Justia Energy, Oil & Gas Law Opinion Summaries

Section 205 of the Federal Power Act does not allow FERC to make modifications to a proposal that transform the proposal into an entirely new rate of FERC's own making. Electricity generators petitioned for review of FERC's decision modifying PJM's proposed changes to its rate structure. FERC's modifications created a new rate scheme that was significantly different from PJM's proposal and from PJM's prior rate design. The D.C. Circuit held that FERC contravened the limitation on its Section 205 authority. Therefore, the court granted the petitions for review and vacated FERC's orders with respect to several aspects of PJM's proposed rate structure -- the self-supply exemption, the competitive entry exemption, unit-specific review, and the mitigation period. The court remanded to FERC. View "NRG Power Marketing, LLC v. FERC" on Justia Law

Drilling operations commence when: (1) work is done preparatory to drilling; (2) the driller has the capability to do the actual drilling; and (3) there is a good faith intent to complete the well. It is not necessary that the drill bit actually penetrate the ground. GADECO, LLC, appealed a judgment and orders declaring its oil and gas lease with Laurie Abell was terminated, dismissing its counterclaim against Abell, and awarding Abell her costs and attorney fees. GADECO and Abell began negotiating a surface use and damage agreement in mid-November 2011. GADECO sent Abell a proposed agreement on December 26, 2011, and later attempted to contact Abell about the agreement, but she refused to execute it. GADECO applied for a well permit in early 2012, shortly before the primary term of the lease was set to expire, and the permit was approved on January 23, 2012. Two days later, Abell leased the same mineral interests to Kodiak Oil & Gas. Unable to secure a surface use and damage agreement from Abell, GADECO relocated the well off the subject property but within the spacing unit, and a producing oil and gas well was completed in 2013. After giving notice of termination, Abell brought this lawsuit seeking a determination that GADECO's lease had terminated and an award of costs and attorney fees. GAEDCO counterclaimed for breach of contract and damages. The North Dakota Supreme Court found that where the failure to produce oil or gas from leased land is due to the fault of the lessor, the lease is not terminated at the end of the primary term, since the lessor is not entitled to set up termination of the lease where she has prevented the lessee from conducting operations which might bring about an extension of the lease. The Court reversed and remanded, finding genuine issues of material fact precluding summary judgment, and remanded for further proceedings. View "Abell v. GADECO, LLC" on Justia Law

After settlement of a class action for royalties from gas wells, the federal district court for the Western District of Oklahoma awarded attorney fees to class counsel and an incentive award to the lead plaintiff to be paid out of the common fund shared by class members. The court rejected claims by two objectors, and they appealed. Finding the district court failed to compute attorney fees under the lodestar method, as required by Oklahoma law in this diversity case, and the incentive award was unsupported by the record, the Tenth Circuit reversed and remanded. View "Chieftain Royalty v. Enervest Energy" on Justia Law

The Commission determined that Florida Power overcharged Seminole for electricity and ordered a refund. Seminole petitioned for review, claiming that it was entitled to a larger refund. The DC Circuit denied the petition for review, holding that the Commission correctly concluded that the service agreement required Seminole to make any challenge to a bill within 24 months of receiving that bill, and thus limited Florida Power's refund liability. The court also held that, in the face of ambiguity, the Commission reasonably concluded that the tariff allowed transmission providers to use non-apportionment. View "Seminole Electric Cooperative v. FERC" on Justia Law

Allco appealed the district court's dismissal of two related, but not formally consolidated, complaints that focus on Connecticut's implementation of Connecticut Public Acts 13-303 and 15-107. Allco argued that the state programs violate federal law and the dormant Commerce Clause, and that Connecticut's implementation of the programs has injured Allco. The Second Circuit affirmed and held that Allco failed to state a claim that Connecticut's renewable energy solicitations conducted pursuant Connecticut Public Acts 13-303 and 15-107 were preempted by federal law. The court also held that Allco failed to state a claim that Connecticut's Renewable Portfolio Standard program violates the dormant Commerce Clause. View "Allco Finance Ltd. v. Klee" on Justia Law

LPSC petitioned for review of FERC's rejection of LPSC's request to reform certain depreciation rates. The DC Circuit denied the petition for review and rejected LPSC's claim that FERC failed to confront its asserted evidence of undue discrimination where FERC fulfilled such obligations; FERC precedent did not require the use of FERC's own depreciation standards; and there has been no unlawful subdelegation because FERC has exercised, and intends to continue to exercise, its authority. View "Louisiana Public Service Commission v. FERC" on Justia Law

In construing an unambiguous deed, the parties’ intent is paramount, and that intent is determined by conducting a careful and detailed examination of a deed in its entirety rather than applying some default rule that appears nowhere in the deed’s text.In this case, the Supreme Court construed a deed that conveyed a mineral estate and the surface above it. At issue was whether the language of the deed passed the entire burden of an outstanding non-participating royalty interest (NPRI) to the grantees or whether the NPRI proportionately burdened the grantor’s reserved interest. The trial court ruled that the deed burdened both parties with an outstanding NPRI and that the parties must share the burden of the NPRI in proportion to their respective fractional mineral interests. The court of appeals affirmed. The Supreme Court affirmed, holding that the only reasonable reading of the deed in this case resulted in the parties bearing the NPRI burden in shares proportionate to their fractional interests in the minerals. View "Wenske v. Ealy" on Justia Law

In this dispute involving mineral interests pooled for natural gas production, lessors and other stakeholders alleged that the lessee underpaid royalties owed to them under their mineral leases and pooling agreements. The issues presented in this appeal centered on the lessee’s efforts to avoid a contractual obligation to pay royalties to the overlapping unit stakeholders for production from a zone shared by the two pooled units. The lower courts held that the agreement to pay royalties was enforceable. The Supreme Court affirmed, holding (1) ineffective conveyance of title does not preclude the lessee’s liability under a contract theory; (2) the lessee’s quasi-estoppel and scrivener’s error defenses to contract enforcement failed as a matter of law; and (3) the lessee was not entitled to recoup royalty payments from stakeholders in another pooled unit; (4) this court’s decision in Hooks v. Samson Lone Star, Ltd. Partnership, 457 S.W. 3d 52 (Tex. 2015) precluded the unpooling stakeholders’ claims; and (5) the court of appeals properly construed a proportionate-reduction clause to award royalties owed to the overlapping unit stakeholders in accordance with their fifty percent mineral-interest ownership. View "Samson Exploration, LLC v. T.S. Reed Properties, Inc." on Justia Law

ConocoPhillips Co. and Alma Energy Corp. exchanged oil and gas interests under an exchange agreement in which each indemnified the other for any environmental claims related to the properties received. Alma later filed for protection under Chapter 11 of the Bankruptcy Code. Thereafter, Noble Energy Inc. agreed to by the properties Alma had received from Conoco under the exchange agreement. After the bankruptcy proceeding concluded, an environmental contamination suit was filed against Conoco, and Noble refused to indemnify Conoco under the exchange agreement. Conoco filed suit against Noble alleging breach of the exchange agreement and seeking to recover the $63 million it paid to settle the suit. The trial court granted summary judgment for Noble. The court of appeals reversed and entered summary judgment for Conoco, concluding that the exchange agreement was an executory contract that was assumed by Alma and assigned to Noble in the bankruptcy proceeding. The Supreme Court affirmed, holding that under the terms of the bankruptcy court order confirming the plan of reorganization and the agreement for sale of Alma’s assets, Noble was assigned an undisclosed contractual indemnity obligation of Alma. View "Noble Energy, Inc. v. Conocophillips Co." on Justia Law

MISO, a nonprofit association of utilities, manages electrical transmission facilities for its members. Beginning in 2006, the Federal Energy Regulatory Commission (FERC) approved changes to MISO’s Tariff that enabled it to authorize network expansion projects and divide the costs among the member utilities. Duke and American own Ohio and Kentucky utilities. In July 2009, American gave notice that it planned to withdraw from MISO. Duke followed suit in May 2010. Under the Tariff, a utility cannot withdraw from MISO any earlier than the last day of the year following the year it gives notice. Two months after Duke announced its intention to withdraw, MISO proposed a new category of more expensive expansion projects. FERC approved this revision to the Tariff. In August 2010, MISO authorized the first Multi-Value Project. In December 2011, weeks before Duke’s scheduled departure, MISO approved 16 projects, to cost billions of dollars. MISO proposed amending the Tariff, so that ex-members could be charged for the costs of Multi-Value Projects approved before their departure. FERC approved that revision prospectively, holding that the revision imposed new obligations on withdrawing members and could not apply to Duke and American to charge them for the Multi-Value Projects. Other MISO Transmission Owners appealed, claiming that FERC departed from the reasoning of its prior orders. The Sixth Circuit denied a petition for review, stating that there is no presumption that costs for the Multi-Value Projects should be allocated up front. View "MISO Transmission Owners v. Federal Energy Regulatory Commission" on Justia Law