Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in U.S. 7th Circuit Court of Appeals
SonCo Holdings, LLC v. Bradley
The SEC filed a complaint. The court appointed a receiver to handle defendants' assets for distribution among victims of the $31 million fraud. Assets included oil and gas leases. SonCo filed a claim. The parties came to terms; the court entered an agreed order that required SonCo to pay $580,000 for assignment of the leases. The wells were unproductive, because of freeze orders entered to prevent dissipation of assets; the lease operator, ALCO, had posted a $250,000 bond with the Texas Railroad Commission. The bond was, in part, from defrauded investors. SonCo was ordered to replace ALCO as operator and to obtain a bond. More than a year later, SonCo had not posted the bond or obtained Commission authorization to operate the wells, but had paid for the assignment. The judge held SonCo in contempt and ordered it to return the leases, allowing the receiver to keep $600,000 that SonCo had paid. SonCo returned the leases. The Seventh Circuit affirmed that SonCo willfully violated the order, but vacated the sanction. The judge on remand may: reimpose the sanction, upon demonstrating that it is a compensatory remedy for civil contempt; impose a different, or no sanction; or proceed under rules governing criminal contempt. View "SonCo Holdings, LLC v. Bradley" on Justia Law
Exelon Generation Co., LLC v. Local 15, Int’l Bhd of Elec. Workers
The Atomic Energy Act, 42 U.S.C. 2011, requires that nuclear generators implement access authorization programs. Many employees at privately-owned nuclear power plants must receive a security clearance with "unescorted access" privileges. When such access is denied or revoked, the Nuclear Regulatory Commission requires owner-licensees to provide the aggrieved worker with a review procedure. From 1991 to 2009, the Commission took the position that labor arbitrators could review access denials at unionized facilities. Courts agreed. In 2009, the Commission completed post-9/11 overhaul of security requirements. New language was ambiguous as to whether the Commission had changed its policy to prohibit arbitral review. The district court entered declaratory judgment that the amendments prohibited arbitration of access denial decisions. The Seventh Circuit reversed, concluding that the Commission did not "flip-flop on an important, longstanding, and controversial policy without clearly indicating either in the text of the rule or at any point in the rulemaking history that it was doing so." View "Exelon Generation Co., LLC v. Local 15, Int'l Bhd of Elec. Workers" on Justia Law
BPI Energy Holdings, Inc. v. IEC (Montgomery), LLC
Plaintiffs are producers of coal bed methane gas; defendant is large coal-mining company. Gas extraction firms need access to coal from which to extract gas and coal companies need to have gas removed from their mines before mining. To form an alliance for that purpose, plaintiff began by acquiring options to buy coal-mining rights; it planned to sell the options in exchange for the right to extract gas from its partner's coal. The parties signed memorandum of understanding, which stated that it did not constitute a binding agreement, and, later, a non-binding letter of intent. Plaintiff began transferring coal rights to defendant as contemplated by the letter of intent, but defendant delayed reciprocating. Ultimately defendant announced that it was terminating the letter of intent. The trial court entered summary judgment for defendant on a fraud claim. The Seventh Circuit affirmed, stating that "when a document says it isn't a contract, it isn't a contract" and that plaintiff did not establish promissory fraud or justifiable reliance.View "BPI Energy Holdings, Inc. v. IEC (Montgomery), LLC" on Justia Law
Cedar Farm, Harrison County, Inc. v. Louisville Gas & Elec. Co
Plaintiff owns 2,485 acres containing Indiana's only antebellum plantation and 2,000 acres of "classified forest," with endangered species habitats. A utility company has a lease for storing and extracting oil and natural gas on portions of the property. The Lease continues so long as "oil or gas is produced in paying quantities" or "the Property continues to be used for the underground storage of gas" and will terminate upon the utility's surrender or failure to make payments. The lease contains provisions to protect historic sites and to calculate damage to trees, requires notice of utility activity, and requires that the utility's use be "as minimally necessary." Plaintiff sought damages and to terminate the lease and evict the utility. The district court entered judgment for the utility, finding that a disagreement about the use of land was not an express reason for termination and that the lease specifically provided that damages were the proper remedy. Plaintiff dismissed the damages claim with prejudice to appeal the ejectment claim. The Seventh Circuit affirmed. Plaintiff did not show that damages are inadequate to compensate for the harm to its property. View "Cedar Farm, Harrison County, Inc. v. Louisville Gas & Elec. Co" on Justia Law
Sierra Club v. Khanjee Holding (US) Inc.
Original defendants wanted to build a power plant in southern Illinois. In the first appeal, the Seventh Circuit concluded that defendants' Prevention of Significant Deterioration (“PSD”) permit (42 U.S.C. 7475(a)), had expired. After the ruling, the district court assessed a penalty of $100,000 on all defendants, jointly and severally, and awarded attorneys' fees to Sierra Club. The Seventh Circuit affirmed, first holding that defendant waived constitutional arguments by not raising them before the district court. The court acted within its discretion; it considered all of the relevant statutory factors and did not make any clearly erroneous findings of fact in assessing a penalty and awarding fees. View "Sierra Club v. Khanjee Holding (US) Inc." on Justia Law
Dynegy Mktg. & Trade v. Multiut Corp.
Plaintiff, a natural gas supplier, and defendants, a natural gas distributor and its executive, had a written contract. The relationship unraveled in the face of a failed acquisition, several million dollars' worth of unpaid invoices, and frequent disputes over pricing, inflamed by allegations that natural gas suppliers were manipulating the indices on which natural gas price quotes are based. The district court granted plaintiff summary judgment and ultimately issued a Rule 54(b) judgment on contract and guaranty claims and rejecting counterclaims. The court awarded $8,929,449 in pre-judgment interest on top of its damages of $13,693,943. The Seventh Circuit affirmed, rejecting arguments concerning exclusion of an affidavit submitted by defendant, the alleged existence of additional oral contracts, an implied agreement to waive interest, and the sufficiency of evidence. Without something linking defendant's downfall to plaintiff's divulgence or inappropriate use of information in violation of the confidentiality agreement, there was no issue warranting trial on that claim. There was insufficient evidence of price discrimination in violation of the Robinson-Patman Act, 15 U.S.C. 13(a). View "Dynegy Mktg. & Trade v. Multiut Corp." on Justia Law