Justia Energy, Oil & Gas Law Opinion Summaries

Plaintiff, individually and as surviving spouse of Arlie Walls, filed suit against Petrohawk alleging claims related to an oil and gas lease. The court concluded that Petrohawk's failure to pay royalties in a timely manner did not substantially defeat the purpose of the contract and therefore does not constitute a material breach of contract; plaintiff waived the breaches with respect to all of the assignments except the Petrohawk-Exxon assignment; the district court did not err in concluding that plaintiff unreasonably withheld consent to the assignment from Petrohawk to Exxon; the language of the lease does not support plaintiff's argument that the lease holds Petrohawk liable for breaches of previous assignees, specifically Alta; and plaintiff is not entitled to statutory penalties because she failed to make factual allegations of Petrohawk's willfulness or bad faith. Accordingly, the court affirmed the district court's judgment. View "Walls v. Petrohawk Properties, LP" on Justia Law

On September 16, 2013, the Commission issued an Order Conditionally Accepting Tariff Revisions filed by ISO New England. In the same order, the Commission rejected the tariff proposal to allocate costs to transmission owners as inconsistent with cost-causation principles and directed ISO New England to submit a compliance filing that would allocate the costs of the Program to Real-Time Load Obligation. On April 8, 2014, FERC issued orders denying requests for rehearing of the Orders issued in Docket ER13-1851 and Docket ER13-2266. TransCanada and the Retail Energy Supply Association filed petitions for review challenging the Orders issued by FERC approving the Winter 2013-14 Reliability Program. The court declined to assess FERC’s conditional approval of the Program in Docket ER13-1851 because FERC made it clear that its decision was only tentative. The court concluded that the Commission’s decision regarding the allocation of the costs of the Program to Load-Serving Entities was a final action in Docket ER13-1851 and is ripe for review; the court found no merit in petitioners' challenges to the cost-allocation decision; and therefore, the court denied the petitions for review of the cost-allocation decision in Docket ER13-1851. The court granted in part the petition for review of Docket ER13-2266 because FERC could not properly assess whether the Program’s rates were just and reasonable. View "TransCanada Power Marketing v. FERC" on Justia Law

Petitioners challenged several FERC orders that were issued following the court's remand in Port of Seattle v. FERC. The key issue on appeal is the applicability of the Mobile-Sierra doctrine, which requires FERC to “presume that the rate set out in a freely negotiated wholesale-energy contract meets the ‘just and reasonable’ requirement” imposed by law. The court concluded that it has jurisdiction only as to the issue of whether FERC erred by invoking the Mobile-Sierra doctrine and that it lacks jurisdiction to review FERC’s evidentiary orders. The court held that FERC reasonably applied Mobile-Sierra to the class of contracts at issue and that FERC's interpretation is reasonable. In this case, FERC’s baseline assumption that the presumption applies to the contracts at issue is not unreasonable in light of Morgan Stanley Capital Grp., Inc. v. Pub. Util. Dist. No. 1. Accordingly, the court denied the petition with respect to petitioners' claim that the Mobile-Sierra presumption cannot apply to the spot sales at issue and dismissed the evidentiary challenges for lack of jurisdiction. View "State of California v. FERC" on Justia Law

Appellant/cross-appellee OXY USA Inc. appealed the grant of summary judgment to appellees/cross-appellants, a class of plaintiffs represented by David and Donna Schell, and Ron Oliver, on the question of whether their oil and gas leases required OXY to make "free gas" useable for domestic purposes. OXY also appealed: the district court’s certification of plaintiffs' class; the denial of a motion to decertify; and an order to quash the deposition of an absent class member. Plaintiffs cross-appealed the district court's: denial of their motion for attorneys' fees; denial of their motion for litigation expenses; and denial of an incentive award. Notably, plaintiffs also moved to dismiss the appeal as moot. OXY opposed dismissal for mootness, but argued that if the Tenth Circuit found mootness, the Court should vacate the district court’s decision. Appellees/cross-appellants were approximately 2,200 surface owners of Kansas land burdened by oil and gas leases held or operated by OXY, executed separately from approximately 1906 to 2007. The leases contained a "free gas" clause. The clauses weren't identical, but all, in substance, purported to grant the lessor access to free gas for domestic use. All of the plaintiffs who have used free gas obtain their gas from a tap connected directly to a wellhead line. In addition, some members of the plaintiff class (including about half of the current users of free gas) received royalty payments from OXY based on the production of gas on their land. In August 2007, OXY sent letters warning free gas users that their gas may become unsafe to use, either because of high hydrogen sulfide content or low pressure at the wellhead. These letters urged the lessors to convert their houses to an alternative energy source. On August 31, 2007, leaseholders David Schell, Donna Schell, Howard Pickens, and Ron Oliver filed this action on behalf of themselves and others similarly situated, seeking a permanent injunction, a declaratory judgment, and actual damages based on alleged breaches of mineral leases entered into with OXY for failure to supply free usable gas. After review of the matter, the Tenth Circuit held that that OXY’s sale of the oil and gas leases at issue here mooted its appeal; therefore, the Court granted plaintiffs’ motion to dismiss. Nevertheless, the Court concluded that the cross-appeal had not been mooted by this sale, and affirmed the district court’s judgment as to the denial of attorneys’ fees, litigation expenses, and an incentive award. View "Schell v. OXY USA" on Justia Law

This appeal stems from a dispute regarding the continued validity of an oil and gas lease covering land in Williams County, North Dakota. Appellants challenged the district court's grant of Northern Oil's and Limsco's motions for summary judgment. The court found Northern Oil and Limsco’s interpretation more persuasive and thus adopted their position that the Pugh clause in the lease divides the lease at PLSS-section boundaries. The court agreed with the district court that the lease remains valid because production from other areas in Section 3 maintains the lease as to the entire section and affirmed the judgment. View "Northern Oil and Gas, Inc. v. Moen" on Justia Law

This case was brought by the plaintiffs, mineral royalty owners, against defendants, mineral lessees and working interest owners, for unrecovered hydrocarbons after two wells ceased production. Following a lengthy bench trial, the district court concluded plaintiffs had not proven the operators caused any loss of hydrocarbons and dismissed their claims with prejudice. The single issue before the Louisiana Supreme Court was whether the district court committed manifest error in ruling in favor of defendants, finding their experts more credible than plaintiffs' expert. The Court of Appeal reversed. The Supreme Court found that the appellate court was incorrect in its analysis of the manifest error review standard, and after reviewing the record, the Supreme Court concluded there was a reasonable basis for the district court's conclusion on causation. Therefore, it's conclusion was not clearly erroneous. The Court reversed the Court of Appeals and reinstated the judgment of dismissal. View "Hayes Fund for the First Untied Methodist Church of Welsh, LLC v. Kerr-McGee Rocky Mountain, LLC" on Justia Law

Nathaniel Fleck and Alma Bergmann as trustees of the George J. Fleck Trust ("Fleck") appealed the grant of summary judgment quieting title to an oil and gas lease in favor of Missouri River Royalty Corp., Exxon Mobil Corp. and Mountain Pacific General, Inc. (collectively "defendants"). Fleck owns mineral interests in McKenzie County described as the south half of section 10 in range 100 west of township 150 north. In 1972, Fleck's predecessors in interest executed an oil and gas lease in favor of the defendants' predecessor in interest. The lease term was ten years and as long thereafter as oil or gas was produced. The lease also provided it would not expire if production ceased after expiration of the primary term if the lessee resumed operations to drill a well or to restore production within ninety days. In 1982, the Fleck 1 well was completed and the lease extended. In 2012, Fleck served the defendants with a notice of forfeiture and a demand for release of the lease. Fleck sued the defendants to quiet title, alleging the oil and gas lease expired due to a failure to produce oil or gas in paying quantities. The defendants answered, counterclaimed and requested the court declare the lease remained valid and in effect by the continued production of oil and gas from the Fleck 1 well and by the commencement of operations to restore production. Fleck moved for summary judgment, arguing they were entitled to a declaration quieting title to the mineral interests because the lease terminated when the Fleck 1 well stopped producing in paying quantities in 2010 and the defendants failed to engage in new drilling or reworking operations within ninety days. Pacific Mountain General and Missouri River Royalty separately moved for summary judgment, arguing the lease extended into its secondary term and remains valid and in effect based on the continued production of oil and gas by the Fleck 1 well. Exxon Mobil joined Missouri River Royalty's motion. The district court interpreted the lease and found production in paying quantities was not required to extend the lease, the well consistently produced an average of a few barrels per day, production was continuous at all relevant times and any cessation of production was temporary. The Supreme Court reversed, finding that the district court misapplied the law in interpreting the lease and that summary judgment was not appropriate. View "Fleck v. Missouri River Royalty Corp." on Justia Law

Pennaco Energy, Inc. obtained oil and gas leases and made contracts with the surface landowners, who were predecessors of Appellees. The contracts granted Pennaco use of the landowners’ land during exploration and production under the mineral leases. After several years, Pennaco assigned its interest in its coal bed methane operation to CEP-M purchase, LLC, which re-assigned those interests to High Plains Gas, Inc. After the assignment, neither Pennaco nor the assignees made any required payments under the assignments, nor did they reclaim any of the land, as required under the agreements. Appellees sued Pennaco for breach of the agreements. The district court granted summary judgment in favor of Appellees. Pennaco appealed, arguing that the district court erred in concluding that Pennaco remained liable under the agreements even after the assignment. The Supreme Court affirmed, holding that because the agreements contained indications that Pennaco’s contractual obligations continued even after assignment and because there was no express clause that terminated Pennaco’s obligations upon assigning the agreements to a third party, Pennaco remained liable to Appellees to perform the covenants in the event its assignee defaulted. View "Pennaco Energy, Inc. v. KD Co., LLC" on Justia Law

The Department of Commerce determined that utility scale wind towers from the People’s Republic of China and utility scale wind towers from the Socialist Republic of Vietnam (together, the subject merchandise) were sold in the United States at less than fair value and that it received countervailable subsidies. The International Trade Commission made a final affirmative determination of material injury to the domestic industry. The determination was by divided vote of the six-member Commission. The Court of International Trade upheld the Commission’s affirmative injury determination. Siemens Energy, Inc., an importer of utility scale wind towers, challenged the determination. The issues on appeal concerned the interpretation and effect of the divided vote. The Federal Circuit affirmed, holding that the Court of International Trade properly upheld the Commission’s affirmative injury determination. View "Simens Energy, Inc. v. United States, Wind Tower Trade Coalition" on Justia Law

Western Minnesota and intervenors petitioned for review of FERC's award of a permit for a hydroelectric project in Polk County, Iowa. The Commission concluded that the municipal preference under Section 7(a) of the Federal Power Act (FPA), 16 U.S.C. 800(a), applies only to municipalities “located in the[] vicinity” of the water resources to be developed. Petitioners claimed that the Commission’s geographic proximity test is an impermissible interpretation of the plain text of the statute. The court agreed that Congress has spoken directly to the question in defining “municipality” in Section 3(7) of the FPA. Accordingly, the court granted the petition for review, vacated the permit order and rehearing order, and remanded for further proceedings. View "Western Minnesota Municipal v. FERC" on Justia Law