Posts Authored by Zachary D. Eddy

Power companies ask Supreme Court to strike down nuclear power subsidies; Supreme Court denies petitions for writs of certiorari (update)

Update:  On April 15, 2019, the U.S. Supreme Court denied, without decision, two petitions for writs of certiorari that were filed by one of the nation’s leading trade associations representing independent power producers. Those cases alleged, among other things, that ZEN legislation out of both New York and Illinois were preempted by federal law. The Court upheld the dismissal of the complaint in each case, and the Zero Emission Nuclear (ZEN) legislation in New York and Illinois was effectively upheld as not in violation of the Federal Power Act.

On January 7, 2019, the Electric Power Supply Association, one of the nation’s leading trade associations representing independent power producers, filed two petitions for writs of certiorari with the U.S. Supreme Court. The writs for cert arise from appeals of a Second Circuit Court of Appeals decision, which is summarized here, and a Seventh Circuit Court of Appeals decision, which is summarized here, that both upheld state subsidies for nuclear power generation facilities in New York and Illinois, respectively. The question presented by both appeals is “[w]hether the [Federal Power Act (FPA), 16 U.S.C. § 791a et seq.] preempts only state subsidies that explicitly require a wholesale generator to sell its output in FERC-approved auctions, or whether the FPA also preempts state subsidies that lack such an express requirement but that, by design, subsidize only generators that sell their entire output via such auctions, thereby achieving the same effect.”

Both petitions urged the Court to recognize the great importance of the decisions from the Second Circuit and Seventh Circuit if upheld. “The economic and policy stakes are enormous,” and the subsidies will grossly distort market outcomes. “Unless this Court intervenes, these subsidy schemes will impose huge costs and threaten serious distortions of the FERC-authorized mechanisms for setting wholesale rates at economically efficient levels and sending appropriate price signals to wholesale market participants.” To the petitioners, the decisions ratify “a fundamental transfer of regulatory authority to the States and away from the federal government and its policy of relying on market forces to set just and reasonable wholesale rates and send economically efficient signals regarding market entry and exit.”

This case will have major ramifications across the country but particularly here in Ohio, as the outcome could work to either essentially permit or effectively preempt future attempts at providing nuclear subsidies to failing generation facilities. The response date for both petitions has been set for February 7, 2019.

National, Oil & Gas Litigation

2019 Infrastructure Funding: How to get it and spend it wisely

On January 14, 2019, the President signed the Water Infrastructure Improvement Act (H.R. 7279), granting municipalities new statutory tools to affordably confront expensive infrastructure challenges using Integrated Planning. Bricker & Eckler, McMahon DeGulis and Muskingum Watershed Conservancy District are hosting a series of free public infrastructure planning events to discuss these tools and the integrated planning process.

This program will be offered in various Ohio locations February through May. For more information, including schedule, location details and to register, visit the event page.

Ohio

$86 million Risberg Line project approved for construction

The $86 million Risberg Line project was approved by the Federal Energy Regulatory Commission on Dec. 14, according to Star Beacon. The project will extend the natural gas pipeline by 28 miles through northwest Ashtabula County and is expected to increase job opportunities and tax revenue for the surrounding areas. For more, read the full story.

Ohio, Pennsylvania

Funding approved for new railyard facility in Hannibal

U.S. Senator Sherrod Brown announced $20 million in funding for the construction of a new railyard and pipeline facility in the town of Hannibal, Ohio on Dec. 6, according to The Daily Jeff. The rail transloading project is expected to increase the area’s energy exports and connectivity to global markets. For more, read the full story.

Ohio

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
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