Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in US Court of Appeals for the Tenth Circuit
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Antero Resources Company and South Jersey Gas Company entered into an eight-year contract for Antero to deliver natural gas from the Marcellus Shale formation to gas meters located on the Columbia Pipeline in West Virginia. The parties tied gas pricing to the Columbia Appalachia Index.During performance of the contract, the price of natural gas linked to the Index increased. South Jersey contested the higher prices, arguing that modifications to the Index materially changed the pricing methodology, and that the Index should be replaced with one that reflected the original agreement. Antero disagreed. South Jersey then sued Antero in New Jersey state court for failing to negotiate a replacement index, and began paying a lower price based on a different index. Antero then sued South Jersey in federal district court in Colorado, where its principal place of business was located, for breach of contract for its failure to pay the Index price. The lawsuits were consolidated in Colorado and the case proceeded to trial. The jury rejected South Jersey’s claims, finding South Jersey breached the contract and Antero was entitled to $60 million damages. South Jersey argued on appeal the district court erred in denying its motion for judgment in its favor as a matter of law, or, alternatively, that the court erred in instructing the jury. After review, the Tenth Circuit affirmed, finding a reasonable jury could find South Jersey breached its contract with Antero because the Index was not discontinued nor did it materially change. Furthermore, the Court found no defects in the jury instructions. View "Antero Resources Corp. v. South Jersey Resources Group" on Justia Law

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Peabody Twentymile Mining, LLC (“Peabody Twentymile”) operates the Foidel Creek Mine, a large underground coal mine in Colorado. The mine uses over one thousand ventilation stoppings to separate the fresh intake air from the air flowing out of the mine that has been circulated through areas where extraction is occurring. In 2014, an inspector for the Mine Safety and Health Administration (“MSHA”) issued a citation to Peabody Twentymile for a violation of the federal law requiring permanent ventilation stoppings to be “constructed in a traditionally accepted method and of materials that have been demonstrated to perform adequately.” MSHA alleged Peabody Twentymile was using polyurethane spray foam to seal the perimeter of a permanent concrete block ventilation stopping. Peabody Twentymile unsuccessfully contested the citation and civil penalty before an administrative law judge (“ALJ”). The ALJ relied on the preamble to the ventilation stopping regulation, which listed six “traditionally accepted construction methods,” to determine that Peabody Twentymile’s method of constructing concrete block stoppings was not “traditionally accepted” and was subject to a $162 fine. Peabody Twentymile then petitioned the Federal Mine Safety and Health Review Commission (the “Commission”) for review, and the Commission issued an evenly split decision, causing the ALJ’s decision to stand. Peabody Twentymile thereafter petitioned the Tenth Circuit for review of the ALJ’s decision. The Tenth Circuit concluded Peabody Twentymile’s construction method was “traditionally accepted” by MSHA under the unambiguous meaning of that phrase, it reversed the ALJ’s decision and vacated the citation. View "Peabody Twentymile Mining v. Secretary of Labor" on Justia Law

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The issue presented for the Tenth Circuit's review centered on whether the Bureau of Land Management violated the National Historic Preservation Act (NHPA) and the National Environmental Policy Act (NEPA) in granting more than 300 applications for permits to drill horizontal, multi-stage hydraulically fracked wells in the Mancos Shale area of the San Juan Basin in northeastern New Mexico. Appellants, four environmental advocacy groups) sued the Secretary of the Department of the Interior, the Bureau of Land Management, and the Secretary of the BLM, alleging that the BLM authorized the drilling without fully considering its indirect and cumulative impacts on the environment or on historic properties. The district court denied Appellants a preliminary injunction, and the Tenth Circuit affirmed that decision in 2016. After merits briefing, the district court concluded that the BLM had not violated either NHPA or NEPA and dismissed Appellants’ claims with prejudice. Appellants appealed, and this time, the Tenth Circuit affirmed in part, reversed in part, and remanded. The Tenth Circuit determined that, as to five EAs, Appellants have demonstrated that the BLM needed to, but did not, consider the cumulative impacts of water resources associated with 3,960 reasonably foreseeable horizontal Mancos Shale wells. The BLM’s issuance of FONSIs and approval of APDs associated with these EAs was therefore arbitrary and capricious and violated NEPA. The matter was remanded for the district court to vacate the FONSIs and APDs associated with those five environmental analyses; the Tenth Circuit affirmed as to all other issues. View "Dine Citizens v. Bernhardt" on Justia Law

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Defendant Chaparral Energy, L.L.C. (Chaparral) operated approximately 2,500 oil and gas wells in Oklahoma. Plaintiffs Naylor Farms, Inc. and Harrel’s, L.L.C. (collectively, Naylor Farms) had royalty interests in some of those wells. According to Naylor Farms, Chaparral systematically underpaid Naylor Farms and other similarly situated royalty owners by improperly deducting from their royalty payments certain gas-treatment costs that Naylor Farms contended Chaparral was required to shoulder under Oklahoma law. Naylor Farms brought a putative class-action lawsuit against Chaparral and moved to certify the class under Rule 23 of the Federal Rules of Civil Procedure. The district court granted Naylor Farms’ motion to certify, and Chaparral appealed the district court’s certification order. After review, the Tenth Circuit concluded Chaparral failed to demonstrate the district court’s decision to certify the class fell outside “the bounds of rationally available choices given the facts and law involved in the matter at hand.” View "Naylor Farms v. Chaparral Energy" on Justia Law

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The Bill Barrett Corporation and YMC Royalty Company were oil and gas companies who held mineral rights in northeastern Colorado. In 2013, they had the opportunity to jointly develop two oil wells. To facilitate the drilling operations, YMC executed documents authorizing joint expenditures, accepting responsibility for costs, and electing to participate and share in the revenues. But after depositing nearly $150,000 in revenues, YMC asserted it had never entered into an enforceable joint operating agreement with Barrett and declined to pay its share of the costs. Barrett sued for breach of contract. A jury ultimately found in favor of Barrett. The district court denied YMC’s motions for judgment as a matter of law and for a new trial. After its review of the matter, the Tenth Circuit concluded the parties formed an enforceable contract under Colorado law and a reasonable jury could conclude the parties should be held to their bargain. The Court also found no reversible error in the district court's administration of trial, and affirmed that court's judgment. View "Bill Barrett Corporation v. YMC Royalty Company" on Justia Law

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Dennis Woolman, former president of The Clemens Coal Company, challenged a district court’s determination that Liberty Mutual Fire Insurance Company didn’t breach a duty to him by failing to procure for Clemens Coal an insurance policy with a black-lung disease endorsement. Clemens Coal operated a surface coal mine until it filed for bankruptcy in 1997. Woolman served as Clemens Coal’s last president before it went bankrupt. Federal law required Clemens Coal to maintain worker’s compensation insurance with a special endorsement covering miners’ black-lung disease benefits. Woolman didn’t personally procure insurance for Clemens Coal but instead delegated that responsibility to an outside consultant. The policy the consultant ultimately purchased for the company did not contain a black-lung-claim endorsement, and it expressly excluded coverage for federal occupational disease claims, such as those arising under the Black Lung Benefits Act (the Act). In 2012, a former Clemens Coal employee, Clayton Spencer, filed a claim with the United States Department of Labor (DOL) against Clemens Coal for benefits under the Act. After some investigation, the DOL advised Woolman that Clemens Coal was uninsured for black-lung-benefits claims as of July 25, 1997 (the last date of Spencer’s employment) and that, without such coverage, Woolman, as Clemens Coal’s president, could be held personally liable. Woolman promptly tendered the claim to Liberty Mutual for a legal defense. Liberty Mutual responded with a reservation-of-rights letter, stating that it hadn’t yet determined coverage for Spencer’s claim but that it would provide a defense during its investigation. Then in a follow-up letter, Liberty Mutual clarified that it would defend Clemens Coal as a company (not Woolman personally) and advised Woolman to retain his own counsel. Liberty Mutual eventually concluded that the insurance policy didn’t cover the black-lung claim, and sued Clemens Coal and Woolman for a declaration to that effect. In his suit, Woolman also challenged the district court’s rejection of his argument that Liberty Mutual should have been estopped from denying black-lung-disease coverage, insisting that he relied on Liberty Mutual to provide such coverage. Having considered the totality of the circumstances, the Tenth Circuit Court of Appeals concluded the district court didn’t err in declining Woolman’s extraordinary request to expand the coverages in the Liberty Mutual policy. “Liberty Mutual never represented it would procure the coverage that Woolman now seeks, and the policy itself clearly excludes such coverage. No other compelling consideration justifies rewriting the agreement— twenty years later—to Woolman’s liking.” View "Liberty Mutual Fire Insurance v. Woolman" on Justia Law

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Enable Intrastate Transmission, LLC owned and operated a natural gas pipeline that crossed Indian allotted land in Anadarko, Oklahoma. A twenty-year easement for the pipeline expired in 2000. Enable failed to renew the easement but also failed to remove the pipeline. In response, roughly three-dozen individual Native American Allottees who held equitable title in the allotted land filed suit. The district court granted summary judgment to the Allottees, ruling on the basis of stipulated facts that Enable was liable for trespass. The court then enjoined the trespass, ordering Enable to remove the pipeline. Enable appealed both rulings; the Tenth Circuit affirmed in part, reversed in part and remanded for further proceedings. The Court determined the district court properly granted summary judgment to the Allottees but erred in issuing the permanent injunction. A federal district court’s decision to permanently enjoin a continuing trespass on allotted land should take into account: (1) whether an injunction is necessary to prevent “irreparable harm;” (2) whether “the threatened injury outweighs the harm that the injunction may cause” to the enjoined party; and (3) whether the injunction would “adversely affect the public interest.” The Tenth Circuit concluded that by ordering Enable to remove the pipeline on the basis of liability alone, the district court legally erred and thus abused its discretion. The district court incorporated a simplified injunction rule from Oklahoma law when it should have adhered to basic tenants of federal equity jurisprudence. This matter was remanded for the district court "for a full weighing of the equities." View "Davilla v. Enable Midstream Partners" on Justia Law

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Plaintiff-Appellant DTC Energy Group, Inc., sued two of its former employees, Adam Hirschfeld and Joseph Galban, as well as one of its industry competitors, Ally Consulting, LLC, for using DTC’s trade secrets to divert business from DTC to Ally. DTC moved for a preliminary injunction based on its claims for breach of contract, breach of the duty of loyalty, misappropriation of trade secrets, and unfair competition. The district court denied the motion, finding DTC had shown a probability of irreparable harm from Hirschfeld’s ongoing solicitation of DTC clients, but that DTC could not show the ongoing solicitation violated Hirschfeld’s employment agreement. After review, the Tenth Circuit determined the district court did not abuse its discretion when denying DTC's motion for a preliminary injunction, and affirmed. View "DTC Energy Group v. Hirschfeld" on Justia Law

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The issue raised on appeal in this matter centered on a trespass claim by Plaintiffs-Appellants Marvin and Mildred Bay that Defendants-Appellees Anadarko E&P Onshore LLC and Anadarko Land Corp. (together, “Anadarko”), that through a lessee, exceeded the scope of an easement by using excessive surface land to drill for oil and gas. The district court had diversity jurisdiction over the case and entered final judgment against the Bays pursuant to Federal Rule of Civil Procedure 54(b). The Tenth Circuit was presented with an issue of whether a deed reserving mineral rights in land (and the specific right to use the surface as “convenient or necessary” to access the minerals) requires applying a different test than the one prescribed in Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913 (Colo. 1997), to evaluate whether the mineral owner’s use of land constitutes a trespass. The Court concluded it did not, and reversed and remanded for further proceedings. View "Bay v. Anadarko E&P Onshore" on Justia Law

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Husky Ventures, Inc. (“Husky”) sued B55 Investments Ltd. (“B55”) and its president, Christopher McArthur, for breach of contract and tortious interference under Oklahoma law. In response, B55 filed counterclaims against Husky. A jury reached a verdict in Husky’s favor, awarding $4 million in compensatory damages against both B55 and McArthur and $2 million in punitive damages against just McArthur; the jury also rejected the counterclaims. In further proceedings, the district court entered a permanent injunction and a declaratory judgment in Husky’s favor. After the court entered final judgment, B55 and McArthur appealed, and moved for a new trial under Federal Rule of Civil Procedure 59(a) or, in the alternative, to certify a question of state law to the Oklahoma Supreme Court. The court denied the motion in all respects. On appeal, B55 and McArthur contended the district court erred in denying their motion for a new trial and again moved to certify a question of state law to the Oklahoma Supreme Court. In addition, they appealed the permanent injunction and declaratory judgment and argue that the district court erred in refusing to grant leave to amend the counterclaims. The Tenth Circuit dismissed B55 and McArthur’s claims relating to the motion for a new trial for lack of appellate jurisdiction and denied their motion to certify the state law question as moot. The Court otherwise affirmed the district court’s judgment on the remaining issues. View "Husky Ventures v. B55 Investments" on Justia Law