In re Dept. of Energy Stripper Well Exemption

• Court: U.S. District Court — District of Kansas
• Citation: In re Dept. of Energy Stripper Well Exemption, 520 F.Supp. 1232 (D. Kan. 1981)
• Decision Date: 14 July 1981
• Docket Number: 77-1087,78-1070,79-1388,79-1325,79-1258,78-1509,76-429-C6,78-1176,78-1235,78-1513,79-1204,78-1410,78-1230,79-1387,79-1384,79-1319,79-1385,79-1318,79-1320,79-1321,79-1322,77-1456,Civ. A. No. 77-1146,79-1389 and 79-1416.,79-1386
• Parties: In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION. ENERGY RESERVES GROUP, INC., Suburban Propane Gas Corporation, Marathon Oil Company and Sklar & Phillips Oil Company v. DEPARTMENT OF ENERGY, et al. SIERRA PETROLEUM CO., INC. v. DEPARTMENT OF ENERGY, et al. BRADEN-ZENITH, INC. and The Estate of S. H. Killingsworth v. DEPARTMENT OF ENERGY, et al. MOBIL OIL CORPORATION, Mobil Producing Texas & New Mexico, Ind. and Willie Ansley Bryson v. DEPARTMENT OF ENERGY, et al. STELBAR OIL CORPORATION, INC., The Standard Oil Company, Ohio and Theo M. Glenn, Jr. and Eleanor Glenn v. DEPARTMENT OF ENERGY, et al. Robert Dale BRANDENBURG and Texaco, Inc. v. DEPARTMENT OF ENERGY, et al. AMIN OIL, INC. v. DEPARTMENT OF ENERGY, et al. Otis C. PEAVEY, et al. and Sun Oil Company (Delaware) v. DEPARTMENT OF ENERGY, et al. Howard STOUT, Lorena Houlton and Mary E. Hall, Co-Trustees of the Charles S. Page Trust and Gulf Oil Corporation v. DEPARTMENT OF ENERGY, et al. Robert E. DAVIS and Energy Consumers & Producers Association, Inc., Ruthven, Inc., Pioneer Operations Company, Inc. v. DEPARTMENT OF ENERGY, et al. George R. JONES, et al. v. DEPARTMENT OF ENERGY, et al. PETROLEUM MANAGEMENT, INC. v. DEPARTMENT OF ENERGY, et al. ATLANTIC RICHFIELD COMPANY v. DEPARTMENT OF ENERGY, et al. W. R. MURFIN, d/b/a Murfin Drilling Company, and Champlin Petroleum Company v. DEPARTMENT OF ENERGY, et al. UNION OIL COMPANY OF CALIFORNIA v. DEPARTMENT OF ENERGY, et al. COASTAL STATES GAS CORP., Coastal States Gas Producing Co., and Gas Producing Enterprises Inc. v. DEPARTMENT OF ENERGY, et al. EXXON CORPORATION v. DEPARTMENT OF ENERGY, et al. CONTINENTAL OIL CO. v. DEPARTMENT OF ENERGY, et al. HUNT OIL COMPANY v. DEPARTMENT OF ENERGY, et al. CRYSTAL OIL COMPANY and Ira Thomas May v. DEPARTMENT OF ENERGY, et al. MUSKEGON DEVELOPMENT CO. v. DEPARTMENT OF ENERGY, et al. OKLAHOMA ASS'N. OF ENERGY CONSUMERS & PRODUCERS v. DEPARTMENT OF ENERGY, et al. Paul B. FLETCHER, Sr. and Anadarko Production Company v. DEPARTMENT OF ENERGY, et al. IU INTERNATIONAL OIL & GAS, INC. v. DEPARTMENT OF ENERGY, et al. WOOD OIL CO. and Dan Wallace d/b/a Columbus Oil Co. v. DEPARTMENT OF ENERGY, et al. WILL I. LEWIS ENTERPRISES, INC. v. DEPARTMENT OF ENERGY, et al. Jimmie AUSTIN d/b/a Austin Drilling Company v. DEPARTMENT OF ENERGY, et al. SANTA FE ENERGY COMPANY v. DEPARTMENT OF ENERGY, et al. George G. ANDERMAN and Donald R. Kirby v. DEPARTMENT OF ENERGY, et al. Patricia Anne LEONARD, et al. v. DEPARTMENT OF ENERGY, et al. FARMERS PETROLEUM COOPERATIVE, INC. v. DEPARTMENT OF ENERGY, et al. KIRKWOOD OIL & GAS COMPANY v. DEPARTMENT OF ENERGY, et al. PETROLEUM CORPORATION OF TEXAS v. DEPARTMENT OF ENERGY, et al.

520 F. Supp. 1232

In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION.

ENERGY RESERVES GROUP, INC., Suburban Propane Gas Corporation, Marathon Oil Company and Sklar & Phillips Oil Company v. DEPARTMENT OF ENERGY, et al.

SIERRA PETROLEUM CO., INC. v. DEPARTMENT OF ENERGY, et al.

BRADEN-ZENITH, INC. and The Estate of S. H. Killingsworth v. DEPARTMENT OF ENERGY, et al.

MOBIL OIL CORPORATION, Mobil Producing Texas & New Mexico, Ind. and Willie Ansley Bryson v. DEPARTMENT OF ENERGY, et al.

STELBAR OIL CORPORATION, INC., The Standard Oil Company, Ohio and Theo M. Glenn, Jr. and Eleanor Glenn v. DEPARTMENT OF ENERGY, et al.

Robert Dale BRANDENBURG and Texaco, Inc. v. DEPARTMENT OF ENERGY, et al.

AMIN OIL, INC. v. DEPARTMENT OF ENERGY, et al.

Otis C. PEAVEY, et al. and Sun Oil Company (Delaware) v. DEPARTMENT OF ENERGY, et al.

Howard STOUT, Lorena Houlton and Mary E. Hall, Co-Trustees of the Charles S. Page Trust and Gulf Oil Corporation v. DEPARTMENT OF ENERGY, et al.

Robert E. DAVIS and Energy Consumers & Producers Association, Inc., Ruthven, Inc., Pioneer Operations Company, Inc. v. DEPARTMENT OF ENERGY, et al.

George R. JONES, et al. v. DEPARTMENT OF ENERGY, et al.

PETROLEUM MANAGEMENT, INC. v. DEPARTMENT OF ENERGY, et al.

ATLANTIC RICHFIELD COMPANY v. DEPARTMENT OF ENERGY, et al.

W. R. MURFIN, d/b/a Murfin Drilling Company, and Champlin Petroleum Company v. DEPARTMENT OF ENERGY, et al.

UNION OIL COMPANY OF CALIFORNIA v. DEPARTMENT OF ENERGY, et al.

COASTAL STATES GAS CORP., Coastal States Gas Producing Co., and Gas Producing Enterprises Inc. v. DEPARTMENT OF ENERGY, et al.

EXXON CORPORATION v. DEPARTMENT OF ENERGY, et al.

CONTINENTAL OIL CO. v. DEPARTMENT OF ENERGY, et al.

HUNT OIL COMPANY v. DEPARTMENT OF ENERGY, et al.

CRYSTAL OIL COMPANY and Ira Thomas May v. DEPARTMENT OF ENERGY, et al.

MUSKEGON DEVELOPMENT CO. v. DEPARTMENT OF ENERGY, et al.

OKLAHOMA ASS'N. OF ENERGY CONSUMERS & PRODUCERS v. DEPARTMENT OF ENERGY, et al.

Paul B. FLETCHER, Sr. and Anadarko Production Company v. DEPARTMENT OF ENERGY, et al.

IU INTERNATIONAL OIL & GAS, INC. v. DEPARTMENT OF ENERGY, et al.

WOOD OIL CO. and Dan Wallace d/b/a Columbus Oil Co. v. DEPARTMENT OF ENERGY, et al.

WILL I. LEWIS ENTERPRISES, INC. v. DEPARTMENT OF ENERGY, et al.

Jimmie AUSTIN d/b/a Austin Drilling Company v. DEPARTMENT OF ENERGY, et al.

SANTA FE ENERGY COMPANY v. DEPARTMENT OF ENERGY, et al.

George G. ANDERMAN and Donald R. Kirby v. DEPARTMENT OF ENERGY, et al.

Patricia Anne LEONARD, et al. v. DEPARTMENT OF ENERGY, et al.

FARMERS PETROLEUM COOPERATIVE, INC. v. DEPARTMENT OF ENERGY, et al.

KIRKWOOD OIL & GAS COMPANY v. DEPARTMENT OF ENERGY, et al.

PETROLEUM CORPORATION OF TEXAS v. DEPARTMENT OF ENERGY, et al.

Civ. A. Nos. 77-1146, 77-1087, 76-429-C6, 78-1070, 78-1176, 78-1230, 79-1387, 78-1410, 78-1513, 77-1456, 78-1235, 78-1509, 79-1204, 79-1258, 79-1318, 79-1319, 79-1320, 79-1321, 79-1322, 79-1325, 79-1384, 79-1385, 79-1386, 79-1388, 79-1389 and 79-1416. MDL No. 378.

United States District Court, D. Kansas.

July 14, 1981.

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John P. McKenna, Nancy C. Crisman, Frank W. Krogh, Samuel Soopper, Marcia K. Sowles, John L. Gurney, U. S. Dept. of Energy, Washington, D. C., for defendants.

Joseph W. Kennedy, Dennis M. Feeney, John P. Bowman, Morris, Laing, Evans, Brock & Kennedy, Chartered, Wichita, Kan., for Energy Reserves Group, Inc.; Suburban Propane Gas Corp.; Sun Oil Company; The Gulf Companies; Anadarko Production Co.; Texaco Inc.; Champlin Petroleum Company; Marathon Oil Company; Standard Oil Company, Ohio; Killingsworth Estate; George B. Anderman and Donald R. Kirby; Stelbar Oil Corporation, Inc.; Sierra Petroleum Co.; Braden-Zenith, Inc.; Sklar & Phillips; Will I. Lewis Enterprises, Inc.

Daniel Joseph, Warren E. Connelly, Akin, Gump, Strauss, Hauer & Feld, Washington, D. C., for Anadarko Production Co.; Marathon Oil Company; Standard Oil Company, Ohio; Sun Oil Company.

Richard Jones, Evan J. Olson, Hershberger, Patterson, Jones & Roth, Wichita, Kan., for Muskegon Development Co.; Mobil Oil Corporation; Mobil Producing Texas New Mexico Inc.

Stewart Stone, Jr., John E. Sparks, Brobeck, Phleger & Harrison, San Francisco, Cal., for Union Oil Company of California.

Keith A. Jones, Fulbright & Jaworski, Washington, D. C., for Coastal States Gas Corporation.

Irley A. Bonnette, Houston, Tex., for Anadarko Production Co.

Arthur M. Meyer, Jr., John R. Cope, Bracewell & Patterson, Washington, D. C., for Killingsworth Estate.

David J. Beck, Ronald D. Secrest, Fulbright & Jaworski, Edward de la Garza, Houston, Tex., for Exxon Corporation; Crystal Oil Co.

A. B. Conant, Jr., Karen S. Bedell, Shank, Irwin, Conant, Williamson & Grevelle, Dallas, Tex., for Hunt Oil Company; Patricia Anne Leonard.

John L. Carter, Vinson & Elkins, Houston, Tex., Michael J. Henke, Richard G. Wilkins, Vinson & Elkins, Washington, D. C., for Conoco, Inc.; Aminoil USA, Inc.

Richard L. Bohanon, Andrews, Davis, Legg, Bixler, Milsten & Murrah, Oklahoma City, Okl., for Oklahoma Association of Energy Consumers and Producers.

Gerald Sawatzky, Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan., for Atlantic Richfield Company.

Gus Svolos, Richard E. Weicher, Ronald A. Lane, Chicago, Ill., for Santa Fe Energy Company.

Clark R. Mandigo, Wichita, Kan., for Energy Reserves Group, Inc.

R. Kennedy Bridwell, Morristown, N. J., for Suburban Propane Gas Corp.

George G. Olsen, Stephen G. Greenberg, Williams & Jensen, P. C., Washington, D. C., for IU International Oil & Gas, Inc.

Fred A. Gipson, Gipson & Johnston, Seminole, Okl., for Wood Oil Co., et al.; Jimmie Austin.

Herbert H. Hopper, Wichita, Kan., for Petroleum Management, Inc.

James P. Murphy, Findlay, Ohio, for Marathon Oil Company.

D. Frank Frisina, Cleveland, Ohio, for The Standard Oil Company, Ohio.

John C. Cirone, Kerry R. Brittain, Fort Worth, Tex., for Champlin Petroleum Company.

J. Frederick Lawson, Tulsa, Okl., for Texaco Inc.

Jonathan C. Waller, Elaine Boze, G. David Neal, Dallas, Tex., for Sun Oil Company (Delaware).

Robert F. Ochs, Edward T. Cotham, Jr., Houston, Tex., for The Gulf Companies.

James D. Voorhees, Davis, Graham & Stubbs, Denver, Colo., for George G. Anderman and Donald R. Kirby.

James B. Harris, Thompson & Knight, John McReynolds, Worsham, Forsythe & Sampels, Dallas, Tex., for Petroleum Corporation of Texas.

John M. Shuey, Shuey, Smith & Fleming, Shreveport, La., for Sklar & Phillips.

Evan J. Olson, Hershberger, Patterson, Jones & Roth, Wichita, Kan., for Farmers Petroleum Cooperative, Inc.

Philip E. Pankoff, Wood, Ris & Hames, Denver, Colo., for Kirkwood Oil & Gas Company.

OPINION OF THE COURT

THEIS, Chief Judge.

These multidistrict litigation (MDL) cases now come on for final decision of the Court. Trial of these cases, after extensive pretrial proceedings and litigation involving two appeals by the defendants to the Temporary Emergency Court of Appeals (TECA), was finally held to this Court from January 19, to February 6, 1981. After considering the evidence presented at trial, and after studying the briefs of the parties, and reviewing the appellate decisions in the consolidated cases, the Court enters this opinion.

A brief review of the pretrial proceedings may be illuminating and certainly, in this Court's opinion, accounts for the singularly bellicose and adamant efforts of the Government, through their various counsel, to resist trial on the merits of the issue of law common to all of these cases. Originating as a single case to enjoin as illegal the governmental enforcement of the regulations of the then Federal Energy Administration (FEA), now Department of Energy (DOE), prohibiting those plaintiff oil companies from including fluid injection wells in a well count to establish pricing levels for crude oil produced from stripper wells on plaintiffs' leases, under a stripper well exemption in the legislative act, other cases were soon filed which were consolidated into one action. These cases were ruled on by this Court in its decision reported in Energy Reserves Group, Inc. v. Federal Energy Administration, 447 F.Supp. 1135 (D.Kan.1978), which held FEA Ruling 1974-29, excluding the count of injection wells, was legislative in nature rather than interpretive of the regulation, and therefore void. This decision was appealed to the Temporary Emergency Court of Appeals, resulting in a reversal of the Court's decision in a 2 to 1 decision of the three learned judges of TECA, in which each judge rendered a separate opinion. This decision is reported as Energy Reserves Group, Inc. v. Department of Energy, 589 F.2d 1082 (TECA 1978). In short summary, the TECA majority held valid Ruling 1974-29 as a reasonable interpretation of the regulation implementing the statutory stripper well exemption, and remanded for trial the issue of whether the regulation was valid under the intent of Congress as expressed in the statute and its legislative history, and whether the regulation was arbitrarily and capriciously adopted by the administrative agency. By this time case litigation was burgeoning on the identical issues in many other federal court districts and forwarded to this district and combined for disposition of this Court as multidistrict litigation under order of the Judicial Panel of Multidistrict Litigation in June, 1979, reported as In re Dept. of Energy Stripper Well Exemption Litigation, 472 F.Supp. 1282 (1979). Governmental resistance to this Court's efforts to get the case ready for trial and its unilateral insistence that the litigation had been terminated by TECA in the 1978 appeal, resulted in yet another appeal to mandamus this Court, reported as Duncan, Sec'y. of Energy v. Theis, Chief Judge, 613 F.2d 305 (Em.App.1979). TECA rejected the government counsels' contention that TECA had decided this case in its prior opinion, and that there...