Justia Energy, Oil & Gas Law Opinion Summaries

The Federal Energy Regulatory Commission regulates the transmission and wholesale of electric energy in interstate commerce, 16 U.S.C. 824(b), and must approve changes to any rate or charge. PJM, a regional transmission organization that manages an electric grid covering 13 Mid-Atlantic and Midwestern states and the District of Columbia, meets its obligation to ensure sufficient generating capacity by conducting a yearly auction in which electricity suppliers submit offers to be available to provide capacity during a one-year period, three years in the future. The Variable Resource Requirement Curve (VRR Curve) represents the prices that consumers should pay for varying quantities of capacity. The intersection of the VRR and supply curves dictates the amount of capacity committed and the price suppliers are paid. The VRR Curve is set based on the amount of capacity that must be produced to meet peak demand to allow no more than one power outage every decade and how much revenue a hypothetical new generator (Reference Resource) would need to earn in the capacity market to justify construction.The Commission accepted PJM;s proposed revisions to the capacity market auction mechanism: keeping a combustion turbine plant as its Reference Resource and increasing the value of the Reference Resource’s estimated offer to supply energy by 10% (10% adder). The D.C. Circuit affirmed the approval of the Reference Resource as just and reasonable but vacated the approval of the 10% adder. View "Delaware Division of the Public Advocate v. Federal Energy Regulatory Commission" on Justia Law

Malekeh Khosravan appealed the denial of her motion to strike or tax costs with respect to the expert witness fees incurred by defendants Chevron Corporation, Chevron U.S.A. Inc., and Texaco Inc. (Chevron defendants) following the trial court’s granting of the Chevron defendants’ motion for summary judgment. Malekeh and her husband Gholam Khosravan brought claims for negligence, premises liability, loss of consortium, and related claims, alleging Khosravan contracted mesothelioma caused by exposure to asbestos while he was an Iranian citizen working for the National Iranian Oil Company (NIOC) at the Abadan refinery the Khosravans alleged was controlled by the predecessors to the Chevron defendants, Exxon Mobil Corporation, and ExxonMobil Oil Corporation (Exxon defendants). The trial court concluded the Chevron and Exxon defendants did not owe a duty of care to Khosravan, and the California Court of Appeal affirmed. The trial court awarded the Chevron defendants their expert witness fees as costs based on the Khosravans’ failure to accept the Chevron defendants’ statutory settlement offers made to Khosravan and Malekeh under Code of Civil Procedure section 998. On appeal, Malekeh contended the trial court erred in denying the motion to strike or tax costs because the settlement offers required the Khosravans to indemnify the Chevron defendants against possible future claims of nonparties, making the offers impossible to value; the Khosravans obtained a more favorable judgment than the offers in light of the indemnity provisions; and the offers were “token” settlement offers made in bad faith. The Court of Appeal concurred with this reasoning and reversed: "We recognize the desire by defendants to reach a settlement that protects them from all liability for the conduct alleged in the complaint, whether as to the plaintiffs or their heirs in a wrongful death action. But if defendants seek that protection through indemnification, they may well need to give up the benefit of section 998." View "Khosravan v. Chevron Corp." on Justia Law

The Fourth Circuit considered two petitions for review challenging FERC's issuance of a license to McMahan, authorizing McMahan to operate the Bynum Hydroelectric Project on the Haw River in North Carolina. Assuming without deciding that a state may waive its certification authority under section 401 of the Clean Water Act by coordinating with an applicant in a scheme to defeat the statutory review period through a process of withdrawing and resubmitting the certification application, the court concluded that FERC's finding of coordination between McMahan and NCDEQ is not supported by substantial evidence. Furthermore, without evidence of improper coordination, the court concluded that FERC erred by determining that North Carolina waived its certification authority under section 401.In Case No. 20-1655, the court granted NCDEQ's petition for review of FERC's determination that NCDEQ waived its rights under the Clean Water Act to issue a water quality certification for the Project. The court vacated the license issued by FERC and remanded with instructions for FERC to reissue the license to include the water-quality conditions imposed by NCDEQ. In Case No. 20-1671, the court dismissed for lack of jurisdiction that portion of PK Ventures' petition for review challenging the validity of McMahan's state applications for a section 401 certification. Finding no merit to the remaining claims, the court otherwise denied the petition for review. View "North Carolina Department of Environmental Equality v. Federal Energy Regulatory Commission" on Justia Law

In this complaint alleging violations of the Clean Water Act (CWA), 33 U.S.C. 1251 et seq., and the Resource Conservation and Recovery Act (RCA), 42 U.S.C. 6901 et seq., the First Circuit vacated the order of the district court granting a motion to stay the proceedings under the so-called doctrine of primary jurisdiction, holding that the district court improperly stayed the case.Conservation Law Foundation, a not-for-profit organization, brought this suit against ExxonMobil Corporation, ExxonMobil Oil Corporation, and ExxonMobil Pipeline Company (collectively, ExxonMobil), alleging unlawful violations at ExxonMobil's petroleum storage and distribution terminal in Everett, Massachusetts. After the district court denied ExxonMobil's motion to dismiss, ExxonMobil moved to stay the case under the doctrine of primary jurisdiction until the Environmental Protection Agency (EPA) issued a decision on ExxonMobil's pending permit renewal application for the Everett terminal. The First Circuit vacated the stay order, holding that the district court erred in granting a stay under the doctrine of primary jurisdiction until EPA issues a new permit for ExxonMobil's Everett terminal. View "Conservation Law Foundation v. ExxonMobil Corp." on Justia Law

Arising under the 2006 version of La. R.S. 30:29 (referred to as Act 312), this oilfield remediation case involved the Vermilion Parish School Board (“VPSB”), individually and on behalf of the State of Louisiana, as petitioner, and Union Oil Company of California, Union Exploration Partners (collectively, “UNOCAL”), Chevron U.S.A., Inc., Chevron Midcontinent LP, and Carrollton Resources, LLC as defendants. Although the exact date of VPSB’s knowledge of contamination to the land was disputed, it was clear that VPSB became aware of such sometime in 2003 or 2004. In September 2004, VPSB filed a petition, urging causes of action for negligence, strict liability, unjust enrichment, trespass, breach of contract, and violations of Louisiana environmental laws. VPSB sought damages to cover the cost of evaluating and remediating the alleged damage and contamination to the property. It also sought damages for diminution of the property value, mental anguish, inconvenience, punitive damages, and stigma damages. UNOCAL sought reversal of the lower courts’ finding that VPSB’s strict liability claim was not prescribed. UNOCAL also contested the court of appeal’s ruling that the jury verdict was inconsistent and its remand for a new trial. Finding UNOCAL failed to prove that VPSB’s strict liability cause of action was factually prescribed, the Louisiana Supreme Court affirmed the court of appeal’s ruling on prescription, but on alternative grounds. Finding the jury was improperly allowed to decide issues reserved solely for the trial court, and cognizant the extraneous instructions and verdict interrogatories permeated the jury’s consideration of the verdict as a whole, the Supreme Court vacated the trial court’s judgment and affirmed the court of appeal’s remand for new trial. View "Louisiana v. Louisiana Land & Exploration Co. et al." on Justia Law

The Supreme Court held that the Public Utilities Commission (PUC) did not abuse its discretion in deciding not to reopen a December 2014 order (Order No. 32600) upon allegations raised in 2019 that changed circumstances warranted relief from the order.The order at issue approved a purchase power agreement (PPA) in which Hawaiian Electric Company agreed to purchase wind energy generated by Na Pua Makani on a wind farm to be constructed on the island of O'ahu. Life of the Land (LOL) sought to reopen the order with reference to Hawai'i Rules of Civil Procedure Rule 60(b). The PUC denied LOL's motion for relief, concluding that it was without jurisdiction to consider the motion because LOL had not timely appealed the order under Haw. Rev. Stat. 269-15.5 and, alternatively, that the motion for relief was an untimely motion for rehearing or reconsideration. The Supreme Court affirmed, holding that the PUC did not abuse its discretion in declining to turn to HRCP Rule 60(b) to reopen Order No. 32600. View "In re Application of Hawaiian Electric Co." on Justia Law

Gasoline is subject to an excise tax. The combined fuel excise taxes account for more than 80% of the annual revenue collected for the Highway Trust Fund. The 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act. introduced new credits that fuel producers could use to offset their fuel excise taxes, including one for using “alternative fuels” to create “alternative fuel mixtures” (AFM credit), 26 U.S.C. 6426(e).U.S. Venture buys fuel from various suppliers and combines it with different additives before selling the finished product to retailers. Since 2012 U.S. Venture has commonly added butane to the gasoline it produces and sells. Butane is a type of gas, made from both natural gas and petroleum. It has long been considered a fuel additive, with suppliers adding it to gasoline since at least the 1960s.In 2017. U.S. Venture first sought an AFM tax credit for producing and selling fuel that contained a mixture of gasoline and butane. The IRS rejected its position. The district court and Seventh Circuit affirmed. There is nothing alternative about gasoline containing a butane additive, as indicated by a combination of statutory provisions defining the scope of the alternative fuel mixture tax credit. View "U.S. Venture, Inc. v. United States" on Justia Law

Under the Natural Gas Act, to build an interstate pipeline, a natural gas company must obtain from the Federal Energy Regulatory Commission (FERC) a certificate of "public convenience and necessity,” 15 U.S.C. 717f(e). A 1947 amendment, section 717f(h), authorized certificate holders to exercise the federal eminent domain power. FERC granted PennEast a certificate of public convenience and necessity for a 116-mile pipeline from Pennsylvania to New Jersey. Challenges to that authorization remain pending. PennEast sought to exercise the federal eminent domain power to obtain rights-of-way along the pipeline route, including land in which New Jersey asserts a property interest. New Jersey asserted sovereign immunity. The Third Circuit concluded that PennEast was not authorized to condemn New Jersey’s property.The Supreme Court reversed, first holding that New Jersey’s appeal is not a collateral attack on the FERC order. Section 717f(h) authorizes FERC certificate holders to condemn all necessary rights-of-way, whether owned by private parties or states, and is consistent with established federal government practice for the construction of infrastructure, whether by government or through a private company.States may be sued only in limited circumstances: where the state expressly consents; where Congress clearly abrogates the state’s immunity under the Fourteenth Amendment; or if it has implicitly agreed to suit in “the structure of the original Constitution.” The states implicitly consented to private condemnation suits when they ratified the Constitution, including the eminent domain power, which is inextricably intertwined with condemnation authority. Separating the two would diminish the federal eminent domain power, which the states may not do. View "PennEast Pipeline Co. v. New Jersey" on Justia Law

In 2017, the City of Farmington (Defendant) adopted an ordinance that imposed additional charges on customers who generate their own electricity. Defendant argued that change reflected the true cost imposed by these customers on the electric grid; Plaintiffs argued the charges amounted to price discrimination in violation of FERC rules. Defendant moved to dismiss Vote Solar and several other plaintiffs for lack of standing. Sua sponte, the district court requested supplemental briefing concerning its statutory subject-matter jurisdiction. The parties, operating under the assumption that the "as-implemented" versus "as-applied" framework governed subject-matter jurisdiction: Plaintiffs argued they were lodging an as-implemented claim and Defendant characterized the claim as as-applied. Due to its interpretation of PURPA’s jurisdictional provisions, the district court dismissed the case for failure to state a claim under Rule 12(b)(6), finding that because Plaintiffs did not argue Defendant had made no effort to implement FERC’s price discrimination rules, its claim did not fall within the district court’s jurisdiction. It also deemed Defendant’s motion regarding standing moot. Plaintiffs appealed. The Tenth Circuit Court of Appeals reversed, finding that this case was one of an “as-implemented” claim. "In this case, the district court rejected that established distinction, introducing a particularized and novel interpretation of PURPA’s jurisdictional scheme under which federal courts have jurisdiction only if a utility fails to make any reasonable effort to implement a Federal Energy Regulatory Commission (FERC) rule." The Tenth Circuit declined to adopt the district court's decision in this case. View "Vote Solar v. City of Farmington" on Justia Law

The Supreme Judicial Court affirmed the decision of the Energy Facilities Siting Board that approved a proposal by Eversource Energy under Mass. Gen. Laws ch. 264, 69J to construct a new electrical transmission line between substations in Sudbury and Hudson, holding that there was no error in the Board's assessment and approval of the project.Eversource sought to construct the new transmission line after it was discovered that the particular area needed additional energy supply to withstand certain contingencies. The Supreme Judicial Court concluded that there was no error in the Board's assessment and approval of the project, holding (1) the Board has wide to discretion to balance the reliability, cost and environmental impact of each proposal before it to achieve its statutory mandate; and (2) there was no legal basis for disturbing the Board's careful and reasoned decision in this case. View "Sudbury v. Energy Facilities Siting Board" on Justia Law