Posts Authored by Zachary D. Eddy

Second Circuit follows lead of Seventh: Nuke subsidies upheld

On September 27, 2018, the Second Circuit Court of Appeals issued its decision in Coalition for Competitive Electricity v. Zibelman, 2nd Cir. No. 17-2654, 2018 U.S. App. LEXIS 27605 (Sep. 27, 2018). This decision, which follows the Seventh Circuit’s decision in Elec. Power Supply Assn. v. Anthony M. Star, summarized here, is the second decision in the span of two weeks to affirm a state’s subsidization of nuclear generation facilities. As in Star, the principal issue in Zibelman was whether the Federal Power Act, specifically 16 U.S.C. § 824(b)(1), which provides that the Federal Energy Regulation Commission (FERC) is to regulate the sale of electricity in interstate commerce, and the states are to regulate local distribution and the facilities used to generate power, preempts a state law that seeks to subsidize some of the state’s nuclear generation facilities in the form of zero emission credits (ZEC) credits. Following the Seventh Circuit’s lead, the Second Circuit held that the state program was not preempted by the Federal Power Act; however, the decision differed in two main respects. For more, read the full publication.

National

Ohio law requires oil and gas land professionals to hold broker’s license to be compensated

On September 25, 2018, the Ohio Supreme Court issued its decision in Thomas Dundics v. Eric Petroleum, Slip Opinion No. 2018-Ohio-3826, holding that the plain language of Ohio Revised Code 4735.01 does not exclude oil and gas land professionals or oil and gas leases from the definitions of “real estate” and “real estate broker” within the statute. The case considered the specific question of whether “oil-and-gas land professionals, who help obtain oil-and-gas leases for oil-and-gas development businesses, must be licensed real-estate brokers when they engage in the activities described in R.C. 4735.01(A) with respect to oil-and-gas leases,” and “[m]ore specifically, … whether R.C. 4735.21 precludes a person who is not a licensed real-estate broker from bringing a cause of action to recover compensation allegedly owed for negotiating oil-and-gas leases." For more, read the full story

Ohio, Oil & Gas Litigation

Bricker partners with Ohio advancement groups to host economic development trainings

Attorneys within Bricker & Eckler's economic development practice have partnered with APEG, JobsOhio and OEDA to design and host EDNow!, an upcoming economic development training program. EDNow! empowers elected and appointed community leaders, especially those within Southern and Eastern Ohio, to guide their local communities’ futures with cutting-edge economic development strategies. Buckeye Hills Regional Council, OVRDC and OMEGA have also assisted with this initiative.

The program will be offered in various Ohio locations on September 26 and October 10. For more information, including the schedule, location details and ticket information, visit the EDNow! event page.

Ohio

7th Circuit Court of Appeals affirms Illinois subsidy for nuclear generation facilities

On September 13, 2018, the Seventh Circuit Court of Appeals issued its long-awaited decision in the consolidated cases of Elec. Power Supply Assn. v. Anthony M. Star, 7th Cir. Nos. 17-2433, 17-2445, 2018 U.S. App. LEXIS 25980 (Sep. 13, 2018).  The decision — authored by the well-known jurist, Circuit Judge Frank Easterbrook — decided an issue that is very similar to an issue also currently pending before the United States Court of Appeals for the Second Circuit, the case of Coalition For Competitive Electricity, et al. v. Zibelman, et al., 2nd Cir. No. 17-2654. The issue in question is namely whether the Federal Power Act preempts a state law that sought to subsidize some of the state’s nuclear generation facilities. The Federal Power Act provision— 16 U.S.C. § 824(b)(1) — provides that the Federal Energy Regulatory Commission (FERC) is to regulate the sale of electricity in interstate commerce, whereas the states are to regulate local distribution and the facilities used to generate power. For more, read the full story

Ohio, Oil & Gas Litigation

Judgment issued for oil and gas well operator

On September 6, 2018, the Monroe County Court of Common Pleas issued a decision in Theresa Jacobs, et al. v. Dye Oil, LLC, et al., C.P. Monroe No. 2017-189 (September 6, 2018), granting summary judgment for the operator of an oil and gas well on the grounds that (1) the subject lease had produced in paying quantities during the requisite state of limitations period; (2) that the operator had timely paid royalties under the lease; (3) that a well was commenced before the expiration of the primary term; and (4) that the producer had not breached any implied covenants. In 1979, the plaintiffs’ predecessor-in-interest leased over 73 acres to the defendants’ predecessors, Walter and Victor Dye. The subject lease contained the following language in the habendum clause: “Lessor does hereby grant unto the Lessee for the Term of two years (and so long thereafter as oil and gas is produced from the land leased and royalty or rentals paid by Lessee therefor) the exclusive right to mine for and produce petroleum and natural gas” from the property at issue.

The plaintiffs purchased 10 acres of the leased premises in 2010. In 2014, the plaintiffs sent the defendants a letter indicating that they were entitled to royalties for any oil and gas produced from their property. The defendants responded to the letter, agreeing to tender landowner royalty upon the receipt of a signed W-9. In lieu of executing the requisite tax documents, the plaintiffs brought suit alleging, in part, that the lease had expired by its own terms. This claim was based both on a claim for lack of production in paying quantities and the fact that the defendants had continued to pay royalties to the heirs of the plaintiff’s predecessor-in-interest after the plaintiffs’ acquisition of the subject property in 2010. The court granted summary judgment to the operator, however, finding that the evidence showed that the well had been producing oil and gas in paying quantities since 2002, the defendants had fulfilled their obligations under the lease by timely paying royalties to the heirs of the plaintiff’s predecessor-in-interest since that time, that the well was drilled timely and that no implied covenants were breached. 

Ohio

Ohio's Fifth District Court of Appeals issues a decision on unitization

On August 13, 2018, the Ohio Fifth District Court of Appeals issued a decision in Am. Energy-Utica, LLC v. Fuller, 2018-Ohio-3250, holding that an order unitizing the landowner’s parcel under R.C. 1509.28 after the landowner chose not to voluntarily consent to the unit “retroactively impair[ed] the obligation of the contract,” namely a provision in the landowner’s oil and gas lease stating, “UNITIZATION BY WRITTEN AGREEMENT ONLY.” In this case, Fuller executed an oil and gas lease in 1981, covering a 40-acre parcel, that contained no explicit restrictions on the formations or depths covered by the lease and included handwritten changes that crossed out the provision allowing for unitization and, instead, provided: “UNITIZATION BY WRITTEN AGREEMENT ONLY!”  After a series of assignments, American Energy-Utica, LLC acquired the deep rights under the Fuller parcel. American Energy approached Fuller to execute an amendment to allow for unitization of the Fuller parcel. The parties were unable to reach an agreement, and Fuller refused to consent to the unit. American Energy then included his parcel in a unitization application to ODNR under R.C. 1509.28.

In the case, American Energy filed a claim for injunctive relief to gain access to the Fuller property to conduct seismic testing, as well as an application with ODNR to force a portion of Fuller’s property into a drilling unit. Fuller filed a counterclaim for breach of the lease agreement provision related to unitization by written agreement only. The trial court held that the oil and gas lease covered all formations under the property and that “R.C. 1509.28 permits the unitization of the lease.” On appeal, the Fifth District reversed the trial court’s decision on unitization, relying on the Ohio Supreme Court’s decision in Burtner-Morgan-Stephens Co. v. Wilson, 63 Ohio St.3d 257 (1992). The Fifth District held that application of R.C. 1509.28 in this case constituted breach of the express provisions of the lease. 

Ohio, Oil & Gas Litigation

New law prioritizes identifying and plugging abandoned oil and gas wells

On June 29, 2018, Governor Kasich signed into law a bill aimed at identifying and plugging abandoned oil and gas wells throughout Ohio. The bill, H.B. 225, mandates that the Ohio Division of Natural Resources' chief of the division of oil and gas resources management spend “not less than thirty percent of the revenue credited to the oil and gas well fund” to plug wells where a “known responsible owner” cannot be identified. The new law also requires the chief to submit written reports concerning the status of efforts to identify and plug abandoned oil and gas wells.

Ohio

PA Supreme Court: Oil and gas wells may not be an acceptable use in certain residential/agricultural zoned areas

In a 4-3 decision, the Pennsylvania Supreme Court, in Gorsline v. Board of Supervisors of Fairfield Township, J-13-2017, 2018 Pa. LEXIS 2781 (June 1, 2018), announced a ruling that may impact shale gas development in non-industrially zoned areas throughout Pennsylvania. In the case, Fairfield Township approved an application to permit Inflection Energy, LLC to drill multiple gas wells in a residential-agricultural zoned area. The issuance of the permit was based upon the township board of supervisors’ determination that the drilling and operation of the wells was “similar to and compatible with the other uses permitted in the zone” where the property is located and that the wells constituted a “public service facility” under the local zoning code. Two local families appealed the township’s decision.

The trial court overturned the decision to permit the oil and gas wells, finding that the board’s classification of the wells as “similar to” a “public service facility” was not supported by substantial evidence. The intermediate appellate court reversed the trial court, finding that the oil and gas company’s proposed use was similar to and compatible with a “public service facility” and/or an “essential service.” The Pennsylvania Supreme Court found that the board’s determination to permit the wells as “similar to and compatible with” a “public service facility” or “essential service” was an error as a matter of law. The Court reasoned that the proposed drilling did not demonstrate any benefit to the local community such that it could be considered a public service facility but indicated its decision did not decide that all oil and gas development in residential or agricultural zones is unacceptable as a matter of Pennsylvania law. In fact, the Court noted that the Pennsylvania Municipalities Planning Code specifically “permits the governing body of a municipality to amend its zoning ordinances to permit oil and gas development in any or all of its zoning districts.” For more, read the full Pittsburgh Post-Gazette story.

Oil & Gas Litigation, Pennsylvania

Ohio EPA releases draft Storm Water General Permit for pipeline projects

Ohio EPA has released a draft Construction Storm Water General Permit for Oil and Gas Linear Transmission Line and Gathering Line Installation for public comment. According to Ohio EPA, the draft permit is a “non-NPDES” permit issued under state law and would apply outside of the federal storm water construction exemption for these types of projects. The draft permit requires the development and implementation of a storm water pollution prevention plan (SWP3) and a horizontal directional drilling (HDD) contingency plan. The permit will be necessary for construction activities disturbing five or more acres.

A public informational session is scheduled for Tuesday, May 22, 2018, from 2:30-4:00 p.m. A public hearing on the draft permit has been scheduled for Wednesday, May 30, 2018, at 3:00 p.m. Both events will be held at Ohio EPA’s Central Office in Columbus, Ohio. Public comments should be submitted to Ohio EPA by June 6, 2018.

Ohio

Ohio Supreme Court denies writ of mandamus in dispute involving ODNR

The Supreme Court of Ohio on January 30, 2018 issued an opinion in State ex rel. Kerns v. Simmers, Slip Opinion No. 2018-Ohio-256, denying a writ of mandamus seeking to compel the Chief of the Ohio Department of Natural Resources (ODNR) to commence appropriation proceedings. In this case, a group of landowners objected to ODNR’s issuance of a unitization order under R.C. 1509.28.  Following the issuance of the order, the landowners appealed to the Oil and Gas Commission, and following an adverse ruling before the Commission, filed a writ of mandamus in the Ohio Supreme Court to order the Chief to commence appropriation proceedings to compensate them for an alleged unconstitutional taking of their mineral interests.

In order to be entitled to the writ of mandamus, the petitioners needed to show (1) they had a clear legal right to appropriation proceedings, (2) that respondents had a clear legal duty to commence the proceedings, and (3) the landowners had no plain and adequate legal remedy. The Court denied the writ and dismissed the landowners’ case, reasoning they should have appealed the Oil and Gas Commission’s decision to the Franklin County Court of Common Pleas. Such appeal to the common pleas court would have constituted an adequate legal remedy. The Court’s decision was unanimous, with Justice Kennedy concurring in judgment only.

Ohio, Oil & Gas Litigation
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