Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in US Court of Appeals for the Fifth Circuit
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In 2022, the Department of Energy (DOE) repealed regulations, known as the 2020 Rules, that had created new classes of dishwashers and laundry machines with shorter cycle times, arguing the 2020 rules were illegal. Several states, led by Louisiana, petitioned for the review of the repeal. The United States Court of Appeals for the Fifth Circuit ruled in favor of the states, finding that the DOE's repeal was arbitrary and capricious for failing to consider the performance characteristics of the appliances, the substitution effects, and the evidence showing that the Department’s conservation standards were leading Americans to use more energy and water. The court also noted that the DOE failed to consider other remedies short of repealing the 2020 rules entirely. The court did not reach a conclusion on whether the DOE had the statutory authority to regulate water use in dishwashers and clothes washers. The court granted the petition and remanded the case back to the DOE for further proceedings consistent with its opinion. View "Louisiana v. DOE" on Justia Law

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Plaintiffs filed this action as unleased mineral owners whose interests are situated within forced drilling units formed by the Louisiana Office of Conservation and operated by Chesapeake. Plaintiffs have not made separate arrangements to dispose of their shares of production, so the unit operator can sell the shares but must pay the owners a pro rata share of the proceeds within one hundred eighty days of the sale. Chesapeake timely removed this action to the district court, based on diversity jurisdiction. The district court certified its ruling for interlocutory appeal pursuant to 28 U.S.C. Section 1292(b).   The Fifth Circuit explained that this case concerns the interplay between Louisiana’s relatively new conservation laws and its deeply rooted negotiorum gestio doctrine. The court wrote that because it cannot make a reliable Erie guess as to the applicability of Louisiana’s negotiorum gestio doctrine. Accordingly, the court certified the following determinative question of law to the Louisiana Supreme Court: 1) Does La. Civ. Code art. 2292 applies to unit operators selling production in accordance with La. R.S. 30:10(A)(3)? View "Johnson v. Chesapeake Louisiana, L.P." on Justia Law

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Defendant Compass Minerals Louisiana, Inc. (“Compass”) is part of a mineral company that owns and operates multiple salt mines. Among Compass’s locations is its Cote Blanche salt mine. Compass contracted with Louisiana-based companies Fire & Safety Specialists, Inc. (“FSS”) and MC Electric, LLC (“MCE”). An electrician employed by MCE died in an accident at the Cote Blanche salt mine. Both FSS and MCE held a commercial general liability policy with QBE. QBE filed a declaratory action in federal court, asserting that the indemnification and additional-insured provisions in the FSS and MCE purchase orders are “null, void, and unenforceable” under the Louisiana Oilfield Anti-Indemnity Act (“LOAIA”). The court rejected QBE’s argument that Compass “drills for” salt by using the drill-and-blast method for breaking a salt wall. It concluded, relatedly, that the term “drilling for minerals” in the LOAIA “should be construed as referring to the drilling of a well.” QBE appealed.   Finding no clear and controlling precedent on this issue of Louisiana law, the Fifth Circuit certified two questions to the Louisiana Supreme Court: 1.     Does the Louisiana Oilfield Anti-Indemnity Act, La. Stat. Ann. Section 9:2780, apply to provisions in agreements that pertain to “drilling for minerals,” even where the agreement does not “pertain to a well”? 2.     If the Act applies to agreements that pertain to “drilling for minerals,” irrespective of the agreement’s nexus to a well, does the Act apply to invalidate these indemnification and additional-insured provisions contained in contracts for fire suppression and electrical work in a salt mine, by virtue of the salt mine’s use of a “drill-and-blast” method for mining salt? View "QBE Syndicate 1036 v. Compass Minerals" on Justia Law

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Driftwood LNG and Driftwood Pipeline (jointly “Driftwood”) want to convert natural gas produced in the United States into liquefied natural gas (“LNG”) for export to international markets. That undertaking involves building an LNG production and export terminal and a pipeline that will connect to existing interstate pipeline systems; the terminal would be located on the Calcasieu River in Louisiana. Numerous federal and state agencies are involved in the approval and permitting process for projects such as Driftwood’s. One of those agencies— the U.S. Army Corps of Engineers (“the Corps”)—granted Driftwood one of the requisite permits. Petitioners Healthy Gulf and Sierra Club petition for review of that permit, alleging that the Corps’s decision violated the governing statute and was arbitrary and capricious.   The Fifth Circuit denied the petition. The court explained that the record reveals thorough analysis and cooperation by the Corps and other agencies and a lucid explanation of why the Corps was permitting a departure from the default hierarchy. The court wrote that the approval process spanned several years and involved detailed analysis by (and often the cooperation of) FERC, the Corps, the EPA, the National Marine Fisheries Services, the Louisiana Department of Wildlife and Fisheries, and LDEQ, among others. The administrative record is over 24,000 pages and provides more than enough insight into the agencies’ deliberations. Moreover, the court explained that both the Corps and the Louisiana Department of Natural Resources (which issued Driftwood a Coastal Use permit) imposed conditions on Driftwood to ensure that it did not dredge and use contaminated material. View "Healthy Gulf v. US Army Corps of Eng" on Justia Law

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The Nuclear Regulatory Commission has asserted that it has authority under the Atomic Energy Act to license temporary, away from reactor storage facilities for spent nuclear fuel. Based on that claim of authority, the Commission issued a license for Interim Storage Partners, LLC, to operate a temporary storage facility on the Permian Basin.Fasken Land and Minerals, Ltd., and Permian Basin Land and Royalty Owners (“PBLRO”) petitioned for review of the license. As did the State of Texas, arguing that the Atomic Energy Act doesn’t confer authority on the Commission to license such a facility.The Fifth Circuit granted Texas’ petition for review and vacated the license, finding that the Atomic Energy Act does not confer on the Commission the broad authority it claims to issue licenses for private parties to store spent nuclear fuel away from the reactor. And the Nuclear Waste Policy Act establishes a comprehensive statutory scheme for dealing with nuclear waste generated from commercial nuclear power generation, thereby foreclosing the Commission’s claim of authority. View "State of Texas v. NRC" on Justia Law

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Seven years ago, the Fifth Circuit court vacated d, as arbitrary and capricious, the Federal Energy Regulatory Commission’s (“FERC”) cost allocation scheme for electrical grid improvements in the WestConnect region, which covers utility service to much of the American West. On remand, FERC was instructed to provide a more complete justification for its orders. The petition under review asserts that the reasons FERC gave on remand remain insufficient.   The Fifth Circuit granted the petition and reversed the orders. The court explained that FERC’s orders violate the Federal Power Act as a matter of law and, alternatively, the agency has again inadequately explained its actions. The cost causation principle that binds FERC does not authorize it to force its regulated jurisdictional utilities to assume the costs of providing service to non-jurisdictional utilities. The court explained that FERC’s compliance orders cannot “satisfy its statutory mandate—except by ignoring the benefits the non-jurisdictional utilities would receive.” View "El Paso Electric v. FERC" on Justia Law

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The Louisiana Public Service Commission (“LPSC”) petitioned the Fifth Circuit for a writ of mandamus compelling the Federal Energy Regulatory Commission (“FERC”) to resolve several of its complaints before the agency related to a ratemaking dispute with System Energy Resources, Inc. (“SERI”), operator of the Grand Gulf Nuclear Station.   The Fifth Circuit concluded that FERC has yet to provide the court with sufficient explanation for its delay despite ongoing irreparable harm to consumers. Accordingly, the court ordered FERC to provide the court—within 21 days—with a meaningful explanation for the length of time the Commission takes for final action in Section 206 complaint proceedings, including those at issue here. View "In re: LA Pub Svc Comm" on Justia Law

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Electric Reliability Council of Texas, Inc. (“ERCOT”) determines market-clearing prices unless otherwise directed by the Public Utility Commission of Texas (“PUCT”). ERCOT is the sole buyer and seller of all energy in Texas. According to the operative complaint, during winter storm Uri ERCOT and the PUCT allegedly “intervened in the market for wholesale electricity by setting prices [that were] orders of magnitude higher than what market forces would ordinarily produce.”   Just Energy, a retail energy provider, purports that after the storm, ERCOT “floored” it with invoices totaling approximately $335 million. Just Energy commenced bankruptcy proceedings in Canada and filed this Chapter 15 case in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Just Energy challenges its invoice obligations. At the hearing on ERCOT’s motion to dismiss, the bankruptcy court stated that it would strike various language like, “subject to reduction only after a finding by the Court concerning a legally appropriate energy price per megawatt hour as proven by expert testimony, if appropriate, but in no event greater than the price per megawatt hour in effect after market forces took effect.” By striking this and similar language sprinkled throughout the complaint, the court concluded that “this change solves the abstention problem.”    The Fifth Circuit disagreed and vacated the bankruptcy court’s order and remanded with instructions to determine the appropriate trajectory of this case after abstention. The court explained that abstention under Burford6\ is proper because: (1) the doctrine applies in the bankruptcy context; and (2) four of the five Burford factors counsel in favor of abstention. View "Electric Reliability v. Just Energy" on Justia Law

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Petitioners Shrimpers and Fishermen of the RGV, Sierra Club, and Save RGV from LNG (collectively, “Petitioners”) challenge the issuance of a Clean Water Act (“CWA”) permit by the U.S. Army Corps of Engineers (the “Corps”). Petitioners allege that the Corps’ permit issuance violated the CWA and its implementing regulations.   The Fifth Circuit denied the petition for review, holding that the Corps approved the least environmentally damaging practicable alternative presented before it during the permitting process and did not act arbitrarily in its evaluation of pipeline construction impacts and mitigation efforts. The court explained Petitioners’ first set of arguments centers on the Corps’ estimation that restoration will occur within one year. They state that the Corps did not consider the full construction period when quantifying the duration of impacts, which they allege is improper. However, they supply no evidence that the construction period must be, or even that it typically is, included when assessing whether impacts are temporary.   Further, the Corps’ analysis also comports with the EIS, which estimates that herbaceous vegetation will regenerate “within 1 to 3 years.” The EIS estimation necessarily includes the finding that vegetation may revegetate in one year, as the Corps concluded. Finally, the EPA feedback Petitioners relied upon does not consider the approved compensatory mitigation plan or the special conditions of the permit because the comments are from 2015 and 2018— well before the current permit (and even the original permit) was approved. The Corps considered this feedback and aligned its ultimate approach with the EPA’s recommendations. View "Shrimpers v. United States Army Corps" on Justia Law

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Appellant Sanare Energy Partners, L.L.C. agreed to purchase a mineral lease and related interests from Appellee PetroQuest Energy, L.L.C. Later, PetroQuest filed bankruptcy, and Sanare filed an adversary suit in that proceeding. Sanare argued that the lack of certain third-party consents rendered PetroQuest liable for costs associated with some “Assets” whose transfer the sale envisioned. The bankruptcy court and the district court each disagreed with Sanare.   The Fifth Circuit affirmed. The court explained that the Properties are “Assets” under the PSA, including section 11.1, even if the Bureau’s withheld consent prevented record title for the Properties from transferring to Sanare. This conclusion is plain from the PSA’s text, which excludes Customary Post-Closing Consents such as the Bureau’s from the category of consent failures that alter the parties’ bargain. Consent failures that do not produce a void-ab-initio transfer also do not alter the parties’ bargain, so the Agreements, too, are Assets under the PSA’s plain text. View "Sanare Energy v. Petroquest" on Justia Law