Justia Energy, Oil & Gas Law Opinion Summaries

In 2004, the Ninth Circuit decided California ex rel. Lockyer v. FERC, which held that FERC may authorize market-based energy tariffs so long as that regulatory framework incorporates both an ex ante market power analysis and enforceable post-approval transaction reporting. In the instant case, Petitioners, the people of the state of California and related parties, sought review of a series of orders issued by the Federal Energy Regulatory Commission (FERC) on remand following the Court’s decision in Lockyer, arguing that FERC failed to follow Lockyer and violated the Federal Power Act by requiring proof of excessive market share as a necessary condition for relief for transaction reporting violations. The Ninth Circuit granted the petition for judicial review, holding that FERC structured the remand proceedings in a manner contrary to the terms of the Lockyer decision. Remanded to FERC for further proceedings. View "People of State of Cal. v. FERC" on Justia Law

Citizens of Myersville, in Frederick County, Maryland, oppose the construction of a natural gas facility called a compressor station in their town as part of a larger expansion of natural gas facilities in the northeastern United States proposed by Dominion, a regional natural gas company. The Federal Energy Regulatory Commission, over the objections of the citizens, conditionally approved it. Dominion fulfilled the Commission’s conditions, including obtaining a Clean Air Act permit from the Maryland Department of the Environment. Dominion built the station, and it has been operating for approximately six months. The D.C. Circuit denied a petition for review, rejecting arguments that the Commission lacked substantial evidence to conclude that there was a public need for the project; that the Commission unlawfully interfered with Maryland’s rights under the Clean Air Act; that environmental review of the project, including its consideration of potential alternatives, was inadequate; and that the Commission unlawfully withheld hydraulic flow diagrams from them in violation of their due process rights. View "Myersville Citizens for a Rural Community, Inc. v. Fed. Energy Regulatory Comm'n" on Justia Law

The Federal Energy Regulatory Commission (FERC) has regulatory authority over interstate aspects of the nation’s electric power system, but not over “facilities used in local distribution or only for the transmission of electric energy in intrastate commerce,” 16 U.S.C. 824(a). FERC entered orders adopting standards and procedures for determining which power distribution facilities are subject to the agency’s regulatory jurisdiction and which facilities fall within the statutory exception for local distribution of electric energy. The state and the Public Service Commission of the State of New York challenged the standards and procedures as an unreasonable interpretation of the agency’s statutory grant of jurisdiction and as arbitrary and capricious under the Administrative Procedure Act. The Second Circuit upheld the orders as reasonably interpreting the agency’s regulatory jurisdiction under the Federal Power Act as amended by the Electricity Modernization Act of 2005 and supported by sufficient explanation and substantial evidence as required by the Administrative Procedure Act. View "New York v. Fed. Energy Regulatory Comm'n" on Justia Law

Institutions that buy natural gas directly from interstate pipelines sued, claiming that the pipelines had violated state antitrust laws: that they reported false information to the natural-gas indices on which natural-gas contracts were based. The indices affected both retail and wholesale natural-gas prices. The pipelines sought summary judgment, arguing that the Natural Gas Act pre-empted state-law claims. That Act gives the Federal Energy Regulatory Commission (FERC) authority to determine whether rates charged by natural-gas companies or practices affecting such rates are unreasonable, 15 U.S.C. 717d(a). It limits FERC’s jurisdiction to the transportation of natural gas in interstate commerce, the sale in interstate commerce of natural gas for resale, and natural-gas companies engaged in such transportation or sale, leaving regulation of other portions of the industry, such as retail sales, to the states. The district court granted the motion. The Ninth Circuit reversed. Acknowledging that the pipelines’ index manipulation increased wholesale prices, it held that the state-law claims were not pre-empted because they were aimed at obtaining damages only for excessively high retail prices. The Supreme Court affirmed, emphasizing the importance of considering the target at which the state-law claims aim. Here, the claims are aimed at practices affecting retail prices, a matter “firmly on the States’ side of [the] dividing line.” State antitrust laws are not aimed at natural-gas companies in particular, but rather all businesses and states have long provided “common-law and statutory remedies against monopolies and unfair business practices.” The industries did not identify a specific FERC determination that state antitrust claims are pre-empted by the Act. View "Oneok, Inc. v. Learjet, Inc." on Justia Law

PJM is a regional transmission organization that combines multiple utility power grids into a single transmission system to “reduce technical inefficiencies caused when different utilities operate different portions of the grid independently.” PJM coordinates the movement of wholesale electricity in 13 mid-Atlantic states and the District of Columbia. To prevent interruptions to the delivery of electricity, PJM upgrades its system in accordance with its governing agreements: the Regional Transmission Expansion Plan, the Consolidated Transmission Owners Agreement, and the PJM Open Access Transmission Tariff. The petitioners, incumbent owners, challenged orders in which the Federal Energy Regulatory Commission (FERC) concluded that they had no right of first refusal for proposed expansions or upgrades and that PJM may designate third-party developers to construct transmission facilities within incumbent members’ zones. While their petition was pending, FERC directed PJM to remove or revise “any provision that could be read as supplying a federal right of first refusal for any type of transmission project that is selected in the regional transmission plan for purposes of cost allocation.” The D.C. Circuit dismissed the petition, concluding that there is no live controversy between adverse parties, so that any decision would constitute an impermissible advisory opinion.it View "Pub. Serv. Elec. & Gas Co. v. Fed. Energy Regulatory Comm'n" on Justia Law

In 1969, Grantors and an oil company entered into a continuing oil and gas lease covering Grantors’ property. Less than seven months later, Grantors entered into a mineral deed with Grantee covering the same property. The mineral deed had a primary term of fifteen years. In 2012, Plaintiffs, the sole heirs of Grantors, filed a declaratory judgment seeking a declaration that the royalty interest held by Defendants, the sole heirs of Grantee, had terminated. The district court granted summary judgment for Defendants, concluding that because the mineral deed stated that it was subject to the terms of the continuing oil and gas lease and because Grantor was a party to both the lease and the mineral deed, the parties intended that they be read together. The Supreme Court reversed, holding (1) the “subject to” clause in the mineral deed did not incorporate the provisions of the lease; and (2) therefore, Defendants’ mineral interest did not continue past its fifteen-year term. View "Netahla v. Netahla" on Justia Law

Plaintiff, a mineral owner, sued Defendant alleging breach of contract, failure to pay royalties, and fraud. The claims centered on three oil and gas leases that Plaintiff, the lessor, executed with Defendant, the lessee. Plaintiff prevailed on the majority of his claims in the trial court. As relevant to this appeal, the jury determined that Plaintiff, in the exercise of reasonable diligence, discovered the fraud less than four years before filing suit. The trial court therefore concluded that the claims were not time barred. The court of appeals reversed, concluding that the fraud should have been discovered, as a matter of law, more than four years before Plaintiff filed suit because Plaintiff should have discovered the relevant information in the Texas Railroad Commission’s public records. The Supreme Court reversed, holding that Plaintiff’s reasonable diligence in discovering the underlying fraud was a question of fact for the jury. Remanded. View "Hooks v. Samson Lone Star, Ltd. P’ship" on Justia Law

The TMP is a 5.6-mile stretch of pipeline, connecting Missouri with Illinois beneath the Mississippi River. Under the Natural Gas Act, 15 U.S.C. 717f, the Federal Energy Regulatory Commission issued MoGas a certificate of public convenience and necessity for a project that included using the TMP for natural gas service for the first time. On remand, the Commission approved inclusion of the acquisition cost in MoGas’s rate base because the TMP had been devoted to a new use, transporting natural gas instead of oil, and the cost of new construction would have been greater. Objectors challenged the Commission’s determination that the company had shown that the acquisition of pipeline facilities provided specific benefits in accordance with Commission precedent. Although acknowledging that a lower acquisition cost can produce benefits to customers in some cases, they argued the Commission failed to examine whether there were actual quantifiable dollar benefits for Missouri customers. The D.C. Circuit affirmed, deferring to the Commission’s benefits exception, which allows an acquisition premium to be included in a pipeline’s rate base when the purchase price is less than the cost of constructing comparable facilities, the facility is converted to a new use, and the transacting parties are unaffiliated. View "Mo. Pub. Serv. Comm'n v. Fed. Energy Regulatory Comm'n" on Justia Law

At issue in this oil and gas dispute was the validity of a mineral lease on nearly two thousand acres of land in north Texas. The non-participating royalty interest holder (non-executive) claimed the executive-right holder (executive) procured the mineral lease in breach of a duty of good faith owed to her. The non-executive further alleged that the lessee acted in concert with the executive in facilitating the breach of duty and that the executive’s ill-gotten gains were fraudulently transferred to third parties. The trial court granted a take-nothing summary judgment on all claims. The court of appeals reversed, concluding that issues of material fact existed that precluded summary judgment. The Supreme Court affirmed in part and reversed in part, holding (1) fact questions precluded summary judgment as to the non-executive’s breach-of-duty claim against the executive; but (2) summary judgment was proper as to the claims against the remaining defendants. View "KCM Financial LLC v. Bradshaw" on Justia Law

Plaintiff filed this diversity action alleging that he owned fractional working interests in four Ritchie County mining partnerships, which owned six oil and gas wells, and demanding an accounting of the four partnerships. Defendant counterclaimed for the cumulative operating expenses attributable to Plaintiff’s asserted working interests in the partnerships. The district court awarded summary judgment to Defendant, concluding that Plaintiff’s assertion of interests in the four mining partnerships failed because he could not produce a writing that evidenced his co-ownership of the subject leases or wells in conformance with the Statute of Frauds. The Supreme Court of West Virginia accepted the Fourth Circuit’s certified question of law and answered (1) if a person contends he owns an interest in a common-law mining partnership, the Statute of Frauds requires the person to prove he is a partner of the mining partnership through a written conveyance; and (2) if the partnership is a general partnership and the partnership owns oil and gas leases, the Statute of Frauds does not require a person to produce a written instrument to prove he is a partner in the general partnership. Having adopted the West Virginia Supreme Court’s opinion answering the Court’s certified question of law, the Fourth Circuit vacated the judgment of the district court and remanded. View "Valentine v. Sugar Rock, Inc." on Justia Law