Justia Energy, Oil & Gas Law Opinion Summaries

A group of Kansas residential natural gas consumers, who purchase gas from local distributors, sued several interstate wholesalers. They alleged that during Winter Storm Uri, the wholesalers manipulated the market and sold natural gas to local distributors at exorbitant prices, leading to unprecedented increases in retail gas prices. The plaintiffs claimed these actions violated the Kansas Consumer Protection Act (KCPA) by forcing local distributors into the high-priced spot market and passing the excessive costs on to consumers. The plaintiffs contended that even though the alleged misconduct occurred in the wholesale market, it had a direct and significant impact on retail customers.The United States District Court for the District of Kansas consolidated five class actions and reviewed the claims. The district court granted the defendants’ joint motion to dismiss, finding that the Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over interstate wholesale natural gas rates under the Natural Gas Act (NGA), and that the plaintiffs’ state-law claims were preempted. The court concluded that the challenged conduct concerned wholesale transactions, which are subject to comprehensive federal regulation.The United States Court of Appeals for the Tenth Circuit reviewed the case. It affirmed the district court’s decision, holding that the NGA field-preempts the plaintiffs’ KCPA claims because the claims are aimed directly at, and challenge, transactions and practices in the interstate wholesale natural gas market, an area reserved for federal oversight. The Tenth Circuit distinguished this case from Supreme Court precedent where state-law claims were not preempted, emphasizing that these plaintiffs’ claims targeted wholesale sales rather than background marketplace conditions. The court concluded that the exclusive jurisdiction of FERC over wholesale sales foreclosed state-law consumer protection claims based on those transactions. View "Mehl v. BP Energy Company" on Justia Law

Several individuals who own royalty interests in the Kansas Hugoton Gas Field brought a putative class action against two energy companies. Their claims are based on an alleged breach of a 2008 class action settlement agreement, which had resolved earlier disputes about underpayment of royalties by one of the companies. The 2008 settlement required limits on certain deductions from royalty payments and specified that its terms would bind successors, assigns, and related entities. In 2014, one defendant acquired assets from the other and continued making royalty payments. Plaintiffs allege the acquiring company violated the settlement by taking improper deductions after the acquisition.The plaintiffs initially sought to enforce the settlement in Kansas state court, but the District Court of Stevens County determined the judgment had become dormant and unenforceable. Plaintiffs appealed that ruling, and while the appeal was pending, they filed this federal class action complaint in the United States District Court for the District of Kansas. The district court denied defendants’ motions to dismiss but later denied class certification. The district court found that the proposed class was not ascertainable because identifying class members would require individualized title review and that other Rule 23 requirements were not satisfied.The United States Court of Appeals for the Tenth Circuit reviewed the district court’s decision. The appellate court clarified that, under its recent precedent, class ascertainability does not require administrative feasibility—only an objectively and clearly defined class. The court found the proposed class ascertainable, that common questions predominated, and that the plaintiffs satisfied all Rule 23 requirements. The Tenth Circuit reversed the district court’s denial of class certification and remanded with instructions to certify the putative class. View "Rider v. Oxy USA" on Justia Law

Devon Energy Production Company, L.P. was engaged in gas production from two New Mexico units under a federal lease, which required payment of royalties to the federal government. State officials, acting under federal authority, audited Devon Energy’s operations and disallowed certain deductions related to the treatment and transportation of natural gas over a four-year period. The charges for these services were bundled, making it difficult to separate deductible from non-deductible costs. A related Devon entity had previously resolved a similar dispute with the government through a settlement agreement, which established formulas for calculating allowable deductions.The Office of Natural Resources Revenue, a federal agency, reviewed Devon Energy’s objections to the audit and upheld the disallowance, ordering payment of the contested royalties or further documentation. Devon Energy sought review in the United States District Court for the Western District of Oklahoma, arguing that the agency acted arbitrarily and capriciously by not considering the prior settlement agreement. The district court affirmed the agency’s decision, reasoning that the agreement did not cover all disputed royalties.The United States Court of Appeals for the Tenth Circuit reviewed the case de novo, applying the arbitrary-and-capricious standard. The Tenth Circuit found that the agency erred by failing to consider the prior settlement agreement, which may have had significant legal and factual implications for the calculation of deductions. The court also found that the record was insufficient to support the government’s alternative arguments for affirmance, such as the identity of the contracting entity and the expiration of the agreement’s terms. The Tenth Circuit reversed the district court’s judgment and remanded the case for the district court to determine the appropriate remedy—whether vacatur of the agency’s decision or a remand to the agency is warranted. View "Devon Energy Production Company v. DOI" on Justia Law

A group of oil-and-gas royalty owners in Oklahoma, represented by Chieftain Royalty Company, sued EnerVest Energy’s predecessor in 2011 for allegedly underpaying royalties. After EnerVest acquired the wells, the parties reached a $52 million settlement in 2015 to be paid to the class after expenses and attorneys’ fees. Class counsel sought 40% of the fund as fees, plus expenses and an incentive award for the class representative. Two class members objected to the fee and incentive awards.The United States District Court for the Western District of Oklahoma approved the settlement, awarding 33.33% of the fund for attorneys’ fees and a 0.5% incentive award. On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the settlement but reversed the fee and incentive awards, holding that Oklahoma law applied and required a lodestar analysis (not solely a percentage-of-the-fund), and that incentive awards must be based on time spent on case-related services. Following remand and a clarifying decision from the Oklahoma Supreme Court in Strack v. Continental Resources, Inc., the district court reapplied the statutory factors, found a 33.33% fee reasonable (supported by a 2.15 lodestar multiplier), and adjusted the incentive award based on the representative’s service. A subsequent Tenth Circuit appeal led to vacatur of the fee award on procedural notice grounds, then the district court reinstated the same fee after proper notice.On this third appeal, the United States Court of Appeals for the Tenth Circuit held that Oklahoma law does not impose a hard ceiling on percentage fees or lodestar multipliers. The district court properly applied Oklahoma’s statutory factors, conducted a thorough reasonableness analysis, and did not abuse its discretion by awarding 33.33% of the fund ($17,333,333.33) as attorneys’ fees. The fee award was affirmed. View "Chieftain Royalty Company v. Enervest Energy Institutional Fund XIII-A" on Justia Law

This case involves a class action dispute over late payments of oil proceeds to royalty and working interest owners in Oklahoma. The plaintiff, an Oklahoma landowner with royalty interests in three oil wells, alleged that Sunoco, Inc. and Sunoco Partners Marketing & Terminals, L.P. failed to pay statutory interest on late payments as required by Oklahoma’s Production Revenue Standards Act (PRSA). The PRSA mandates that first purchasers of oil must pay proceeds within strict timeframes and include 12 percent interest on any late payments. The class was defined to include all owners who received late payments from Sunoco without the required interest.After Sunoco removed the case to the United States District Court for the Eastern District of Oklahoma, the court certified the class in 2019, finding common questions predominated, including whether Sunoco owed interest on untimely payments and whether a demand was required. The district court granted partial summary judgment on liability for the PRSA claim, and after a bench trial, awarded the class over $103 million in actual damages (including prejudgment interest) and $75 million in punitive damages. Sunoco appealed, challenging class certification, standing for certain class members, the calculation of prejudgment interest, and the punitive damages award. The Tenth Circuit previously remanded for clarification on damages allocation for unidentified owners, which the district court addressed.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s rulings on class certification, ascertainability, standing, and the award of actual damages including prejudgment interest. The court held that the PRSA requires automatic payment of statutory interest on late payments, and that prejudgment interest should be compounded until paid. However, the Tenth Circuit vacated the punitive damages award, holding that punitive damages are not available for breach of contract claims under Oklahoma law when the only claim proven was a PRSA violation. The case was remanded for amendment of the judgment consistent with this opinion. View "Cline v. Sunoco" on Justia Law

Plaintiffs, C&M Resources, LLC and Winter Oil, LLC, acting on behalf of a putative class of royalty owners, alleged that Extraction Oil and Gas, Inc. underpaid royalties owed under oil and natural gas production agreements. This case is the third attempt by the plaintiffs to pursue these claims, all arising from the same set of facts. In the two prior lawsuits filed in Colorado state court, the trial courts dismissed the complaints for lack of subject matter jurisdiction, finding that the plaintiffs had failed to exhaust administrative remedies before the Colorado Oil and Gas Conservation Commission, as required by statute. The plaintiffs did not appeal those dismissals.In the present case, originally filed in state court in 2019, proceedings were stayed pending the Colorado Supreme Court’s decision in Antero Resources Corp. v. Airport Land Partners, Ltd. After the stay was lifted in 2023 and discovery commenced, Extraction determined that the amount in controversy exceeded $5 million and removed the case to federal court under the Class Action Fairness Act. The plaintiffs moved to remand, arguing that removal was untimely and that Extraction had waived its right to remove by participating in state court litigation. The United States District Court for the District of Colorado denied the remand motion, finding that the removal was timely based on information obtained during discovery and that the bankruptcy proof of claim and other documents from prior cases did not trigger the removal clock.The United States Court of Appeals for the Tenth Circuit reviewed the district court’s decisions. It held that the district court properly denied remand and correctly applied collateral estoppel, precluding the plaintiffs from relitigating the exhaustion requirement. The Tenth Circuit affirmed the district court’s judgment on the pleadings in favor of Extraction, finding no error in the lower court’s rulings. View "C&M Resources v. Extraction Oil and Gas" on Justia Law

This case involved a dispute over the ownership of mineral rights appurtenant to several tracts of land located in Haskell County, Kansas. Michael Leathers and his brother Ronald Leathers each inherited half of these mineral rights from their mother. But an error in a quit claim deed subsequently executed between the brothers left it unclear whether Ronald’s one-half interest in the mineral estate had been conveyed to Michael. In a series of orders spanning several years, the district court (1) reformed the quit claim deed to reflect that Ronald had reserved his one-half interest in the mineral estate; (2) awarded half of Ronald’s one-half interest to Ronald’s wife Theresa (pursuant to Ronald and Theresa’s divorce decree); and (3) held that Ronald owed approximately $1.5 million to the IRS and that the IRS’s tax liens had first priority to any present and future royalties due to Ronald from his remaining one-quarter mineral interest. Ronald appealed, but finding no reversible error in the district court’s judgment with respect to the reformation and the interests, the Tenth Circuit affirmed the district court on all grounds. View "Leathers v. Leathers" on Justia Law

Plaintiffs-Appellants, a certified class of Osage tribal members who owned headrights, appealed the district court’s accounting order. Plaintiffs alleged that the government was improperly distributing royalties to non-Osage tribal members, which diluted the royalties for the Osage tribal members, the rightful headright owners. The complaint attributed this misdistribution to the government’s mismanagement of the trust assets and the government’s failure to perform an accounting. Thus, Plaintiffs sought to compel the government to perform an accounting and to prospectively restrict royalty payments to Osage tribal members and their heirs. The district court dismissed Plaintiffs’ accounting claim because it found that the applicable statute only required the government to account for deposits, not withdrawals, and that such an accounting would not support Plaintiffs’ misdistribution claim. After review, the Tenth Circuit could not say the district court abused its discretion. "The accounting the district court fashioned will certainly inform Plaintiffs of the trust receipts and disbursements and to whom those disbursements were made." View "Fletcher v. United States" on Justia Law

Buccaneer Energy (USA) Inc. sued SG Interests I, Ltd., SG Interests VII, Ltd. (together, “SG”), and Gunnison Energy Corporation (“GEC”) (collectively, “Defendants”) after unsuccessfully seeking an agreement to transport natural gas on Defendants’ jointly owned pipeline system at a price Buccaneer considered reasonable. Specifically, Buccaneer alleged that by refusing to provide reasonable access to the system, Defendants had conspired in restraint of trade and conspired to monopolize in violation of sections 1 and 2 of the Sherman Act, respectively. The district court granted summary judgment to Defendants, concluding that Buccaneer could not establish either of its antitrust claims and that, in any event, Buccaneer lacked antitrust standing. The Tenth Circuit agreed that Buccaneer failed to present sufficient evidence to create a genuine issue of fact on one or more elements of each of its claims, and therefore affirmed on that dispositive basis alone. View "Buccaneer Energy v. Gunnison Energy" on Justia Law

Relator-Appellant Jack Grynberg appealed two district court orders awarding attorney fees. In 1995, Grynberg filed an action in federal district court for the District of Columbia alleging 70 companies in the natural gas industry violated the False Claims Act (FCA). Specifically, he accused the defendants of using techniques that under-measured the gas they extracted from federal and Indian lands under lease agreements. Sixty of the defendants filed motions to dismiss, which the district court granted. It held the defendants were improperly joined under Federal Rule of Civil Procedure 20, and that Grynberg's complaint failed to satisfy the particularized pleading requirement of Rule 9(b). Three months after "Grynberg I's" dismissal, Grynberg began filing 73 separate lawsuits against more than 300 companies in the natural gas industry. The 73 complaints, which closely resembled one another, formed the basis of this case. In this, "Grynberg II," Grynberg moved to consolidate the cases as an Multi-District Litigation (MDL), and they were eventually consolidated in federal district court for the District of Wyoming. Between the dismissal in Grynberg I and filing the complaints in Grynberg II, Grynberg served Freedom of Information Act ("FOIA") requests with the Minerals Management Service ("MMS"), seeking data on pipeline company-purchasers of natural gas. Grynberg created "Exhibit B's" to his complaints from that MMS data, which allegedly showed the defendants were mismeasuring gas. The inaccuracy of the Exhibit Bs did not surface until long after the complaints were filed and after the government conducted a time-consuming investigation. Without yet knowing the Exhibit Bs were inaccurate, the district court denied motions to dismiss for lack of particularity under Rule 9(b), which the court read as requiring a complaint to state the "time, place and contents of the false representation, [and] the identity of the party making the false statements." After surviving the motions to dismiss, Grynberg then faced the defendants' motions for summary judgment, which argued the complaints were based on publicly disclosed information and Grynberg was not an "original source" of the information. Following discovery, a special master recommended 40 of the 73 cases be dismissed for lack of jurisdiction. The district court went further by holding that all 73 cases were jurisdictionally barred. Following the dismissal of the claims and the Tenth Circuit's decision in the first appeal, the district court entered two orders awarding attorney fees: (1) under the FCA's fee-shifting provision; and (2) fees relating to the first appeal on the original-source question. Between the two orders, the court granted 35 defendant groups attorney fees totaling nearly $17 million. As to the remaining defendants in this appeal, around $5.5 million of attorney fees was awarded to the FCA Appellees for district court proceedings, and around $1 million of attorney fees was awarded to the Appellate-Fee Appellees for the first appeal. Grynberg appealed the award of fees under the FCA as to seven defendant groups. He appealed the award of fees to 13 other defendant groups. After review, the Tenth Circuit affirmed the FCA fees, but reversed the appellate-related attorney fees. View "In re: Natural Gas Royalties Qui Tam Litigation" on Justia Law