Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Utah Supreme Court

by
The Supreme Court set aside orders from the Public Service Commission in two related cases, holding that the Commission did not have the authority to impose "interim" rates as an element of the energy balancing account procedures described in Utah Code 54-7-13.5. The Commission issued an order eliminating an "energy balancing account" (EBA) rate processes to PacifiCorp, an electric power provider, and later issued an order adopting the recommendation of the Division of Public Utilities that interim rates be reinstated in the EBA mechanism. After PacifiCorp submitted its 2018 EBA filing that proposed to recover EBA costs in the amount of $28 million on an interim basis the Commission issued an order imposing interim rates. Certain consumer groups challenged the Commission's interim rate orders. The Supreme Court set aside the orders, holding that the interim rates were imposed without a requirement that PacifiCorp prove by substantial evidence that the costs incorporated in the rates were prudently incurred or just and reasonable, which violates the controlling standard set forth in section 54-7-13.5(2)(e)(ii). View "Utah Office of Consumer Services v. Public Service Commission of Utah" on Justia Law

by
The Supreme Court affirmed the decision of the Board of Oil, Gas, and Mining to impose a joint operating agreement (JOA) on J.P. Furlong Company’s relationship with the party operating a drilling unit that included Furlong’s mineral lease. Furlong complained that the Board accepted, without making any of the changes to the JOA that Furlong wanted, the JOA the operator proposed. On appeal, Furlong argued that the Board erroneously applied the law to conclude that the JOA was just and reasonable and that there was not substantial evidence to support the Board’s decision. The Supreme Court affirmed, holding that the Board correctly applied the law and rendered a decision supported by substantial evidence. View "J.P. Furlong Co. v. Board of Oil & Gas Mining" on Justia Law

by
Trans-Western filed an amended complaint in federal district court asserting claims against U.S. Gypsum for breach of an oil and gas lease and breach of the covenant of quiet enjoyment. The district court found that U.S. Gypsum had wrongfully rescinded the lease and that the rescission constituted a breach of contract and a breach of the covenant of quiet enjoyment. The court awarded nominal damages of one dollar to Trans-Western. The parties appealed. The Tenth Circuit Court of Appeals certified to the Supreme Court the question of how to measure expectation damages for the breach of an oil and gas lease. The Supreme Court answered (1) expectation damages for the breach of an oil and gas lease are measured in much the same way as expectation damages for the breach of any other contract; (2) damages may include general and consequential damages; and (3) trial courts may allow the use of post-breach evidence to help establish and measure expectation damages. View "Trans-Western Petroleum, Inc. v. U.S. Gypsum Co." on Justia Law

by
The Board of Oil, Gas and Mining (Board) affirmed the approval by the Division of Oil, Gas and Mining (Division) of Alton Coal Development's (ACD) mining permit, which allowed ACD to conduct surface coal mining operations at the Coal Hollow Mine. Petitioners appealed, arguing that the Board erred in affirming ACD's permit because the permit application was deficient in several respects. The Supreme Court affirmed the Board's decision, holding (1) the Board properly concluded that the Division gave adequate consideration to cultural and historic resources in the adjacent area; (2) the Board properly concluded that the Division's cumulative hydrological Impact Assessment satisfied Utah's requirements; (3) the Board properly concluded that the hydrologic monitoring plan was adequate; and (4) therefore, the Board acted within its discretion in affirming the Division's conclusions that ACD's mining permit application satisfied all of the statutory and regulatory requirements. View "Sierra Club v. Bd. of Oil, Gas, & Mining" on Justia Law

by
Appellants, Marion Energy and the State of Utah School and Institutional Trust Lands Administration, leased and owned oil and gas deposits lying underneath property owned by the KFJ Ranch Partnership. In order to build a road to access those deposits, Appellants sought to condemn a portion of KFJ's land by relying upon a statute that permits the exercise of eminent domain for the construction of roads to facilitate the working of mineral deposits. The district court dismissed Appellants' condemnation action, concluding that the statute did not provide the authority to take land for roads to access oil and gas deposits. The Supreme Court affirmed the district court's dismissal, holding that the phrase "mineral deposits" in the statute was ambiguous, and because all ambiguities in a statute purporting to grant the power of eminent domain are strictly construed against the condemning party, Appellants were not authorized by the statute to condemn KFJ's land. View "Marion Energy, Inc. v. KFJ Ranch P'ship" on Justia Law

by
Appellants Marion Energy (Marion) and the State of Utah School and Institutional Trust Lands Administration (the Trust) leased and owned oil and gas deposits that lay underneath property owned by the KFJ Ranch Partnership (KFJ). To build a road to access their deposits, Marion and the Trust sought to condemn a portion of KFJ's land. To do so, they relied on a statute that permits the exercise of eminent domain for the construction of roads to facilitate the working of "mineral deposits." At issue was whether the phrase "mineral deposits" as used in the statute was intended by the legislature to encompass oil and gas deposits. The district court granted KFJ's motion to dismiss, concluding that the statute did not provide authority to take land for roads to access oil and gas deposits. On appeal, the Supreme Court affirmed, holding (1) the statute is ambiguous as to whether "mineral deposits" includes oil and gas, and (2) because the Court strictly construes an ambiguous statute purporting to grant the power of eminent domain against the condemning party, Marion and the Trust were not authorized by the statute to condemn KFJ's land.