Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in US Court of Appeals for the Third Circuit
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Warren tenders gasoline products to Colonial (a common carrier) for shipment on Colonial’s pipeline from Texas to New Jersey, where Warren has a gasoline-blending operation. The rates and conditions for the transportation services are specified in tariffs approved by the Federal Energy Regulation Commission (FERC). The tariff recognizes that the gasoline batches Colonial transports for Warren are fungible and allows Colonial to comingle gasoline from many shippers during transport. Colonial must deliver gasoline of the same volume and grade as the gasoline that was entrusted to it, with the same characteristics that influence the gasoline’s combustion performance (octane rating and distillation value), and its environmental impact, such as volatility. The tariff does not state whether “on specification” gasoline includes any “blend margin.” In 2016, FERC determined that the regulation of in-pipeline blending was outside its jurisdiction. Colonial continued giving Warren gasoline that complies with the relevant tariff but Warren claims that Colonial’s in-line blending of the gasoline with butane diminishes Warren’s ability to blend cheaper blendstocks into the gasoline. Warren regularly blends cheaper gasoline with more expensive gasoline to increase the amount of on-specification gasoline that it can sell,Warren sued for loss of profits (Carmack Amendment 49 U.S.C. 1590), conversion, unjust enrichment, and tortious interference. The Third Circuit affirmed the summary judgment rejection of the claims. Warren’s request seeks an enlargement of its rights under the FERC-approved tariff and violates the filed-rate doctrine’s nondiscrimination principle. View "George E. Warren LLC v. Colonial Pipeline Co" on Justia Law

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The Delaware River Basin Commission banned high-volume hydraulic fracturing (fracking) within the Delaware River Basin, reflecting its determination that fracking “poses significant, immediate and long-term risks to the development, conservation, utilization, management, and preservation of the [Basin’s] water resources.” The ban codified a “de facto moratorium” on natural gas extraction in the Basin since 2010. Two Pennsylvania state senators, the Pennsylvania Senate Republican Caucus, and several Pennsylvania municipalities challenged the ban, alleging that the Commission exceeded its authority under the Delaware River Basin Compact, violated the Takings Clause, illegally exercised the power of eminent domain, and violated the Constitution’s guarantee of a republican form of government.The Third Circuit affirmed the dismissal of the suit for lack of standing. No plaintiff alleged the kinds of injuries that Article III demands. Legislative injuries claimed by the state senators and the Republican Caucus affect the state legislature as a whole; under Supreme Court precedent, “individual members lack standing to assert the institutional interests of a legislature.” The municipalities alleged economic injuries that are “conjectural” and “hypothetical” rather than “actual and imminent.” None of the plaintiffs have standing as trustees of Pennsylvania’s public natural resources under the Pennsylvania Constitution's Environmental Rights Amendment because the fracking ban has not cognizably harmed the trust. View "Yaw v. Delaware River Basin Commission" on Justia Law

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Delaware and Hoboken, New Jersey each sued the oil companies in state court for state-law torts. By “produc[ing], marketing, and s[e]l[ling] fossil fuels,” they claimed, the oil companies worsened climate change. They sought damages for the environmental harm they had suffered and injunctions to stop future harm. The oil companies removed the cases to federal district courts. The suits’ broad focus on “global climate change,” the companies reasoned, “demand[ed] resolution by a federal court under federal law.”. They argued the tort claims arose under federal law, either because they were inherently federal, not state claims, or they raised substantive federal issues; the suits related to producing oil on the Outer Continental Shelf; and the oil companies were acting under federal officers.The Third Circuit affirmed the remands of the cases to state courts, noting that four other circuits have refused to allow the oil companies to remove similar state tort suits to federal court. These lawsuits neither are inherently federal nor raise substantial federal issues that belong in federal court. Oil production on the Outer Continental Shelf is too many steps removed from the burning of fuels that causes climate change. Delaware and Hoboken are not suing over actions that the companies were directed to take by federal officers. View "City of Hoboken v. Chevron Corp" on Justia Law

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UGI builds natural gas pipelines. It obtained authorization to construct and operate an underground pipeline along 34.4 miles of land in Pennsylvania under the Natural Gas Act, 15 U.S.C. 717, The Landowners rejected UGI’s offers of compensation for rights of way, so UGI sought orders of condemnation. UGI prevailed; only the amount of compensation remained. The Landowners’ expert set the before-taking value of the land by comparing properties in the area and estimating what each is worth relative to the market but, in estimating the post-taking property values, the expert relied on his own “damaged goods theory,” drawing on his experience working in his grandfather’s appliance shop. The expert cited the impact on real estate values from the Three Mile Island nuclear incident in 1979, the Exxon Valdez Alaskan oil spill in 1989, and assorted leaking underground storage tanks. The expert’s reports contain no data relating to those incidents. The district court agreed “that some form of ‘stigma’ attaches to the property as a whole” and adjusted the awards accordingly. The Third Circuit vacated. Rule 702 requires reliable expert testimony that fits the proceedings. The expert testimony presented by the Landowners bound only to speculation and conjecture, not good science or other “good grounds.” View "UGI Sunbury LLC v. Permanent Easement for 1.7575 Acres" on Justia Law

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The Natural Gas Act (NGA), 15 U.S.C. 717, allows private gas companies to exercise the federal government’s power to take property by eminent domain, if the company has a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission (FERC); was unable to acquire the property by contract or reach agreement about the amount to be paid; and the value of the property exceeds $3,000. PennEast, scheduled to build a pipeline through Pennsylvania and New Jersey, obtained federal approval for the project and filed suit under the NGA to condemn and gain immediate access to properties along the pipeline route, including 42 properties owned, at least in part, by New Jersey or arms of the state. New Jersey sought dismissal, citing the Eleventh Amendment. The district court ruled in favor of PennEast. The Third Circuit vacated. The Eleventh Amendment recognizes that states enjoy sovereign immunity from suits by private parties in federal court. New Jersey has not consented to PennEast’s condemnation suits and its sovereign immunity has not been abrogated by the NGA. The federal government’s power of eminent domain and its power to hale sovereign states into federal court are separate and distinct. In the NGA, Congress has delegated only the power of eminent domain. View "In re: PennEast Pipeline Co. LLC" on Justia Law

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The Natural Gas Act (NGA), 15 U.S.C. 717f(h) gives natural gas companies that hold certificates of public convenience and necessity from the Federal Energy Regulatory Commission (FERC) the power of eminent domain but does not provide for “quick take” to permit immediate possession. Transcontinental is building a natural gas pipeline through Pennsylvania, Maryland, Virginia, North Carolina, and South Carolina and needed rights of way. Transcontinental met the requirements of section 717f(h). The administrative review leading up to the certificate of public convenience and necessity lasted almost three years and included extensive outreach and public participation and an Environmental Impact Statement. Transcontinental extended written offers of compensation exceeding $3000 to each Landowner, but these offers were not accepted. The Landowners had all participated in the FERC administrative process. Transcontinental, planning to begin construction in fall 2017, filed condemnation suits The district court granted Transcontinental summary judgment, effectively giving it immediate possession, concluding that the Landowners had received “adequate due process.” The Third Circuit affirmed, rejecting an argument that granting immediate possession violated the separation of powers because eminent domain is a legislative power and the NGA did not grant “quick take.” Transcontinental properly obtained the substantive right to the property by following the statutory requirements, which are not similar to “quick take” procedures, before seeking equitable relief to obtain possession. View "Transcontinental Gas Pipe Line Co., LLC v. Permanent Easements for 2.14 Acres" on Justia Law

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Wayne Land and Mineral Group, wanting to obtain natural gas by fracking reserves, sought a declaratory judgment that an interstate compact does not give the Delaware River Basin Commission authority to review Wayne’s proposal. The district court dismissed the case after determining that Wayne’s proposed activities constituted a “project” subject to the Commission’s oversight, according to the Compact's unambiguous terms. The Third Circuit vacated, concluding that the meaning of the word “project” is ambiguous. The court remanded the case for fact-finding on the intent of the Compact's drafters. The Compact defines “project” as “any work, service or activity which is separately planned, financed, or identified by the [C]ommission, or any separate facility undertaken or to be undertaken within a specified area, for the conservation, utilization, control, development or management of water resources which can be established and utilized independently or as an addition to an existing facility, and can be considered as a separate entity for purposes of evaluation” and requires approval for any project having a substantial effect on the water resources of the Basin. In 2009 the Commission imposed a moratorium on fracking. View "Wayne Land and Mineral Group LLC v. Delaware River Basin Commission" on Justia Law

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Jeffrey Ware, Ph.D., was a University of Pennsylvania neuroscientist, studying the effects of radiation on biological organisms with the goal of better understanding how radiation affects astronauts while in orbit. Ware used cesium-137 irradiators to track the effects of low-level radiation on mice and rats. In 2010, Ware suffered a rare form of brain cancer, gliosarcoma. His widow, Boyer, claims gliosarcoma is associated with radiation exposure but produced no expert reports and that Ware’s cancer specifically resulted from radiation exposure that UPenn failed to properly monitor, protect against or warn of. Ware underwent chemotherapy and radiation at the University’s hospital. Boyer alleges that Ware was not given appropriate information about these treatments; that, given the advanced stage of his disease, they provided little benefit; and that a UPenn doctor enrolled Ware in a research study to investigate the effects of chemotherapy and radiation on brain cancer patients without his knowing consent. The Third Circuit affirmed the application of the Price-Anderson Act, 42 U.S.C. 2011, and its remedy-limiting provisions to Boyer's suit. The Act gives federal courts jurisdiction to resolve a broad set of claims involving liability for physical harm arising from nuclear radiation. Boyer’s case is within the Act’s reach. View "Estate of Ware v. Hospital of the University of Pennsylvania" on Justia Law

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Plaintiffs assert that they developed cancer after being exposed to excessive radiation emissions from the Nuclear Material and Equipment Company’s Apollo, Pennsylvania facility. The district court held that their common-law claims against were preempted by the Price-Anderson Nuclear Industries Indemnity Act and rejected their Price-Anderson “public liability” claims on summary judgment. The Third Circuit affirmed. Although the Act preempted common-law negligence claims, the public liability claims require Plaintiffs to prove versions of the traditional negligence elements: duty, breach, causation, and damages. With respect to duty, the court noted the restrictions on access to the facility; Plaintiffs did not establish the existence of excessive radiation outside the restricted area. The facility’s license did not establish a tort duty. Even with state-of-the-art data, it is impossible to determine with certainty that radiation is the cause of a given incidence of cancer. Plaintiffs failed to offer evidence from which a jury could find that each plaintiff was exposed to radiation from Defendants’ uranium effluent sufficiently frequently, regularly, and proximately to substantially cause their illnesses. View "McMunn v. Babcock & Wilcox Power Generation Group, Inc." on Justia Law

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SemGroup purchased oil from producers and resold it to downstream purchasers. It also traded financial options contracts for the right to buy or sell oil at a fixed price on a future date. At the end of the fiscal year preceding bankruptcy, SemGroup’s revenues were $13.2 billion. SemGroup’s operating companies purchased oil from thousands of wells in several states and from thousands of oil producers, including from Appellants, producers in Texas, Kansas, and Oklahoma. The producers took no actions to protect themselves in case 11 of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. When SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part. The producers argued that local laws gave them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. The Third Circuit affirmed summary judgment in favor of the downstream purchasers; parties who took precautions against insolvency do not act as insurers to those who took none. View "In re: SemCrude LP" on Justia Law