Justia Energy, Oil & Gas Law Opinion Summaries

The issue this appeal presented for the Tenth Circuit's review centered on the denial of tax benefits relating to petitioner Preston Olsen's purchase of solar lenses. The benefits were only available if the taxpayer had a profit motive for the purchases. Olsen bought the lenses in 2009, 2011, 2012, 2013, and 2014, through a program created by Neldon Johnson. Under the program, Johnson would use the lenses in a new system to generate electricity by heating a liquid to generate steam and drive a turbine. Johnson never finished the system; he had completed the lenses on only one tower and hadn’t decided whether those lenses would heat water, oil, or molten salt. Johnson funded the program through investors like Olsen who bought lenses from Johnson’s companies and leased the lenses to another of Johnson’s companies. Once the system began producing revenue, Johnson's company would pay Olsen’s company $150 per lens per year. But the system never generated any revenue. From 2009 to 2014, Olsen annually claimed depreciation deductions and solar energy credits on the lenses. These claims allowed the Olsens to pay little or no federal income taxes. "So the Olsens came out ahead even though they had never obtained any money from the leases." The tax court disallowed the benefits in part because it found Petitioner lacked a profit motive. Finding no reversible error in the tax court's decision, the Tenth Circuit affirmed. View "Olsen, et al. v. CIR" on Justia Law

The Tenth Circuit found the EPA’s own written decision indicated the EPA concluded that the statutory and regulatory definitions of “small refinery” did not provide specific “guidance []or limits” on how the terms “refinery” and “average aggregate daily crude oil throughput” should have been “evaluated.” Accordingly, the EPA proceeded as though it “ha[d] discretion to choose what factors and information it w[ould] consider in this evaluation.” The EPA’s decisions to deny an extension of a temporary exemption to “small refineries” from complying with the Clean Air Act’s Renewable Fuel Standard Program were reversed and remanded. "That does not mean that the EPA could not again arrive at the same conclusion. But, to do so, the EPA would need to (a) either consider and apply its own regulatory definition of “facility” to the circumstances presented here or explain why that regulatory definition is inapplicable, (b) provide clear guidance on its integration analysis, to the extent it continues to rely on that factor, and (c) omit any consideration of Suncor’s management structure or public statements unless it can demonstrate that those factors are somehow consistent with, and have a reasonable connection to, the statutory and regulatory definitions of the term “refinery.” View "Suncor Energy v. EPA" on Justia Law

OXY USA, Inc. appealed a decision of the U.S. Department of the Interior’s Office of Natural Resources Revenue (“ONRR”) ordering it to pay an additional $1,820,652.66 in royalty payments on federal gas leases that were committed to the Bravo Dome Unit (“the Unit”). The owner of the leases OXY subsequently acquired - Amerada Hess Corporation (“Hess”) - used almost all of the CO2 it produced in the Unit for its own purposes rather than sale. ONRR rejected Hess’s valuation method and established its own. Hess appealed, and ONRR’s Director issued a decision reducing the amount Hess owed but affirming the remainder of ONRR’s order. Hess appealed to the Interior Board of Land Appeals, but the Board did not issue a final merits decision prior to the 33-month limitations period. On appeal to the United States District Court for the District of New Mexico, the district court rejected OXY’s challenge to the amount of royalties owed and affirmed the Director’s decision. Finding ONRR's interpretation and application of the marketable-condition rule to this case was not plainly erroneous or inconsistent with the applicable regulations, the Tenth Circuit Court of Appeals affirmed. View "OXY USA v. DOI, et al." on Justia Law

At issue in this appeal was a contract dispute between Ute Indian Tribe of the Uintah and Ouray Reservation (the Tribe) and Lynn Becker, a non-Indian. The contract concerned Becker’s work marketing and developing the Tribe’s mineral resources on the Ute reservation. Becker sued the Tribe in Utah state court for allegedly breaching the contract by failing to pay him a percentage of certain revenue the Tribe received from its mineral holdings. Later, the Tribe filed this lawsuit, challenging the state court’s subject-matter jurisdiction under federal law. The district court denied the Tribe’s motion for a preliminary injunction against the state-court proceedings, and the Tribe appealed. After its review, the Tenth Circuit Court of Appeals reversed, finding the Tribe was entitled to injunctive relief. The appellate court found the trial court’s factual findings established that Becker’s state-court claims arose on the reservation because no substantial part of the conduct supporting them occurred elsewhere. And because the claims arose on the reservation, the state court lacks subject-matter jurisdiction absent congressional authorization. Accordingly, under the particular circumstances of this appeal, the Tenth Circuit "close[d] this chapter in Becker’s dispute with the Tribe by ordering the district court to permanently enjoin the state-court proceedings." View "Ute Indian Tribe of the Uintah, et al. v. Lawrence, et al." on Justia Law

Phelps Gas & Oil brought a class action in Colorado state court against Noble Energy and DCP Midstream for underpayments on oil and gas royalties Noble allegedly owed Phelps and other owners of royalty interests. DCP Midstream removed the class action to federal district court. Phelps then moved to remand the case to state court, arguing the case failed to meet the federal $75,000 amount-in-controversy requirement. The district court denied the motion, and later entered summary judgment, dismissing all of Phelps’s claims. The Tenth Circuit concluded the district court erred in denying Phelps’s motion to remand, thus dismissing the appeal for lack of jurisdiction. "[N]either the value to Phelps nor the cost to either defendant in this case would result in more than $75,000 at controversy. Though the contracts between Noble and DCP are worth millions of dollars, we cannot base federal jurisdiction on potential future litigation involving the defendants." View "Phelps Oil and Gas v. Noble Energy" on Justia Law

In 2017, the City of Farmington (Defendant) adopted an ordinance that imposed additional charges on customers who generate their own electricity. Defendant argued that change reflected the true cost imposed by these customers on the electric grid; Plaintiffs argued the charges amounted to price discrimination in violation of FERC rules. Defendant moved to dismiss Vote Solar and several other plaintiffs for lack of standing. Sua sponte, the district court requested supplemental briefing concerning its statutory subject-matter jurisdiction. The parties, operating under the assumption that the "as-implemented" versus "as-applied" framework governed subject-matter jurisdiction: Plaintiffs argued they were lodging an as-implemented claim and Defendant characterized the claim as as-applied. Due to its interpretation of PURPA’s jurisdictional provisions, the district court dismissed the case for failure to state a claim under Rule 12(b)(6), finding that because Plaintiffs did not argue Defendant had made no effort to implement FERC’s price discrimination rules, its claim did not fall within the district court’s jurisdiction. It also deemed Defendant’s motion regarding standing moot. Plaintiffs appealed. The Tenth Circuit Court of Appeals reversed, finding that this case was one of an “as-implemented” claim. "In this case, the district court rejected that established distinction, introducing a particularized and novel interpretation of PURPA’s jurisdictional scheme under which federal courts have jurisdiction only if a utility fails to make any reasonable effort to implement a Federal Energy Regulatory Commission (FERC) rule." The Tenth Circuit declined to adopt the district court's decision in this case. View "Vote Solar v. City of Farmington" on Justia Law

In 2013, a refinery unit (“Unit”) at the Sinclair Wyoming Refinery Co. (“Sinclair”) in Sinclair, Wyoming caught fire and exploded because its “FV-241” control valve fractured and released flammable hydrogen gas. A high temperature hydrogen attack (“HTHA”) weakened the valve and caused the fracture. FV-241 was made from carbon steel, which was more susceptible to HTHA than stainless steel. Sinclair had purchased the Unit in 2004. Sinclair moved the Unit from California to Wyoming and converted it from its previous use to a hydrotreater, a refinery unit that introduced hydrogen to remove impurities from the product stream. Sinclair contracted the design, engineering, and construction work to other companies. During the moving and conversion process, FV-241 was remanufactured and installed on the Unit. Sinclair brought a diversity action against seven companies involved in dismantling the Unit, converting it to a hydrotreater, rebuilding it in Wyoming, and remanufacturing and installing FV-241. Sinclair alleged various contract and tort claims. The district court granted several motions to dismiss and motions for summary judgment that eliminated all of Sinclair’s claims. The court also entered summary judgment in favor of certain Defendants’ indemnity counterclaim. Although its analysis diverged from the district court's judgment in some respects, the Tenth Circuit affirmed orders dismissing or granting summary judgment on all of Sinclair's claims, and granting summary judgment on the indemnity counter claim. View "Sinclair Wyoming Refining v. A & B Builders" on Justia Law

In 2013, a fire caused the Sinclair Wyoming Refining Company to restrict operations for several months. It filed a claim with its eighteen insurers, including Infrassure, Ltd., which collectively provided Sinclair coverage for business interruption losses under an all-risk insurance policy. In 2015, after twenty months of claim adjustment, Sinclair and the other seventeen insurers settled the claim. But Infrassure did not agree with the settlement value and eventually exercised its right under the policy to have Sinclair’s covered loss calculated by a panel of three appraisers. The panel valued the loss at $60,365,508, with Infrassure liable for $4,527,413. Infrassure, still unsatisfied, sought to invalidate the award in district court, arguing that the appraisers relied improperly on the settlement amount rather than independently valuing the loss. The district court rejected this theory and confirmed the award, holding Infrassure failed to show any actionable misconduct on behalf of the appraisers. After review, the Tenth Circuit agreed the record revealed nothing warranting setting aside the appraisal award, and therefore affirmed. View "Sinclair Wyoming v. Infrassure" on Justia Law

The issue this case presented for the Tenth Circuit's review centered on whether federal court was the proper forum for a suit filed in Colorado state court by local governmental entities for the global warming-related damage allegedly caused by oil and gas companies in Colorado. Suncor Energy and ExxonMobil advanced seven bases for federal subject matter jurisdiction in removing the action to federal court, each of which the district court rejected in its remand order. Suncor Energy and ExxonMobil appealed, reiterating six of those bases for federal jurisdiction. After review, the Tenth Circuit held that 28 U.S.C. 1447(d) limited its appellate jurisdiction to just one of them: federal officer removal under 28 U.S.C. 1442(a)(1). And because the Court concluded ExxonMobil failed to establish grounds for federal officer removal, the Court affirmed the district court’s order on that basis and dismissed the remainder of this appeal. View "Boulder County Commissioners v. Suncor Energy" on Justia Law

Appellee-defendant TEP Rocky Mountain, LLC (“TEP”) operated wells that produced natural gas in Colorado. These wells were subject to various leases or royalty Appellant-intervenors Ivo Lindauer, Sidney Lindauer, Ruther Lindauer, and Diamond Minerals LLC (the “Lindauers” or the “Intervenors”), were the representatives for a class of royalty owners who filed suit in 2006 in Colorado state court, alleging that TEP had underpaid royalties on various leases and royalty agreements. In 2008, TEP and the Lindauer class entered into a settlement agreement (the “Lindauer SA”) purporting to “resolve all class claims relating to past calculation of royalt[ies]” and to “establish certain rules to govern future royalty” payments. The Lindauer SA declared that the state court would retain “continuing jurisdiction” to enforce provisions of the settlement related to “the description of past and future royalty methodologies.” Approximately eight years passed, free of incident. But on July 18, 2017, a subset of the Lindauer class (the “Sefcovic class”) initiated this action against TEP in Colorado state court, alleging that TEP had calculated and paid royalties in a manner inconsistent with the Lindauer SA and contrary to the underlying royalty agreements. TEP removed the case to federal court. Appellants intervened in the district court, seeking to dismiss the action for lack of federal subject matter jurisdiction. Through two separate motions to dismiss, the briefing from both parties "confused the bounds of federal subject matter jurisdiction and conflated that concept with the doctrines of abstention and comity, and with matters of venue and forum." Despite this misdirection, the district court properly exercised jurisdiction and rebuffed appellants’ attempts to unwind nearly eighteen months of class action litigation. After review, the Tenth Circuit concurred with the district court's judgment and affirmed it. View "Elna Sefcovic v. TEP Rocky Mountain" on Justia Law