Articles Posted in Energy, Oil & Gas Law

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Plaintiff David Speed filed a petition asserting a putative class action against defendant JMA Energy Company, LLC. He alleged that JMA had willfully violated an Oklahoma statute that required payment of interest on delayed payment of revenue from oil and gas production. He further asserted that JMA fraudulently concealed from mineral-interest owners that it owed interest due under the statute, intending to pay only those who requested interest. JMA removed the case to the United States District Court for the Eastern District of Oklahoma, asserting that the district court had jurisdiction under the Class Action Fairness Act (CAFA - 28 U.S.C. 1332(d)). After conducting jurisdictional discovery, Speed filed an amended motion to remand the case to state court. The district court granted this motion, relying on an exception to CAFA that permitted a district court to decline to exercise jurisdiction over a class action meeting certain citizenship prerequisites “in the interests of justice and looking at the totality of the circumstances,” based on its consideration of six enumerated factors. On appeal JMA challenged the district court’s remand order. Because the district court properly considered the statutory factors and did not abuse its discretion by remanding to state court, the Tenth Circuit affirmed. View "Speed v. JMA Energy Company" on Justia Law

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In an amendment to the Clean Air Act (CAA), Congress directed the EPA to operate a Renewable Fuel Standards Program (the RFS Program) to increase oil refineries’ use of renewable fuels. But for small refineries that would suffer a “disproportionate economic hardship” in complying with the RFS Program, the statute required the EPA to grant exemptions on a case-by-case basis. Petitioner Sinclair Wyoming Refining Company owned and operated two refineries in Wyoming: one in Sinclair, and another in Casper. Both fell within the RFS Program’s definition of “small refinery” and were exempt from the RFS requirements until 2011. Those exemptions were extended until 2013 after the Department of Energy found Sinclair’s Wyoming refineries to be among the 13 of 59 small refineries that would continue to face “disproportionate economic hardship” if required to comply with the RFS Program. Sinclair then petitioned the EPA to extend their small-refinery exemptions. The EPA denied Sinclair’s petitions in two separate decisions, finding that both refineries appeared to be profitable enough to pay the cost of the RFS Program. Sinclair filed a timely petition for review with the Tenth Circuit court, which concluded the EPA exceeded its statutory authority under the CAA in interpreting the hardship exemption to require a threat to a refinery’s survival as an ongoing operation. Because the Court found the EPA exceeded its statutory authority, it vacated the EPA’s decisions and remanded to the EPA for further proceedings. View "Sinclair Wyoming Refining v. EPA" on Justia Law

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Consolidation Coal Company appealed after the Department of Labor (“DOL”) awarded survivor’s benefits to Judy Noyes under the Black Lung Benefits Act (“BLBA”). The administrative law judge (“ALJ”) determined that Mrs. Noyes was entitled to a statutory presumption that the death of her husband, James Noyes, resulted from his exposure to coal dust in underground coal mines. The ALJ further concluded that Consolidation failed to rebut that presumption by showing either that Mr. Noyes did not suffer from pneumoconiosis or that pneumoconiosis did not cause his death. Consolidation argued on appeal the ALJ erred in retroactively applying the rebuttal standard from DOL’s revised regulations to Mrs. Noyes’ claim for benefits, and that the ALJ’s determination that Consolidation failed to meet its burden of rebuttal was not supported by substantial evidence. After review, the Tenth Circuit held the ALJ permissibly applied the rebuttal standard from the revised regulations to Mrs. Noyes’ claim, and that standard could further be applied retrospectively to claims, like Mrs. Noyes’, that were filed prior to the effective date of the revised regulations. However, the Court agreed with Consolidation that the ALJ incorrectly stated the revised rebuttal standard in analyzing Mrs. Noyes’ claim. View "Consolidation Coal Company v. OWCP" on Justia Law

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The Department of the Interior (“DOI”) adopted an administrative appeal requirement for agency actions under the Surface Mining Control and Reclamation Act (“SMCRA”). Following an initial decision by an administrative law judge (“ALJ”), DOI regulations required an adversely affected party to concurrently file an appeal and a petition for stay pending appeal with the Interior Board of Land Appeals (“IBLA”) to exhaust administrative remedies. However, an ALJ decision is not always rendered inoperative pending appeal: the IBLA retains discretion to grant or deny the stay. The issue this case presented for the Tenth Circuit's review was whether the IBLA’s denial of a stay rendered an ALJ’s decision final for purposes of judicial review, notwithstanding a pending IBLA appeal. The Tenth Circuit found that intra-agency review “is a prerequisite to judicial review only when expressly required by statute or when an agency rule requires appeal before review and the administrative action is made inoperative pending that review.” Because the ALJ’s decision in this case was not rendered inoperative pending appeal to the IBLA, it was final agency action. View "Farrell-Cooper Mining v. DOI" on Justia Law

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Under the federal environmental laws, the owner of property contaminated with hazardous substances or a person who arranges for the disposal of hazardous substances may be strictly liable for subsequent clean-up costs. The United States owned national forest lands in New Mexico that were mined over several generations by Chevron Mining Inc. The question presented for the Tenth Circuit’s review was whether the United States is a “potentially responsible party” (PRP) for the environmental contamination located on that land. The Tenth Circuit concluded that under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), the United States is an “owner,” and, therefore, a PRP, because it was strictly liable for its equitable portion of the costs necessary to remediate the contamination arising from mining activity on federal land. The Court also concluded the United States cannot be held liable as an “arranger” of hazardous substance disposal because it did not own or possess the substances in question. The Court reversed the district court in part and affirmed in part, remanding for further proceedings to determine the United States’ equitable share, if any, of the clean-up costs. View "Chevron Mining v. United States" on Justia Law

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Northern Natural Gas Company initiated proceedings against a number of parties to condemn certain rights relating to the storage of natural gas in and under more than 9,000 acres of land in southeast Kansas, known as the Cunningham Storage Field. Northern Natural Gas brought this action under the Natural Gas Act of 1938 (NGA), 15 U.S.C. 717 et seq. A three-person commission was appointed to determine the appropriate condemnation award, and the district court adopted the commission’s findings and recommendations in full. Both sides appealed, asserting various arguments in support of their positions that the award either over- or under-compensated the Landowners and Producers. After review, the Tenth Circuit concluded: the condemnation award should not have included either (1) the value of storage gas in and under the Cunningham Field on the date of taking, or (2) the lost value of producing such gas after the date of certification, because certification extinguished any property interests the Landowners and Producers may have held in the gas before that date. But the Court agreed with the award’s inclusion of value for Extension Area tracts based on their potential use for gas storage and buffer rights, the commission’s valuation for the eight Extension Area wells, and the district court’s denial of attorneys’ fees. View "Northern Natural Gas v. Approximately 9117 Acres" on Justia Law

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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

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This case involved a dispute over the ownership of mineral rights appurtenant to several tracts of land located in Haskell County, Kansas. Michael Leathers and his brother Ronald Leathers each inherited half of these mineral rights from their mother. But an error in a quit claim deed subsequently executed between the brothers left it unclear whether Ronald’s one-half interest in the mineral estate had been conveyed to Michael. In a series of orders spanning several years, the district court (1) reformed the quit claim deed to reflect that Ronald had reserved his one-half interest in the mineral estate; (2) awarded half of Ronald’s one-half interest to Ronald’s wife Theresa (pursuant to Ronald and Theresa’s divorce decree); and (3) held that Ronald owed approximately $1.5 million to the IRS and that the IRS’s tax liens had first priority to any present and future royalties due to Ronald from his remaining one-quarter mineral interest. Ronald appealed, but finding no reversible error in the district court’s judgment with respect to the reformation and the interests, the Tenth Circuit affirmed the district court on all grounds. View "Leathers v. Leathers" on Justia Law

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Plaintiffs-Appellants, a certified class of Osage tribal members who owned headrights, appealed the district court’s accounting order. Plaintiffs alleged that the government was improperly distributing royalties to non-Osage tribal members, which diluted the royalties for the Osage tribal members, the rightful headright owners. The complaint attributed this misdistribution to the government’s mismanagement of the trust assets and the government’s failure to perform an accounting. Thus, Plaintiffs sought to compel the government to perform an accounting and to prospectively restrict royalty payments to Osage tribal members and their heirs. The district court dismissed Plaintiffs’ accounting claim because it found that the applicable statute only required the government to account for deposits, not withdrawals, and that such an accounting would not support Plaintiffs’ misdistribution claim. After review, the Tenth Circuit could not say the district court abused its discretion. "The accounting the district court fashioned will certainly inform Plaintiffs of the trust receipts and disbursements and to whom those disbursements were made." View "Fletcher v. United States" on Justia Law

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Buccaneer Energy (USA) Inc. sued SG Interests I, Ltd., SG Interests VII, Ltd. (together, “SG”), and Gunnison Energy Corporation (“GEC”) (collectively, “Defendants”) after unsuccessfully seeking an agreement to transport natural gas on Defendants’ jointly owned pipeline system at a price Buccaneer considered reasonable. Specifically, Buccaneer alleged that by refusing to provide reasonable access to the system, Defendants had conspired in restraint of trade and conspired to monopolize in violation of sections 1 and 2 of the Sherman Act, respectively. The district court granted summary judgment to Defendants, concluding that Buccaneer could not establish either of its antitrust claims and that, in any event, Buccaneer lacked antitrust standing. The Tenth Circuit agreed that Buccaneer failed to present sufficient evidence to create a genuine issue of fact on one or more elements of each of its claims, and therefore affirmed on that dispositive basis alone. View "Buccaneer Energy v. Gunnison Energy" on Justia Law