Justia Energy, Oil & Gas Law Opinion Summaries

Constellation Mystic Power, LLC (Mystic)—a subsidiary of Exelon Generation Company, LLC (ExGen), which itself is a subsidiary of Exelon Corporation (Exelon)—announced its intention to retire the Mystic Generating Station (Mystic Station). ISO New England entered into a cost-of-service agreement with Mystic and ExGen to keep two of Mystic Station’s generating units, referred to as Mystic 8 and 9, in service between June 2022 and May 2024. The parties filed the proposed agreement (Mystic Agreement) with the Federal Energy Regulatory Commission (Commission or FERC). The Commission ultimately approved the terms of the Mystic Agreement.   At issue are Commission orders related to its approval of the Mystic Agreement. Two groups of petitioners sought review: Mystic and a group of New England state regulators (State Petitioners). The DC Circuit dismissed Mystic’s petition for review in part and denied it in part; the court granted the State Petitioners’ petitions. The court held that the Commission’s application of the original cost test to determine Mystic 8 and 9’s rate base was not arbitrary and capricious. The court dismissed Mystic’s objection to the Commission’s selection of capital structure as moot in light of the Commission’s May 2022 Order. The court further concluded that the Commission properly included historical rate base components in the true-up mechanism but also find that the Commission failed to respond to the State Petitioners’ request for clarification. View "Constellation Mystic Power v. FERC" on Justia Law

Nine Illinois energy consumers sued their electricity provider, ComEd, and its parent, Exelon, on behalf of themselves and those similarly situated for damages under the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging injury from increased electricity rates. These rates increased, they allege, because ComEd bribed former Illinois Speaker of the House Michael Madigan to shepherd three bills through the state’s legislature: the Energy Infrastructure and Modernization Act of 2011 (EIMA); 2013 amendments to that legislation; and the Future Energy Jobs Act of 2016. Although Illinois law still required public utilities to file rates with the Illinois Commerce Commission (ICC), EIMA implemented statutorily prescribed, performance-based rate increases that limited ICC discretion in reviewing rates and authorized at least $2.6 billion in ComEd spending on smart meters and smart grid infrastructure, costs that were required to be passed on to customers. In 2016, FEJA provided $2.35 billion in funding for nuclear power plants operated, paid for through a new fee for utility customers, and allowed ComEd to charge ratepayers for all energy efficiency programs and for some expenses relating to employee incentive compensation, pensions, and other post-employment benefits.The Seventh Circuit affirmed the dismissal of the suit. Paying a state’s required filed utility rate is not a cognizable injury for a RICO damages claim. View "Brooks v. Commonwealth Edison Co." on Justia Law

LSP Transmission Holdings II, LLC, Cardinal Point Electric, LLC, and LS Power Midcontinent, LLC are transmission development companies. They petition for review of a set of Federal Energy Regulatory Commission (FERC) orders that approve modifications to the criteria used by the Midcontinent Independent System Operator, Inc. (MISO), a regional transmission grid operator, to determine whether opportunities to develop proposed transmission upgrades to the interstate power grid are open to competitive bids from companies like petitioners. Petitioners challenge two aspects of the orders: (1) FERC’s decision to accept MISO’s proposal to use 230 kilovolts (kV) as the minimum voltage threshold for a project to qualify as a Market Efficiency Project (a category of projects subject to competitive bidding) rather than requiring a lower 100 kV threshold; and (2) FERC’s approval of an exception from competitive bidding for certain reliability projects needed soon. FERC defends its orders on their merits, but it first contests Petitioners’ standing to challenge the orders and whether the petitions are ripe for review.   The DC Circuit denied the petitions for review. The court explained that at least one petitioner—LS Power Midcontinent—has standing to raise these claims and that the petitions are ripe. But the petitions fail on their merits: FERC’s decision to accept 230 kV as the new voltage threshold was not arbitrary and capricious, and FERC reasonably approved MISO’s Immediate Need Reliability Exception. View "LSP Transmission Holdings II, LLC v. FERC" on Justia Law

Midship Pipeline Company, L.L.C. challenged part of a Federal Energy Regulatory Commission (FERC) order directing an administrative law judge to determine the “reasonable cost” for Midship to complete remediation activities at Sandy Creek Farms in Oklahoma.The Fifth Circuit disagreed with the FERC, finding that the matter was ripe for appeal. Further, the Fifth Circuit determined that the FERC order directing an administrative law judge to determine the “reasonable cost” of remediation activities was ultra vires because the FERC lacked authority under the Natural Gas Act (NGA) to do so. Thus, the court held that the FERC's action was ultra vires and vacated that portion of the Commission's order. The court remanded the remaining portion of the order to the FERC for further proceedings. View "Midship Pipeline v. FERC" on Justia Law

The Supreme Court affirmed in part and reversed in part rulings made by the State Corporation Commission during its triennial review of Appalachian Power Company's rates, terms, and conditions pursuant to Va. Code 56.585.1, holding that remand was required for further proceedings.Specifically, the Supreme Court held that the Commission (1) erred in finding that it was not reasonable for Appalachian to record its costs associated with the early retirement of its coal-fired power plants as asset impairments; (2) did not err when it implemented depreciation rates from the revised 2017 Depreciation Study for the years 2018 and 2019 in the triennial review; (3) did not err by refusing to apply Va. Code 56-585.1(E) retroactively; and (4) did not err in finding Appalachian's affiliate costs under an Inter-Company Power Agreement with Ohio Valley Electric Cooperation to be reasonable. View "Appalachian Power Co. v. State Corp. Commission" on Justia Law

On January 20, 2021, Acting Secretary of the Interior Scott de la Vega suspended delegated authority “[t]o issue any onshore or offshore fossil fuel authorization . . . .” On January 27, 2021, President Biden issued Executive Order 14,008.   The district court issued a nationwide preliminary injunction enjoining President Biden and various Department of Interior officials (the “Government”) from pausing oil and gas lease sales. The Fifth Circuit vacated and remanded, holding that the district court’s order and accompanying memorandum lack specificity. The court explained that to comply with Rule 65(d) a district court’s order should state its terms specifically and describe in reasonable detail the conduct restrained or required. The court wrote that the present injunction fails to meet Rule 65(d) requirements. View "State of Louisiana v. Biden" on Justia Law

Delaware and Hoboken, New Jersey each sued the oil companies in state court for state-law torts. By “produc[ing], marketing, and s[e]l[ling] fossil fuels,” they claimed, the oil companies worsened climate change. They sought damages for the environmental harm they had suffered and injunctions to stop future harm. The oil companies removed the cases to federal district courts. The suits’ broad focus on “global climate change,” the companies reasoned, “demand[ed] resolution by a federal court under federal law.”. They argued the tort claims arose under federal law, either because they were inherently federal, not state claims, or they raised substantive federal issues; the suits related to producing oil on the Outer Continental Shelf; and the oil companies were acting under federal officers.The Third Circuit affirmed the remands of the cases to state courts, noting that four other circuits have refused to allow the oil companies to remove similar state tort suits to federal court. These lawsuits neither are inherently federal nor raise substantial federal issues that belong in federal court. Oil production on the Outer Continental Shelf is too many steps removed from the burning of fuels that causes climate change. Delaware and Hoboken are not suing over actions that the companies were directed to take by federal officers. View "City of Hoboken v. Chevron Corp" on Justia Law

Chevron U.S.A. Inc. intends to decommission two oil platforms located off the coast of California. The activity of those platforms is generally subject to the Clean Air Act. Chevron asked the Environmental Protection Agency for guidance on whether, as the process of decommissioning the two oil platforms moves forward, the platforms will cease to qualify as regulated sources under the Clean Air Act. EPA responded in a letter to Chevron. Unsatisfied with the views set out in EPA’s letter, Chevron now seeks judicial review of EPA’s response.The DC Circuit dismissed Chevron’s petition for review. The court wrote that it does not reach the merits of Chevron’s petition for review. In the circumstances of this case, the Clean Air Act’s venue provision allows for judicial review in this court only if EPA’s challenged action is “nationally applicable,” as opposed to “locally or regionally applicable.” 42 U.S.C. Section 7607(b)(1). The court concluded that EPA’s response letter is locally or regionally applicable, and that venue over Chevron’s challenge lies exclusively in the United States Court of Appeals for the Ninth Circuit. View "Chevron U.S.A. Inc. v. EPA" on Justia Law

Finite owns 90.9% of Orient #1, an abandoned Illinois coal mine; the other 9.1% belongs to Royal. In 2004, Keyrock's predecessor acquired an interest in Orient #1 to extract coal mine methane from its section of the property, drilled wells, and, in 2007, obtained a vacuum permit from the Illinois Department of Natural Resources. Finite discovered the pump’s use in 2018 after a test revealed that coal mine methane had been drained extensively from Orient #1. Finite unsuccessfully petitioned the Department for compulsory unitization of the parties’ properties, to require Keyrock to share its methane production with Finite.Finite sued, alleging conversion, trespass, accounting, and common law unitization, and sought to enjoin the use of a vacuum pump. The district court granted the defendants summary judgment, finding that, under the rule of capture (gas that migrates is subject to recovery and possession by the holder of the gas estate on the property to which the gas migrates), the methane could not be owned until extracted regardless of whether extraction occurred by means of a vacuum pump. Finite’s claims hinged on ownership, so the rule of capture foreclosed Finite’s claims.The Seventh Circuit affirmed. Absent illegality, the Department’s issuance of the permit suggests that the use of the vacuum pump to extract methane did not violate Finite’s correlative rights (imposing a duty on owners not to waste natural resources intentionally or negligently as to injure their neighbor).. View "Finite Resources, Ltd. v. DTE Methane Resources, LLC" on Justia Law

The Supreme Court affirmed the decision of the Ohio Power Siting Board to approve the application of Icebreaker Windpower, Inc. for a certificate of environmental compatibility and public need to build a six-turbine wind-powered electric-generation facility in Lake Erie, holding that Appellants did not meet their burden of demonstrating that the Board's decision was against the manifest weight of the evidence.Specifically, the Supreme Court held (1) there was sufficient evidence in the record before the Board for it to determine the nature of the probable environmental impact of the project under Ohio Rev. Code 4906.10(A)(2) and whether the project represented the minimum adverse environmental impact under Ohio Rev. Code 4906.10(A)(3); and (2) the Board did not err in determining that it lacked jurisdiction to consider the residents' public-trust argument. View "In re Application of Icebreaker Windpower, Inc." on Justia Law