Justia Energy, Oil & Gas Law Opinion Summaries

These consolidated cases involve a dispute between Antero Resources Corporation (“Antero”) and a group of landowners (“Lessors”) over the payment of natural gas royalties under several oil and gas leases. The leases permit Antero to extract and sell natural gas owned by the Lessors in exchange for royalty payments. Antero appealed from the district court’s summary judgment order, which held that Antero breached the terms of the leases by deducting certain “post-production costs” from the royalties it paid Lessors and awarded damages. Lessors cross-appeal the district court’s earlier dismissal of their fraud and punitive damages claims against Antero.   The Fourth Circuit affirmed the district court’s summary judgment order in part and vacated in part. The court concluded that some of the leases prohibit Antero from deducting any post-production costs from Lessors’ royalties, but other leases—namely, those that contain a “Market Enhancement Clause”—do authorize deductions in certain circumstances. Separately, the court affirmed the dismissal of the fraud and punitive damages claims because Lessors did not plead them with sufficient particularity. View "Gerald Corder v. Antero Resources Corporation" on Justia Law

A real estate development company PEM Entities LLC (PEM), asserts a North Carolina county violated the Federal Constitution and state law by imposing new rules for getting water and sewage services. The district court dismissed the complaint, concluding the company lacked standing to bring its takings and due process claims, its equal protection claim was too insubstantial to raise a federal question, and the court should not exercise jurisdiction over the state law claims once the federal claims were dismissed.   The Fourth Circuit affirmed. The court explained that without a constitutionally protected property interest, PEM’s takings and due process claims fail as a matter of law. Accordingly, the court affirmed the district court’s dismissal of PEM’s takings and due process claims because they fail to state a claim on which relief can be granted. Further, the court concluded the district court was right to dismiss PEM’s equal protection claim but should have done so for failure to state a claim rather than lack of jurisdiction. Thu, having concluded the district court correctly dismissed all of PEM’s federal claims, the court saw no abuse of discretion in the district court’s decision not to exercise supplemental jurisdiction over the state law claims. View "PEM Entities LLC v. County of Franklin" on Justia Law

The Tennessee Valley Authority sells its power to the BVU Authority in Virginia, one of its many customers. The BVU Authority in turn sells its power to local consumers who need electricity. Among those local consumers is Plaintiff, who believes that the TVA has a statutory duty to use the fruits of its sales to large industrial buyers to subsidize consumers’ electricity consumption. Plaintiff believes that a string of TVA rate changes, shifting costs from industry to consumers, were illegal. So he sued BVU Authority and TVA under three theories, which all more or less amount to claims that the TVA failed to live up to its statutory duties under Section 11. The district court dismissed all three claims because TVA’s rate-making authority is committed to agency discretion and thus unreviewable.   The Fourth Circuit affirmed the district court’s dismissal of all three of Plaintiff’s claims. The court explained that Section 11 of the TVA Act lays out broad policies and goals that operate more like aspirations than commands. It does not support any of the claims that Plaintiff offers against TVA or BVU Authority. TVA rate-making is a presumptively unreviewable category of agency action under 701(a)(2), and the policy-laden language of Section 11 does not provide any guidelines or limits to overcome that presumption. Because the TVA-BVU contract simply repeats the vague statutory language, Plaintiff’s contract claim is really a statutory claim in disguise, and Section 11 of the TVA Act does not provide a private cause of action. View "David Holbrook v. Tennessee Valley Authority" on Justia Law

The Fourth Circuit considered two petitions for review challenging FERC's issuance of a license to McMahan, authorizing McMahan to operate the Bynum Hydroelectric Project on the Haw River in North Carolina. Assuming without deciding that a state may waive its certification authority under section 401 of the Clean Water Act by coordinating with an applicant in a scheme to defeat the statutory review period through a process of withdrawing and resubmitting the certification application, the court concluded that FERC's finding of coordination between McMahan and NCDEQ is not supported by substantial evidence. Furthermore, without evidence of improper coordination, the court concluded that FERC erred by determining that North Carolina waived its certification authority under section 401.In Case No. 20-1655, the court granted NCDEQ's petition for review of FERC's determination that NCDEQ waived its rights under the Clean Water Act to issue a water quality certification for the Project. The court vacated the license issued by FERC and remanded with instructions for FERC to reissue the license to include the water-quality conditions imposed by NCDEQ. In Case No. 20-1671, the court dismissed for lack of jurisdiction that portion of PK Ventures' petition for review challenging the validity of McMahan's state applications for a section 401 certification. Finding no merit to the remaining claims, the court otherwise denied the petition for review. View "North Carolina Department of Environmental Equality v. Federal Energy Regulatory Commission" on Justia Law

MVP asked two Army Corps districts to verify that, pursuant to the Clean Water Act, MVP's proposed discharge of dredged and/or fill material into waters of the United States in furtherance of construction of a natural gas pipeline in those districts could be governed by the Army Corps' 2017 nationwide permit (NWP) referred to as NWP 12. The Huntington District issued a verification, determining that the Pipeline project met the criteria for operation under the NWP 12, excusing the project from the individual permitting process (the "Verification"). The Norfolk District did the same, issuing a reinstatement of its prior verification allowing MVP to use NWP 12 in that district (the "Reinstatement"). Petitioners filed petitions for agency review of the Verification and Reinstatement pursuant to the Natural Gas Act (NGA) and filed the instant motions to stay.The Fourth Circuit concluded that petitioners are likely to succeed on the merits of their petitions for review, and other equitable factors weigh in favor of granting the motions for stay. The court explained that the Verification was likely issued in contravention of applicable law because the Army Corps impermissibly incorporated into NWP 12 a modified permit condition from the West Virginia Department of Environmental Protection (WVDEP). Furthermore, because the Verification was likely issued in contravention of law, the Reinstatement (which necessarily depends on the validity of the Verification) is likely defective as well. Therefore, the court granted petitioners' motions for a stay of the Huntington District's Verification and the Norfolk District's Reinstatement until such time as the court may consider the petitions for review on their merits. However, the court concluded that petitioners are not likely to succeed on the merits of their challenges to the Army Corps' 2017 issuance of NWP 12 itself because the court likely lacks jurisdiction to entertain such challenges. View "Sierra Club v. U. S. Army Corps of Engineers" on Justia Law

The Fourth Circuit vacated the district court's grant of summary judgment in favor of plaintiffs in an action brought against Equinor and SWN, challenging the deduction of post-production costs from royalties paid to plaintiffs pursuant to an oil and gas lease between the parties. The district court held that the lease failed to properly provide for the method of calculating post-production costs.The court held, however, that the lease provisions regarding royalty payments satisfy Estate of Tawney v. Columbia Natural Resources, LLC, 633 S.E.2d 22 (W. Va. 2006), and are otherwise consistent with West Virginia law. In this case, the lease suffices under Tawney to indicate the method for calculating the amount of post-production costs to be deducted when calculating plaintiffs' royalties; that method is simply to add up all of the identified, reasonable, and actually incurred post-production costs, and deduct them from SWN and Equinor's gross proceeds; and the amount is then adjusted for plaintiffs' fractional share of the total pooled acreage and their royalty rate. Especially in light of Leggett v. EQT Production Co., 800 S.E.2d 850 (W. Va. 2017), the court concluded that West Virginia law demands nothing more. The court found it unnecessary to certify any issue of law. View "Young v. Equinor USA Onshore Properties, Inc." on Justia Law

The Fourth Circuit granted Ergon's petition for review of the EPA's decision denying Ergon's petition to be exempt from the EPA's administration of a renewable fuel standard program. The court previously vacated and remanded the EPA's denial as arbitrary and capricious. On remand, the EPA denied Ergon's petition again. In this appeal, Ergon argues that the EPA repeated the errors the court previously identified in Ergon I by again relying on the DOE's facially deficient scoring metrics to deny the petition.The court reviewed the record and concluded that, although the EPA's post-remand decision largely cured the problems the court previously identified, Ergon has provided sufficient evidence undermining one aspect of the EPA's decision. In this case, part of the EPA's basis for accepting the DOE's reasoning as to Section 1(b) of the DOE's Scoring Matrix has been reliably called into question, and thus the EPA's decision was arbitrary and capricious. Because of the threshold problem with the rationale provided for the Section 1(b) scoring, the court did not reach the secondary issue regarding the apparently contradictory definitions of "refinery" used in Section 1(b) and 2(a). Accordingly, the court vacated and remanded for further proceedings. View "Ergon-West Virginia, Inc. v. Environmental Protection Agency" on Justia Law

The Fourth Circuit affirmed the district court's remand order and held that the federal officer removal statute, 28 U.S.C. 1442, does not provide a proper basis for removal in a climate-change lawsuit against oil and gas companies.The court first held that Noel v. McCain, 538 F.2d 633 (4th Cir. 1976), remains binding precedent in this circuit and dismissed this appeal for lack of jurisdiction, insofar as it seeks to challenge the district court's determination with respect to the propriety of removal based on federal-question, Outer Continental Shelf Lands Act, admiralty, and bankruptcy jurisdiction.Although the court had jurisdiction to review the federal officer removal statute claim, the court agreed with Baltimore that none of the three contractual relationships defendants pointed to were sufficient to justify removal under the federal officer removal statute in this case, either because they failed to satisfy the acting-under prong or because they were insufficiently related to Baltimore's claims for purposes of the nexus prong. View "Mayor and City Council of Baltimore v. BP P.L.C." on Justia Law

The Fourth Circuit affirmed the district court's judgment holding that FERC's action against financial trading entities and an individual trader was timely-filed within the five-year statute of limitations on civil penalty actions under 28 U.S.C. 2462. The court held that FERC did not have a complete and present cause of action to file suit in federal district court until 60 days elapsed after it had issued the penalty assessment order and appellants refused to pay the assessed penalty. Therefore, FERC's claim had not accrued until then and this action was timely filed. View "Federal Energy Regulatory Commission v. Powhatan Energy Fund, LLC" on Justia Law

Petitioners challenged the Board's award of a permit for construction of a compressor station on behalf of ACP in the historic community of Union Hill. The compression station is one of three stations planned to support the transmission of natural gas through ACP's 600-mile pipeline.The Fourth Circuit held that the Board erred in failing to consider electric turbines as zero-emission alternatives to gas-fired turbines in the compressor station. The court also held that the Board erred in failing to assess the compressor station's potential for disproportionate health impacts on the predominantly African-American community of Union Hill, and in failing to independently evaluate the suitability of that site. Accordingly, the court vacated the permit and remanded for the Board to make findings with regard to conflicting evidence in the record, the particular studies it relied on, and the corresponding local character and degree of injury from particulate matter and toxic substances threatened by construction and operation of the compressor station. View "Friends of Buckingham v. State Air Pollution Control Board" on Justia Law