Justia Energy, Oil & Gas Law Opinion Summaries

Rocky Mountain and American Fuels filed two separate actions against CARB, contending that the Low Carbon Fuel Standard, Cal. Code Regs. tit. 17, 95480-90, violated the dormant Commerce Clause and was preempted by Section 211(o) of the Clean Air Act, 42 U.S.C. 7545(o), known as the federal Renewable Fuel Standard (RFS). The court held that the Fuel Standard's regulation of ethanol did not facially discriminate against out-of-state commerce, and its initial crude-oil provisions (2011 Provisions) did not discriminate against out-of-state crude oil in purpose or practical effect. The court also held that the Fuel Standard did not violate the dormant Commerce Clause's prohibition on extraterritorial regulation. The court vacated the preliminary injunction and remanded to the district court for further considerations under Pike v. Bruce Church, Inc. View "Rocky Mountain Farmers Union v. Corey" on Justia Law

The federal government moved the Osage Nation to the State of Oklahoma. Years later, the Nation discovered its new home contained mammoth reserves of oil and gas. The federal government appropriated itself as trustee, to oversee collection of royalty income and its distribution to tribal members. In this lawsuit, tribal members sought an accounting to determine whether the federal government fulfilled its fiduciary obligations. The district court dismissed the tribal members’ claims. Upon review of the district court record, the Tenth Circuit found the tribe was entitled to an accounting, and accordingly reversed. View "Fletcher, et al v. United States, et al" on Justia Law

In connection with construction of a pipeline to ship natural gas from Wyoming to Eastern Ohio, Rockies Express and Minerals Management Service (MMS), within the Department of the Interior, entered into contracts containing Royalty-in-Kind (RIK) provisions. Under the RIK program, the government receives its royalty for mineral resources extracted under federal leases “in kind,” i.e., in natural gas, rather than in cash, 30 U.S.C. 192; 42 U.S.C. 15902(b). In exchange, the government makes monthly payments to ensure that a certain quantity of the mineral resources is made available for its purposes. The government then enters into processing and transportation contracts to sell the mineral royalties, often at a substantial profit over royalties received in cash. The Civilian Board of Contract Appeals determined that MMS had materially breached the contract, but that Rockies Express was only entitled to damages that had accrued before the Secretary of the Interior announced a decision to phase-out RIK contracts. The Federal Circuit affirmed that MMS materially breached the contract, but reversed the decision to limit damages. Rockies Express is entitled to compensatory damages to put it in as good a position as that in which it would have been put by full performance of the contract. View "Rockies Express Pipeline, LLC v. Salazar" on Justia Law

Plaintiff-Appellant Farrell-Cooper Mining Company and Defendant-Appellant Oklahoma Department of Mines appealed a district court's dismissal of their claims for declaratory and injunctive relief against the Department of Interior; the Secretary of the Interior; the Office of Surface Mining, Reclamation and Enforcement; and the Director of OSMRE. A dispute arose over reclamation requirements contained in surface coal mine permits for Farrell-Cooper's Liberty Mine #5 and Liberty Mine #6. Upon review, the Tenth Circuit dismissed the appeal as unripe. View "Farrell-Cooper Mining Company v. US Department of the Interior, et al" on Justia Law

Plaintiffs filed suit against Chesapeake seeking an injunction and damages based on claims arising from the drilling and operation by Chesapeake of three natural gas wells on surface property owned by plaintiffs. Chesapeake owns lease rights to minerals beneath plaintiffs' surface property and the property rights of both parties ultimately flowed from two severance deeds that originally split the surface and mineral estates of the 101 acres of land plaintiffs owned. The only issue on appeal was whether the district court erred when it granted summary judgment for Chesapeake on plaintiffs' claim for common law trespass. The court concluded that the district court was correct to hold that creating drill waste pits was reasonably necessary for recovery of natural gas and did not impose a substantial burden on plaintiffs' surface property, that creation of the pits was consistent with Chesapeake's rights under its lease, was a practice common to natural gas wells in West Virginia, and consistent with requirements of applicable rules and regulations for the protection of the environment. Accordingly, the court affirmed the judgment of the district court. View "Whiteman v. Chesapeake Appalachia, LLC" on Justia Law

The companies supplied oil and gas to SemCrude on credit. After SemCrude petitioned for bankruptcy, the companies filed a complaint contending that they retained property and statutory lien rights in those commodities and asserted that their claims could not be discharged without affording them the opportunity to litigate their claims in an adversary proceeding. They were not given that opportunity. The court instead established global procedures that entitled the companies to file one representative proceeding for each state in which they supplied oil and gas. All interested parties had the right to brief, and present oral argument on, their claims. Regardless whether a company participated, however, the rulings from the representative action would be binding on it. After such proceedings, the court rejected the companies’ claims that that they retained property and statutory lien rights. Following confirmation of Semcrude’s reorganization plan, the companies appealed to the district court, which rejected their claims as equitably moot. The Third Circuit reversed. The record did not support SemCrude’s claims that granting the companies relief would collapse its plan of reorganization or undermine the justifiable reliance of third parties to their significant harm. View "In re: SemCrude LP" on Justia Law

In the 1960s Penelec and NYSEG built the Homer City coal-burning power plant in Indiana County, Pennsylvania. The Clean Air Act of 1970 subsequently charged the EPA with setting national maximum permissible levels of common pollutants, 42 U.S.C. § 7409(a)–(b). In 1990 the CAA was amended by Title V, the Operating Permit Program, which requires all major sources of air pollution to obtain operating permits. The Plant’s “grandfathered” status ended in the 1990s, when Penelec and NYSEG made changes to boilers that increased emissions of sulfur dioxide and particulate matter. Penelec and NYSEG believed the changes were “routine maintenance” and did not apply for a permit. In 1995, Penelec and NYSEG applied for a Title V operating permit; they subsequently sold the Plant to EME, which then sold to OLs, which simultaneously leased it back to EME. By 2004, the Plant had become “one of the largest air pollution sources in the nation,” and was a target of the EPA’s new enforcement initiative. In 2008 the EPA filed suit, alleging that the former owners had modified the Plant without a permit and without installing required emissions controls. The Third Circuit affirmed dismissal. The relief sought would require distortion of plain statutory text to shore up what the EPA views as an incomplete remedial scheme. View "United States v. EME Homer City Generation, L.P." on Justia Law

Plaintiffs filed suit against GenOn, on behalf of a putative class of at least 1,500 individuals who own or inhabit residential property within one mile of GenOn’s 570-megawatt coal-fired electrical generation facility in Springdale, Pennsylvania. The complaint asserted state tort law claims, based on ash and contaminants settling on plaintiffs’ property. The district court dismissed, finding that because the plant was subject to comprehensive regulation under the Clean Air Act, 42 U.S.C. 7401, it owed no extra duty to the members of the class under state tort law. The Third Circuit reversed, holding that the plain language of the Clean Air Act and controlling Supreme Court precedent indicate that state common law actions are not preempted. View "Bell v. Cheswick Generating Station, Genon Power Midwest, L.P." on Justia Law

Plaintiffs filed suit on behalf of themselves and other similarly situated landowners who used agents in an effort to lease oil and gas rights in Mercer County. When the transactions did not go as planned, plaintiffs sued an oil and gas company, Halcon, alleging breach of agreement and the duty of fair dealing. After Halcon claimed that the agents were “necessary parties,” plaintiffs decided to file direct claims against the agents, which destroyed diversity jurisdiction. Plaintiffs intended to pursue all of their claims in state court. Halcon argued that it did not oppose joining agents, agreed that the all claims would benefit from being heard in a single proceeding, but asserted that the case should proceed in federal court under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), (d)(2)(A), (d)(5)(B), because discovery had begun and there were ongoing ADR activities. The district court dismissed without prejudice. Plaintiffs filed in state court, with some changes. Halcon then removed the state court action to the same federal district court, which again remanded, citing the “home state” exception to subject matter jurisdiction under CAFA. The Third Circuit affirmed, citing CAFA’s “local controversy” exception because the case relates to Pennsylvania owners and their land. View "Vodenichar v. Halcon Energy Props., Inc." on Justia Law

Plaintiff challenged the EPA's permit allowing Shell to construct, operate, and conduct "pollutant emitting activities" associated with a drill vessel (the "Kulluk") in the Beaufort Sea off Alaska's North Slope. The court rejected Plaintiff's argument that the Environmental Appeals Board's (EAB) Decision was not entitled to Chevron deference; Section 7661c(e) of the Clean Air Act, 42 U.S.C. 7661c(e), was ambiguous, and the EPA's interpretation was reasonable under the applicable statutes' plain language; the court owed Chevron deference to the EAB Decision not to require a preconstruction increment analysis for the "Kulluk;" and the EPA permissibly granted a 500-meter exemption to the "Kulluk" from "ambient air" standards. View "Alaska Wilderness League v. EPA" on Justia Law