In the midst of a chaotic year and a tense campaign season, issues such as COVID-19, race relations, and healthcare seem to be at the forefront of Americans’ minds as they head to the polls on November 3. But the oil and gas industry stands to be impacted regardless of the election outcome in November, and those impacts will have wide-reaching effects on the U.S. economy, its energy independence, and its diplomatic relations. The 2020 Presidential candidates, Republican Donald Trump and Democrat Joe Biden, have divergent positions on U.S. oil and gas production, with the former pledging continued expansion of domestic oil and gas drilling and production, and the latter pledging to transition the U.S. away from its reliance on fossil fuels. Continue Reading
Louisiana Supreme Court Grants UNOCAL’s Writ Application from Third Circuit Decision Involving Prescription and Breach of Contract in Act 312 Case
On October 6, 2020, the Louisiana Supreme Court granted a writ application filed by UNOCAL in State of Louisiana, et al. v. Louisiana Land & Exploration Co., et al. This application sought review of the Louisiana Third Circuit’s decision that affirmed the Vermilion Parish School Board’s authority to sue on behalf of the state, rejected a prescription defense on the basis of prescription immunity under the Louisiana Constitution, and found that “environmental damage” as defined under Act 312 is sufficient to trigger a breach of contract claim. A detailed summary of the Third Circuit’s decision can be found here. Continue Reading
Department of Interior Proposes New Financial Assurance and Decommissioning Regulations
The Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”) recently issued a proposed rule on Risk Management, Financial Assurance and Loss Prevention (“Proposed Rule”), which was published in the Federal Register on October 16, 2020 and is now open for public comment. The Proposed Rule is the result of an extended effort by the Department of Interior, through its subagencies BOEM and BSEE to “streamline its evaluation criteria for determining whether oil, gas and sulfur lessees, right-of-use and easement (RUE) grant holders, and pipeline right-of-way grant holders may be required to provide bonds or other security above the prescribed amounts for base bonds to ensure compliance with their Outer Continental Shelf (OCS) obligations,” primarily decommissioning obligations. The path to this Proposed Rule has been long and winding, beginning in 2014 with BOEM resisting making changes through formal notice and comment rulemaking pursuant to the Administrative Procedures Act, and instead continuing to regulate this issue through Notice to Lessee (“NTL”) guidance documents. BOEM issued the last and most controversial NTL, NTL No. 2016-N01, in 2016, which created widespread industry concern, and, as a result, was never fully implemented.
Below is a summary of the current regulations and some of the more significant proposed changes. Continue Reading
Oil Majors’ Commitment to Net-Zero Emissions Leads to Investments in Wind Energy
U.S. and European major oil companies are beginning to re-evaluate their business structure and investment strategies in light of the current financial, legal, and social climate. In response, the industry is seeing a varying degree of investments in renewable energy and commitments to climate-related goals. As companies make this transition into renewable energy, one sector picking up speed is wind energy.
BP, which rebranded itself as “Beyond Petroleum” in 2000, announced in February of this year its plans of becoming a net-zero emissions company by 2050. In August, BP set forth its strategy towards net-zero emissions, which includes plans to have 50 gigawatts of renewable generating capacity by 2030, up from the 2.5 gigawatts it currently has.
The Future of Carbon Capture and Sequestration
By ratifying the 2015 Paris Agreement,[1] nations across the world made a commitment to reducing greenhouse gas emissions by at least 40% by the year 2030. Carbon dioxide is one of the primary greenhouse gases found in the Earth’s atmosphere, accounting for 76% of global greenhouse gas emissions according to published reports.
Any effort to reduce greenhouse gas emissions will undoubtedly rely heavily on reducing the presence of carbon dioxide in the atmosphere. There are two primary ways to achieve a reduction of CO2: (1) decrease the output of carbon dioxide emissions; or (2) increase the amount of carbon dioxide that is removed from the atmosphere.
U.S. Supreme Court To Review Scope of Appellate Review for Federal Officer Removal in Climate Change Litigation
Today, the United States Supreme Court granted a Petition for Certiorari filed by energy companies in Baltimore’s climate change lawsuit. By granting the petition, the Supreme Court has agreed to review the Fourth Circuit Court of Appeals’ decision remanding the suit to state court after rejecting the energy companies’ contention that they were acting as federal officers pursuant to historical contracts with the federal government. Continue Reading
Louisiana Third Circuit Decision Imposes Damages for Due Process Violation on Private Company
On July 15, 2020, The Third Circuit Court of Appeals issued an opinion awarding damages for a violation of due process rights against a private pipeline company. Bayou Bridge Pipeline, LLC v. 38.00 Acres, More or Less, Located in St. Martin Parish, et al.[1] (“Bayou Bridge”) centers around the construction of a crude oil pipeline from the Clifton Ridge terminal in Lake Charles, Louisiana to a marketing hub in St. James, Louisiana. The 38 acres relevant to this lawsuit were in St. Martin Parish and were needed for construction of the pipeline. While Bayou Bridge Pipeline, LLC (“BBP”) identified approximately 470 heirs to the title of the property, it began construction on the Defendant Landowners’ (“Defendants” or “Landowners”) property in June 2018 prior to receiving servitude agreements from each person having ownership interest. Continue Reading
DOI Announcement of a Proposed Rule on Risk Management, Financial Assurance and Loss Prevention
The long-awaited proposed changes to the Department of Interior’s Financial Assurance Rule (“Proposed Rule”) were finally announced yesterday by the Trump Administration. The announcement provides, among other things, that the proposed rulemaking is in efforts to clarify, streamline and provide greater transparency to the financial assurance requirements (e.g., supplemental bonding) for OCS lessees and grant holders of pipeline rights-of-way (“ROW”) and rights-of-use and easement (“RUE”), while protecting U.S. taxpayers against picking up the tab for high-risk decommissioning liabilities. Once this Proposed Rule is published in the Federal Register (date yet to be announced), the public will have a 60-day comment period. Continue Reading
Louisiana’s Coastal Land Loss Litigation Produces Opinion of Interest to Appellate Practitioners in Federal Court
The jurisdictional contest over the proper forum for Louisiana’s sprawling coastal land loss litigation continues as petitions for panel and en banc rehearings on federal jurisdiction pend before the U.S. Fifth Circuit Court of Appeals. Meanwhile, the plaintiffs’ strident effort to return to the state courts, located in the coastal Parishes whose governments have sued the industry, has yielded an opinion involving the jurisdiction of federal district courts during an appeal. Continue Reading
Commercial Lease Considerations in the Wake of Hurricane Laura
Commercial Lease Considerations in the Wake of Hurricane Laura
Following disasters such as Hurricane Laura, business owners have a variety of concerns when beginning the recovery process. Chief among those concerns: what to do when your place of business has been damaged or destroyed? If you lease your place of business, or if you lease out land or buildings to other people for their businesses, this concern becomes especially important when you consider the different parties with a potential interest in the recovery—the lessor (landlord), the lessor’s insurer, the lessor’s lender, the lessee (tenant), the lessee’s insurer, and the lessee’s lender. Being familiar with your lease agreement is the key to understanding the extent of your rights and responsibilities, especially as they pertain to repair obligations, obligations regarding the payment or reimbursement of insurance deductibles, insurance recovery, and rights to termination and reduction (abatement) of rent. As an initial matter, the first question you should ask yourself is: What kind of lease agreement do I have? Continue Reading
