Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in U.S. 3rd Circuit Court of Appeals
In re: SemCrude LP
The companies supplied oil and gas to SemCrude on credit. After SemCrude petitioned for bankruptcy, the companies filed a complaint contending that they retained property and statutory lien rights in those commodities and asserted that their claims could not be discharged without affording them the opportunity to litigate their claims in an adversary proceeding. They were not given that opportunity. The court instead established global procedures that entitled the companies to file one representative proceeding for each state in which they supplied oil and gas. All interested parties had the right to brief, and present oral argument on, their claims. Regardless whether a company participated, however, the rulings from the representative action would be binding on it. After such proceedings, the court rejected the companies’ claims that that they retained property and statutory lien rights. Following confirmation of Semcrude’s reorganization plan, the companies appealed to the district court, which rejected their claims as equitably moot. The Third Circuit reversed. The record did not support SemCrude’s claims that granting the companies relief would collapse its plan of reorganization or undermine the justifiable reliance of third parties to their significant harm. View "In re: SemCrude LP" on Justia Law
United States v. EME Homer City Generation, L.P.
In the 1960s Penelec and NYSEG built the Homer City coal-burning power plant in Indiana County, Pennsylvania. The Clean Air Act of 1970 subsequently charged the EPA with setting national maximum permissible levels of common pollutants, 42 U.S.C. § 7409(a)–(b). In 1990 the CAA was amended by Title V, the Operating Permit Program, which requires all major sources of air pollution to obtain operating permits. The Plant’s “grandfathered” status ended in the 1990s, when Penelec and NYSEG made changes to boilers that increased emissions of sulfur dioxide and particulate matter. Penelec and NYSEG believed the changes were “routine maintenance” and did not apply for a permit. In 1995, Penelec and NYSEG applied for a Title V operating permit; they subsequently sold the Plant to EME, which then sold to OLs, which simultaneously leased it back to EME. By 2004, the Plant had become “one of the largest air pollution sources in the nation,” and was a target of the EPA’s new enforcement initiative. In 2008 the EPA filed suit, alleging that the former owners had modified the Plant without a permit and without installing required emissions controls. The Third Circuit affirmed dismissal. The relief sought would require distortion of plain statutory text to shore up what the EPA views as an incomplete remedial scheme. View "United States v. EME Homer City Generation, L.P." on Justia Law
Bell v. Cheswick Generating Station, Genon Power Midwest, L.P.
Plaintiffs filed suit against GenOn, on behalf of a putative class of at least 1,500 individuals who own or inhabit residential property within one mile of GenOn’s 570-megawatt coal-fired electrical generation facility in Springdale, Pennsylvania. The complaint asserted state tort law claims, based on ash and contaminants settling on plaintiffs’ property. The district court dismissed, finding that because the plant was subject to comprehensive regulation under the Clean Air Act, 42 U.S.C. 7401, it owed no extra duty to the members of the class under state tort law. The Third Circuit reversed, holding that the plain language of the Clean Air Act and controlling Supreme Court precedent indicate that state common law actions are not preempted. View "Bell v. Cheswick Generating Station, Genon Power Midwest, L.P." on Justia Law
Vodenichar v. Halcon Energy Props., Inc.
Plaintiffs filed suit on behalf of themselves and other similarly situated landowners who used agents in an effort to lease oil and gas rights in Mercer County. When the transactions did not go as planned, plaintiffs sued an oil and gas company, Halcon, alleging breach of agreement and the duty of fair dealing. After Halcon claimed that the agents were “necessary parties,” plaintiffs decided to file direct claims against the agents, which destroyed diversity jurisdiction. Plaintiffs intended to pursue all of their claims in state court. Halcon argued that it did not oppose joining agents, agreed that the all claims would benefit from being heard in a single proceeding, but asserted that the case should proceed in federal court under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), (d)(2)(A), (d)(5)(B), because discovery had begun and there were ongoing ADR activities. The district court dismissed without prejudice. Plaintiffs filed in state court, with some changes. Halcon then removed the state court action to the same federal district court, which again remanded, citing the “home state” exception to subject matter jurisdiction under CAFA. The Third Circuit affirmed, citing CAFA’s “local controversy” exception because the case relates to Pennsylvania owners and their land. View "Vodenichar v. Halcon Energy Props., Inc." on Justia Law
GenOn REMA LLC v. U.S. Envtl. Prot. Agency
Portland Generating Station is a 427-megawatt, coal-fired, electricity generating plant in Northampton County, Pennsylvania, directly across the Delaware River within 500 feet of Warren County, New Jersey. The EPA found that Portland emits sulfur dioxide in amounts that significantly interfere with control of air pollution across state borders. In response to a petition under the Clean Air Act (42 U.S.C. 7408, 7409)), the EPA imposed direct limits on Portland‘s emissions and restrictions to reduce its contribution to air pollution within three years. The Third Circuit upheld the EPA actions. It was reasonable for the EPA to interpret Section 126(b) as an independent mechanism for enforcing interstate pollution control, giving it authority to promulgate the Portland Rule. The contents of the Portland Rule are not arbitrary, capricious, or abusive of the EPA‘s discretion. View "GenOn REMA LLC v. U.S. Envtl. Prot. Agency" on Justia 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
Orton filed a Chapter 7 petition. On Schedule A (realty), he listed his one-eighth interest in vacant land that is subject to an oil and gas lease, stating fair market value as $34,000 and claiming an exemption for $4,250 (1/8). On Schedule B (personal property), Orton listed his one-fourth interest in royalty interest in the oil and gas lease, assigning a fair market value of $1; no well has been drilled. On Schedule C (claimed exemptions), Orton claimed wildcard exemptions, 11 U.S.C. 522(d)(5), for $4,250 and $1. No party objected. The Trustee moved to close the case and to except Orton’s royalty interest from abandonment, preserving ability to recover any future royalties for the estate. Orton objected, claiming that he had successfully, permanently removed the assets from the estate, securing for himself future appreciation, free from creditors’ claims. The Bankruptcy Court held that the Trustee was entitled to pursue any future increase in value above the amount stated in Schedule C. The district court and Third Circuit affirmed. The Trustee, not the Debtor, is entitled to post-petition appreciation in value of estate assets that surpasses the amount exempted. Orton had exempted only an interest, not the asset itself, and was entitled to only the amount listed in Schedule C, not to future appreciation. View "In Re:Orton" on Justia Law
Commonwealth of PA Dep’ of Envtl. Prot. v. Lockheed Martin Corp.
In 1957 the Commonwealth constructed the Quehanna Wild Area Nuclear Site. Part of the site was donated to Pennsylvania State University. Until 1967 Penn State leased to a Lockheed predecessor, conducting work under Atomic Energy Commission contracts, involving Strontium-90, a radioactive isotope. The predecessor partially decontaminated. According to Lockheed, the Commonwealth was aware that Strontium-90 remained and could not be removed without dismantling the facility. In the 1990s, the Nuclear Regulatory Commission ordered the Commonwealth, the Pennsylvania Department of Environmental Protection, and the Department of Conservation and Natural Resources to decommission the facility. This cost more than $20 million. PADEP sued Lockheed under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9607(a). Lockheed defended that the Commonwealth should recover less than its demand based on its own conduct and liability and the doctrines of unclean hands, estoppel, waiver, and laches. Lockheed also alleged that PADEP was liable under CERCLA as an owner-operator and as having arranged for or transported hazardous substances. The district court dismissed Lockheed’s third-party complaint, concluding that the Commonwealth and DCNR retained Eleventh Amendment immunity when PADEP filed a federal suit. The Third Circuit vacated with instructions to dismiss the third party complaint as moot, based on the sufficiency of Lockheed’s affirmative defenses. View "Commonwealth of PA Dep' of Envtl. Prot. v. Lockheed Martin Corp." on Justia Law
Minard Run Oil Co. v. U.S. Forest Serv.
The Forest Service manages the surface of the Allegheny National Forest, but most mineral rights are privately owned. From 1980 until recently the Service cooperated with owners to manage drilling; owners would provide advance notice and the Service would issue a Notice to Proceed. As a result of a settlement with environmental groups, the Service changed its policy and postponed issuance of NTPs until a multi-year, Environmental Impact Study under the National Environmental Policy Act (NEPA, 42 U.S.C. 4332(C)) is complete. The district court issued a preliminary injunction against the Service, requiring it to return to its prior process. The Third Circuit affirmed. The Service does not have the broad authority it claims over private mineral rights owners' access to surface lands. Its special use regulations do not apply to outstanding rights; the limited regulatory scheme applicable to most reserved rights in the ANF does not impose a permit requirement. Although the Service is entitled to notice, and may request and negotiate accommodation of its state-law right to due regard, its approval is not required for surface access. The moratorium causes irreparable injury to owners by depriving them of unique oil and gas extraction opportunities. View "Minard Run Oil Co. v. U.S. Forest Serv." on Justia Law
NJ Envtl Fed’n v. U.S. Nuclear Regulatory Comm’n,
Oyster Creek in Ocean County, New Jersey was licensed under the Atomic Energy Act, 42 U.S.C. 2133(c) in 1969 for a 40-year term and is the oldest operating commercial nuclear power plant in the country. Objectors claimed that the application for license renewal was deficient with respect to detection of corrosion in a safety structure. The Atomic Safety and Licensing Board rejected the claims; the Nuclear Regulatory Commission granted the license. After examining the objectors' specific technical claims, the Third Circuit denied review. The Board and the NRC provided hundreds of pages detailing their decision-making and gave due consideration to objectors' concerns; the review was well-reasoned and within the realm of the agency's unique expertise.