Institute for Energy Law 24th Annual Energy Litigation Conference

The Institute for Energy Law’s 24th Annual Energy Litigation Conference, held in Houston, Texas, brought together leading practitioners and industry professionals to discuss key developments and challenges in energy litigation. Chamberlain Hrdlicka Shareholders Lincoln Chen and Mark Sherrill attended the conference, gaining valuable insights into emerging trends, evolving legal frameworks, and strategic approaches to managing risk in the energy sector.

Emerging Legal Disputes in the Energy Sector

Technological advancement and shifting market dynamics in the energy sector are generating a new wave of litigation. Grid congestion and curtailment risks are driving disputes between developers and off-takers over performance expectations and revenue shortfalls. Power Purchase Agreements (PPAs) remain a persistent source of litigation, particularly around liquidated damages calculations when unanticipated regulatory changes affect project timelines or output. As long-term contracts spanning decades, it is difficult for PPAs to anticipate all contingencies, which could lead to litigation. Consolidation in the energy sector has heightened disputes over indemnity obligations and legacy liabilities. As companies acquire assets, ambiguity about who bears responsibility for pre-existing environmental issues, contractual obligations, and injury claims continues to drive litigation. Clear articulation of indemnity provisions—including scope, duration, and transferability—is critical to avoiding these disputes. Lithium extraction from produced water represents the next frontier for both opportunity and litigation. As this technology becomes more commercially viable, disputes will likely emerge over mineral rights, royalty obligations, and lease coverage—echoing historical disputes over other unconventional resources.

AI and Evidentiary Challenges

Judge Xavier Rodriguez of the U.S. District Court for the Western District of Texas discussed his participation in a Duke University study comparing judicial findings with those generated by AI programs. He addressed the implications of proposed Federal Rule of Evidence 707, which would subject AI-generated evidence to Daubert-style reliability standards typically applied to expert testimony.

Key concerns include the potential for implicit bias in AI-generated materials and the risk that Daubert challenges to AI-assisted expert reports could inadvertently breach work product protections. As AI tools become more embedded in litigation workflows, energy litigators will need to understand how to authenticate, evaluate, and challenge machine-generated evidence—making early preparation and technological literacy increasingly critical.

Carbon Capture and Sequestration (CCS)

Multiple speakers focused on the opportunities and challenges associated with CCS projects.  New legislation in South Dakota seems to present hurdles for future CCS projects in that state, while recent regulatory developments in Texas present a sense of optimism for at least one large-scale project.  Meanwhile, litigation is ongoing in North Dakota concerning whether a CCS project could constitute a taking under principles of constitutional law.  Other panelists focused on the key elements of a successful CCS project, including subsurface composition, size of the tract of land, the regulatory environment, and the threshold volume of carbon dioxide.  Speakers also addressed the reporting requirements necessary for developers to claim their tax credits.

The conference reinforced that the energy sector is continuing to navigate legal uncertainty. By staying ahead of these trends and adopting proactive litigation strategies, companies can better position themselves to manage disputes and protect their long-term interests.

Lincoln Chen is a shareholder in the firm's Commercial Litigation practice, focusing on energy disputes. Mark Sherrill is a shareholder in the firm’s Bankruptcy & Restructuring practice, with a focus on energy and financial trading contracts.