Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in Transportation Law
George E. Warren LLC v. Colonial Pipeline Co
Warren tenders gasoline products to Colonial (a common carrier) for shipment on Colonial’s pipeline from Texas to New Jersey, where Warren has a gasoline-blending operation. The rates and conditions for the transportation services are specified in tariffs approved by the Federal Energy Regulation Commission (FERC). The tariff recognizes that the gasoline batches Colonial transports for Warren are fungible and allows Colonial to comingle gasoline from many shippers during transport. Colonial must deliver gasoline of the same volume and grade as the gasoline that was entrusted to it, with the same characteristics that influence the gasoline’s combustion performance (octane rating and distillation value), and its environmental impact, such as volatility. The tariff does not state whether “on specification” gasoline includes any “blend margin.” In 2016, FERC determined that the regulation of in-pipeline blending was outside its jurisdiction. Colonial continued giving Warren gasoline that complies with the relevant tariff but Warren claims that Colonial’s in-line blending of the gasoline with butane diminishes Warren’s ability to blend cheaper blendstocks into the gasoline. Warren regularly blends cheaper gasoline with more expensive gasoline to increase the amount of on-specification gasoline that it can sell,Warren sued for loss of profits (Carmack Amendment 49 U.S.C. 1590), conversion, unjust enrichment, and tortious interference. The Third Circuit affirmed the summary judgment rejection of the claims. Warren’s request seeks an enlargement of its rights under the FERC-approved tariff and violates the filed-rate doctrine’s nondiscrimination principle. View "George E. Warren LLC v. Colonial Pipeline Co" on Justia Law
PBS Coals, et al v. PennDOT
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
New York v. National Highway Traffic Safety Administration
The Second Circuit granted a petition for review of the NHTSA's final rule, which reversed the agency's 2016 increase to the base rate of the Corporate Average Fuel Economy (CAFE) penalty. The court held that the CAFE penalty is a civil monetary penalty under the Federal Civil Penalties Inflation Adjustment Act Improvements Act. Consequently, NHTSA did not act in accordance with law when it reached the contrary conclusion in its 2019 Final Rule and reversed its initial catch-up inflation adjustment.The court also held that the NHTSA's reconsideration of the economic effects of its initial rule was untimely and therefore unauthorized. In this case, the Improvements Act provided a limited window of time for NHTSA to reduce the initial catch-up inflation adjustment to the CAFE penalty based on a conclusion that the increase would have a negative economic impact. However, by 2019, that window had closed and the agency acted in excess of its authority when it reconsidered and reversed its prior increase of the CAFE penalty based on an assessment of economic consequences. Accordingly, the court vacated the rule. View "New York v. National Highway Traffic Safety Administration" on Justia Law
Georgia Motor Trucking Assn. v. Georgia Dept. of Rev.
At issue in this case was the meaning of the term “motor fuel taxes” as used in the Georgia Constitution, Article III, Sec. IX, Par. IV(b). A trucking industry association and three individual motor carriers challenged local sales and use taxes on motor fuels, the revenues of which were not used solely for public roads and bridges. They argued that these taxes fell within the meaning of “motor fuel taxes” under the Motor Fuel Provision and, therefore, the revenues from these taxes (or an amount equal to that revenue) had to be allocated to the maintenance and construction of public roads and bridges. The Georgia Supreme Court affirmed the dismissal of the plaintiffs’ complaint because the history and context of the Motor Fuel Provision revealed that “motor fuel taxes” were limited to per-gallon taxes on distributors of motor fuel, and did not include sales and use taxes imposed on retail sales of motor fuels. View "Georgia Motor Trucking Assn. v. Georgia Dept. of Rev." on Justia Law
CSX Transp., Inc. v. Tenn. Dep’t of Revenue
The 1976 Railroad Revitalization and Regulatory Reform Act prohibits states from imposing taxes that “discriminat[e] against a rail carrier,” 49 U.S.C. 11501(b)(4)A, including: Assessing rail transportation property at a value with a higher ratio to the true market value of the property than the ratio applied to other commercial and industrial property; levying or collecting an ad valorem property tax on rail transportation property at a tax rate that exceeds the rate applicable to commercial and industrial property in the same jurisdiction; or imposing “another tax that discriminates against a rail carrier providing transportation.” Railroads sued, claiming that Tennessee sales and use tax assessments were discriminatory. The district court agreed, holding that imposition of those taxes on railroad purchases and use of diesel fuel was discriminatory. In response, in 2014, Tennessee enacted a Transportation Fuel Equity Act that repeals the sales and use tax on railroad diesel fuel, but subjects railroads to the same per-gallon tax imposed on motor carriers under the Highway User Fuel Tax. Previously railroads, like other carriers using diesel fuel for off-highway purposes, were exempt from a “diesel tax.” The Railroads contend the Act is discriminatory because it now subjects only railroads to taxation of diesel fuel used off-highway. The Sixth Circuit affirmed denial of the Railroads’ motion for a preliminary injunction on its targeted or singling-out approach and the functional approach, but remanded for consideration of the Railroads’ argument under the competitive approach. View "CSX Transp., Inc. v. Tenn. Dep't of Revenue" on Justia Law
Posted in: Energy, Oil & Gas Law, Tax Law, Transportation Law
United States v. Citgo Asphalt Ref. Co.
As the tanker Athos neared Paulsboro, New Jersey, an abandoned anchor in the Delaware River punctured its hull and caused 263,000 gallons of crude oil to spill. The owner of the tanker, Frescati, paid $180 million in cleanup costs and ship damages, but was reimbursed for nearly $88 million by the U.S. government under the Oil Pollution Act, 33 U.S.C. 2701. Frescati made claims against CARCO, which ordered the oil and owned the terminal where the Athos was to unload, claiming breach of the safe port/safe berth warranty made to an intermediary responsible for chartering the Athos and negligence and negligent misrepresentation. The government, as a statutory subrogee for the $88 million reimbursement reached a limited settlement agreement. The district court held that CARCO was not liable for the accident, but made no findings of fact and conclusions of law, required by FRCP 52(a)(1). The Third Circuit remanded for findings, but stated that the Athos and Frescati were implied beneficiaries of CARCO‘s safe berth warranty; that the warranty is an express assurance of safety; and that the named port exception to that warranty does not apply to hazards that are unknown and not reasonably foreseeable. The court noted that it is not clear that the warranty was actually breached, absent findings as to the Athos‘s actual draft or the clearance provided. The court further stated that CARCO could be liable in negligence for hazards outside the approach to CARCO‘s terminal. View "United States v. Citgo Asphalt Ref. Co." on Justia Law
Gabarick, et al. v. Laurin Maritime (America) Inc., et al.
This case arose when an ocean-going tanker collided with a barge that was being towed on the Mississippi River, which resulted in the barge splitting in half and spilling its cargo of oil into the river. Following the filing of numerous lawsuits, including personal injury claims by the crew members and class actions by fishermen, the primary insurer filed an interpleader action, depositing its policy limits with the court. At issue was the allocations of the interpleader funds as well as the district court's finding that the maritime insurance policy's liability limit included defense costs. The court affirmed the district court's decision that defense costs eroded policy limits but was persuaded that its orders allocating court-held funds among claimants were tentative and produced no appealable order. View "Gabarick, et al. v. Laurin Maritime (America) Inc., et al." on Justia Law
Gabarick, et al. v. Laurin Maritime (America), Inc., et al.
This case arose from an oil spill in the Mississippi River when an ocean-going tanker struck a barge that was being towed. Appellants (Excess Insurers) appealed the district court's decision requiring them to pay prejudgment interest on the funds deposited into the court's registry in an interpleader action. The Excess Insurers argued that the district court erred by: (1) finding that coverage under the excess policy was triggered by the primary insurer's filing of an interpleader complaint; (2) holding that a marine insurer that filed an interpleader action and deposited the policy limits with the court was obligated to pay legal interest in excess of the policy limits; and (3) applying the incorrect interest rate and awarding interest from the incorrect date. The court held that because the Excess Insurers' liability had not been triggered at the time the Excess Insurers filed their interpleader complaint, the district court erred in finding that they unreasonably delayed in depositing the policy limit into the court's registry and holding them liable for prejudgment interest. Therefore, the court reversed the judgment and did not reach the remaining issues. View "Gabarick, et al. v. Laurin Maritime (America), Inc., et al." on Justia Law