An opinion that observes “Obviously the jury was not overly enamored with Appellants.” is worth discussing. The decision is Stephens et al v. Three Finger Black Shale Partnership et al.

What to know about partnerships 

Parties to a transaction need to be mindful that if a business deal is a partnership, there will be rights and duties not present in arms-length commercial transactions. The main question in Stephens: Was a partnership formed by a letter agreement, a participation agreement and the actions of the parties? Continue Reading Texas Court Addresses Bad Acts in a Lease Play

Co-author Niloufar Hafizi

The Colorado oil and gas industry breathed a collective sigh of relief when the state Supreme Court announced its unanimous decision in Colorado Oil and Gas Conservation Commission v. Martinez. The court sided with the Commission in rejecting a proposed rule by a group of teenage plaintiffs that would have precluded the Commission from issuing oil and gas drilling permits “unless the best available science demonstrates, and an independent, third-party conforms, that drilling can occur in a manner that does not cumulatively … impair Colorado’s atmosphere, water, wildlife, and water resources, does not adversely impact human health, and does not contribute to climate change” (Notice the skillful use of “and” and not “or”).

After denying the request the Commission prevailed at the district court. The plaintiffs won a split court of appeals decision in which the majority concluded that the enabling statute – the Colorado Oil and Gas Conservation Act – authorized the Commission to condition a drilling permit on a finding of no adverse cumulative impacts to public health and the environment, and that the Commission had improperly refused to make a rule that was within its power.

The Supreme Court

The Supreme Court upheld the Commission’s ruling, focusing on the Commission’s primary reason for refusing the proposal: It did not have the statutory authority to impose the condition of “no cumulative adverse impacts” on a drilling permit application. The enabling statute identified multiple policy goals for the agency and contained a declaration of purpose stating how it was “in the public interest to…[f]oster the responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state of Colorado in a manner consistent with protection of public health, safety, and welfare, including protection of the environment and wildlife resources.” [emphasis added] The Commission interpreted that language as a requirement to balance oil and gas production with the other concerns. The plaintiffs argued that “in a manner consistent with” is the equivalent of “subject to”.

The Court looked at legislative history, legislators’ comments, and the entire statute to conclude that the Commission “is required…to foster the development of oil and gas resources, protecting and enforcing the rights of owners and producers” while taking steps to, as the statue puts it, “ … to prevent and mitigate significant adverse environmental impacts to the extent necessary to protect public health, safety, and welfare, but only after taking into consideration cost-effectiveness and technical feasibility.”

After analyzing the Act, the court found that the Commission had been correct in determining that the proposed rule was outside its statutory authority.

Takeaways

  • In light of this suit and Proposition 112, one can conclude that a large and dedicated group of environmentalists is out to put an end to the Colorado oil and gas industry.
  • This was a statutory construction case, not a referendum on what the Supreme Court thinks about oil and gas drilling.
  • The battle at the Commission isn’t over. One reason for denying the proposed rule was that the commission is working with the Colorado Department of Health to address the plaintiffs’ concerns.
  • The youthful antagonists were represented by the same group of actors who are behind Juliana v. U. S., now on an appeal by the government in the Ninth Circuit Court of Appeals. That’s the case asserting that the federal government’s failure to reduce carbon emissions violates plaintiffs’ constitutional rights and the government’s obligations as a public trustee.

We will have a more in-depth report on Martinez soon.

In the meantime, let us despair over the Debacle in the Dome.

Co-author Ethan Wood

We told you to “Beware of Strips and Gores” back in 2012 and today we bring you Green et al v. Chesapeake et al, the sequel. Unlike cinema’s greatest follow-ups, this entry feels more like an unneeded rehash of the original. Nevertheless, it is a good refresher on the topic.

 

Rules for the Genre

The strip-and-gore doctrine operates to pass title to lands in addition to the lands described in a conveyance when:

  1. The adjoining land is relatively narrow, small in size and value in
    comparison to the expressly conveyed land, and no longer important or valuable to the grantor of the larger tract;
  2. The adjoining land was not included in the property description in the deed at issue; and
  3. No other language in the deed indicates that the grantor intended to reserve an interest in the adjoining land.

Continue Reading Strip and Gore 2: The Sequel

At least some landmen are once again free to be landmen in Ohio. You will recall that in Dundics v. Eric Petroleum the Ohio Supreme Court declared that the Ohio Real Estate Broker statute prohibited land professionals from practicing their trade in that state unless they were licensed as real estate brokers. As predicted, the Industry appealed to the Legislature, which last month in Senate Bill 263 (here is the part pertaining to land professionals) revised statutes governing the activities of oil and gas land professionals. The fix isn’t perfect but is better than the Dundics situation.  Continue Reading Ohio Land Professionals Saved by the Legislature … Kind Of

I report herein on 2018’s parade of reprobates, rapscallions and others generally lacking in moral hygiene.  We reflect on a mother’s love, corruption in Venezuela, a disloyal employee, stealing from friends, a disgraced politician, and the wisdom of Forrest Gump.

Perp: Carol Faulkner

Violation: Not a crime but worthy of your consideration for its shamelessness. A “mendacious filing” in a an SEC civil enforcement action against Chris Faulkner, and she “repeatedly and willfully abused the judicial system” in connection with his fraud case.

Sentence: Sanctioned $5,205.50. This was after she was held in civil contempt and fled to Lebanon.

Titillating fact: This is the Frack Master’s OWN MOTHER. Merle was right; Mama failed … in so many ways.

_________

Perps: In “Operation Money Flight“, seven defendants (six Venezuelians and a Swiss banker), nine co-conspirators, and three unnamed “government officials”. Continue Reading 2018’s Bad Guys in Energy

Co-author Nikki Niloufar Hafizi

From the state of Washington to the streets of Paris, proposed taxes on carbon have been making headlines. Why a carbon tax, and what are the arguments for and against it?

Pricing carbon

A progressive carbon tax is a climate-change mitigation policy preferred by many economists. Their reasoning goes like this: Carbon and other greenhouse gas emissions contribute to collective problems such as air pollution and climate change, but the entities emitting the GHGs don’t pay for the damage to the “atmospheric commons”. The price of GHG-emitting activities is lower than its theoretical market price should be, and humans consume more than they otherwise would of these GHG-intensive products and services (think gasoline). A tax on carbon content would correct this market failure and incentivize market participants (consumers and producers … such as yourself?) to emit less carbon by changing their behavior and using different technologies. Continue Reading Carbon Taxes: Wrong Price, Wrong Time?

Co-author Isreal Miller

Local taxing authorities frequently look to out-of-towners to bear what the locals consider the outsiders’ fair share of the burdens of increased oil and gas activity. The counties are often small and rural. (See the Dimmit County road tax).You can’t blame them, but  Reeves County (county seat: Pecos, 2010 pop. 13,783), Loving (county seat: Mentone, 2010 pop. 1,340), and Ward (county seat: Monahans, 2010 pop. 10,658) have been reminded by the big guys and gals in Austin that these efforts are not likely to succeed. It didn’t work for Huey Long and it isn’t working well now.

The Texas Supreme Court issued four opinions addressing the taxation of compressors used to deliver natural gas into pipelines: All four were consolidated for briefing with another case, EXLP Leasing, LLC v. Galveston Central Appraisal District. EXLP v. Galveston addressed most, if not all, of the issues raised in each of the four cases at hand. Specifically, the court upheld Texas Tax Code § 23.1241(b), which values the compressors based on the lease revenue they generated during the previous tax year divided by twelve. EXLP v. Galveston also determined that the taxable situs for the compressors was the county in which EXLP Leasing maintained a business address and storage yard (Washington County) and not in the various counties in which the equipment might otherwise be physically located or leased (e.g., Galveston County). Continue Reading Local Taxation of Oil and Gas Activities Fails Again

In a ruling that could benefit mineral owners who don’t regularly examine county deed records (to-wit, you?) the Supreme Court of Texas in Carl M. Archer Trust No. Three et al v. Tregellas held that the discovery rule delayed the running of the statute of limitations on behalf of the holder of a recorded right of first refusal to purchase mineral interests.

The trustees sued the Tregellases for buying the minerals without allowing the Trust to exercise its ROFR, contending that a contract was formed when they sued more than four years after the Tregellases’ purchase; the suit was their acceptance of the right to purchase the minerals, they said.

According to the Trellgases, the claim was barred by limitations because the suit was filed more than four years after the sale. The trustees responded that even if that were so, limitations should be delayed because they they had no obligation to search the county deed records.

The discovery rule described … Continue Reading Texas High Court Invokes the Discovery Rule

In Frederick v. Allegheny Township Zoning Hearing Board, et al, the Pennsylvania Commonwealth Court affirmed a local zoning ordinance allowing oil and gas operations in all zoning districts in the Township as long as they satisfied enumerated standards that were designed to protect the public health, safety and welfare of the citizenry.

Facts and Findings

CNX received a permit to drill a well. The ordinance imposes a 1,000 foot setback and prescribes notice requirements and operational limitations. Citizens owning neighboring tracts complained that the well was not compatible with agricultural and residential use, complaining about noise from pad site preparation and drilling activities.

The objectors did not challenge the Zoning Board’s fact findings. That was either a tactical mistake or a lost cause. One can’t tell from the opinion. The court noted these findings, among others:

  • This is an area that has historically had gas production. There are 242 conventional gas wells in the Township, some of which employ hydraulic fracturing.
  • One farm already has three gas wells plainly visible to persons driving by the property.
  • Nothing will be visible to the neighbors after the well has been drilled and completed.
  • The Zoning Board rejected as not credible the testimony of several experts sponsored by the objectors.

Continue Reading Man Bites Dog – Local Zoning Board Okays Drilling-Friendly Ordinance

Co-author Ethan Wood

In Texas losing a title dispute doesn’t mean you committed myriad heinous torts by asserting your rights in the first place. The test: Were you reasonable in bringing your colorable but not correct claim? So says Dorfman v. J P Morgan Chase Bank, NA. Continue Reading Asserting a Losing Title Claim Isn’t (Always) Tortious