Justia Energy, Oil & Gas Law Opinion Summaries

In October 2008, the Idaho Power Company filed an application with the Idaho Public Utilities Commission (IPUC) to modify its tariff. Some of the proposed amendments applied to the relocation of utilities facilities within public rights-of-way. The City of Nampa and the Association of Canyon County Highway Districts intervened in the proceedings, and each objected to the Companyâs proposed amendments to the tariff. The IPUC approved the amendments, and Ada County Highway District (ACHD) filed a petition or reconsideration and clarification. Specifically, ACHD argued that the IPUC exceeded its authority in approving the amendments and that portions of the amended tariff were âan unlawful attempt to amend or abrogate the common law rule requiring a utility to relocate its facilities placed in a public right-of-way at its expense.â Upon review, the Supreme Court found that the IPUC exceeded its authority in determining utilities relocation within public rights-of-way. The Court set aside the amended tariff.

The Ohio Public Utilities Commission approved a âprogram portfolio planâ proposed by Appellee American Electric Power (SEP). The plan contained a variety of programs designed to increase energy efficiency and reduce peak demands on AEPâs system. Appellant Industrial Energy Users-Ohio (IEU) challenged the PUCâs approval of the plan to the district court, arguing that the plan was too costly, was not energy-efficient, and did not meet the requirements imposed under the applicable state laws. The Supreme Court reviewed the record and found that IEUâs challenges âall lack merit.â The Court affirmed the lower courtâs and PUCâs decisions approving the plan.

The Ohio Public Utilities Commission (PUC) approved âreasonable arrangementsâ between American Electric Power Company (AEP) and two manufacturing firms, Ormet Primary Aluminum (Ormet) and Eramet Marietta, Inc. (Eramet). The arrangements gave substantial price discounts on electric service. The PUC approved the arrangements and allowed AEP to collect from other customers most of the revenue foregone to the discounts. Ormet asked the commission to approve an arrangement linking Ormetâs electric rate to the market price of aluminum; Eramet asked for a fixed discounted rate. The PUC held public hearings to consider the manufacturersâ applications, and numerous parties intervened, including Industrial Energy Users-Ohio (IEU). Disagreements regarding both applications centered on the amount of the discount and who should pay for it. The PUC issued orders permitting discounted rates to the manufacturers, but the PUCâs plan was not exactly what AEP had proposed. AEP appealed the PUCâs decision, arguing that the discounts do not allow the power company to recoup its losses from the plan discounts. The Supreme Court found that state law âaffirmatively gives the commissionânot the utilitiesâfinal say over arrangementsâ like the ones decided for Ormet and Eramet. The Court affirmed the PUCâs decisions regarding the manufacturing companiesâ arrangements.

Appellants challenged a district courtâs discovery order that directed them to disclose what they called privileged information. To achieve this end, the Appellants filed an interlocutory appeal and a petition for writ of mandamus with the Tenth Circuit. The Appellants in this case include motor fuel retailers and the retail motor fuel trade associations to which the retailers belong. The Plaintiffs in this case are consumers and other interested parties. Collectively they filed twelve putative class action cases in seven federal district courts. The Plaintiffs alleged that the retailersâ âvolumetric pricing systemâ for retail motor fuel overcharges customers. When the temperature of the fuel rises, the fuelâs volume expands, but the actual energy content stays the same â customers pay for âmoreâ fuel but half the energy. Plaintiffs allege that the temperature fluctuations and fuel volumes are accounted for in every aspect of the Appellantsâ âvolumetric pricing systemâ except at the retail level, thus overcharging retail customers. The Tenth Circuit held that Appellants devoted a majority of their appellate brief to their contention that a First Amendment privilege should be presumed with respect to the information Plaintiffs sought to discover. However, Appellants made an âunwise strategic decisionâ by seeking a presumption when they failed to prove the information was indeed privileged. The Court dismissed Appellantsâ interlocutory appeal and denied their application for writ of mandamus.

Pursuant to an oil and gas lease with Appellee Trees Oil Company (Trees), Appellant Arthur Hockett had a 1/8-royalty interest in the production from a Haskell County well that produced natural gas. Trees operated the well, and sold the gas produced to âfirst purchasers.â Before paying Trees for production, the first purchasers deduct taxes and fees imposed by the state. Trees then pays Appellant 1/8 of the net sales proceeds. In 2009, Appellant filed a complaint against Trees, seeking recovery of the amount in tax deducted from the sales proceeds from the first purchasers. Trees moved to dismiss the suit, arguing that it could not be held liable for complying with state law by paying the sales taxes. The district court held that the taxes and fees were to be imposed on all owners in the venture, including royalty owners. Appellant appealed. The Supreme Court found that state law does not require royalty owners pay the oil and gas taxes and fees if they do not operate the well. The fees withheld by the first purchaser are an expense attributable to the oil company as the well operator. In computing Appellantâs royalties, Trees was not permitted to deduct the amount of its fees expenses from the gross sale price under contract with the first purchaser. Accordingly, the Court held that the district court erred in ruling in favor of Trees. The Court remanded the remanded the case for further proceedings.

In 1953, Standard Oil Company owned a refinery in Mandan, and the Northern Pacific Railway Company owned land between the refinery and the Heart River. Northern Pacific executed a written permit granting Standard Oil permission to construct a pipeline along Northern Pacificâs right-of-way from the refinery to the river. The permit provided that Standard Oil could not transfer or assign the permit without Northern Pacificâs permission. In 1998, Northern Pacificâs successor-in-interest sold the portion of land that contained Standard Oilâs pipeline. In 2001, Standard Oilâs successor-in-interest, sold the refinery. In 2004, Tesoro, the new owner of the refinery, filed a âNotice of Permitâ along with the 1953 permit, with the Recorderâs Office. Later that year, the property was sold to Riverwood Commercial Park. Disputes arose between Riverwood and Tesoro over Riverwoodâs planned development of the property. The dispute bounced between the district and Supreme Court for various theories of recovery. Riverwoodâs theories centered on the characterization of the 1953 âpermitâ: all of Riverwoodâs claims would fail as a matter of law if the 1953 permit was not a license but an easement. After thorough review of the record, the Supreme Court concluded that the 1953 permit was indeed an easement, and affirmed a grant of summary judgment in favor of Tesoro and Standard Oil.

Oyster Creek in Ocean County, New Jersey was licensed under the Atomic Energy Act, 42 U.S.C. 2133(c) in 1969 for a 40-year term and is the oldest operating commercial nuclear power plant in the country. Objectors claimed that the application for license renewal was deficient with respect to detection of corrosion in a safety structure. The Atomic Safety and Licensing Board rejected the claims; the Nuclear Regulatory Commission granted the license. After examining the objectors' specific technical claims, the Third Circuit denied review. The Board and the NRC provided hundreds of pages detailing their decision-making and gave due consideration to objectors' concerns; the review was well-reasoned and within the realm of the agency's unique expertise.

This case involved two related oil and gas mineral lease disputes that were jointly tried. One of the disputes was between petitioners, BP American Production Co., Atlantic Richfield Co., and Vastar Resources, Inc. (collectively, "BP"), the lessee and operator, and respondents, the Marshall family, the lessors. The other dispute was between BP's successors-in-interest, Wagner Oil Co. (collectively, "Wagner"), and another lessor, respondents Vaquillas Ranch Co. Ltd. ("Vaquillas"). At issue was whether limitations barred the Marshall family's fraud claim against BP and whether Vaquillas lost title by adverse possession after Wagner succeeded to BP's interests, took over the operations, and produced and paid Vaquillas royalties for nearly twenty years. The court held that, because the Marshall family injury was not inherently undiscoverable and BP's fraudulent representations about its good faith efforts to develop the well could have been discovered with reasonable diligence before limitations expired, neither the discovery rule nor fraudulent concealment extended limitations and therefore, the Marshall family's fraud claims against BP were time barred. The court also held that by paying a clearly labeled royalty to Vaquillas, Wagner sufficiently asserted its intent to oust Vaquillas to acquire the lease by adverse possession.

An underground pipeline leaked gasoline five times between 1948 and 1962. After tests revealed benzene in wells, not including the plaintiffs' well, the company conducted remediation and monitoring and purchased the property now owned by the plaintiffs. The plaintiffs bought the property and a low level of benzene was detected in the well in 1996. The company installed a new well, which tested free of benzene 22 times between 1997 and 2002. Benzene was detected at a very low level in 2003 and the plaintiffs moved in 2005. In 2002 one of the plaintiffs was diagnosed, at age 48, with non-Hodgkins lymphoma. The district court entered summary judgment for the company. The Sixth Circuit affirmed. The district court acted within its discretion in excluding, as unreliable under the Daubert standard, an expert's specific-causation opinion. The expert did not ascertain the level of plaintiff's exposure and the level of benzene in the well never exceeded the EPA's standard; the expert did not rule out other possible causes, such as the plaintiff's smoking.

In September 2007, Petitioner Mitchell Glasgow was severely burned from a fire at an oil well at which he worked. At the time, Therral Story Well Service (TSWS) directly employed Mr. Glasgow. The mineral owners contracted with another company, PAR Minerals, Inc., to produce oil and gas. In turn, PAR Minerals contracted with TSWS to drill a well. The well penetrated into formations that were pressurized with hydrocarbons. Mr. Glasgow was circulating water trough the well while waiting for heavier drilling mud to be pumped into the well to control the pressure. A TSWS employee told Mr. Glasgow to stand away from the well because the pressure was dangerous, but a PAR Minerals "on-site supervisor" ordered Mr. Glasgow to get on his station at the pump, and jump away only if gas escaped from the well. Gas escaped, ignited, and severely burned Mr. Glasgow. Mr. Glasgow filed suit against PAR Minerals and its insurer. PAR Minerals would receive service of process one year later. PAR Minerals moved for summary judgment, arguing that it was Mr. Glasgow's "statutory employer" and therefore immune to lawsuits like his. The district court granted PAR Minerals' motion, holding that because of the year delay in getting PAR Minerals notice of the lawsuit, Mr. Glasgow's suit was prescribed and untimely. A split appellate court affirmed the district court's dismissal, and Mr. Glasgow appealed. After a thorough review of the record, the Supreme Court found that the lower courts erred in dismissing Mr. Glasgow's claims as prescribed. The Court reversed the lower courts' holdings and remanded the case for further proceedings.