Articles Posted in Energy, Oil & Gas Law

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Trans-Western filed an amended complaint in federal district court asserting claims against U.S. Gypsum for breach of an oil and gas lease and breach of the covenant of quiet enjoyment. The district court found that U.S. Gypsum had wrongfully rescinded the lease and that the rescission constituted a breach of contract and a breach of the covenant of quiet enjoyment. The court awarded nominal damages of one dollar to Trans-Western. The parties appealed. The Tenth Circuit Court of Appeals certified to the Supreme Court the question of how to measure expectation damages for the breach of an oil and gas lease. The Supreme Court answered (1) expectation damages for the breach of an oil and gas lease are measured in much the same way as expectation damages for the breach of any other contract; (2) damages may include general and consequential damages; and (3) trial courts may allow the use of post-breach evidence to help establish and measure expectation damages. View "Trans-Western Petroleum, Inc. v. U.S. Gypsum Co." on Justia Law

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Anadarko Petroleum Corporation, which acquired Kerr-McGee Oil & Gas Onshore L.P. in 2006, operated oil and gas wells from 2008 to 2011 and filed severance tax returns during this period. The severance tax rate an owner of oil and gas interests must pay depends on the fair market value of the owner’s interest. At issue in this case was how the value of such an interest is to be calculated. In 2010, the Auditing Division of the Utah State Tax Commission issued notices to Anadarko and Kerr-McGee (collectively Anadarko) informing Anadarko of a deficiency in its 2009 severance tax and assessing additional taxes and interest, and informing Kerr-McGee that its claimed 2009 refund was being reduced. Anadarko filed a petition for determination with the Commission. At issue before the Commission was whether the Auditing Division had applied the correct tax rate. The Commission granted summary judgment for the Auditing Division. The Supreme Court reversed, holding that the Commission improperly disallowed deductions Anadarko made for tax-exempt federal, state, and Indian tribe royalty interests under the severance tax statute. Remanded. View "Anadarko Petroleum Corp. v. Utah State Tax Comm’n" on Justia Law

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In 2013, the Utah Public Service Commission (PSC) approved power purchase agreements between PacifiCorp and two small power producers. Under these agreements, PacifiCorp’s Rocky Mountain Power division would become obligated to purchase all power produced by the producers’ clean energy wind projects. Ellis-Hall Consultants, a competitor of the two small power producers, intervened in the PSC proceedings and subsequently appealed. The Supreme Court affirmed the PSC’s decision, holding (1) the power purchase agreements did not contravene the terms of an applicable regulatory tariff referred to as Schedule 38; (2) PacifiCorp did not engage in discrimination in its application of the terms of Schedule 38; and (3) the power purchase agreements were enforceable. View "Ellis-Hall Consultants, LLC v. Pub. Serv. Comm’n of Utah" on Justia Law

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The Board of Oil, Gas and Mining (Board) affirmed the approval by the Division of Oil, Gas and Mining (Division) of Alton Coal Development's (ACD) mining permit, which allowed ACD to conduct surface coal mining operations at the Coal Hollow Mine. Petitioners appealed, arguing that the Board erred in affirming ACD's permit because the permit application was deficient in several respects. The Supreme Court affirmed the Board's decision, holding (1) the Board properly concluded that the Division gave adequate consideration to cultural and historic resources in the adjacent area; (2) the Board properly concluded that the Division's cumulative hydrological Impact Assessment satisfied Utah's requirements; (3) the Board properly concluded that the hydrologic monitoring plan was adequate; and (4) therefore, the Board acted within its discretion in affirming the Division's conclusions that ACD's mining permit application satisfied all of the statutory and regulatory requirements. View "Sierra Club v. Bd. of Oil, Gas, & Mining" on Justia Law

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Appellants, Marion Energy and the State of Utah School and Institutional Trust Lands Administration, leased and owned oil and gas deposits lying underneath property owned by the KFJ Ranch Partnership. In order to build a road to access those deposits, Appellants sought to condemn a portion of KFJ's land by relying upon a statute that permits the exercise of eminent domain for the construction of roads to facilitate the working of mineral deposits. The district court dismissed Appellants' condemnation action, concluding that the statute did not provide the authority to take land for roads to access oil and gas deposits. The Supreme Court affirmed the district court's dismissal, holding that the phrase "mineral deposits" in the statute was ambiguous, and because all ambiguities in a statute purporting to grant the power of eminent domain are strictly construed against the condemning party, Appellants were not authorized by the statute to condemn KFJ's land. View "Marion Energy, Inc. v. KFJ Ranch P'ship" on Justia Law

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Appellants Marion Energy (Marion) and the State of Utah School and Institutional Trust Lands Administration (the Trust) leased and owned oil and gas deposits that lay underneath property owned by the KFJ Ranch Partnership (KFJ). To build a road to access their deposits, Marion and the Trust sought to condemn a portion of KFJ's land. To do so, they relied on a statute that permits the exercise of eminent domain for the construction of roads to facilitate the working of "mineral deposits." At issue was whether the phrase "mineral deposits" as used in the statute was intended by the legislature to encompass oil and gas deposits. The district court granted KFJ's motion to dismiss, concluding that the statute did not provide authority to take land for roads to access oil and gas deposits. On appeal, the Supreme Court affirmed, holding (1) the statute is ambiguous as to whether "mineral deposits" includes oil and gas, and (2) because the Court strictly construes an ambiguous statute purporting to grant the power of eminent domain against the condemning party, Marion and the Trust were not authorized by the statute to condemn KFJ's land. View "Marion Energy, Inc. v. KFJ Ranch P'ship" on Justia Law