Justia Energy, Oil & Gas Law Opinion Summaries

The Supreme Court affirmed the judgment of the Minnesota Tax Court reducing the Commissioner of Revenue's valuations of CenterPoint Energy Minnegasco's natural gas distribution pipeline system for January 2, 2018 through January 2, 2019, holding that the Commissioner was not entitled to relief.The tax court reduced the Commissioner's valuations and ordered the Commissioner to recalculate Minnegasco's tax liability. The Commissioner appealed, challenging the tax court's income-equalization and cost approaches. The Supreme Court affirmed, holding that the tax court (1) did not err in the way that it used the Commissioner's initial assessments when evaluating the totality of the evidence and making its independent evaluations; (2) did not abuse its discretion in considering the conflicting expert opinions; and (3) did not clearly err in finding external obsolescence. View "Commissioner of Revenue v. CenterPoint Energy Resources Corp." on Justia Law

Nicole Fitzpatrick obtained a dissolution of her marriage to Jeremy Fitzpatrick. The couple had minor children and significant marital assets, including real property, bank accounts, investments, and personal possessions. Among these were investments in oil and gas assets. The issue this case presented for the Oklahoma Supreme Court’s review centered on the Court of Civil Appeals decision regarding the division of the oil and gas assets. During the course of the marriage, Husband pursued a mutual goal of investments in oil and gas assets through two different ventures. He inextricably tied the Bakken and Energy deals and encumbered marital assets. The trial court found that all the A and B units of both the Bakken and Energy properties were acquired during the marriage through joint efforts of both parties, and were marital property subject to division. Because part of the properties' value lay in their future growth, the trial court considered the most equitable form of property division. The court ordered that future distributions and proceeds flowing from both sets of A and B units were to be held in constructive trust for both parties' benefit, and for Husband to distribute her equal marital share to Wife. COCA reversed the trial court's decisions regarding the Energy A and B units, finding that the trial court should have determined the units' value and set a valuation date. COCA also found that the trial court's use of a constructive trust for the Energy units was not proper. However, COCA did not disturb the trial court's use of a constructive trust with regard to the Bakken units. The Supreme Court affirmed the trial court’s authority to distribute the assets although they could not be valued at the time of the divorce decree; the Court concurred with the trial court’s imposition of a constructive trust to ensure protection of the assets’ future value. View "Fitzpatrick v. Fitzpatrick" on Justia Law

Gulf South Pipeline Company, LLC owned an underground natural gas storage facility in Rankin County, Mississippi. It owned additional properties that ran through thirty-two Mississippi counties. As a public service corporation with property situated in more than one Mississippi county, property belonging to Gulf South was assessed centrally by the Mississippi Department of Revenue rather than by individual county tax assessors. After conducting the central assessment, MDOR apportions the tax revenues among the several counties in which the property is located. A significant amount of the natural gas stored in Gulf South’s Rankin County facility is owned by Gulf South’s customers and, therefore, it is excluded from MDOR’s central assessment. The Rankin County tax assessor requested that Gulf South disclose the volume of natural gas owned by each of its customers. Following Gulf South’s refusal to provide these data, in September 2021 the Rankin County tax assessor gave notice of its intention to assess Gulf South more than sixteen million dollars for approximately four billion cubic feet of natural gas stored by Gulf South but owned by its customers. Gulf South filed suit at the Chancery Court in Hinds County, seeking to enjoin the assessment and seeking a declaratory judgment that MDOR was the exclusive entity with the authority to assess a public service corporation with property located in more than one Mississippi county. On interlocutory appeal, the Mississippi Supreme Court was asked to determine whether venue was proper in Hinds County when Rankin County was named as a defendant and MDOR was joined as a necessary party. The Court held that, under the venue provisions of Mississippi Code Section 11-45-17 and the Court’s consistent construction of these statutory provisions as mandatory and controlling, venue was proper only in Rankin County. Therefore, the chancellor erred by denying Rankin County’s motion to transfer venue. View "Rankin County v. Boardwalk Pipeline Partners, L.P., et al." on Justia Law

The Supreme Court reversed the judgment of the circuit court granting summary judgment for Respondent in this action claiming that Respondent owned fifty percent interest in the oil and gas estate Petitioners purchased at prior tax sales, holding that the circuit court erred.In 1989, Respondent and Petitioners participated in a tax sale after a delinquent taxpayer neglected to pay taxes on 135 acres of property and twenty-five percent of its subjacent oil and gas estate. Respondent bought the property, and Petitioners bought the interest in the oil and gas estate. In 1993, Petitioner brought another twenty-five percent interest in the same oil and gas estate after another tax resulting from a different taxpayer's delinquency. Respondent subsequently filed this lawsuit claiming ownership in the fifty percent interest in the oil and gas estate Petitioners had purchased. The circuit court granted summary judgment for Respondent. The Supreme Court reversed, holding (1) Petitioners purchased a valid tax deed to the oil and gas estate, and Respondent lacked grounds to challenge Petitioners' tax-sale deed; and (2) as to Petitioners' 1995 deed, the delinquent taxpayer clearly owned the twenty-five percent interest in the oil and gas estate for which his taxes were delinquent. View "Collingwood Appalachian Minerals III, LLC v. Erlewine" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the orders of the trial court granting TotalEnergies E&P USA, Inc.'s motion to stay arbitration before the American Arbitration Association (AAA) and denying MP Gulf of Mexico, LLC's motion to compel that arbitration, holding that the parties' contracts required them to resolve their controversies through arbitration.In the underlying dispute involving oil and gas leases Total E&P filed this suit seeking a declaratory construing the parties' cost sharing agreement. Thereafter, MP Gulf initiated an arbitration proceeding asserting that Total E&P breached the agreement. At issue was whether the parties clearly and unmistakably delegated arbitrability issues to the arbitrator by agreeing to arbitrate their controversies in accordance with the AAA Commercial Rules. The trial court granted Total E&P's motion to stay the AAA arbitration and denied MP Gulf's motion to compel that arbitration. The court of appeals reversed and compelled AAA arbitration. The Supreme Court reversed, holding that the parties clearly and unmistakably delegated to the AAA arbitrator the decision of whether the parties' controversy must be resolved by arbitration. View "TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC" on Justia Law

Plaintiffs-landowners alleged Anadarko Petroleum Corporation's intracompany practice of leasing its mineral interests to its affiliated operating company, including its 30% royalty rate, had the intent and effect of reducing the value of Plaintiffs’ mineral interests. Plaintiffs claimed Anadarko thereby maintained and furthered its dominant position in the market for leasing oil and gas mineral interests in violation of the Sherman Act § 2 and Wyoming antitrust laws. Plaintiffs sought treble damages and attorneys’ fees under § 4 of the Clayton Act. The federal district court certified a class action, for liability purposes only, comprised of “[a]ll persons . . . having ownership of Class Minerals during the Class Period.” Anadarko appealed the district court’s class certification pursuant to Federal Rule of Civil Procedure 23(f). The Tenth Circuit concluded the district court applied the correct legal standard in deciding whether the class satisfied the requirements of Rule 23, and it did not abuse its discretion in certifying the class. The Court therefore affirmed the district court’s class certification. View "Black, et al. v. Occidental Petroleum, et al." on Justia Law

Wolverine transports refined petroleum products in its 700-mile pipeline system. These pipelines run from refineries in the Chicago area to terminals and other pipelines in and around Indiana and Michigan. Because Wolverine transports refined petroleum, a hazardous liquid, the company is subject to safety standards, 49 U.S.C. 60101, and falls into the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) regulatory orbit. A few years ago, PHMSA conducted a routine inspection of Wolverine’s records, procedures, and facilities and identified several issues. PHMSA sent Wolverine a Notice of Probable Violation, which acts as an informal charging document, and described nine potential violations of PHMSA’s regulations, including a dent with metal loss on the topside of a pipe segment, with respect to which Wolverine did not meet an “immediate repair” requirement. Wolverine missed a 180-day repair requirement for other deficiencies.The Sixth Circuit affirmed a $65,800 civil penalty. The court rejected Wolverine’s arguments that PHMSA’s action was arbitrary and violated its due process rights. Wolverine had adequate notice and, to the extent Wolverine believes another approach would better achieve PHMSA’s desired policy outcomes, its argument is one for resolution by PHMSA. View "Wolverine Pipe Line Co. v. United States Department of Transportation, Pipeline and Hazardous Materials Safety Administration" on Justia Law

Blue Steel owned an unleased oil and gas interest in the Clarks Creek-Bakken Pool, McKenzie County, North Dakota. In 2012, the Commission pooled all pertinent oil and gas interests in the Clarks Creek-Bakken formation for the development and operation of a spacing unit. That unit—The Jore Federal Spacing Unit—had the capacity for 24 wells. White Butte Oil Operations, LLC operated ten wells that were completed in the spacing unit. White Butte was a company affiliated with Slawson Exploration Company, Inc., and which operated oil wells on the Fort Berthold Indian Reservation. In August 2019, Slawson sent Blue Steel a proposal to participate in four wells, but Blue Steel did not return an election to participate. In October 2019, Slawson sent Blue Steel a proposal to participate in two wells. Blue Steel did not return an election to participate or accept the opportunity to lease. Nor did the record show Reeves Dalton, the co-founder of Blue Steel, or any other person acting on behalf of Blue Steel, contacted Slawson about the invitations. Slawson began the risk penalty process for the six wells. In August 2021, Blue Steel applied to the Commission for an order finding Blue Steel was not subject to a risk penalty because Slawson failed to make a proper invitation to participate and a good-faith attempt to lease. In December 2021, the Commission held a hearing on the application. In February 2022, the Commission issued an order denying Blue Steel’s application, finding Slawson met the good-faith attempt to lease requirement. In March 2022, Blue Steel appealed to the district court, which affirmed the Commission’s decision. On appeal, Blue Steel argued the Commission erred when it concluded Slawson could impose a risk penalty on Blue Steel. In particular, Blue Steel claimed the Commission erred by finding Slawson made a good-faith attempt to obtain Blue Steel’s interest without first providing a proposed lease “containing a primary term, a per-acre bonus, a royalty rate, and other clauses.” After review, the North Dakota Supreme Court affirmed the Commission’s order finding Slawson made a good-faith invitation to lease or participate, and concluding Blue Steel was subject to a risk penalty. View "Blue Steel Oil and Gas v. NDIC, et al." on Justia Law

Mountain Valley Pipeline, LLC has been trying to build its eponymous Mountain Valley Pipeline through West Virginia and Virginia. In 2017, the Federal Energy Regulatory Commission first issued a certificate approving the project. To build an interstate natural gas pipeline, a company often needs additional federal permits from agencies other than the Commission. Mountain Valley needed approvals from the Bureau of Land Management, Forest Service, Army Corps of Engineers, and Fish and Wildlife Service. While Mountain Valley initially obtained each of those additional permits, the United States Court of Appeals for the Fourth Circuit vacated all of them over time. The Commission responded with a series of follow-up orders. As Mountain Valley reacquired permits from the other agencies, the Commission extended the deadline for completing construction and authorized work to resume. Several environmental groups petitioned for a review of the Commission’s orders allowing the project to proceed.   The DC Circuit denied most of their claims and concluded that one is moot. But the court agreed with one of the claims: that the Commission inadequately explained its decision not to prepare a supplemental environmental impact statement addressing unexpectedly severe erosion and sedimentation along the pipeline’s right-of-way. While the court granted the petitions for review in part on that ground, it did not vacate the Commission’s orders allowing work on the project to resume. Instead, the court remanded the orders without vacatur to enable the Commission either to prepare a supplemental environmental impact statement or to better explain why one is unnecessary. View "Sierra Club v. FERC" on Justia Law

The Supreme Court reversed the opinion of the court of appeals reversing the trial court's holding that, as a matter of law, a statutory "safe-harbor" provision applied and relieved an operator of oil-and-gas wells from any obligation to pay interest in the amounts withheld, holding that the safe-harbor provision applied as a matter of law.At issue was the "safe harbor" provision that permits operators to withhold payments without interest under certain circumstances. In reliance with the safe harbor provision the operator in this case withheld production payments it was contractually obligated to make to one of the wells' owners. The owner brought suit seeking to recover the payments with interest. The operator made the payments but without interest. The trial court concluded that the safe-harbor provision allowed the operator to withhold the funds. The court of appeals reversed. The Supreme Court reversed, holding that the operator established as a matter of law that it was entitled to withhold distribution of production payments without interest under the statutory safe-harbor provision of Tex. Nat. Res. Code 91.402(b)(1)(A) and (b)(1)(B)(ii). View "Freeport McMoRan Oil & Gas LLC v. 1776 Energy Partners, LLC" on Justia Law