Justia Energy, Oil & Gas Law Opinion Summaries

Tri-State Generation and Transmission Association, Inc., a generation and transmission cooperative, admitted Mieco, Inc., a natural gas supplier, as a member. The Federal Energy Regulatory Commission (FERC) concluded that owing to the admission of Mieco (1) Tri-State was subject to its jurisdiction and (2) the Commission has exclusive jurisdiction over the exit charge levied by Tri-State upon a member that leaves the cooperative. United Power, Inc., (United) a utility and member of Tri-State, opposed the admission of Mieco and wants United’s exit charge adjudicated in a state forum. United challenged the FERC’s conclusions as ultra vires and arbitrary and capricious.   The DC Circuit dismissed the petitions for review insofar as they raise objections that have not properly been exhausted before the agency, and denied the petitions in all other respects. The court first explained that it was reasonable for the FERC to conclude that providing such clarity was a prudent and efficient use of a declaratory order. Further, the FERC has exclusive jurisdiction over an exit charge. A state proceeding adjudicating whether an exit charge is just and reasonable is therefore preempted because it is “unmistakably and unambiguously directed” at something that is in “the FERC’s exclusive domain.” View "United Power, Inc. v. FERC" on Justia Law

The Sabine–Neches Waterway is vitally important to the local, state, and federal economies. Despite its importance, sixty years have gone by without much effort to maintain or otherwise improve it. The Sabine–Neches Navigation District (District) set out to change that. Congress covered most of the cost with the District left to cover the rest. The District planned to cover its share through port fees. But the same federal law that led to congressional funding also sets limits on how costs can be passed onto consumers by local entities. Two energy companies sued the District, claiming that the port fees exceeded those limits. The district court concluded that they failed to state plausible claims and dismissed the case.   The Fifth Circuit affirmed. The court explained that the statute, properly construed, allows the District to finance its share of the project once a usable increment of the project is completed. Because Anchorage Basin No. 1 has been completed, subsection (a)(1) permitted the District to pass the Ordinance containing the User Fee. Further, Plaintiffs’ argument hinges on a strict reading of “necessary.” But context is needed to determine whether “necessary” means “absolute physical necessity” or merely “conducive to the end sought.” Under these circumstances, it is the latter. Thus, the District can cover more than 25% of the cost with the User Fee proceeds. View "BG Gulf Coast LNG v. Sabine-Neches" on Justia Law

The Tennessee Valley Authority sells its power to the BVU Authority in Virginia, one of its many customers. The BVU Authority in turn sells its power to local consumers who need electricity. Among those local consumers is Plaintiff, who believes that the TVA has a statutory duty to use the fruits of its sales to large industrial buyers to subsidize consumers’ electricity consumption. Plaintiff believes that a string of TVA rate changes, shifting costs from industry to consumers, were illegal. So he sued BVU Authority and TVA under three theories, which all more or less amount to claims that the TVA failed to live up to its statutory duties under Section 11. The district court dismissed all three claims because TVA’s rate-making authority is committed to agency discretion and thus unreviewable.   The Fourth Circuit affirmed the district court’s dismissal of all three of Plaintiff’s claims. The court explained that Section 11 of the TVA Act lays out broad policies and goals that operate more like aspirations than commands. It does not support any of the claims that Plaintiff offers against TVA or BVU Authority. TVA rate-making is a presumptively unreviewable category of agency action under 701(a)(2), and the policy-laden language of Section 11 does not provide any guidelines or limits to overcome that presumption. Because the TVA-BVU contract simply repeats the vague statutory language, Plaintiff’s contract claim is really a statutory claim in disguise, and Section 11 of the TVA Act does not provide a private cause of action. View "David Holbrook v. Tennessee Valley Authority" on Justia Law

Loggerhead Holdings, Inc., a holding company that owned a scuba diving cruise business, was one of many plaintiffs who brought suit against an oil company because of the explosion of an offshore drilling rig and the resulting discharge of a massive quantity of oil into the Gulf of Mexico. Loggerhead’s claims were dismissed on summary judgment.   The Fifth Circuit affirmed in part and reversed in part. The court explained that Loggerhead had been able to continue operations for several years despite its fraught financial condition, and indeed despite reporting net losses on its taxes for the three years preceding the disastrous events of April 2010 in the Gulf. Whether it could have continued to survive, if not thrive, had the April events not occurred presents a fact question. Thus, the court concluded that a reasonable factfinder could find the requisite causal link between the Deepwater Horizon disaster and Loggerhead’s demise. Summary judgment should not have been granted.   However, because Loggerhead was not able to offer more than Dixon’s allegations and an unsupported estimate — evidence “so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant” — the district court properly granted BP’s motion for summary judgment on the Section 2702(b)(2)(B) claim. View "Loggerhead Holdings v. BP" on Justia Law

The State of North Dakota, ex rel. the North Dakota Board of University and School Lands, and the Office of the Commissioner of University and School Lands, a/k/a the North Dakota Department of Trust Lands appealed a judgment dismissing its claim against Newfield Exploration Company relating to the underpayment of gas royalties. The North Dakota Supreme Court found that the district court concluded the State did not establish a legal obligation owed by Newfield. However, the State pled N.D.C.C. § 47-16-39.1 in its counterclaim, which the court recognized at trial. Because the State satisfied both the pleading and the proof requirements of N.D.C.C. § 47-16-39.1, the Supreme Court held the district court erred in concluding the State did not prove Newfield owed it a legal obligation to pay additional royalties. Rather, as the well operator, Newfield owed the State an obligation under N.D.C.C. § 47-16-39.1 to pay royalties according to the State’s leases. The court failed to recognize Newfield’s legal obligations as a well operator under N.D.C.C. § 47-16-39.1. The Supreme Court concluded the district court erred in dismissing the State's counterclaim; therefore, judgment was reversed and the matter remanded for findings related to the State's damages and Newfield's affirmative defenses. View "Newfield Exploration Company, et al. v. North Dakota, et al." on Justia Law

Texas recently enacted such a ban on new entrants in a market with a more direct connection to interstate commerce than the drilling of oil wells: the building of transmission lines that are part of multistate electricity grids. The operator of one such multistate grid awarded Plaintiff NextEra Energy Capital Holdings, Inc. the right to build new transmission lines in an area of east Texas that is part of an interstate grid. But before NextEra obtained the necessary construction certificate from the Public Utilities Commission of Texas, the state enacted the law, SB 1938, that bars new entrants from building transmission lines. NextEra challenges the new law on dormant Commerce Clause grounds. It also argues that the law violates the Contracts Clause by upsetting its contractual expectation that it would be allowed to build the new lines   The Fifth Circuit concluded that the dormant Commerce Clause claims should proceed past the pleading stage. But the Contracts Clause claim fails as a matter of law under the modern, narrow reading of that provision. The court explained that limiting competition based on the existence or extent of a business’s local foothold is the protectionism that the Commerce Clause guards against. Thus, the court reversed the Rule 12(b)(6) dismissal of the claim that the very terms of SB 1938 discriminate against interstate commerce. Further, the court held that SB 1938 did not interfere with an existing contractual right of NextEra. NextEra did not have a concrete, vested right that the law could impair. It thus fails at the threshold question for proving a modern Contracts Clause violation. View "NextEra, et al v. D'Andrea, et al" on Justia Law

On interlocutory appeal in this case involving the New England Clean Energy Connect project (Project), the Supreme Judicial Court held that retroactive application of legislation enacted by voters (the Initiative) to the Project, as required by section 6 of the Initiative, was unconstitutional.On November 2, 2021, fifty-nine percent of Maine voters approved a ballot question through a public referendum that would result in legislation effectively precluding the Project, which is designed to transmit power generated in Quebec through Maine and into Massachusetts. Plaintiff filed a complaint for declaratory relief alleging that retroactive application of the Initiative to the Project was unconstitutional. The trial court reported the case to the Supreme Judicial Court. The Supreme Judicial Court held that section 6 of the Initiative, as applied retroactively to the certificate of public convenience and necessity (CPCN) issued for the Project, would infringe on Plaintiff's constitutionally-protected vested rights if Plaintiff can demonstrate that it engaged in substantial construction of the Project in good-faith reliance on the authority granted by the CPCN before Maine voters approved the initiated bill by public referendum. View "NECEC Transmission LLC v. Bureau of Parks & Lands" on Justia Law

The Department of the Interior sells offshore leases to oil and gas companies for development. This case concerns the adequacy of an environmental impact statement prepared in connection with two lease sales held in 2018. Three environmental groups asserted that the supplemental environmental impact statements (EIS) did not comply with NEPA. They sued Interior and the Bureau of Ocean Energy Management (BOEM), the component agency within Interior that had prepared the EIS. They argued that BOEM failed to assess a true “no action” alternative because it had assumed that energy development would occur sooner or later, even if Lease Sales 250 or 251 did not. The district court granted summary judgment to Interior. In upholding BOEM’s “no action” analysis, it found the Bureau had reasonably assumed that development was inevitable.   The DC Circuit reversed the summary judgment in part and remand the case to the district court with instructions to remand it to the agency for further consideration of the GAO report. In so doing, the court declined to vacate any of the administrative orders under review. The court further affirmed the summary judgment in all other respects. The court held that the Interior adequately considered the option of not leasing, reasonably refused to consider potential future regulatory changes, and unreasonably refused to consider possible deficiencies in environmental enforcement. View "Gulf Restoration Network v. Debra Haaland" on Justia Law

The Supreme Court affirmed the judgment the district court denying TEP Rocky Mountain LLC's (TEP RM) motion to dismiss this action, granting summary judgment to Record TJ Ranch Limited Partnership (TJ Ranch) on several issues, and ruling that TEP RM had breached the parties' agreements, holding that there was no error.TJ Ranch brought this action seeking payment under a surface use and damage agreement governing oil and gas development and production of ranch lands. TEP RM filed a motion to dismiss for lack of personal jurisdiction, which the district court denied. The court ultimately concluded that TJ Ranch was entitled to payment. The Supreme Court affirmed, holding that the district court (1) correctly exercised personal jurisdiction over TEP RM; (2) did not clearly err in its findings; and (3) did not abuse its discretion in denying TEP RM's motions to stay. View "TEP Rocky Mountain LLC v. Record TJ Ranch Limited Partnership" on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the Wyoming Board of Equalization (Board) concluding that WPX Energy Rocky Mountain, LLC was entitled to deduct some of its "reservation fees," holding that the Board erred in interpreting the plain language of Wyo. Stat. Ann. 39-14-203(b)(vi)(C) in its decision.At issue on appeal was whether and to what extent WPX was entitled to deduct "reservation fees" under the "netback" severance tax valuation method, section(vi)(C), for natural gas production years 2013-2015. The Board concluded that WPX was entitled to deduct some of its reservation fees. The Supreme Court reversed in part, holding (1) the statute allows WPX to fully deduct its pipeline reservation fees for months when some but not the full reserve capacity of gas was transported on that pipeline; (2) the statute does not allow WPX to deduct its Bison Pipeline reservation fees for months when it shipped no gas on the pipeline; and (3) the Board's conclusion that WPX cannot deduct any portion of its Bison Pipeline reservation fees it used to recoup pipeline construction costs was contrary to the plain language of the statute and the Bison agreement. View "Wyo. Department of Revenue v. WPX Energy Rocky Mountain, LLC" on Justia Law