Lawyers for Chevron Corp., hoping to keep climate-change lawsuits by California cities out of state courts, have sued Oslo-based Statoil, calling it “one of many” oil producers that should help foot the bill if the industry is found liable, reports The Los Angeles Times.

Kartikay Mehrotra writes that adding foreign companies to the litigation is a tactical maneuver to keep the dispute out of state court, where the cities have more favorable prospects, and force it into federal court.

She quotes Julia Olson, executive director and chief legal counsel for the environmental law group Our Children’s Trust: “The industry is grasping at straws while looking for any way out of these cases and using creative lawyering to do so. By cherry-picking Statoil, a sovereign Norwegian entity, Chevron hopes to reinforce federal jurisdiction.”

Read the LA Times article.

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A Steptoe & Johnson article takes a look at the way additional insured coverage under an insurance policy is analyzed when there is an underlying drilling contract limiting the additional insured coverage to the scope of the liability assumed in the service contract.

The article in The National Law Review discusses In re Deepwater Horizon, a Texas Supreme Court case that governs allocation of risk, assumed liabilities, and the granting of additional insured status in underlying service contracts, and the precedent the case established.

The article also considers some other cases that were litigated after the Deepwater Horizon case.

Read the article.

Charles Sartain, in a discussion involving a Texas case concerning a disagreement over the negotiation of the payment for a pipeline easement, addresses the issue of whether emails can create a contract.

Writing in the Gray Reed & McGraw Energy & the Law blog, Sartain outlines the facts in Bujnoch v. Copano. In an early email exchange, the pipeline company set the price at $70 per foot, with both sides apparently agreeing. But when the property owner receives the paperwork, the price is listed at $25.

Sartain addresses the questions of: Could the emails be read together to make a written contract? Did the emails omit essential terms? Was the description of the easement sufficient? Did “futuristic” language contemplate an agreement to be executed in the future? And, Did the parties agree to transact business electronically?

Read the article.

The Fifth Circuit en banc has handed down an historic re-working of the test for determining whether oilfield contracts are maritime or non-maritime in nature, according to a Baker Donelson post.

Christopher Hannan writes that the en banc decision in In Re Larry Doiron, Inc. simplifies decades’ worth of confusing and often inconsistent jurisprudence to give a more streamlined and hopefully predictable rule for determining whether oilfield contracts are maritime or not.

He quotes the en banc ruling:

First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters? . . . Second, if the answer to the above question is “yes,” does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract? If so, the contract is maritime in nature.

Read the article.

Monday’s blowout near Quinton, Oklahoma, that killed five workers is the deadliest oil and gas incident since the 2010 Deepwater Horizon disaster in the Gulf of Mexico. As this incident moves from the recovery of the victims to the cleanup and investigation stage, a prominent Texas trial lawyer says the industry must use this tragedy as a signal to self-reflect and take stock of their safety procedures, according to a post on the website of Androvett Legal Media & Marketing.

“When it comes to rig blowouts, somebody made a mistake,” says trial lawyer Frank Branson of The Law Offices of Frank L. Branson, who has handled numerous oilfield tragedies, including involvement in a 2015 onshore rig explosion where three men died in a well blowout near Midland, Texas.

“Every driller and operator knows that well control must be maintained at all times. That’s rule number one on these rigs. A failure to control the well is inexcusable and absolutely preventable. With so much at stake, companies like Patterson-UTI and Red Mountain Energy must make worker safety – not shareholder profits – the overriding priority.

“Patterson-UTI, one of the largest onshore rig operators in the U.S., has been called out for its safety shortcomings by name in Congressional reports and has been fined by OSHA following earlier oil and gas well fatalities. As the families of those killed search for answers, it’s clear that relatively toothless regulations are not enough to ensure the safety of hardworking oilfield workers. In cases like these, American jurors will be called upon to determine who was at fault and return a verdict that will make sure these companies put worker safety first.”

Royalty owners are seeking class-action status in a lawsuit against Talisman Energy USA, Inc. over claims the company manipulated production volumes for wells operated in the Eagle Ford shale basin in South Texas, according to a post on the website of Androvett Legal Media and Marketing.

Attorneys for plaintiffs Rayanne Regmund Chesser, Gloria Janssen, and Michael and Carol Newberry filed a motion Jan. 22, 2018, seeking class certification in U.S. District Court for the Southern District of Texas and named lawyers Bryan O. Blevins Jr. and Mike Hamilton of Provost Umphrey Law Firm, L.L.P., to represent the class. The lawyers estimate approximately 4,000 royalty owners could be involved.

“It’s clear that Talisman knew what they were doing when the company voluntarily commingled production from different wells and then allocated net sales in violation of best oilfield practices and Texas law,” said Blevins. “We intend to prove that the amounts paid to the royalty owners were based on manipulated production volumes.”

The lawsuit charges that from Jan. 1, 2013, to June 1, 2016, Talisman failed to report, account for and make royalty payments based on its lease agreements. In addition, the company is accused of altering wellhead production volumes by as much as 20 percent and paying royalties based on estimated sales volumes instead of the actual amount of oil or gas sold or saved.

In 2010, Talisman entered the Texas oil and gas market in a joint venture with Statoil. In July 2013, the agreement was revised, with Statoil assuming half the well operations and Talisman operating the other half. Shortly after that, royalty owners noticed a difference in reported production volumes from Talisman compared to Statoil.

Talisman Energy USA is an indirect subsidiary of Calgary, Alberta–based Talisman Energy Inc., which was acquired by Repsol S.A. in 2015.

The case is Rayanne Regmund Chesser, Gloria Janssen, Michael Newberry and Carol Newberry v. Talisman Energy USA, Inc. No. 4:16-cv-02960 in the U.S. District Court for the Southern District of Texas, Houston Division.

Baker Botts partner Mike Bresson told listeners at the beginning of the law firm’s recent webinar that “Master limited partnerships [MLPs] did just fine on tax reform.”

Joseph Markman, writing in Oil and Gas Investor about the webinar presentation, quoted Bresson: “The first big [change], which is definitely a positive, is a reduction in tax rates,” said Steve Marcus, partner and Dallas-based department chair in taxes. “The corporate tax rate’s been reduced from 35% to 21%.”

Another change, however, may have a slightly negative impact, now that interest deductions are limited. The limitation amounts to about 30% of an MLP’s adjusted taxable income. How this affects the typical MLP depends on its tax shield.

Markman explains: “For an MLP to calculate the 30% limitation on its ability to deduct its own net business interest expense, it must determine its share of ‘excess taxable income’ allocated to it from a subsidiary partnership. An MLP’s unitholder would then determine ‘excess taxable income’ in calculating the limitation with respect to its net business interest expense.”

Read the article.

A federal judge has ordered a pair of attorneys for an environmental group to pay $52,000 in legal fees to an energy company because, the judge said, they filed a “frivolous” legal challenge to a fracking waste injection well in Pennsylvania, according to a report by StateImpact, a reporting project of NPR member stations.

“U.S. Magistrate Judge Susan Paradise Baxter of the Western District of Pennsylvania ruled the attorneys, Thomas Linzey and Elizabeth Dunne, should pay part of Pennsylvania General Energy’s (PGE) legal fees for advancing a “discredited” legal argument that had already been defeated in prior decisions,” writes reporter Reid Frazier. “In addition to the fine, the judge referred Linzey to the state Supreme Court Disciplinary Board for additional discipline.”

In her opinion, Baxter wrote:

The continued pursuit of frivolous claims and defenses, despite Linzey’s first-hand knowledge of their insufficiency, and the refusal to retract each upon reasonable request, substantially and inappropriately prolonged this litigation, and required the Court and PGE to expend significant time and resources eliminating these baseless claims.

Read the StateImpact article.

As evidence that cyberattacks continue to threaten electric infrastructure in the United States, a report issued in December by cybersecurity firm FireEye indicates that critical infrastructure industrial control systems (ICS) could be susceptible to a new type of malware, reports Morgan Lewis in its Power & Pipes blog.

According to the report, a piece of malware called “TRITON” triggered the emergency shutdown capability of an industrial process within a critical infrastructure ICS.

“In 2013, hackers believed to be operating on behalf of a state-actor managed to take partial control of the Bowman Avenue Dam near Rye Brook, New York. More recently, reports emerged this past summer that hackers gained access to the operational grid controls of US-based energy firms,” write J. Daniel Skees and Arjun Prasad Ramadevanahalli.

Read the article.

Noble Energy Inc. reached an agreement on Dec. 15 with CNX Resources Corp. to sell its Marcellus midstream assets, quickly resolving a lingering legal dispute between the two companies, reports Oil & Gas Investor.

Emily Patsy writes that CNX Resources will acquire Noble’s 50 percent interest in CONE Gathering LLC, which owns the general partner of CONE Midstream Partners LP, for $305 million cash. The agreement calls for Noble to keeps 21.7 million common limited partner units in CONE Midstream with plans to divest them over the next few years, according to a company press release.

“As a result of the transaction with CNX, Noble terminated its prior agreement to divest its entire Marcellus midstream holdings to Wheeling Creek Midstream LLC, a portfolio company of Quantum Energy Partners, for $765 million,” according to the report. “That particular deal came under fire when CNX, which holds a 50% interest in CONE Gathering, filed a suit to enjoin Noble’s transaction with Wheeling Creek.”

Read the article.

In an unexpected shake up in the oil pipeline industry, the Federal Energy Regulatory Commission recently declined to approve an oil pipeline’s proposal to have its marketing affiliate obtain its pipeline capacity at full price and then resell the space at a discount, a practice that is currently widespread in the industry, according to a report published by Dorsey & Whitney LLP.

According to pleadings in Magellan Midstream Partners, L.P., Magellan filed a petition for declaratory order requesting the Commission declare its proposal to establish a marketing affiliate to buy, sell, and ship crude oil on Magellan’s pipeline system lawful under the Interstate Commerce Act.

“The proposed marketing affiliate would pay Magellan’s shipping rates filed with FERC, even if the affiliate resold the capacity at an economic loss—where the price differential between the origin and destination markets is less than the filed tariff rates. Magellan said that even though the affiliated company would lose money on the transaction, the integrated company would make money overall and would be able to attract more crude oil shippers. Magellan argued that due to the prevalence of these transactions in the oil pipeline industry, it was at a disadvantage in attracting oil pipeline shippers because it could only offer transportation services at its filed tariff rate,” according to the article.

FERC’s ruling declining to approved the proposal will likely cause oil pipelines to review their current marketing affiliate contracts and will impact how marketing affiliates do business in the future.

Read the article.

Delegating a $12 million arbitration to accountants rather than lawyers in Apache v. YPF SA was the right call, writes Charles Sartain in the Gray Reed Energy & the Law blog. The problem was in the procedures and protections for a party believing the accountants got it wrong.

Sartain provides background: “Apache sold its entire business in Argentina to YPF for $700 million. The Sale and Purchase Agreement allowed for adjustments to the consideration based on a variety of factors. The parties traded accounting statements, and a dispute arose over a ‘Lock Box Working Capital’ amount and ‘Leakage.’ YPF contended that Apache owed $12 million.”

The parties submitted the dispute to KPMG, which found that Apache owned $98. million. Apache challenged the finding.

Read the article.

While the Federal Energy Regulatory Commission continues its investigation of the notice of proposed rulemaking on deployment of energy storage, state mandates and incentives will likely unfold ahead of federal rules moving toward a more organized market for energy storage, according to a post by Morgan, Lewis & Bockius.

Levi McAllister and Brooke E. McGlinn write:

Read the article.

Courts in several states recently have addressed questions about post-production cost deductions in petroleum production, according to an on-demand webcast from Steptoe & Johnson.

In this webcast, Andrew S. Graham reviews the state of the play in the Appalachian Basin, as well as other oil and gas producing states, on the source of the deduction problem and where the states stand on this notoriously thorny issue.

Among the topics for discussion:

• What does the Leggett case mean for West Virginia producers in light of Tawney?
• Why did the Supreme Court of Ohio decide to not decide a case on post-production deductions?
• Has the marketable product rule reached a high-water mark in Colorado?

Watch the on-demand webinar.

Stanford professor Mark Jacobson has sued a prominent energy researcher and the National Academy of Sciences for defamation over a sharply-worded rebuttal of his work, shifting a heated scientific debate over renewable energy out of the journals and into the courts, according to the MIT Technology Review.

The suit demands a retraction of a June paper in the Proceedings of the National Academy of Sciences.

“Jacobson seeks more than $10 million in damages from both the paper’s publisher and its lead author, Christopher Clack, who is chief executive of Vibrant Clean Energy and a former NOAA researcher,” according to the article.

Clack and 20 other researchers responded in a publication that Jacobson’s paper “contained modeling errors and implausible assumptions that could distort public policy and spending decisions.”

Read the article.

A U.S. District Court recently addressed issues associated with a producing vertical well’s claim for damages related to another company’s subsequent installation of a horizontal well, reports Walter G. Wright for Mitchell, Williams, Selig, Gates & Woodyard.

Specifically, the court addressed whether various damage claims were waived by the execution of a consent and release agreement.

Wright explains that the defendant cited the second paragraph in the agreement in support of its assertion for the waiver of most damages. In contrast, the plaintiff cited the last sentence of the first paragraph for the proposition that it was not restricted in its ability to “seek relief.”

The court found the agreement to be ambiguous because of this inconsistency and contradiction and found that the terms should be construed against the defendant, who drafted the agreement.

Read the article.

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Steptoe & Johnson’s Energy and Environmental, Products & Mass Tort Groups will host a webinar to discuss the implementation of the Coal Ash Rule, the current litigation landscape surrounding coal ash, and strategies for avoiding courtroom and regulatory challenges.

The complimentary one-hour event will be Wednesday, Dec. 13, 2017, at noon Eastern time.

The Disposal of Coal Combustion Residuals from Electric Utilities Final Rule (the Coal Ash Rule) is the first federal rule to regulate coal ash waste disposal, the firm says on its website. The Coal Ash Rule has proven controversial since it was first announced in 2015 and has given rise to regulatory changes, mass tort actions, and citizen suits under the Resource Conservation and Recovery Act (RCRA). The US Environmental Protection Agency recently announced that it is considering rolling back portions of the Coal Ash Rule. Growing controversies over the disposal of coal ash, the Coal Ash Rule, and the future of coal ash regulation are not likely to end soon.

Register for the webinar.

Ecova has posted an on-demand webinar reviewing the top takeaways from third quarter of 2017.

The webinar also covers potential short- and long-term impacts of a tighter natural gas supply and demand balance heading into this upcoming winter.

Other energy and natural gas market trends covered include:

• Upcoming winter, gas and storage vs historical averages
• Associated risks with less gas supply heading into winter
• Working risk tolerance into procurement strategy

Watch the on-demand webinar.

Two major Californian cities — San Francisco and Oakland — have filed lawsuits against five oil and energy super majors September, according to Zacks Equity Research.

The cities have taken legal action against Chevron Corp., ConocoPhillips, Royal Dutch Shell plc, ExxonMobil Corp. and BP p.l.c.

“The companies have been accused of causing an adverse impact on the climate, resulting in global warming. The plaintiffs hold these fossil fuel companies accountable for rising sea levels, changing landscapes, higher global temperatures and increased risk of storms and droughts,” Zacks reports.

The plaintiffs allege that the defendants continue to produce and market products that contribute to climate change and rising sea levels.

Read the article.

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The Institute for Energy Law will present a webinar discussing the various climate change-based lawsuits and current trends in climate change litigation.

The event will be Wednesday, Oct. 18, 2017, at 1 p.m. EDT / 10 a.m. PDT. Information about MCLE credit and fees can be found on the registration site.

The institute is a part of the Center for American and International Law.

“Over the past few years, government entities and non-governmental organizations have moved the debate over climate change from the court of public opinion and into the courtroom,” according to the institute. “Oil and gas companies have been one of the bigger targets for such suits, where plaintiffs have alleged that the companies are responsible for rising sea levels and that they have failed to warn about the potential impacts of greenhouse gas emissions.”

Register for the event.