Justia Energy, Oil & Gas Law Opinion Summaries

This case involved the duties and standard of care of an oil and gas operator under an exculpatory clause in a joint operating agreement (JOA). Based on language in the exculpatory clause in the JOA, the trial court instructed the jury to find that to find a breach of the JOA the operator's conduct must have risen to the level of gross negligence or willful misconduct. The jury found the operator, Petitioner, breached his duties under the JOA to the working interest owners. The court of appeals affirmed, holding (1) the gross negligence and willful misconduct instruction should not have been included in the charge because the case centered around a breach of contract; but (2) there was legally sufficient evidence to support the jury's findings that Petitioner breached his duty as operator when measured against the elements of breach of contract. The Supreme Court reversed, holding (1) the exculpatory clause in the JOA established the standard for the claims against Petitioner; and (2) there was legally insufficient evidence that Petitioner was grossly negligent or acted with willful misconduct. View "Reeder v. Wood County Energy, LLC" on Justia Law

Joe Waldock appealed the grant of summary judgment quieting title to 25 percent of the mineral interests under a tract of land in Mountrail County in the successors in interest of the Estate of William C. Edwardson. Waldock argued the district court erred in deciding a 1954 administrator's deed from Edwardson's Estate to Waldock's predecessor in interest, Clark Van Horn, was equivalent to a quitclaim deed and in deciding the rule for interpreting mineral conveyances from "Duhig v. Peavy-Moore Co.," (144 S.W.2d 878 (Tex. 1940)), was not applicable to the administrator's deed. ThUpon review, the Supreme Court concluded the legal effect of the plain language of the administrator's deed conveyed 25 percent of the mineral interests to Waldock's predecessor in interest and reserved 25 percent of the mineral interests to Edwardson's Estate. Accordingly, the Court affirmed. View "Waldock v. Amber Harvest Corporation" on Justia Law

The successors to the interests of eight siblings of John Q. Nichols ("Goughnour defendants") appealed the grant of summary judgment in a quiet title action by the successors to the interests of John Q. Nichols ("Nichols plaintiffs") to determine ownership of 1/2 of the mineral interests in a parcel of land in Mountrail County. The Goughnour defendants claimed they collectively owned 1/4 of the mineral interests in the land and the Nichols plaintiffs owned 1/4 of the mineral interests. The district court decided the Goughnour defendants collectively owned 1/9 of the mineral interests in the land and the Nichols plaintiffs owned 7/18 of the mineral interests. After review of the district court record, the Supreme Court affirmed. View "Nichols v. Goughnor" on Justia Law

Robert Madrid worked for Petitioner Public Service Company of New Mexico (PNM) as a bill collector. "Angered by a particularly obstinate customer," and without permission, Madrid drove to the customer's home and disconnected the customer's gas service. It would later be determined that the customer was not a customer of PNM. PNM fired Madrid. Madrid responded by filing a grievance against PNM with his union, arguing that Madrid's termination violated its collective bargaining agreement with the Company. In making its argument, the union hypothesized that PNM treated Madrid more harshly than other employees guilty of similar conduct. The union sent PNM three discovery requests for documents to prove its hypothesis. Those requests became the subject of the appeal before the Tenth Circuit, as PNM refused to comply. An ALJ determined that PNM had engaged in an unfair labor practice, and ordered the Company to comply with the discovery requests. The National Labor Relations board adopted the ALJ's decision. PNM appealed the Board's order, and the Board cross-petitioned to have its order enforced. Upon review, the Tenth Circuit was unpersuaded by PNM's arguments on appeal, and affirmed the Board's decision. View "Public Service CO of NM v. NLRB" on Justia Law

This case stemmed from a dispute over the proper calculation of royalty payments on state oil and gas leases. Over the years, the Legislature has enacted several versions of the statutory oil and gas lease, and Lessees have entered into “hundreds” of oil and gas leases with the State. Specifically, the New Mexico Legislature enacted statutory oil and gas leases in 1919, 1925, 1927, 1929, 1931, 1945, 1947 and 1984. This appeal concerned the royalty clauses contained in the 1931 and the 1947 statutory lease forms. Both the 1931 lease and 1947 lease specified that the payment of royalty was to be calculated as a percentage of the “net proceeds” resulting from the sale of gas. During 2005 and 2006 Commissioner audited ConocoPhillips Company and Burlington Resources Oil & Gas Company’s royalty payments. Following the Audit, Commissioner notified Lessees that they had been underpaying their royalty obligations and issued them assessments for the underpayment. The Commissioner claimed that pursuant to the terms of the statutory lease forms Lessees could not deduct the post-production costs necessary to prepare the gas for the commercial market when calculating their royalty payments. Commissioner claimed that the improper deductions for post-production costs resulted in ConocoPhillips underpaying royalties by approximately $18.9 million and Burlington underpaying by approximately $5.6 million. In response to Commissioner’s audit and assessments, Lessees filed a complaint in the district court seeking a declaration that Commissioner’s assessment of additional royalty constituted a deprivation of due process, an unconstitutional impairment of contract, and breach of contract. In addition, Lessees claimed that Commissioner had exceeded his constitutional and statutory powers by issuing the assessments and had effectively usurped legislative power by seeking royalty payments under calculation methods not approved by the Legislature. In response, Commissioner alleged a host of counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of the implied covenant to market. This appeal pertained to three orders granting summary judgment on behalf of Lessees and a fourth order denying Commissioner’s motion for reconsideration of the district court’s previous dismissal of his counterclaim for breach of the implied covenant to market. In the first order, the district court granted Lessees’ motion for summary judgment. Upon review of the several orders and claims before the Supreme Court on appeal, the Court affirmed the trial court's grant of summary judgment. View "ConocoPhillips Co. v. Lyons" on Justia Law

The property at the center of this dispute was located in San Juan County with productive oil and gas wells thereon. While ownership of the land was the ultimate question the parties sought to resolve in the underlying lawsuit, the issue on appeal was narrower: whether, as a matter of law, a joint tenancy in realty may be terminated and converted into a tenancy in common by a mutual course of conduct between the owners that demonstrates their intent to hold the property as tenants in common. Upon review of the matter, the Supreme Court held that such a course of conduct may effectively terminate a joint tenancy. Accordingly, the Court reversed the Court of Appeals and remanded the case to the district court for further proceedings. View "Edwin Smith, LLC v. Synergy Operating, LLC" on Justia Law

Plaintiff-Appellant Devon Energy Production Company, L.P. appealed a district court's judgment which dismissed Devon’s declaratory-judgment action against Defendant-Appellee Mosaic Potash Carlsbad, Inc. for lack of subject-matter jurisdiction. More specifically, under Federal Rule of Civil Procedure 57, Devon sought a declaratory judgment that federal law completely preempted Mosaic’s anticipated state-law claims emanating from Devon’s unauthorized drilling in a federally managed area of New Mexico known as the "Potash Area," and that the only remedies available to Mosaic were derived from the federal administrative and judicial remedies of the Administrative Procedure Act and certain regulatory provisions of the U.S. Department of the Interior that govern oil, gas, and potash leasing and development within the Potash Area. Devon alleged that the district court had federal-question jurisdiction over its declaratory-judgment action under 28 U.S.C. 1331. The district court concluded that there was no federal-question jurisdiction to support Devon’s action and dismissed its complaint, and subsequently denied Devon’s motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e). Upon review of the district court's judgment, the Tenth Circuit affirmed. View "Devon Energy Production Co. v. Mosiac Potash Carlsbad, Inc." on Justia Law

The Council of the City of New Orleans and the Louisiana Public Service Commission petitioned for review of an order of the Federal Energy Regulatory Commission (FERC) allowing two companies to withdraw from a regional energy system agreement without paying exit fees. FERC concluded that there was nothing in the agreement that compelled payments prior to withdrawal. FERC found that, under the terms of the agreement, (1) withdrawing companies were not obligated to pay exit fees, and (2) once companies left the agreement, they no longer needed to continue to make rough equalization payments. The D.C. Circuit Court of Appeals denied the petitions for review, holding that FERC's findings were reasonable. View "Council of City of New Orleans v. FERC" on Justia Law

Underlying this appeal was the case of Center for Biological Diversity v. Interior, in which the Court vacated a five-year program for expanding leases for oil and gas development in the coast of Alaska. The U.S. Department of Interior, which approved the program, then issued a new five-year program. Here, the Native Village of Point Hope, Alaska, petitioned the D.C. Circuit Court of Appeals for reimbursement of attorneys' fees and costs it incurred in this matter. The D.C. Circuit allowed reimbursement in the amount of $192,293 in fees and $8,493 in costs, for a total reimbursement of $200,786. View "Ctr. for Biological Diversity v. DOI" on Justia Law

Shell imported petroleum products, 1993-1994, upon which custom duties, taxes, and other fees were paid. During the same period, Shell exported drawback-eligible substitute finished petroleum derivatives. In 1995-1996, substitution drawback claims were filed with the U.S. Customs and Border Protection on Shell’s behalf. Generally, Customs provides a drawback of 99% of any duty, tax, or fee imposed under federal law upon entry or importation if the merchandise (or a commercially interchangeable substitute) is subsequently exported or destroyed under Customs supervision and not used within the U.S. before exportation or destruction, 19 U.S.C. 1313(j),(p). Drawback claims must be filed within three years of exportation. During the time of Shell’s imports, drawback eligibility of Harbor Maintenance Tax and Environmental Tax payments, which Shell now seeks, were heavily disputed. Shell was found not to have included an express request for HMT and ET in the “net claim” figure. In 1997, after the three-year period for the filing of drawback claims had expired Shell filed protests with Customs, seeking drawback as to HMT and ET payments. Customs denied Shell’s protests. The Court of International Trade found the claims time-barred. The Federal Circuit affirmed, holding that 1999 and 2004 statutory amendments did not change Shell’s position. View "Shell Oil Co. v. United States" on Justia Law