Justia Energy, Oil & Gas Law Opinion Summaries

The Supreme Court affirmed the district court’s grant of summary judgment in favor of Hiland Crude, LLC in this declaratory action challenging the tax classification of Hiland Crude’s crude oil gathering pipelines in Montana. Hiland Crude owns and operates crude oil gathering and transmission systems in Montana. The Department of Revenue began centrally assessing Hiland Crude’s property in 2013 and classified all of its pipeline systems within the State as class nine property. Hiland Crude filed this suit asserting that gathering pipeline systems should be taxed as class eight property, regardless of whether the property is centrally assessed, because they are “flow lines and gathering lines” under the class eight statute. The district court agreed and granted summary judgment for Hiland Crude. The Supreme Court affirmed, holding that the district court properly granted summary judgment in favor of Hiland Crude. View "Hiland Crude, LLC v. State, Department of Revenue" on Justia Law

Wayne Land and Mineral Group, wanting to obtain natural gas by fracking reserves, sought a declaratory judgment that an interstate compact does not give the Delaware River Basin Commission authority to review Wayne’s proposal. The district court dismissed the case after determining that Wayne’s proposed activities constituted a “project” subject to the Commission’s oversight, according to the Compact's unambiguous terms. The Third Circuit vacated, concluding that the meaning of the word “project” is ambiguous. The court remanded the case for fact-finding on the intent of the Compact's drafters. The Compact defines “project” as “any work, service or activity which is separately planned, financed, or identified by the [C]ommission, or any separate facility undertaken or to be undertaken within a specified area, for the conservation, utilization, control, development or management of water resources which can be established and utilized independently or as an addition to an existing facility, and can be considered as a separate entity for purposes of evaluation” and requires approval for any project having a substantial effect on the water resources of the Basin. In 2009 the Commission imposed a moratorium on fracking. View "Wayne Land and Mineral Group LLC v. Delaware River Basin Commission" on Justia Law

The Supreme Court reversed the judgment of the court of appeals holding that the royalty interest reserved to the grantor in a 1951 deed was fixed - or set at a specific percentage of production - rather than floating - dependent on the royalty amount in the applicable oil and gas lease.Plaintiffs sought a declaratory judgment that the deed reserved a floating one-half royalty interest. The trial court declared that the deed reserved a floating one-half royalty interest. The court of appeals reversed, concluding that the royalty interest was fixed. The Supreme Court reversed in light of the language and structure of the reservation at issue, holding that the deed unambiguously reserved a floating one-half interest in the royalty in all oil, gas, or other minerals produced from the conveyed property. View "U.S. Shale Energy II, LLC v. Laborde Properties, L.P." on Justia Law

A landowner brought suit against several mineral lessees for breach of the obligations of the mineral lease. The mortgagee of one of the lessees was also named as a defendant. The lower courts held all lessees and the mortgagee jointly liable for damages resulting from the failure to furnish a recordable act evidencing the expiration of the lease (i.e., failure to release the lease). The Louisiana Supreme Court granted consolidated writ applications to determine: (1) whether the mortgagee was properly held jointly liable as an “owner” of the lease under La. Mineral Code art. 207 and a “lessee” under La. Mineral Code art. 140; (2) whether the imposition of joint liability was correct with regard to the owner of a portion of the shallow rights; (3) whether La. Mineral Code art. 140’s calculation of damages contemplated the inclusion of unpaid royalties (the amount due) in addition to double the amount of unpaid royalties (as a penalty) or whether the maximum damage award allowed is twice the amount of unpaid royalties; and (4) whether $125,000 in attorney fees for work done on appeal was excessive. The Court found: (1) the mortgagee was not an “owner” for purposes of La. Mineral Code art. 207 and was, therefore, not liable for failure to release the lease. For the same reasons, the Court found the mortgagee was not a “lessee” for purposes of La. Mineral Code art. 140 and, was, therefore, not liable for failure to pay royalties that were due. (2) The Court found Tauren is jointly liable for the damages because the failure to release the lease was an indivisible obligation under the particular facts of this case. (3) The Court held La. Mineral Code art. 140 authorized as damages a maximum of double the amount of unpaid royalties. (4) Last, the Court amended the award of attorney fees. View "Gloria's Ranch, LLC. v. Tauren Exploration, Inc." on Justia Law

This appeal centered on the trial court's judgment after a bench trial that denied the Appellant's petition to cancel Appellee's oil and gas leases, to quiet title in favor of the Appellant's "top leases," and to hold Appellee liable for slander of title. The Oklahoma Supreme Court retained the appeal to address several issues of first impression. Through this opinion, the Court declined to adopt the definition of "capability" propounded by the Appellant and affirmed the district court's finding that Appellee's wells were capable of production in paying quantities. The Court affirmed the district court's judgment insofar as it quieted title in Appellee's favor as to leasehold interests located inside those wells' spacing units. The Court reversed the district court's judgment insofar as it quieted title in Appellee's favor as to leasehold interests in lands falling outside those wells' spacing units, because the statutory Pugh clause found in 52 O.S. 87.1(b) required it. Furthermore, the Court found that the title of the bill enacting the statutory Pugh clause did not violate Article V, Section 57 of the Oklahoma Constitution and that the effect of the statutory Pugh clause upon Appellee's leasehold interests did not result in an unconstitutional taking in violation of Article II, Section 23 of the Oklahoma Constitution. Lastly, the Court reversed the district court's judgment insofar as it quieted title in Appellee's favor as to leases upon which no well had ever been drilled. View "Hall v. Galmor" on Justia Law

Federal Energy Regulatory Commission Order 1000 encourages the development of “interregional” electricity transmission projects, calling for regional providers to jointly evaluate interregional projects. Poviders must adopt cost-allocation methodologies for dividing up the costs of a joint project to assure that the relative costs borne by a particular transmission provider be commensurate with the relative benefits gained by the provider. MISO, which operates transmission facilities on behalf of providers across 15 midwestern states, proposed to conduct cost allocation for interregional projects using a “cost-avoidance” method. The share of costs allocated to MISO under that method corresponds to the benefits to MISO of its regional projects that would be displaced by the interregional project. In identifying which regional projects should be regarded as displaced, MISO proposed to exclude any project that had already been approved by the MISO board. The Commission rejected MISO’s cost-allocation approach, reasoning that excluding approved regional projects would fail to account for the full potential benefits of an interregional project. The D.C. Circuit denied a petition for review. Although MISO had standing and its claims were ripe, one claim was not properly presented to the agency in a request for rehearing. On the merits of the other claims, the court held that the Commission adequately responded to concerns about the possible effects of including approved regional projects in the cost-allocation calculation. View "Ameren Services Co. v. Federal Energy Regulatory Commission" on Justia Law

The common law rule against perpetuities does not invalidate a grantee’s future interest in the grantor’s reserved non-participating royalty interest (NPRI).Lorene Koopmann and her two children sought declaratory judgment against Burlington Resources Oil & Gas Company, L.P. and Lois Strieber to construe a warranty deed by which Strieber conveyed fee simple title to a tract of land to Lorene and her late husband. Under the deed, Strieber reserved a fifteen-year, one-half NPRI. The Koopmans claimed that they were the sole owners of an NPRI as of December 27, 2011. They also asserted claims against Burlington, which leased the tract from the Koopmanns, for breach of contract and other claims. The trial court granted summary judgment for the Koopmans as to the declaratory action and granted summary judgment for Burlington on the negligence and negligence per se claims. The court of appeals affirmed in part and reversed in part. The Supreme Court held (1) the rule against perpetuities does not invalidate the Koopmann’s future interest in the NPRI; (2) Tex. Nat. Res. Code 91.402 does not preclude a lessor’s common law claim for breach of contract; and (3) the court of appeals properly entered judgment as to attorney’s fees pursuant to Tex. R. Civ. P. 91a. View "ConocoPhillips Co. v. Koopmann" on Justia Law

This case arose from respondent Public Service Company of Colorado’s (“Xcel’s”) challenge to the City of Boulder’s attempt to create a light and power utility. Xcel argued that the ordinance establishing the utility, Ordinance No. 7969 (the “Utility Ordinance”), violated article XIII, section 178 of Boulder’s City Charter. Xcel thus sought a declaratory judgment deeming the Utility Ordinance “ultra vires, null, void, and of no effect.” Petitioners, the City of Boulder, its mayor, mayor pro tem, and city council members (collectively, “Boulder”), argued Xcel’s complaint was, in reality, a C.R.C.P. 106 challenge to a prior ordinance, Ordinance No. 7917 (the “Metrics Ordinance”), by which Boulder had concluded that it could meet certain metrics regarding the costs, efficiency, and reliability of such a utility. Boulder contended this challenge was untimely and thereby deprived the district court of jurisdiction to hear Xcel’s complaint. The district court agreed with Boulder and dismissed Xcel’s complaint. Xcel appealed, and in a unanimous, published decision, a division of the court of appeals vacated the district court’s judgment. As relevant here, the division, like the district court, presumed that Xcel was principally proceeding under C.R.C.P. 106. The division concluded, however, that neither the Metrics Ordinance nor the Utility Ordinance was final, and therefore, Xcel’s complaint was premature. The division thus vacated the district court’s judgment. Although the Colorado Supreme Court agreed with Boulder that the division erred, contrary to Boulder’s position and the premises on which the courts below proceeded, the Supreme Court agreed with Xcel that its complaint asserted a viable and timely claim seeking a declaration that the Utility Ordinance violated Boulder’s City Charter. Accordingly, the Supreme Court concluded the district court had jurisdiction to hear Xcel’s declaratory judgment claim challenging the Utility Ordinance, and remanded this case to allow that claim to proceed. View "City of Boulder v. Public Service Company of Colorado" on Justia Law

The DC Circuit denied Duke's petition for review of the Commission's denial of Duke's complaint against PJM under the Federal Power Act (FPA), 16 U.S.C. 825e. To prepare for a bitterly cold day during the January 2014 polar vortex, Duke purchased expensive natural gas which it ended up not needing. Duke then claimed that PJM, its regional transmission organization, directed it to purchase the gas and that the governing tariff provided for indemnification. The court held that the Commission's finding that PJM never directed Duke to buy gas was supported by substantial evidence on the record. Therefore, the court had no need to address Duke's remaining argument that, had such a directive been issued, the tariff would have authorized indemnification. View "Duke Energy Corp. v. FERC" on Justia Law

After Old Dominion found that its operational costs during the January 2014 polar vortex outstripped the amounts it could charge for electricity under the governing tariff, it asked the Commission to waive provisions of the governing tariff retroactively so that it could recover its costs. The DC Circuit denied Old Dominion's petition for review of the Commission's denial of Old Dominion's request based on the ground that such retroactive charges would violate the filed rate doctrine and the rule against retroactive ratemaking. In this case, the court afforded the Commission's interpretation of the filed tariff and the PJM Operating Agreement substantial deference where there was no dispute that the PJM Tariff's filed rate did not allow the cost recovery that Old Dominion sought. The court also denied the motion of Independent Market Monitor to intervene, but accorded it amicus curiae status. View "Old Dominion Electric Cooperative v. FERC" on Justia Law