Justia Energy, Oil & Gas Law Opinion Summaries

The Clean Air Act (CAA) directs the Environmental Protection Agency (EPA) to regulate emissions of hazardous air pollutants from stationary sources, such as refineries and factories, 42 U.S.C. 7412; it may regulate power plants under this program only if it concludes that “regulation is appropriate and necessary” after studying hazards to public health. EPA found power-plant regulation “appropriate” because power plant emissions pose risks to public health and the environment and because controls capable of reducing these emissions were available. It found regulation “necessary” because other CAA requirements did not eliminate those risks. EPA estimated that the cost of power plant regulation would be $9.6 billion a year, but that quantifiable benefits from the reduction in hazardous-air-pollutant emissions would be $4-$6 million a year. The D. C. Circuit upheld EPA’s refusal to consider costs. The Supreme Court reversed and remanded. EPA interpreted section 7412(n)(1)(A) unreasonably when it deemed cost irrelevant to the decision to regulate power plants. “’Appropriate and necessary’ is a capacious phrase.” It is not rational, nor “appropriate,” to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. That other CAA provisions expressly mention cost indicates that section 7412(n)(1)(A)’s broad reference to appropriateness encompasses multiple relevant factors, including cost. The possibility of considering cost at a later stage, when deciding how much to regulate power plants, does not establish its irrelevance at the earlier stage. Although the CAA makes cost irrelevant to the initial decision to regulate sources other than power plants, the point of having a separate provision for power plants was to treat power plants differently. EPA must decide how to account for cost. View "Michigan v. Envtl. Prot. Agency" on Justia Law

In 2009, Appellants acquired by way of a deed the surface rights to certain land in Harrison County. The deed did not convey to Appellants all of the mineral rights underlying their surface property. But after an oil and gas company inquired about leasing the mineral rights to the land, Appellants initiated procedures under the Dormant Mineral Act to have the mineral interests deemed abandoned and vested in them along with their surface ownership. Less than one month after Appellants published a notice of abandonment of the mineral interests underlying their property, John Croskey recorded a quitclaim deed for mineral interests underlying the property. The trial court determined that the Croskey affidavit preserved the mineral-rights holders’ interests for purposes of the Dormant Mineral Act and thus concluded that Appellants could not establish a claim for the abandonment of the oil and gas rights underlying their surface property. The Supreme Court affirmed, holding that a mineral-interest holder’s claim to preserve filed pursuant to Ohio Rev. Code 5301.56(H)(1)(a) is sufficient to preclude the mineral interests from being deemed abandoned if filed within sixty days after notice of the surface owner’s intent to declare those interests abandoned. View "Dodd v. Croskey" on Justia Law

Under Pub. Util. Code 1701(a)1, the Public Utilities Commission (PUC ) promulgated Rule 1.1, stating: Any person who . . . transacts business with the Commission . . . agrees . . . never to mislead the Commission or its staff by an artifice or false statement of fact or law. After a massive 2010 explosion of an underground gas pipeline owned and operated by Pacific Gas and Electric (PG&E), the PUC imposed reforms, including requiring that PG&E improve its recordkeeping and information technology capabilities. PG&E was directed to keep the PUC informed of any reported pipeline leaks and any discovered information regarding the safety of pipeline operations. Following discovery of a pipeline leak, PG&E also discovered that some information it had provided to the PUC concerning the internal pressure at which certain pipelines could be safely operated might not be correct. About seven months after internally verifying the information, PG&E, communicated to the PUC via a written “Errata”‖ to a previous filing. Following extensive hearings, the PUC deemed this filing both a substantive and a procedural violation and imposed civil penalties totaling $14,350,000. The court of appeal affirmed, finding that the penalties were not grossly disproportional to the gravity of PG&E‘s tardiness. View "Pac. Gas & Elec. Co. v. Pub. Util. Comm'n" on Justia Law

Kern River and the Shippers seek review of seven orders issued by FERC during rate proceedings. The Shippers ship natural gas using Kern River's pipeline. The court concluded that the Commission complied with the Natural Gas Act, 15 U.S.C. 717c, and the court's precedents; the Commission responded meaningfully to petitioners’ objections and articulated a rational explanation for its decisions under the particularly deferential standard of review the court applied to ratemaking decisions; and therefore, the court denied the petitions for review. View "Aera Energy LLC v. FERC" on Justia Law

In a 1996 purchase and sale agreement Torch Energy Advisors Inc. sold its leasehold interests in undeveloped oil and gas fields located under federal waters. Certain interests were excluded from the conveyance. A decade later, a federal court determined that the federal government had repudiated the mineral leases because a statute enacted before the conveyance had been applied in a manner that precluded development of the leasehold interests. Consequently, the purchaser’s successor in interest, Plains Exploration & Production Company, was awarded restitution of the lease-bonus payments that Torch’s predecessor had paid to secure the leases. Torch claimed an ownership interest in approximately half of the judgment based on the terms of the excluded-assets provision in the 1996 agreement. Plains declined to pay. Torch sued, alleging contract and equitable theories of recovery. The trial court entered a take-nothing judgment in Plains’s favor. The court of appeals reversed in part and remanded the equity claim for a trial on the merits, concluding that Torch’s equitable claim hinged on the proper construction of the 1996 agreement’s terms. The Supreme Court reversed, holding that the relevant excluded-assets provisions in the 1996 agreement were unambiguous and, as a matter of law, Torch did not retain ownership of the claimed asset. View "Plains Exploration & Prod. Co. v. Torch Energy Advisors, Inc." on Justia Law

Kachina Pipeline Co., a pipeline operator, and Michael Lillis, a natural-gas producer, entered into a Gas Purchase Agreement. Kachina bought, transported, and resold Lillis’s gas according to the Agreement. Lillis later entered into a separate purchase agreement and constructed his own pipeline to one of Davis Gas Processing’s plants. Thereafter, Lillis sued Kachina, asserting that Kachina breached the Agreement by deducting the costs of compression that occurred after Lillis delivered the gas to Kachina. Lillis also brought a fraud claim, asserting that Kachina represented it would release him from the Agreement. Kachina counterclaimed for breach of the Agreement and seeking declarations that it had the right to deduct compression charges under the Agreement. The trial court granted summary judgment for Kachina, declaring that the Agreement entitled Kachina to deduct the costs of compression from its payments to Lillis and that the Agreement gave Kachina the option to extend the arrangement for an additional five-year term. The court of appeals reversed. The Supreme Court affirmed, holding that the Agreement unambiguously allowed neither the disputed deductions nor a five-year extension. Remanded. View "Kachina Pipeline Co., Inc. v. Lillis" on Justia Law

Shields and Wilson are Indians with interests on the Bakken Oil Shale Formation in the Fort Berthold Reservation in North Dakota, allotted to them under the Dawes Act of 1887. Such land is held in trust by the government, but may be leased by allottees. Shields and Wilson leased oil and gas mining rights on their allotments to companies and affiliated individuals who won a sealed bid auction conducted by the Board of Indian Affairs in 2007. After the auction, the women agreed to terms with the winning bidders, the BIA approved the leases, and the winning bidders sold them for a large profit. Shields and Wilson filed a putative class action, claiming that the government had breached its fiduciary duty by approving the leases for the oil and gas mining rights, and that the bidders aided, abetted, and induced the government to breach that duty. The district court concluded that the United States was a required party which could not be joined, but without which the action could not proceed in equity and good conscience, and dismissed. The Eighth Circuit affirmed. The United States enjoys sovereign immunity for the claims and can decide itself when and where it wants to intervene. View "Two Shields v. Wilkinson." on Justia Law

As a general matter, an overriding royalty on oil and gas production is free of production costs but must bear its share of postproduction costs unless the parties agree otherwise. In this case, the Hyder family leased 948 mineral acres. Chesapeake Exploration, LLC acquired the lessee’s interest. The Hyders and Chesapeake agreed that the overriding royalty was free of production costs under the lease but disputed whether it was also free of postproduction costs. The trial court rendered judgment for the Hyders, awarding them $575,359 in postproduction costs that Chesapeake wrongfully deducted from their overriding royalty. The court of appeals affirmed. The Supreme Court affirmed, holding that the lease in this case clearly freed the gas royalty of postproduction costs and did the same for the overriding royalty. View "Chesapeake Exploration, LLC v. Hyder" on Justia Law

Movant-Appellant Kit Carson Electric Cooperative, Inc. (KCEC) appealed the district court’s denial of its motion seeking intervention as of right or permissive intervention in a pending case. Tri-State Generation and Transmission Association, Inc. (Tri-State), a Colorado non-profit regional cooperative that provides wholesale electric power, filed suit against the New Mexico Public Regulation Commission (NMPRC) seeking declaratory and injunctive relief under 42 U.S.C. 1983. Tri-State argued that the NMPRC’s exercise of jurisdiction and suspension of Tri-State’s wholesale electric rates in New Mexico violated the Commerce Clause of the United States Constitution. In September 2013, Tri-State approved a wholesale rate increase for 2014 and filed an Advice Notice with the NMPRC. After rate protests by KCEC and three others, the NMPRC proceeded to suspend Tri-State’s 2014 rate increases as well. The NMPRC consolidated the proceedings on both the 2013 and 2014 wholesale rates. These proceedings remained pending before the NMPRC. In February 2014, Tri-State filed an amended complaint adding factual allegations regarding the NMPRC’s suspension of its 2014 wholesale rate. Tri-State’s amended complaint asserted Tri-State was entitled to declaratory and injunctive relief because “[t]he Commission’s exertion of jurisdiction to suspend and subsequently review and establish Tri-State’s rates in New Mexico constituted economic protectionism and imposed a burden on interstate commerce in violation of the Commerce Clause.” KCEC sought to intervene as of right pursuant to Federal Rule of Civil Procedure 24(a)(2) and permissively pursuant to Rule 24(b). Tri-State opposed intervention, but the NMPRC did not. Though not a party to the litigation, KCEC filed an answer to Tri-State’s complaint in which it asserted essentially the same affirmative defenses to Tri-State’s claims as had the NMPRC. The only unique defense KCEC presented was that Tri-State’s complaint failed to state a claim upon which relief could be granted. Prior to the district court’s ruling on KCEC’s motion, the NMPRC moved for summary judgment, arguing both that: (1) Tri-State was estopped from challenging the NMPRC’s rate-making jurisdiction given its agreement to the earlier Stipulation; and (2) the NMPRC’s order did not violate either New Mexico law or the Commerce Clause of the United States Constitution. Though still not a party to the litigation, KCEC filed a proposed response to the NMPRC’s motion for summary judgment, presenting essentially the same arguments as the NMPRC and providing no additional evidence. The district court then denied KCEC’s motion to intervene, finding that neither intervention as of right nor permissive intervention was appropriate. The Tenth Circuit affirmed the district court, finding that KCEC did not show that the district court’s denial of permissive intervention was “arbitrary, capricious, whimsical, or manifestly unreasonable.” View "Tri-State Generation v. NM Public Regulation Comm." on Justia Law

Oneida Seven Generations Corporation proposed a renewable energy facility and sought a conditional use permit to install the facility in the City of Green Bay. The City voted to approve the conditional use permit but later voted to rescind the permit on the grounds that it was obtained through misrepresentation. The circuit court affirmed the City’s decision to rescind. The court of appeals reversed, concluding that the City’s decision that the permit was obtained through misrepresentation was not supported by substantial evidence. The Supreme Court affirmed, holding that, based on the evidence presented, the City could not reasonably conclude that the statements by Oneida Seven’s representative regarding the facility’s operations were misrepresentations. View "Oneida Seven Generations Corp. v. City of Green Bay" on Justia Law