasing on the Commonwealth’s forest and park lands as violative of Article I, Section 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment. (“Section 27” or “ERA”). In the first two cases, PEDF challenged several 2009-2015 budgetary provisions enacted in the wake of dramatic increases in oil and gas revenue resulting from Marcellus Shale exploration in Pennsylvania. Applying trust principles, the Pennsylvania Supreme Court held that the budgetary provisions violated Section 27 by utilizing the oil and gas revenue for non-trust purposes via transfers to the General Fund. PEDF v. Commonwealth, 161 A.3d 911 (Pa. 2017) (“PEDF II”); PEDF v. Commonwealth, 255 A.3d 289 (Pa. 2021) (“PEDF V”). The underlying case here was one for a declaratory judgment, and named the Commonwealth and Governor as parties. Here, PEDF raised numerous constitutional challenges to provisions of the General Appropriations Act of 2017 and 2018, as well as the 2017 Fiscal Code amendments, all of which were enacted after the Supreme Court’s decision in PEDF II. After review , the Supreme Court affirmed the Commonwealth Court, whilst rejecting that court;s analysis derived from PEDF III. View "PA Enviro Defense Fdn, Aplt. v. Commonwealth" on Justia Law

In consolidated appeals, the issue presented for the Pennsylvania Supreme Court's review centered on the Commonwealth Court’s holding that, to be held liable for damages under Pennsylvania’s inverse condemnation statute, an entity had to be "clothed with the power of eminent domain" to the property at issue. In 2009, Appellee, UGI Storage Company filed an application with the Federal Energy Regulatory Commission (the “Commission” or “FERC”), seeking a certificate of public convenience and necessity to enable it to acquire and operate certain natural gas facilities. Appellee wished to acquire and operate underground natural gas storage facilities, which the company referred to as the Meeker storage field. Appellee also sought to include within the certificated facilities a 2,980-acre proposed "buffer zone." FERC ultimately granted the application for Appellee to acquire and assume the operation of the Meeker storage field, but denied Appellee’s request to certificate the buffer zone. Appellants petitioned for the appointment of a board of viewers to assess damages for an alleged de facto condemnation of their property, alleging that though their properties had been excluded by FERC from the certificated buffer zone, they interpreted Appellee’s response to the Commission’s order as signaling its intention to apply for additional certifications to obtain property rights relative to the entire buffer zone. The common pleas court initially found that a de facto taking had occurred and appointed a board of viewers to assess damages. Appellee lodged preliminary objections asserting Appellants’ petition was insufficient to support a de facto taking claim. The Supreme Court reversed the Commonwealth Court: "we do not presently discern a constitutional requirement that a quasi-public entity alleged to have invoked governmental power to deprive landowners of the use and enjoyment of their property for a public purpose must be invested with a power of eminent domain in order to be held to account for a de facto condemnation. ... a public or quasi-public entity need not possess a property-specific power of eminent domain in order to implicate inverse condemnation principles." The case was remanded for the Commonwealth Court to address Appellants’ challenge to the common pleas court’s alternative disposition (based upon the landowners’ purported off-the-record waiver of any entitlement to an evidentiary hearing), which had been obviated by the intermediate court’s initial remand decision and that court’s ensuing affirmance of the re-dismissal of Appellants’ petitions. View "Albrecht, et al. v. UGI Storage Co. et al." on Justia Law

The Pennsylvania Environmental Defense Foundation (“PEDF”) challenged amendments the Pennsylvania General Assembly made to the state Fiscal Code that diverted to the General Fund revenues generated from oil and gas leases on state forest and game lands. PEDF claimed the legislation was unconstitutional, violating the Environmental Rights Amendment (the “ERA”). When this case returned to the Commonwealth Court, the Pennsylvania Supreme Court held that the ERA created a constitutional public trust subject to private trust principles. Applying trust law, the Supreme Court determined that royalty revenue streams generated by the sale of gas extracted from Commonwealth lands represented the sale of trust assets and had to be returned to the corpus of the trust. To the extent that 72 P.S. sections 1602-E and 1603-E diverted royalties to the General Fund, the Court found the provisions violated the ERA. The Court lacked sufficient advocacy to determine if the remaining three revenue streams, consisting of large upfront bonus payments, yearly rental fees, and interest penalties for late payments that were allocated to the General Fund under Sections 1604-E and 1605-E, as well as Section 1912 of the Supplemental General Appropriations Act of 2009, also constituted the sale of trust assets. Thus the case was remanded to the Commonwealth Court for further proceedings. On remand, the Commonwealth Court, sitting en banc, determined that the three revenue streams did not constitute the sale of trust assets. On return to the Supreme Court, it was determined the Commonwealth Court's holding was at odds with the Supreme Court's holding before remand. Another remand was unnecessary; the Supreme Court determined the record was sufficiently developed, and based upon that record it held the incomes generated under these oil and gas leases had to be returned to the corpus. As a result, the decision of the Commonwealth Court was reversed. View "PA. Environ. Defense Fd. v. Pennsylvania" on Justia Law

Eleanor McLaughlin acquired all oil, gas, and mineral rights underlying two parcels in Watson Township, Warren County, Pennsylvania. In 1985, she leased the oil and gas rights for each parcel to United Land Services. United Land Services in turn assigned the leases to Appellant Mitch-Well Energy, Inc. In 2008, Jack and Zureya McLaughlin sold their interest in the Warrant 3010 to Sheffield Land and Timber Company, which merged into Appellee SLT Holdings, LLC in 2012. During the initial term of the leases, Mitch-Well drilled one well on each lease parcel and produced oil in paying quantities until 1996. Mitch-Well did not drill any additional wells. After 1996, no oil was produced or royalty payments, or delay rental payments made or tendered until 2013. Nor did Mitch-Well tender any minimum payments during that period under either lease. The Pennsylvania Supreme Court granted review to consider the propriety of the Superior Court’s affirmance of the trial court’s grant of partial summary judgment in favor of Appellees in their complaint in equity against Appellant on the grounds of abandonment. Because Appellees had available to them a full and adequate remedy at law, through contract principles generally applicable to oil and gas leases, and through the specific provisions of the subject leases, the Supreme Court concluded it was error to provide recourse through application of the equitable doctrine of abandonment. View "SLT Holdings v. Mitch-Well Energy" on Justia Law

In an appeal by allowance, the Pennsylvania Supreme Court considered whether the Commonwealth, by the Office of Attorney General (OAG), could bring claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) on behalf of private landowners against a natural gas exploration and production company for its alleged deceptive, misleading, and unfair practices in obtaining natural gas leases from the landowners. The Supreme Court concluded the OAG could not bring claims under the UTPCPL on behalf of private landowners against Anadarko Petroleum Corporation and Anadarko E&P Onshore, L.L.C. (Anadarko) for its alleged unfair and deceptive practices in acquiring natural gas leases from the landowners. Furthermore, the Court found its resolution of the first issue rendered the second issue moot. The Court affirmed the portion of the Commonwealth Court’s decision that reversed the trial court order overruling Anadarko’s preliminary objections to Count III of the OAG’s second amended complaint, and otherwise reversed the order of the Commonwealth Court. View "Com. v. Chesapeake Energy, et al (Anadarko, Aplt.)" on Justia Law

The Pennsylvania Supreme Court granted the Pennsylvania Department of Transportation (“PennDOT”)’s petition seeking review of a Commonwealth Court holding that a de facto taking of an unmined coal estate, owned by Penn Pocahontas and leased to PBS Coals, Inc. (collectively “the Coal Companies”), occurred under the Eminent Domain Code, 26 Pa.C.S. sections 101-1106 (“Code”), when PennDOT’s construction of Highway 219 on an adjoining parcel destroyed options for constructing rights-of-ways to the coal estate’s surface. In reaching that conclusion, the Commonwealth Court held that the feasibility of mining the coal, as measured by the probability of obtaining a legally required permit from the Department of Environmental Protection (“DEP”), was relevant only to damages. The Supreme Court reversed the Commonwealth Court’s decision, agreeing with PennDOT that the legality of extracting the coal went directly to the trial court’s duty to determine whether a taking occurred. Furthermore, the Court held the Commonwealth Court erred by failing to remand the case for consideration of whether consequential damages are available to the Coal Companies. The matter was remanded to the Commonwealth Court with instructions to remand to the trial court with respect to the Coal Companies’ consequential damages claim. View "PBS Coals, et al v. PennDOT" on Justia Law

At issue was whether the rule of capture immunized an energy developer from liability in trespass, where the developer used hydraulic fracturing on the property it owned or leased, and such activities allowed it to obtain oil or gas that migrated from beneath the surface of another person’s land. Plaintiffs’ property was adjacent to a tract of land leased by Appellant Southwestern Energy Production Company for natural gas extraction. Plaintiffs alleged that Southwestern “has and continues to extract natural gas from under the land of the Plaintiffs,” and that such extraction was “willful[], unlawful[], outrageous[] and in complete conscious disregard of the rights and title of the Plaintiffs in said land and the natural gas thereunder.” Southwestern alleged that Plaintiffs’ claims were barred by, inter alia, the rule of capture, and sought declaratory relief confirming its immunity from liability. The court of common pleas court granted Southwestern’s motion for summary judgment, denied Plaintiffs’ motion for partial summary judgment, and denied the motion to compel as moot. The court agreed with Southwestern’s position that the rule of capture applied in the circumstances and, as such, Plaintiffs could not recover under theories of trespass or conversion even if some of the gas harvested by Southwestern had drained from under Plaintiffs’ property. The Superior Court reversed, holding that hydraulic fracturing could give rise to liability in trespass, particularly if subsurface fractures ... crossed boundary lines. The Pennsylvania Supreme Court rejected the concept that the rule of capture was inapplicable to drilling and hydraulic fracturing that occurred entirely within the developer’s property solely because drainage was the direct or indirect result of hydraulic fracturing. Nevertheless, the Supreme Court found the Superior Court panel’s opinion "to suffer from multiple infirmities," reversed and remanded with directions. View "Briggs, et al v. Southwestern Energy" on Justia Law

The issues this case presented for the Pennsylvania Supreme Court’s review centered on: (1) whether the penalty imposed against HIKO Energy, LLC (HIKO) was so grossly disproportionate as to violate the Excessive Fines Clause of the Pennsylvania and U.S. Constitutions; (2) whether the penalty impermissibly punished HIKO for litigating; and (3) whether the Pennsylvania Utility Commission (PUC) abused its discretion in imposing a penalty which was not supported by substantial evidence. The Supreme Court concluded HIKO waived its constitutional challenge to the civil penalty in this case, the penalty was not imposed as a punishment against HIKO for opting to litigate its case, and that the PUC’s conclusions in support of imposing the penalty were supported by substantial evidence. View "HIKO Energy, Aplt. v. PA PUC" on Justia Law