Articles Posted in Energy, Oil & Gas Law

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At issue was a lessor’s right to terminate an oil and gas lease when a lessee fails to make minimum annual rental or royalty payments. The trial court granted summary judgment in favor of the lessors in this case and ordered forfeiture of the lease at issue, declaring that the lease had terminated under its own terms because the lessees had failed to a minimum annual rental of $5,500 under the lease and that the lease was void as against public policy. The court of appeals reversed. The Supreme Court affirmed, holding (1) the provision in the lease requiring the lessee to pay $5,500 annually did not invoke the termination provision in the unrelated delay-rental clause; and (2) the lease did not qualify as a no-term, perpetual lease, and therefore, the lease was not void as against public policy. View "Bohlen v. Anadarko E&P Onshore, LLC" on Justia Law

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Respondents, landowner-lessors, filed a putative class action in federal court claiming that Petitioner, the lessee, underpaid gas royalties under the terms of their leases. Under each lease, the lessee must bear all the production costs. The federal court certified to the Ohio Supreme Court a question regarding whether the lessee was permitted to deduct postproduction costs from the lessors’ royalties and, if so, how those costs were to be calculated. Specifically, the federal court asked the Supreme Court whether Ohio follows the “at the well” rule, which permits the deduction of post-production costs, or whether it follows some version of the “marketable product” rule, which limits the deduction of post-production costs under certain circumstances. The Supreme Court declined to answer the certified question and dismissed the cause, holding (1) under Ohio law, an oil and gas lease is a contract that is subject to the traditional rules of contract construction; and (2) therefore, the rights and remedies of the parties in this case are controlled by the specific language of their lease agreement. View "Lutz v. Chesapeake Appalachia, L.L.C." on Justia Law

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Plaintiff filed a declaratory-judgment action against Defendant, seeking to quiet title to a mineral interest. At issue between the parties was whether the 1989 version of the Dormant Mineral Act or the 2006 version of the Act applied in this case. The trial court granted summary judgment in favor of Plaintiff. The court of appeals affirmed, concluding that the 1989 version of the Act applied, and therefore, Defendant, the owner of the severed mineral estate, did not preserve his rights. The Supreme Court reversed, holding (1) pursuant to Corban v. Chesapeake Exploration, LLC, the 2006 version of the Act applied in this case; and (2) based on Dodd v. Croskey, Defendant preserved his mineral rights. View "Walker v. Shondrick-Nau" on Justia Law

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Nile and Katheryn Batman claimed to hold an interest in minerals underlying the properties owned by Wayne Lipperman and the estate of James Albanese (“Albanese”). Albanese and Lipperman filed separate actions seeking to quiet title to their respective properties, claiming that the severed mineral interests held by the Batmans had been abandoned. Albanese and Lipperman also sought to cancel any oil and gas leases executed in relation to the Batmans’ interests in their properties. The trial court granted summary judgment against Albanese and Lipperman. The court of appeals affirmed in both cases. The Supreme Court affirmed, holding (1) the Ohio Dormant Mineral Act (ODMA) applies in these cases; and (2) because neither Albanese nor Lipperman complied with the notice and affidavit requirements in the ODMA, the mineral interests are preserved in favor of their holder, the Batmans. View "Albanese v. Batman" on Justia Law

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Plaintiff filed this action against Defendants seeking to quiet title to oil and gas rights under his surface lands and requesting a declaratory judgment, a permanent injunction, and compensation for conversion. The federal district court concluded that its ruling on the parties’ motions for summary judgment required a clarification of two areas of Ohio law and certified these questions to the Supreme Court. The Supreme Court answered (1) the 2006 version of the Dormant Mineral Act, rather than the 1989 version of the Act, applies to all claims asserted after June 30, 2006 alleging that the rights to minerals vested in the surface land holder prior to the 2006 amendments as a result of abandonment; and (2) a payment of a delay rental during the primary of an oil and gas lease is neither a title transaction nor a savings event under the Act. View "Corban v. Chesapeake Exploration, LLC" on Justia Law

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In 2012, the Supreme Court affirmed an order of the Ohio Power Siting Board granting a certificate to Buckeye Wind, LLC to construct a wind farm in Champaign County. Buckeye subsequently filed an application to amend the certificate in part so that the wind farm could share portions of its facilities with another authorized wind farm. After a hearing, the Board approved Buckeye’s amendment. Champaign County and associated townships (collectively, the County) appealed, contending that the Board unlawfully approved the requested amendment without holding a hearing on all of the proposed changes in the amendment application. The Supreme Court affirmed, holding (1) the County forfeited its right to challenge the scope of the hearing on appeal; and (2) the Board acted reasonably and lawfully in limiting the scope of the hearing. View "In re Application of Buckeye Wind, LLC" on Justia Law

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This appeal arose from the Public Utilities Commission’s modification and approval of the second electric-security plan of the American Electric Power operating companies, Ohio Power Company and Columbus Southern Power Company (collectively, AEP). In the proceedings below, the Commission authored new generation rates for the companies. Five parties appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) the Commission’s order was unlawful or unreasonable because it allowed AEP to collect unlawful transition revenue or its equivalent through the Retail Stability Rider; and (2) the Commission erred in failing to explain its decision setting the significantly-excessive-earnings test threshold. Remanded. View "In re Application of Columbus S. Power Co." on Justia Law

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The Public Utilities Commission approved a capacity charge for the American Electric Power operating companies - Ohio Power Company and Columbus Southern Power (collectively, AEP) - and authorized AEP to implement a new cost-based charge for capacity service that AEP offers to competitive retail electric service (CRES) providers. The Ohio Consumers’ Counsel (OCC) appealed, and AEP cross-appealed. The Supreme Court affirmed the Commission’s orders in part and reversed them in part, holding (1) OCC’s propositions of law failed; and (2) AEP identified one instance where the Commission committed reversible error. Remanded. View "In re Comm’n Review of the Capacity Charges of Ohio Power Co." on Justia Law

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These consolidated actions involved an original action in the Supreme Court and an appeal of a judgment of the court of appeals and concerned the interpretation of several nearly identical oil and gas leases. In the original action, Relator, an absent and unnamed plaintiff in a class action, challenged the court of appeals’ order tolling the leases in the class action pending appeal and sought writs of prohibition and mandamus. The appeal challenged the court of appeals’ interpretation of the leases in the class action. The Supreme Court (1) affirmed the judgment of the court of appeals in the class action, holding that the court of appeals correctly interpreted the leases; (2) denied a writ of mandamus or prohibition in the original action because Relator had an adequate remedy in the ordinary course of law by moving to intervene in the appeal and because the court of appeals did not patently and unambiguously lack jurisdiction to issue an order tolling the leases; and (3) denied the motions of the appellee in the appeal to toll the terms of the leases. View "State ex rel. Claugus Family Farm, L.P. v. Seventh Dist. Court of Appeals" on Justia Law

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The parties in this case disputed who was the legal owner or holder of certain mineral rights. The United States District Court for the Southern District of Ohio, Eastern Division concluded that the interpretation of Ohio’s Dormant Mineral Act in the context of an oil and gas lease was determinative of the case and certified certain questions to the Supreme Court for answers. The questions were as follows: (1) whether a recorded lease of a severed subsurface mineral estate is a title transaction under the Act, and (2) whether the expiration of a recorded lease and the reversion of the rights granted under that lease is a title transaction that restarts the twenty-year forfeiture clock under the Act at the time of the reversion. The Supreme Court answered (1) a recorded lease of severed oil and gas rights is a title transaction under Ohio Rev. Code 5301.56(B)(3)(a) that constitutes a saving event to preclude the severed mineral rights from being deemed abandoned and reunited with the rights to the corresponding surface property; but (2) the unrecorded expiration of such a lease is not a title transaction that restarts the twenty-year clock under the Act. View "Chesapeake Exploration, LLC v. Buell" on Justia Law