Justia Civil Procedure Opinion SummariesArticles Posted in Energy, Oil & Gas Law
Watchous Enterprises v. Mournes, et al.
In 2016 Watchous Enterprises, LLC contracted with one of the five individual defendant companies, Pacific National Capital, paying it a $7,600 nonrefundable deposit to secure help finding a lender or a joint-venture partner. Pacific introduced Watchous to companies affiliated with Waterfall Mountain LLC (collectively referred to as "Waterfall"). Watchous and Waterfall eventually executed a letter of intent to enter into a joint venture to which Waterfall would contribute more than $80 million. As part of the arrangement, Watchous paid Waterfall a $175,000 refundable deposit. Waterfall said that it would fund the venture through proceeds of loans backed by billions of dollars in Venezuelan sovereign bonds in the name of Waterfall or its lender (RPB Company). But Waterfall never funded Watchous, and Watchous was never refunded the $175,000. Watchous then filed suit under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and common-law claims under Kansas law against Pacific and Waterfall as well as against the five Appellants sued individually. The district court granted partial summary judgment in favor of Watchous on its fraud claims (leaving damages for the jury to decide), essentially on the ground that Appellants misrepresented and failed to disclose “the historic and contemporary facts about Waterfall’s dubious finances, loan defaults, and consistent lack of success in funding similar projects.” Watchous’s remaining claims proceeded to trial, where a jury found that Appellants engaged in a civil conspiracy to defraud Watchous, and had violated RICO. Appellants appealed, but finding no reversible error, the Tenth Circuit affirmed. View "Watchous Enterprises v. Mournes, et al." on Justia Law
Johnson v. Chesapeake Louisiana, L.P.
Plaintiffs filed this action as unleased mineral owners whose interests are situated within forced drilling units formed by the Louisiana Office of Conservation and operated by Chesapeake. Plaintiffs have not made separate arrangements to dispose of their shares of production, so the unit operator can sell the shares but must pay the owners a pro rata share of the proceeds within one hundred eighty days of the sale. Chesapeake timely removed this action to the district court, based on diversity jurisdiction. The district court certified its ruling for interlocutory appeal pursuant to 28 U.S.C. Section 1292(b). The Fifth Circuit explained that this case concerns the interplay between Louisiana’s relatively new conservation laws and its deeply rooted negotiorum gestio doctrine. The court wrote that because it cannot make a reliable Erie guess as to the applicability of Louisiana’s negotiorum gestio doctrine. Accordingly, the court certified the following determinative question of law to the Louisiana Supreme Court: 1) Does La. Civ. Code art. 2292 applies to unit operators selling production in accordance with La. R.S. 30:10(A)(3)? View "Johnson v. Chesapeake Louisiana, L.P." on Justia Law
Oil Valley Petroleum v. Moore
Plaintiff Oil Valley Petroleum, LLC and defendant Clay Moore (Moore) sought equitable relief to adjudicate title based upon two oil and gas leases. Plaintiff requested the trial court to quiet title, cancel an oil and gas lease, and declare its top-lease to be in force and effect. Both parties moved for summary judgment. The district court granted defendant's motion and denied plaintiff's motion. Plaintiff appealed and the Court of Civil Appeals reversed the district court and directed judgment for plaintiff. Defendant sought certiorari to review the Court of Civil Appeals' opinion. The Oklahoma Supreme Court held: (1) exhibits presented during summary judgment proceedings were insufficient to show a material fact that a well was commercially profitable for the purpose of the habendum clause of an oil and gas lease; (2) an overriding royalty interest may be extinguished by an extinguishment of the working interest from which it was carved by a lessee's surrender of the lease in substantial compliance with the lease, unless the surrender is the result of fraud or breach of a fiduciary relationship; and (3) prevailing party status for the purpose of an attorney fee is determined by the trial court when not determined on appeal. The opinion of the Court of Civil Appeals was vacated and the Court reversed the order granting Moore a partial summary judgment and remanded for additional proceedings. View "Oil Valley Petroleum v. Moore" on Justia Law
SEIA V. FERC
This case involves rules adopted by the Federal Energy Regulatory Commission to implement the Public Utility Regulatory Policies Act of 1978 (PURPA). Congress enacted PURPA to encourage the development of a new class of independent, non-utility-owned energy producers known as “Qualifying Facilities,” or “QFs.” PURPA tasks FERC with promulgating rules to implement the statute. In 2020, FERC revised its rules to alter which facilities qualify for PURPA’s benefits and how those facilities are compensated. The new rules make it more difficult to qualify for treatment as a QF, and they also make QF status less advantageous.The Ninth Circuit granted in part and denied in part a petition for review brought by the Solar Energy Industries Association and several environmental organizations challenging Orders 872 and 872-A (collectively, “Order 872”). The panel rejected Petitioners’ argument that Order 872 as a whole is inconsistent with PURPA’s directive that FERC “encourage” the development of QFs. Applying the two-step framework of Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 (1984), the panel held that (1) PURPA on its face gives FERC broad discretion to evaluate which rules are necessary to encourage QFs and which are not, and (2) FERC’s interpretation was not unreasonable. Next, the panel rejected Petitioners’ challenges to four specific provisions of Order 872. First, the panel held that the modified Site Rule—which modified the rules for determining when facilities are deemed to be located at the same or separate sites—survives Chevron, is not arbitrary and capricious under the Administrative Procedure Act (APA), and is not unlawfully retroactive. View "SEIA V. FERC" on Justia Law
EEE Minerals, LLC v. State of North Dakota
EEE Minerals, LLC, and a Trustee for The Vohs Family Revocable Living Trust, sued the State of North Dakota, the Board of University and School Lands, and the Board’s commissioner in a dispute over mineral interests in McKenzie County, North Dakota. Plaintiffs alleged that state law related to mineral ownership was preempted by federal law and that the defendants had engaged in an unconstitutional taking of the plaintiffs’ mineral interests. Plaintiffs sought damages, an injunction, and declaratory relief. The district court dismissed the action. The Eighth Circuit affirmed. Plaintiffs contend that the Flood Control Act impliedly preempts the North Dakota statute because the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The court explained that it is not convinced that the State’s determination of a high-water mark, and the attendant settling of property rights under state law, stands as an obstacle to accomplishing the objectives of the Flood Control Act. The court wrote that the interests of the United States and the goals of the Flood Control Act are unaffected by a dispute between the State and a private party over mineral rights that were not acquired by the federal government. Further, the court explained that Plaintiffs have not established that the United States will be prevented from flooding or inundating any land covered by the 1957 deed in which the State claims ownership of mineral interests under state law. The Flood Control Act would not dictate that property rights be assigned to Plaintiffs. View "EEE Minerals, LLC v. State of North Dakota" on Justia Law
State of Texas v. NRC
The Nuclear Regulatory Commission has asserted that it has authority under the Atomic Energy Act to license temporary, away from reactor storage facilities for spent nuclear fuel. Based on that claim of authority, the Commission issued a license for Interim Storage Partners, LLC, to operate a temporary storage facility on the Permian Basin.Fasken Land and Minerals, Ltd., and Permian Basin Land and Royalty Owners (“PBLRO”) petitioned for review of the license. As did the State of Texas, arguing that the Atomic Energy Act doesn’t confer authority on the Commission to license such a facility.The Fifth Circuit granted Texas’ petition for review and vacated the license, finding that the Atomic Energy Act does not confer on the Commission the broad authority it claims to issue licenses for private parties to store spent nuclear fuel away from the reactor. And the Nuclear Waste Policy Act establishes a comprehensive statutory scheme for dealing with nuclear waste generated from commercial nuclear power generation, thereby foreclosing the Commission’s claim of authority. View "State of Texas v. NRC" on Justia Law
FERC V. VITOL INC., ET AL
The Ninth Circuit affirmed the district court’s order denying Vitol, Inc.’s motion to dismiss, as untimely under the applicable statute of limitations, a complaint filed by the Federal Energy Regulatory Commission (FERC) that sought an order affirming the assessment of a civil penalty against Vitol and one of its traders for making unlawful manipulative trades in the California energy market. The court explained that in measuring the limitations period, the critical question is when FERC’s claim “accrues.” Vitol contended that FERC’s federal district court action was untimely because FERC’s claim accrued as soon as the allegedly unlawful trading occurred. The panel rejected Vitol’s contention and held that FERC’s claim accrued on the date that FERC assessed a civil penalty. The panel reasoned that FERC’s claim arises under 16 U.S.C. Section 823b(d)(3)(B), which gives the agency a cause of action in federal court for “affirming the assessment of the civil penalty,” and that claim does not accrue until FERC has assessed a penalty. The panel also agreed with the district court’s conclusion that FERC’s administrative process for assessing a civil penalty is itself a “proceeding” that is subject to the five-year statute of limitations in 28 U.S.C. Section 2462, and therefore FERC must initiate the proceeding by issuing a notice of proposed penalty within five years of any alleged wrongdoing. View "FERC V. VITOL INC., ET AL" on Justia Law
Entergy Arkansas, LLC v. Arkansas Electric Energy Consumers, Inc.
Entergy Arkansas, LLC, sells electricity to Arkansans. The Arkansas Public Service Commission sets the retail rates that Entergy can charge. Arkansas Electric Energy Consumers, Inc. (“AEEC”) is a trade association comprised of large industrial and agricultural Entergy customers. Entergy asked the Commission for permission to raise its retail rates. AEEC intervened, urging the Commission to deny Entergy’s request. The Commission ultimately did so. Entergy then sued the Commission in September 2020, alleging that the denial violated federal and state law. The Commission promptly moved to dismiss, but the district court denied its motion. Entergy moved for summary judgment. A week later—about twenty-two months after the suit commenced—AEEC moved to intervene as of right or, alternatively, to intervene permissively. AEEC appealed only the denial of its motion for the intervention of right under Rule 24(a)(2). The Eighth Circuit affirmed the denial. The court explained that the Commission’s trial presentation does not evince the sort of “misfeasance or nonfeasance in protecting the public” necessary to overcome the presumption of adequacy. The court explained that the Commission has maintained throughout this litigation that the lawfulness of its denial must be evaluated solely on the basis of the evidence presented in the administrative proceeding (in which AEEC participated) and that additional evidence before the district court is, therefore, unnecessary. AEEC, therefore, has not shown that the Commission inadequately represents its interest in this litigation, as required by Rule 24(a)(2). View "Entergy Arkansas, LLC v. Arkansas Electric Energy Consumers, Inc." on Justia Law
Bay, et al. v. Anadarko E&P Onshore, et al.
Marvin and Mildred Bay (“the Bays”) challenged a court order dismissing their trespass claim against Anadarko E&P Onshore LLC and Anadarko Land Corporation (collectively, “Anadarko”). Anadarko, an oil and gas company, owned the mineral rights under the Bays’ farm. The Bays brought a putative class action along with other surface landowners against Anadarko, alleging that Anadarko’s mineral lessees had exceeded the scope of their mineral rights by drilling multiple vertical wells on the surface owners’ land when it was possible to drill fewer wells of the “directional” type. At the conclusion of the Bays’ presentation of evidence, the district court found that the Bays’ evidence failed as a matter of law to demonstrate that Anadarko’s activities amounted to a trespass and dismissed the case. Finding that the district court applied the wrong legal standard, the Tenth Circuit reversed the dismissal in "Bay I," finding that Colorado’s common law of trespass required the Bays to show that Anadarko’s lessees had “materially interfered” with the Bays’ farming operations. The appellate court questioned whether the record demonstrated that the Bays met this standard in their trial, but because Anadarko had not raised this specific issue, the case was remanded to the district court for further proceedings. On remand, the district court again granted judgment as a matter of law to Anadarko on the material interference issue. Specifically, the court first held that it was bound by the Tenth Circuit's interpretation in Bay I of the material interference standard, then found that the Bays showed only that Anadarko’s conduct inconvenienced them—which was insufficient to satisfy the material interference standard. The Bays again appealed, arguing that the Tenth Circuit's discussion of the material interference standard in Bay I was dictum; thus, the district court incorrectly determined that it was bound to apply that standard. They further argued the material interference standard applied by the district court was inconsistent with the Colorado standard for trespass outlined in Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913 (Colo. 1997), and that the evidence they presented in their trial established a prima facie case of material interference under Gerrity. The Tenth Circuit determined the district court did not err in its second dismissal and affirmed judgment. View "Bay, et al. v. Anadarko E&P Onshore, et al." on Justia Law
City of Hesperia v. Lake Arrowhead Community Services Dist.
This appeal was the second relating to a suit brought by the City of Hesperia (the City) against respondents Lake Arrowhead Community Services District and the Board of Directors of Lake Arrowhead Community Services District (jointly, the District) regarding a proposed 0.96-megawatt solar photovoltaic project (the Solar Project) that the District had been planning to develop on six acres of a 350-acre property it owned, known as the Hesperia Farms Property. The Hesperia Farms Property was located within the City’s municipal boundary and was generally subject to the City’s zoning regulations. The District first approved its Solar Project in December 2015, after determining that the project was either absolutely exempt from the City’s zoning regulations under Government Code section 53091, or qualifiedly exempt under Government Code section 53096. The City sought a writ of mandate prohibiting the District from further pursuing the Solar Project. In Hesperia I, the Court of Appeal determined the District’s Solar Project was not exempt from the City’s zoning regulations under Government Code section 53091’s absolute exemption, or under Government Code section 53096’s qualified exemption. The Court concluded, however, that Government Code section 52096’s qualified exemption did not apply to the District’s approval of the Solar Project only because the District had failed to provide substantial evidence to support its conclusion that there was no other feasible alternative to its proposed location for the Solar Project. This result left open the possibility that the District could undertake further analyses and show that there was no feasible alternative to the Solar Project’s proposed location in order to avoid application of the City’s zoning ordinances. A few months after the District made its second no-feasible-alternative determination with respect to the Solar Project, the City filed a second petition for writ of mandate and complaint challenging the Solar Project. The trial court ultimately denied the City’s second petition. When the City appealed, the Court of Appeal concluded the trial court did not err in rejecting the City’s petition for writ of mandate. View "City of Hesperia v. Lake Arrowhead Community Services Dist." on Justia Law