Justia Energy, Oil & Gas Law Opinion Summaries

John and Minerva Sutherland entered into a mining lease granting Meridian Granite Company the right to conduct mining operations on the Sutherlands' property. A dispute developed between the Sutherlands and Meridian regarding the Sutherlands' obligation to pay taxes relating to the mineral production. The dispute led to litigation. The district court granted Meridian's motion for summary judgment, ruling that the Sutherlands were obligated to pay the disputed taxes. The Supreme Court affirmed, holding that the district court did not err in allowing Meridian to deduct ad valorem and severance taxes from payments to the Sutherlands when such tax payments were not required by the State, as the Sutherlands and Meridian agreed in the mining lease that the Sutherlands would pay the taxes. View "Sutherland v. Meridian Granite Co." on Justia Law

Appellant Taxpayers were the owners of all or a portion of the oil, gas and other minerals in, on, and under each of their real property located in the counties party to this lawsuit. Taxpayers filed a complaint against the Counties, seeking declaratory judgment and injunctive relief, alleging that an ad valorem property tax was an illegal exaction. The circuit court concluded that Taxpayers had failed to make a proper illegal-exaction challenge and dismissed their lawsuit. The Supreme Court affirmed, holding that the circuit court was correct in dismissing the Taxpayers' complaint where (1) the crux of Taxpayers' argument was that the tax assessed against them was illegal because the assessment was flawed; and (2) the Taxpayers' avenue of relief for its assessment grievance lay with each county's equalization board. View "May v. Akers-Lang" on Justia Law

The issue before the Supreme Court was whether the deduction in RCW 82.04.433(1) applies to reduce Business and Occupation (B&O) taxes for manufacturing activities. Plaintiff Tesoro Refining and Marketing Company owns and operates a refinery in Washington state from which it processes crude oil from Alaska, Canada and other sources. The legislature created a tax deduction for the amount of tax "derived from the sales of fuel for consumption outside the territorial waters of the United States." On its monthly tax returns from 1999-2007, Tesoro reported its fuel sales on both the "Manufacturing" B&O tax line and the "Wholesaling and Retailing" B&O tax line. After completing an audit of the refinery, Tesoro requested a partial tax refund claiming the deduction against amounts paid in B&O tax on manufacturing from 1999 through 2004. The request was denied by the Department of Revenue's (DOR) appeals division on the ground that the deduction applied only to taxes paid under the "wholesaler and retailer" B&O tax line. Tesoro appealed to the superior court; the Court of Appeals held that the company could deduct the amount of its "offshore" bunker fuel sales from its B&O taxes. Upon review, the Supreme Court reversed the Court of Appeals and reinstated the superior court's grant of summary judgment to the DOR: "the plain language of RCW 82.04.433(1) … indicates that the B&O deduction applies only to ... taxes on wholesale and retail sales, not on manufacturing." View "Tesoro Ref. & Mktg. Co. v. Dep't of Revenue" on Justia Law

This case arose from a decision rendered by the State Board of Equalization (Board) concerning the valuation point for tax purposes of the natural gas production from the LaBarge Field. The Supreme Court remanded the issue to the Board of whether the meters located at the LaBarge Field well sites were "custody transfer meters" as defined by Wyo. Stat. Ann. 39-14-203(b)(iv) or volume meters for Exxon's share of gas production. The Board held (1) the meters were not custody transfer meters for Exxon's share of gas production, and (2) the same meters were custody transfer meters for the gas produced by two other working interest owners, petroleum companies, who were not parties to the action. The Supreme Court (1) affirmed the Board's determination that the meters were not custody transfer meters for Exxon's gas where the Board's determination harmonized with precedent established in Amoco Prod. Co. v. Dep't of Revenue; but (2) reversed the Board's determination that the meters were custody transfer meters for the petroleum companies' gas because the Board did not have the authority to determine the valuation point for "non-party" persons or entities that do not appeal their tax assessments. View "Exxon Mobil Corp. v. Wyo. Dep't of Revenue" on Justia Law

Appellant contended that it was a "public utility" under OCGA 48-1-2 and, as such, was required under OCGA 48-5-511 to make an annual tax return of its Georgia property to the Georgia Revenue Commissioner rather than to the Chatham County tax authorities. Appellant filed a complaint for a declaratory judgment and for writ of mandamus in superior court, seeking to have the trial court recognize appellant as a "public utility" and to order appellee to accept appellant's annual ad valorem property tax return. The trial court granted appellee's motion to dismiss the complaint based on appellant's failure to state a claim upon which relief could be granted because the doctrine of sovereign immunity was applicable to the claims. The court reversed and held that it need not address whether sovereign immunity would act as a bar to appellant's declaratory action, as it was clear that, if the declaratory action were barred by sovereign immunity, appellant's mandamus action would still remain viable. View "Souther LNG, Inc. v. MacGinnitie" on Justia Law

The issue on appeal to the Supreme Court was whether the Court of Appeals' ruling that the Article X, Section 20 of the Colorado Constitution (Amendment 1) required statewide voter approval each time the Colorado Department of Revenue calculated an increase in the amount of tax due per ton of coal extracted as directed by the formula codified in C.R.S. 39-29-106. After Amendment 1 went into effect, the Department suspended using the tax mechanism for calculating upward adjustments in the amount of coal severance tax owed based on inflation. Following an auditor's review in 2006, an Attorney General's opinion and a rule-making proceedings, the Department recommended applying the statute to calculate the tax due. Implementation resorted in a tax of $0.76 per ton of coal as compared to $0.56 per ton collected in 1992 when Amendment 1 first passed. The Colorado Mining Association and taxpayer coal companies filed an action challenging collection of the $0.76 per ton amount. Colorado Mining asserted that whenever the Department calculated an upward adjustment in the amount of tax due under the statute, it must obtain voter approval. The Court of Appeals agreed, but the Supreme Court disagreed. The Court held that the Department's implementation of section 39-29-106 was not a tax increase, but a "non-discretionary duty required by a pre-Amendment 1 taxing statute which did not require voter approval." Accordingly, the Court reversed the appellate court's judgment and reinstated the trial court's judgment, which held that the Department must implement the statute as written. View "Huber v. Colo. Mining Ass'n" on Justia Law

Chevron, the franchisor, brought suit for declaratory judgment against one of its franchised dealers, M&M Petroleum Services, Inc. M&M responded with a counterclaim of its own, a counterclaim that was not only found to be frivolous, but the product of perjury and other misconduct. The court held that had M&M merely defended Chevron's suit, it could not have been held liable for attorneys' fees. The court held, however, that in affirmatively bringing a counterclaim that was reasonably found to be frivilous, M&M opened itself up to liability for attorneys' fees under the Petroleum Marketing Practices Act, 15 U.S.C. 2805(d)(3). Therefore, the district court did not err in determining that Chevron was eligible to recover attorneys' fees, nor did the district court abuse its discretion in determining that M&M's counterclaim was frivolous and awarding attorneys' fees to Chevron under section 2805(d)(3). View "Chevron U.S.A. Inc. v. M&M Petroleum Servs, Inc." on Justia Law

Appellants, owners of interstate natural gas pipelines subject to a 25% ad valorem tax under Louisiana Constitution article 7, section 18, brought and won a state court suit alleging certain intrastate pipelines were unconstitutionally given more favorable tax treatment by being taxed only 15% from 1994-2003. At issue was whether the state court's revaluation process violated the Due Process, Equal Protection, and Commerce Clauses, via 42 U.S.C. 1983, where that court ordered appellants' tax liability to be recalculated under the same fair-market-value determination process to which the intrastate pipelines were subjected. The court held that the district court properly dismissed appellants' suit because their federal claims were barred by the Tax Injunction Act, 28 U.S.C. 1341, which deprived the federal courts of jurisdiction over suits that sought to interfere with the administration of state tax systems so long as the state provided an adequate procedural vehicle for raising the claims and where appellants have raised their claims in state court and the Louisiana courts did not cease to provide a plain, speedy, or efficient remedy for appellants' injuries. Accordingly, the district court properly granted defendants' motion to dismiss. View "ANR Pipeline Co., et al. v. Louisiana Tax Comm'n, et al." on Justia Law

Plaintiff, operator of an electricity plant, sued defendant ("the county"), seeking to enjoin Expedited Bill 29-10, which imposed a levy on large stationary emitters of carbon dioxide within the county, on the ground that it violated the United States and Maryland Constitutions. At issue was whether a Montgomery County exaction on carbon dioxide emissions, levied only upon plaintiff's electricity-generating facility, was a tax or a fee. The court held that the carbon charge, which targeted a single emitter and was located squarely within the county's own "programmatic efforts to reduce" greenhouse gas emissions, was a punitive and regulatory fee over which the federal courts retained jurisdiction. Accordingly, the court reversed and remanded for further proceedings.

Rather than undertaking appeals from the assessment of taxes on its gas assets in accordance with R.I. Gen. Laws 44-5-26(a), plaintiff electric company sought declaratory and injunctive relief directly from the superior court. Plaintiff sued the taxing authorities of most of Rhode Island's municipalities, requesting a declaration that because the municipalities failed to tax plaintiff's gas assets as tangible personal property, they assessed illegal taxes. The trial justice dismissed all but one count of plaintiff's complaint, holding that plaintiff did not file a timely appeal or invoke the court's equitable jurisdiction. The Supreme Court affirmed. Because plaintiff elected to bypass the applicable review procedures and proceed directly to the superior court, plaintiff failed to establish that it had been assessed an illegal tax. Thus, plaintiff could not avail itself of the direct appeal to the superior court.