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SemGroup purchased oil from producers and resold it to downstream purchasers. It also traded financial options contracts for the right to buy or sell oil at a fixed price on a future date. At the end of the fiscal year preceding bankruptcy, SemGroup’s revenues were $13.2 billion. SemGroup’s operating companies purchased oil from thousands of wells in several states and from thousands of oil producers, including from Appellants, producers in Texas, Kansas, and Oklahoma. The producers took no actions to protect themselves in case 11 of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. When SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part. The producers argued that local laws gave them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. The Third Circuit affirmed summary judgment in favor of the downstream purchasers; parties who took precautions against insolvency do not act as insurers to those who took none. View "In re: SemCrude LP" on Justia Law

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Under the federal environmental laws, the owner of property contaminated with hazardous substances or a person who arranges for the disposal of hazardous substances may be strictly liable for subsequent clean-up costs. The United States owned national forest lands in New Mexico that were mined over several generations by Chevron Mining Inc. The question presented for the Tenth Circuit’s review was whether the United States is a “potentially responsible party” (PRP) for the environmental contamination located on that land. The Tenth Circuit concluded that under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), the United States is an “owner,” and, therefore, a PRP, because it was strictly liable for its equitable portion of the costs necessary to remediate the contamination arising from mining activity on federal land. The Court also concluded the United States cannot be held liable as an “arranger” of hazardous substance disposal because it did not own or possess the substances in question. The Court reversed the district court in part and affirmed in part, remanding for further proceedings to determine the United States’ equitable share, if any, of the clean-up costs. View "Chevron Mining v. United States" on Justia Law

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Orangeburg challenged the Commission's approval of an agreement between two utilities, alleging that the approval constituted an authorization of the North Carolina Utilities Commission's (NCUC) unlawful regime. The DC Circuit held that Orangeburg has standing to challenge the Commission's approval because, among other reasons, the city has demonstrated an imminent loss of the opportunity to purchase a desired product (reliable and low-cost wholesale power), and because that injury was fairly traceable to the Commission's approval of the agreement at issue. On the merits, the court held that the Commission failed to justify its approval of the agreement's disparate treatment of wholesale ratepayers; to justify the disparity, the Commission relied exclusively on one line from a previous FERC order that, without additional explication, appeared either unresponsive or legally unsound. Accordingly, the court vacated in part the orders approving the agreement and denying rehearing, and remanded. View "Orangeburg, South Carolina v. FERC" on Justia Law

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The Atlantic Coast Pipeline, LLC (ACP) sought permission to enter Hazel Palmer’s property to conduct preliminary surveys in order to build a natural gas transmission line. When Palmer withheld her consent, ACP provided a notice of intent to enter her property pursuant to Va. Code 56-49.01. Palmer continued to deny permission, and ACP filed a petition for a declaratory judgment requesting a declaration of its rights under section 56-49.01. Palmer filed a plea in bar and a demurrer, arguing that section 56-49.01 applies only to domestic public service companies and is unconstitutional under Va. Const. art. I, 11 because it impermissibly burdens a fundamental right. The circuit court overruled Palmer’s plea in bar and demurrer. The Supreme Court affirmed, holding (1) section 56-49.01 establishes the General Assembly’s intent that the entry-for-survey privilege be available to foreign natural gas companies that do business within the Commonwealth; and (2) Palmer’s fundamental property rights do not include the right to exclude ACP in this case. View "Palmer v. Atlantic Coast Pipeline, LLC" on Justia Law

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The Atlantic Coast Pipeline, LLC (ACP) sent Landowners letters seeking permission to enter their properties to conduct preliminary surveys and studies in order to build a natural gas transmission line. When Landowners withheld their permission, ACP provided notices of intent to enter their properties pursuant to Va. Code 56-49.01. ACP then filed petitions for declaratory judgment against Landowners seeking an order declaring that the notices of intent to enter provided ACP with a right to enter Landowners’ properties. The circuit court issued a final order concluding that ACP was entitled to enter landowners’ properties pursuant to section 56-49.01. The Supreme Court reversed and remanded, holding that ACP’s notices were deficient because they did not “set forth the date of the intended entry” as required by section 56-49.01(C). View "Chaffins v. Atlantic Coast Pipeline, LLC" on Justia Law

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Absent a prior conveyance of pore space to a third party, the owner of a surface estate owns the pore space beneath the surface. A surface owner may recover damages from a mineral developer for the developer's use of pore space for saltwater disposal. Plaintiffs Randall Mosser, Douglas Mosser, Marilyn Koon, and Jayne Harkin owned a surface estate in a quarter section of land in Billings County. When the plaintiffs acquired their surface estate, it was subject to a 1977 oil and gas lease granted by the plaintiffs' predecessors-in-interest, who had owned both the surface and mineral estate in several tracts of land included in the lease. In 2003, the Industrial Commission approved a plan for unitization of several tracts of land in Billings County, including the plaintiffs' surface estate. Denbury Onshore, LLC operated a well located on the plaintiffs' surface estate, and used the well for saltwater disposal since September 2011. Plaintiffs sued Denbury for saltwater disposal into their pore space, alleging claims for nuisance, for trespass and for damages under the Oil and Gas Production Damage Compensation Act in N.D.C.C. ch. 38-11.1. Plaintiffs moved for partial summary judgment on liability, claiming Denbury's liability was clear and the only issue for trial was the amount of their damages. Denbury moved for summary judgment dismissal of the plaintiffs' action, contending it had the right to dispose of saltwater into the plaintiffs' pore space without providing them compensation. A federal magistrate judge denied the parties' motions, but ruled the plaintiffs owned the pore space beneath their surface estate and Denbury could be liable for saltwater disposal into their pore space under N.D.C.C. ch. 38-11.1. Denbury filed a second motion for summary judgment, seeking dismissal of the plaintiffs' statutory claim for damages on the ground they failed to proffer any evidence to establish that they were currently using the pore space beneath their surface estate, that they had any concrete plans to do so in the near future, or that their property had diminished in value. The federal magistrate judge deferred ruling on that motion and certified several questions of North Dakota law to the North Dakota Supreme Court involving the plaintiffs' right to recover compensation for Denbury's disposal of saltwater into the pore space beneath the plaintiffs' surface estate under N.D.C.C. ch. 38-11.1. View "Mosser v. Denbury Resources, Inc." on Justia Law

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Northern Natural Gas Company initiated proceedings against a number of parties to condemn certain rights relating to the storage of natural gas in and under more than 9,000 acres of land in southeast Kansas, known as the Cunningham Storage Field. Northern Natural Gas brought this action under the Natural Gas Act of 1938 (NGA), 15 U.S.C. 717 et seq. A three-person commission was appointed to determine the appropriate condemnation award, and the district court adopted the commission’s findings and recommendations in full. Both sides appealed, asserting various arguments in support of their positions that the award either over- or under-compensated the Landowners and Producers. After review, the Tenth Circuit concluded: the condemnation award should not have included either (1) the value of storage gas in and under the Cunningham Field on the date of taking, or (2) the lost value of producing such gas after the date of certification, because certification extinguished any property interests the Landowners and Producers may have held in the gas before that date. But the Court agreed with the award’s inclusion of value for Extension Area tracts based on their potential use for gas storage and buffer rights, the commission’s valuation for the eight Extension Area wells, and the district court’s denial of attorneys’ fees. View "Northern Natural Gas v. Approximately 9117 Acres" on Justia Law

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Section 205 of the Federal Power Act does not allow FERC to make modifications to a proposal that transform the proposal into an entirely new rate of FERC's own making. Electricity generators petitioned for review of FERC's decision modifying PJM's proposed changes to its rate structure. FERC's modifications created a new rate scheme that was significantly different from PJM's proposal and from PJM's prior rate design. The D.C. Circuit held that FERC contravened the limitation on its Section 205 authority. Therefore, the court granted the petitions for review and vacated FERC's orders with respect to several aspects of PJM's proposed rate structure -- the self-supply exemption, the competitive entry exemption, unit-specific review, and the mitigation period. The court remanded to FERC. View "NRG Power Marketing, LLC v. FERC" on Justia Law

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Drilling operations commence when: (1) work is done preparatory to drilling; (2) the driller has the capability to do the actual drilling; and (3) there is a good faith intent to complete the well. It is not necessary that the drill bit actually penetrate the ground. GADECO, LLC, appealed a judgment and orders declaring its oil and gas lease with Laurie Abell was terminated, dismissing its counterclaim against Abell, and awarding Abell her costs and attorney fees. GADECO and Abell began negotiating a surface use and damage agreement in mid-November 2011. GADECO sent Abell a proposed agreement on December 26, 2011, and later attempted to contact Abell about the agreement, but she refused to execute it. GADECO applied for a well permit in early 2012, shortly before the primary term of the lease was set to expire, and the permit was approved on January 23, 2012. Two days later, Abell leased the same mineral interests to Kodiak Oil & Gas. Unable to secure a surface use and damage agreement from Abell, GADECO relocated the well off the subject property but within the spacing unit, and a producing oil and gas well was completed in 2013. After giving notice of termination, Abell brought this lawsuit seeking a determination that GADECO's lease had terminated and an award of costs and attorney fees. GAEDCO counterclaimed for breach of contract and damages. The North Dakota Supreme Court found that where the failure to produce oil or gas from leased land is due to the fault of the lessor, the lease is not terminated at the end of the primary term, since the lessor is not entitled to set up termination of the lease where she has prevented the lessee from conducting operations which might bring about an extension of the lease. The Court reversed and remanded, finding genuine issues of material fact precluding summary judgment, and remanded for further proceedings. View "Abell v. GADECO, LLC" on Justia Law

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After settlement of a class action for royalties from gas wells, the federal district court for the Western District of Oklahoma awarded attorney fees to class counsel and an incentive award to the lead plaintiff to be paid out of the common fund shared by class members. The court rejected claims by two objectors, and they appealed. Finding the district court failed to compute attorney fees under the lodestar method, as required by Oklahoma law in this diversity case, and the incentive award was unsupported by the record, the Tenth Circuit reversed and remanded. View "Chieftain Royalty v. Enervest Energy" on Justia Law