Mr./Ms. Negotiator/scrivener/reviewer of Master Service Agreements: When did you last review your go-to indemnity provision? In light of Century Surety Company v. Colgate Operating LLC., perhaps you should do it now. The court deemed an innocuous-seeming indemnity provision to impose a ceiling on indemnity obligations under an MSA. Is your MSA consistent with your intentions?

The MSA

Operator Colgate and consultant Triangle entered into an MSA after Colgate hired Triangle to work on a well in Pecos County, Texas.

The mutual indemnity provision required each party to indemnify the other for claims “… arising out of, resulting from, or in any way incident, to, directly or indirectly, any transaction subject to this Agreement.”

In order to support the indemnity obligations, the MSA required the parties to purchase indemnity insurance with limits of the lesser of (1) not less than $5 million or (2) “the maximum amount which may be required by law, if any, without rendering this mutual indemnification obligation void, unenforceable, or otherwise inoperative.” The MSA complied with the Texas Oilfield Anti-Indemnity Act.  

Colgate purchased a $1 million-dollar general liability insurance policy and a $75 million excess liability policy from Markel. Triangle purchased a $1 million general liability policy from Hallmark and a $5 million excess liability policy from Century.

To settle a suit by an injured employee of a Colgate contractor, Hallmark paid $1 million, Century paid $5 million, and Markel paid $6 million for the benefit of Triangle and Triangle’s consultant. Century, as Triangle’s subrogee, sued Colgate for failure to indemnify Triangle, seeking reimbursement for the $5 million paid towards the settlement.

The district court

The district court concluded that the MSA provided a floor for coverage for mutual indemnity purposes but did not provide a ceiling, invoking the Texas Supreme Court’s “lowest common denominator” rule under a prior version of the statute: When parties agree to provide differing amounts of coverage, the mutual indemnity obligations are limited to the lower amount of insurance. The result was that Century was not entitled to recover the $5 million from Colgate.

Fifth Circuit affirms for a different reason

The current version of the statute limits mutual indemnity obligations to the amount of coverage that each party as indemnitor has agreed to obtain for the benefit of the other party as indemnitee.

The only amount of insurance expressly required by the MSA was $5 million, which served as both a floor and a ceiling.  The words “not less than” stipulated a required minimum and the MSA did not provide a clear maximum.

The district court had turned to the insurance policies to answer the question. The Fifth Circuit said that was not necessary. Triangle’s only rights existed within the MSA and indemnification under the MSA was not the same as insurance coverage. According to TOAIA’s terminology, the remaining $71 million of Colgate’s excess liability coverage was not obtained for the benefit of Triangle. Triangle had no right of indemnity under the Markel policy itself and Colgate was under no obligation to pay any more than the $5 million it agreed to pay under the MSA.

The parties could have spelled out discrete and distinct dollar amounts of insurance that each was required to obtain in general liability and excess coverage but they declined to do so.

Your musical interlude.

COP29 is upon us (Perfidy, thy name is the UNIPCC) being held in the greenwashing Republic of Azerbaijan. And ironically, there are dire warnings from some quarters about the methods “anti-science” Donald Trump will deploy to destroy the planet.

With that in mind, here is a handy list of real scientists, economists and energy professionals you can count on to offer facts, figures, and observations that counterbalance falsehoods embedded in presentations by the UNIPCC, the Mainstream Media, and their co-conspirators the search engines.  Here you go, in alphabetical order.  

David Blackmon, here offering a glimpse of Chris Wright, designated as Secretary of the Department of Energy.

Robert Bryce, author, speaker and substack writer, here discussing the $58,000+ Ford loses on each EV it sells.

Judith Curry, climatologist who has a website in which she discusses many client-related issues and does some fact-checking of the fact-checkers.

Alex Epstein, here talking about the catastrophic cost of government green energy programs.

Stephen Heins, substack writer, here discussing how the Biden administration is undermining LNG exports, to the disadvantage of Europe and our seurity.

Steven Koonin, Senior Fellow at the Hoover Institution, former Obama DOE senior official, here also fact-checking Politico’s fact-checking.

Bjorn Lomborg, Danish economist and political scientist and author of a number of books and articles casting doubt on climate hysteria and the unwise policies resulting therefrom, here speaking about the UN’s overestimates of extreme heat deaths and on the myth of the energy transition.

Daniel Markind, lawyer who writes about climate, here explaining in Forbes one way President Trump could help overcome obstacles to bringing energy to the Northeast. 

Roger Pielke, Jr., college professor, fellow at the  American Enterprise Institute, and substack writer, here chastising advocates’ use of the most implausible scenarios to predict the perils of climate change.

Thomas Shepstone, substack writer, here commenting on the vast sums of money wasted by the Inflation Reduction Act.

Doug Sheridan, commentator and frequent responder to false narratives, here on Linked-in observing Europe’s failing net-zero movement  and challenging Michael Mann and his accusations against Exxon. Follow him on LinkedIn.

Irina Slav, Bulgarian energy writer. Her writings on substack require a subscription but here on Oilprice.com are some of her recent observations on the energy economy

Watts Up With That!, an aggregator of climate reporting, here on vexatious and unsuccessful climate lawsuits.

And finally, an instructional video from long ago on budget deficits, as the past repeats itself.

Your musical interlude.

Q: Is it just me or do we see more honest and varied climate information from the new breed of independent journalists than from the legacy media?

A: Sometimes.

In legal parlance, it was a “remand”, but the result in Energy Transfer, LP et al v. Culberson Midstream LLC et al was the same. According to Judge Bill Whitehill of the Business Court of Texas, First Division, the Texas business court does not have authority over cases filed before September 1, 2024. This one will return to the 193rd District Court in Dallas.  Why? Because the plain language of HB 19 from the 2023 Regular Session, the business court enabling statute, says so.

How the parties got here

Energy Transfer filed suit in April 2022.  The district court’s docket showed 57 pages of activity from April 2022 to August 31, 2024. Energy Transfer removed the case on September 30, 2024. The defendants moved to remand saying that the case is not removable under Government Code §25A.006 because House Bill 19 is restricted to suits commenced on or after September 1, 2024.

The plaintiff made several arguments, all of which were rejected by the court. Lawyers interested in knowing what arguments not to rely on when considering removal of a case to the business court should study this opinion. Those arguments are unnecessarily esoteric to dwell on here.

How to read a Texas statute

The court relied on these rules of statutory construction:

  • Construction of a statute is a legal question.
  • If the statute is not ambiguous the court adopts an interpretation supported by its plain language unless such an interpretation would lead to absurd results.
  • It is presumed that the Legislature included each word in a statute for a purpose and words not included were purposefully omitted.

§25A.006 permits removal of cases to the business court if the case meets jurisdictional requirements but does not address whether cases on file before September 1, 2024, are removable.

The plain language of the statute governs

The wording of the statute was the linchpin of the ruling. §8 of HB 19 could have said the court may begin accepting cases beginning on September 21, 2024, but it does not say that. §8 says, “The changes in law made by this Act apply to civil actions commenced on or after September 1, 2024. The court concluded that it must construe §8 as limiting §25A.006’s removal provisions to cases filed on or after that date.  

The good news

  1. The court was efficient. The matter was removed on September 30, 2024, and remanded by an order on October 30. Prompt justice, one of the advertised advantages of the business courts, was delivered.
  • The parties and future litigants benefited from a written opinion explaining the court’s reasoning. You don’t see that in a typical trial court order due to the workload of those courts.
  • In light of the many as-yet unanswered questions about how this new statute will be interpreted, this case resolved a question about which cases are removable and which aren’t.

For your musical enjoyment, a few Bob Dylan covers:

Lucinda Williams  –  Not Dark Yet

Molly Tuttle – You Ain’t Going Nowhere

Toni Lindgren – Buckets of Rain

New Basement Tapes – When I Get My Hands on You

Author Paul Yale*

In the summer of 2022, the Executive Committee and Board of Directors of the American Association of Professional Landmen approved the first ever Model Form Participation Agreement to be approved by the Association.

So, the basics: A Participation Agreement (PA) typically, it is an agreement by which a participant will buy-in to a drill-ready oil and gas prospect by payment of a “promote” to the prospect generator for having identified a prospect and put a deal together.   

The classic PA is the ”third for a quarter deal” by which the prospect generator gets three other parties to each put up 1/3rd of the costs of the first well on a prospect in exchange for a 1/4th interest, with the prospect generator retaining a 1/4th cost free interest. But there are numerous permeations of that basic structure.

For example, instead of multiple parties, perhaps a single party pays 100% of the costs for a 3/4ths working interest. Perhaps the prospect generator gets more “promote”  by marking up the actual cost of the leases or seismic data. The prospect generator may reserve an override, not only on the original lease block, but on all subsequent lease purchases within an agreed upon Area of Mutual Interest.

PAs are likely as old as the oil and gas industry itself, but until the advent of the new AAPL Model Form, there had never been a standardized form. This slowed the buying and selling of prospects at events such as the North American Prospect Expo as parties had to negotiate from scratch and draft deal specific PAs each time a trade was made.   

In 2017, the AAPL Forms Committee formed a subcommittee, the Participating Agreement Drafting Committee (PADC) to develop a standard form PA. The approach of the PADC was to identify the most common features and alternatives used in PAs and incorporate them into a form that could be customized by filling in blanks and checking boxes.  The result was a 35-page WORD-format document that now appears in the Forms section of the AAPL website.

The PA document is an interesting read; it offers a litany of options and provisions and can serve as a checklist of provisions for landmen and lawyers to consider when negotiating a PA, regardless of whether the form itself is used to document the final deal.

To quote from an article written by the author, “ It is hoped that the introduction of a model form PA will enable documenting well trades at NAPE and elsewhere easier and quicker. It was also the goal of the PADC to develop a model form that would become widespread in use by industry. Only time will tell if the PADC’s goals were met.”

For more details see these articles in Landman Magazine and the State Bar of Texas Oil, Gas & Energy Resources Fall 2024 Section Report and the PA Form (downloaded from the AAPL website).

* Gray Reed Partner Paul Yale is Board Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization and a member of the PADC.  

Your musical interlude. Feel free to consider it sanctimonious, or even corny, but it makes sense during these times. Read into it whatever you want.

Fasken Ranch Ltd et al v. Puig et al featured a reservation in the sale of a ranch of an undivided 1/16 non-participating royalty interest “free of cost forever.”  What does that mean? In particular, does it mean that the royalty owners must bear their share of post-production costs? The answer is No. Read on to know why.

Fasken is the operator of wells on the aforesaid ranch and the Puig parties are royalty owners. The parties agreed that the term exempts the royalty owner from paying production costs (as it always does) but, no surprise, disagreed about postproduction costs. The trial court and the court of appeals both concluded that “free of cost forever” applies equally to production and post-production costs.

As you know, investment in post-production costs makes oil and gas production more valuable for both the producer and the royalty owner. Generally, royalty owners must pay their proportionate share of post-production costs, but that rule can be modified by agreement.

In denying Fasken’s position that the free-of-cost language referred to production costs only, the court was guided by Chesapeake Exploration v. Hyder. There, the Supreme Court considered a “… cost-free (except only its portion of production taxes) overriding royalty of [5%] of gross production obtained …” and concluded that the royalty owner did not bear post-production costs. The Hyder court deemed taxes to be post-production costs and it would make no sense for the cost-free language to refer only to production costs, yet except post-production costs from its application. That led to Chief Justice Hecht’s entertaining “no dogs allowed, except for cats” reference.

The language in the Fasken/Puig deed did not distinguish between production and postproduction costs and literally refers to all costs. The court gave “cost free” its normal meaning and applied the term to both kinds of costs.

Fasken argued that “free of cost forever” was mere surplusage referring to production costs that are already exempt from royalty because, said Fasken, this royalty provision already values royalty at the wellhead. The court responded that the argument would have merit if the deed provided a valuation at the wellhead because a royalty valued at the well bears post-production costs. This reservation did not identify a valuation point.

Fasken also argued that by using the word “produced” the parties meant that the valuation point was at the wellhead. The court considered that to be a strained extension of current law and Fasken offered no authority for the proposition. The court noted that valuation of a point-of-sale royalty also would likely use the word “produced” in the granting clause.

Because Fasken was unable to show that “free of cost forever” refers only to production costs, the NPRI reserved by Puig was free of both production and postproduction costs.

Quincy Jones, RIP.

When one tires of owning real estate with his co-owners, Texas law allows him the right to sue for partition of the property. In James et al v. Thornberry, 59.79 acres in Walker County, Texas, was owned by Ms. James and Ms. Warren, each with an undivided 15% interest, and Mr. Thornberry with 70%. Thornberry sued for partition by sale. (The lesser-used alternative is partition by deed in which the property is surveyed and divided up with each co-owner taking a portion with as close to the same value as the others.) The court appointed commissioners to partition the property and a surveyor to be used as the commissioners deemed necessary. But in his petition Thornberry forgot (as the court put it) that one Charles Mack owned a 50% mineral interest. Thornberry neglected to include Mack as a defendant.

The purpose of partition is to segregate ownership and to allow to each owner the free use, control, and possession of the interest set apart to that owner to the exclusion of all other former joint owners. A partition suit must seek a division of the whole of the common property.

The general rule is that before property can be partitioned all of the joint owners must be made parties so that the trial court may determine the interest each party has and make a proper distribution of the property. Implicit in this rule is that all owners must be joined as owners of the property sought to be partitioned.

That brings us to the purpose of Texas Rule of Civil Procedure 39 which requires the presence of all persons who have an interest in the litigation so that any relief awarded will effectively and completely adjudicate the dispute. Incidentally, that explains why those fixed-or-floating NPRI cases have so many “Rule 39 defendants”.

The judgment ordering partition was reversed and the case was sent back to the trial court so that Mr. Mack could be invited to the party. The court of appeals declined to consider several remaining issues raised by Thornberry. That would be inappropriate because those issues could not be fully resolved by a judgment without Mr. Mack.

Phil Lesh RIP.

Carson et al v. Winter Gordon, Junior is a reason you should not name your son after yourself. But if you insist, at least spell his name correctly.

The Gordons

Winter Gordon was born in the 19th century. His son was Winter Gordon, Junior. The court referred to him as “Father” or “Decedent”. Father had a son born in 1955 named on the birth certificate as “Wenter” Gordon, Junior. The court referred to him as “Gordon”. His opponents in the litigation probably used other names more akin to epithets.

Throughout his life Gordon referred to himself as “Winter Gordon, Junior”. Father died in 2011 and Gordon reported Father/Decedent’s name as “Winter Gordon” and his own name as “Winter Gordon, Junior”. Father’s will was deemed valid after a will contest. Father left his entire estate to Carson, who was Gordon’s niece and Father’s granddaughter.

A tax suit leads to confusion

The Brazos ISD sued Carson for delinquent taxes claiming two tracts of land comprising 49 acres were owned by “Winter Gordon, Junior, et al“.  Carson claimed she had never heard of the property and alleged that the property was vested in the heirs at law or devisees of “Winter Gordon, Junior, deceased”. (That would be Father.) She paid the taxes, obtained an Independent Executor’s Deed (the executor was her mother), and requested the taxing authority to place title in her name.

Unsuppported assertions fail to persuade

Gordon sued alleging that he, rather than Father, purchased the property by a deed in 2008. Carson responded by relying on the Executor’s Deed to her as the sole beneficiary of the estate of Father. She claimed that Gordon only changed his name from ”Wenter” to obfuscate and remove ownership of the property from Father’s estate.

Summary judgment for Gordon was affirmed. His declaratory judgment action was treated as a trespass to try title claim requiring proof of a regular chain of conveyances from the sovereign and through a superior claim from a common grantor.

Gordon presented evidence demonstrating a chain of conveyances from the Sovereign up to the 2008 deed showing the grantors conveyed the property to “Winter Gordon, Junior”. He offered several detailed affidavits supporting his claim that he was the actual buyer. Carson’s response was that the property was actually purchased by Father and not Gordon, they never shared the same name during Father’s lifetime, and Gordon only changed his name five years after Father’s death. She presented a title company’s letter concluding record title appeared to be vested in Father.

The court believed that Gordon’s proof was the kind that could have been easily and conveniently rebutted and the testimony was of a nature which could be effectively countered by opposing evidence. That, Carson did not do.

Carson missed the point. The fact in dispute was whether Gordon or Father was “Winter Gordon, Junior who purchased the property in 2008.” The court found no authority requiring a purchaser to identify himself in a deed by his name exactly as it is written on his birth certificate.

Carson asserted that Gordon was not the true purchaser but was unable to refute the material facts in Gordon’s affidavits testifying that he was the purchaser of the property in 2008. Carson presented argument and supposition but no evidence that discredited Gordon’s association with the transaction.  

Carson did not carry her burden to demonstrate that Junior’s claim that he was the signatory on the 2008 deed was false. The trial court judgment was affirmed. Carson demonstrated no genuine issue of material fact.  Gordon was entitled to a judgment on his trespass to try title claim.

Your musical interlude.

Remnant LLC v. Permico Royalties LLC, et al determined that a 90-year-old claim to ownership of a forfeited corporation was not valid.

The players

Hoffman: By most accounts was a scoundrel and con man who plied his iniquitous trade during the Texas oil boom of the 1930’s. He was indicted for telling people he was the owner of Mid-Tex Corporation, holder of mineral interests in several counties.

Remnant:  Successor-in-interest to Hoffman.

DeMotte: Former owner of Mid-Tex (charter forfeited in 1950).

Permico, Parkcrest and Roemer: Successors-in-interest to DeMotte.

The receiverships

1983: Receiver was appointed to represent former owners of Mid-Tex for execution of a mineral lease in Howard County. An order was entered approving a lease.  

2016: Receivership in Glasscock County over Mid-Tex property. An order was entered approving a lease.

2020: Parkcrest and Roemer intervened in the Glasscock receivership claiming 48.4% of minerals through DeMotte as former owner of Mid-Tex. The ad litem had no notice of the hearing and did not attend. An order was entered that Parkcrest and Roemer were successors in interest to DeMotte’s share of Mid-Tex.

2021: Remnant filed a petition in the Glasscock receivership claiming to be the successor-in-interest to Hoffman. Permico (apparently a lessee) was accused of wrongfully asserting an adverse ownership interest in Mid-Tex.

The trial court granted summary judgment that Permico et al were successors-in-interrest to DeMotte as a former owner of Mid-Tex. Remnant appealed.

Res judicata and collateral estoppel

Ordinarily there can be only one final judgment in a lawsuit, but orders in receivership proceedings are an exception. Remnant complained that the order awarding partial ownership of Mid-Tex to Permico et al was not final because it failed to identify the remaining successors to Mid-Tex. However, Permico et al’s pleadings did not request determination of ownership of all successors of Mid-Tex. All they sought, and all they were granted, was confirmation of their particular interest.

Remnant maintained the because it was not a party or in privity with any party in the Glasscock receivership, Permico et al failed to satisfy this element of res judicata. The court agreed. Remnant was not in control of Permico et al’s actions at the time the judgment was rendered. Remnant was not a successor-in-interest to any party in Permico’s et al’s action.

Permico et al claimed that when they sued to determine their interest in Mid-Tex they “represented” the same interests Remnant now pursued because all of the parties derived their claim from Mid-Tex. That interpretation would effectively deprive Remnant of its right to due process under the 14th Amendment. Permico et al did not represent Remnant’s interest at the time they sought a declaration of their interests. Remnant wins on this point.

Permico et al also failed to demonstrate that the current dispute is based on the same claims that were at issue when the trial court resolved their petition.

The court also concluded that the present dispute involved facts that were not essential to the previous judgment and that the parties were not in privity. Collateral estoppel did not apply.  

Regardless of all of that, summary judgment was proper because Remnant failed to submit evidence raising a fact issue on its claim that Hoffman owned Mid-Tex or that Mid-Tex was his alter ego.

For lawyers

The court discussed the hearsay objection to summary judgment evidence (p. 2-3), whether the judge in the Glasscock proceeding should have been disqualified for having an interest in the case (p. 7-8), and whether service by publication was effective (p. 7-8).

Your musical interlude

.

If you follow the Texas Railroad Commission closely, you should read Ammonite Oil & Gas v. Railroad Commission of Texas, in which the Supreme Court rejected a mineral owner’s effort to force pool an interest under the Mineral Interest Pooling Act. (Read here for the Austin Court of Appeals ruling and the underlying facts). If you are like the rest of us, read on.

The offers were not “fair and reasonable”

The Commission must dismiss a MIPA forced-pooling application if it finds that a fair and reasonable offer to pool voluntarily has not been made. EOG’s wells as permitted would not reach Ammonite’s riverbed minerals. The Commission rejected the applications because Ammonite failed to make a fair and reasonable offer and because forced pooling would not prevent waste, protect correlative rights, or require the drilling of unnecessary wells. The Court held that the Commission’s conclusion that Ammonite failed to make a fair and reasonable offer to voluntarily pool was reasonable.

All production would be from EOG’s lease and none from Ammonite’s. Thus, proceeds from the pool would not be allocated on the basis of the parties’ respective contributions to production.  

The MIPA does not define a fair and reasonable offer. Thus, a decision on that question is left to the discretion of the Commission. The decision must only be supported by substantial evidence, which gives significant deference to the agency.

The Court concluded that the Commission’s rejection of the applications because Ammonite’s offers were not fair and reasonable was based on EOG’s wells as permitted, which did not drain Ammonite’s riverbed tract, and Ammonite did not ask EOG to modify its drilling plans and made no effort to show that it was possible for EOG to revise its plans or extend the wells to reach the riverbed.

That Ammonite proposed to obtain a share of EOG production without Ammonite’s contribute any minerals of its own could justify the Commission’s considering the offer unfair on its face.

The Court also discussed the MIPA-required risk charge.

Stranded minerals?

The Commission made no finding about whether Ammonite’s riverbed minerals were stranded. EOG’s expert testified that drilling a well to produce Ammonite’s minerals might be viable in the future. Ammonite criticized that testimony as beyond speculative but did not put on expert testimony of its own.

The Commission assumed Ammonite’s minerals are stranded but concluded that because the EOG wells were already completed and there was no drainage, granting Ammonite’s applications would not prevent waste or protect correlative lights.

The DISSENT

Justices Young and Busby were happy with anybody. They saw it this way:

The Court of Appeals should have reviewed the Commission’s denial of Ammonite’s applications on the merits.

Ammorite did make fair and reasonable voluntary pooling offers. The Commission’s failure to explain why Ammonite’s offers were not fair and reasonable in itself requires reversal and remand.

The case should be remanded to the Commission so it could decide whether forced pooling of Ammonite’s interest was proper under MIPA §102.011 (which the Commission did not do). The Commission’s explanation on that issue was conclusory at best based upon its mistaken understanding of the fair and reasonable offer point.

The lack of drainage is the very thing that allegedly makes the minerals stranded. Stranded minerals constitutes waste. If there is waste then pooling is on the table and sometimes is mandatory. 

The Commission’s application of the statutory language to the facts was at best unexplained and thus unsustainable as a matter of law. Without knowing anything more than the bottom-line conclusion it is anyone’s guess whether the Commission’s order was reasonable.

Your musical interlude.

Once again, a federal district court has enjoined enforcement of a rule implemented by a wayward federal agency as it governs oil and gas activities. This one is North Dakota, et al v. US Department of Interior, et al. from the District of North Dakota.

The Department of the Interior implemented the Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule (the 2016 Rule) that mandated flaring rather than venting of excess methane gas. The 2016 Rule was struck down as unlawful. Not to be denied, the BLM published the 2024 Rule, which continued the same mandate.

In this suit the plaintiff States claim that the 2024 Rule exceeds BLM’s statutory authority, is an unlawful regulation of air emissions, unlawfully regulates state and private mineral interests, and is arbitrary and capricious.

 The arbitrary and capricious claim is based on allegations that the BLM:

  • Reversed itself on a communitization issue (burdening private lands with regulatory burdens that are lawful only on federal lands) without adequate explanation;
  • Failed to adequately explain how the air emission requirements are justified as cost-effective waste prevention measures;
  • Failed to account for the possible decrease in royalties that is likely attributable to the Rule that will decrease gas production; and
  • Failed to adequately respond to plaintiffs’ comments.

Defendants disagreed strongly on all points raised by the States.

Plaintiff States sought a preliminary injunction pending final trial. The court considered the four factors in determining whether to issue a preliminary injunction, of which the most significant was the probability of success on the merits.

The States showed that they are likely to succeed on the merits of their claim that the 2024 Rule is arbitrary and capricious. “Arbitrary and capricious” in this context means the agency has

  • relied on factors which Congress has not intended it to consider,
  • entirely failed to consider an important aspect of the problem,
  • offered an explanation of its decision that runs counter to the evidence before the agency, or
  • is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.  

In issuing the injunction the court discussed the requirements and purposes of several federal statutes: the Mineral Leasing Act, the Clean Air Act, the Federal Oil and Gas Management Act, the Federal Land Policy and Management Act, and 2023’s Inflation Reduction Act.   

The court concluded that several of the requirements imposed by the 2024 Rule:

  • are unsupported by ancillary environmental benefits,
  • conflict with other state and federal laws, and
  • add another layer of federal regulation on top of a myriad of existing state and federal regulations.

The court found that the Rule interfered with the States’ sovereign authority by “haphazardly adding more stringent flaring restrictions and “bureaucratic hoops” for the States to jump through when they have crafted their own plans under the Clean Air Act, cited “evidence” from a 1980 source without explanation,

The court gratuitously observed that “this case is an example of the left hand of the government not knowing what the right hand of the government is doing.”  

Kris Kristofferson RIP