IN RE DEPT. OF ENERGY STRIPPER WELL EXEMPTION LIT.

• Decision Date: 14 October 1988
• Docket Number: TECA No. 10-74.
• Citation: 864 F.2d 796
• Parties: In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

864 F.2d 796

In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION.

TECA No. 10-74.

Temporary Emergency Court of Appeals.

Argued May 4, 1988.

Decided October 14, 1988.

Philip P. Kalodner, Philadelphia, Pa., was on the brief, for appellants Utilities, Transporters and Mfrs.

Andrew P. Miller, Dickstein, Shapiro and Morin, with whom Milton B. Whitfield and J. Bradley Ortins of the same firm, Washington, D.C., were on the brief, for appellee States Delaware, Iowa, Louisiana, North Dakota, Rhode Island and West Virginia.

Neil F. Hartigan, Atty. Gen., and Michael J. Hayes, Deputy Atty. Gen., Chicago, Ill., were on the brief, for appellee State of Ill.

Dave Frohnmayer, Atty. Gen., and Donald C. Arnold, Chief Counsel, Dept. of Justice, Salem, Or., were on the brief, for appellee State of Or.

LeRoy S. Zimmerman, Atty. Gen., and Eugene F. Waye, Deputy Atty. Gen., Harrisburg, Pennsylvania, were on the brief, for appellee Com. of Pa.

Bernard Nash, Edward G. Modell and Eileen P. Shannon, Nash, Railsback and Plesser, Washington, D.C., were on the brief for appellee States Hawaii, Illinois, Kansas, Nebraska, Nevada, North Carolina, Guam and the Virgin Islands.

James F. Flug and Paula Dinerstein, Lobel, Novins, Lamont and Flug, Washington, D.C., were on the brief, for appellee States Alabama, California, Connecticut, Idaho, Indiana, Maryland, Michigan, Mississippi, Montana, Ohio, South Dakota, Vermont, Wisconsin and Wyoming.

John Van de Kamp, Atty. Gen., and Yeoryios C. Apallas, Deputy Atty. Gen., San Francisco, Cal., were on the brief, for appellee State of Cal.

Stephen C. Skubel, Office of the Gen. Counsel, United States Dept. Of Energy, Washington, D.C., with whom Marc Johnston of the same office, and Theodore A. Miles, Floyd I. Robinson and Edward Levy, Economic Regulatory Admin., Washington, D.C., were on the brief, for appellee U.S. Dept. of Energy.

Before GRANT, PECK and METZNER, Judges.

GRANT, Judge.

Before this court is an appeal of the district court's denial of intervention in In re Department of Energy Stripper Well Exemption Litigation, M.D.L. No. 378 (D.Kan.). Appellants have challenged both the district court's jurisdiction and its determination that the requirements for intervention under Rule 24 of the Federal Rules of Civil Procedure have not been met. For the following reasons, we affirm the district court's judgment.

I. Background

Appellants are a group of six electric utility companies, fourteen shipping companies, and four paper manufacturers (Utilities, Transporters, and Manufacturers) ¹ who sought to intervene in multi-district litigation number M.D.L. 378 pending before the district court for the District of Kansas. ² A brief outline of this litigation is necessary to the understanding of the district court's denial of intervention.

M.D.L. 378 is the consolidation of cases from different districts concerning the validity of Ruling 1974-29 of the Federal Energy Administration, which is now the Department of Energy (DOE). Under that ruling, injection wells were excluded from the well count when applying the stripper well exemption from allocation and price regulation of crude petroleum produced from stripper well leases.

In Energy Reserves Group, Inc. v. Federal Energy Administration, 447 F.Supp. 1135 (D.Kan.1978), the United States District Court for the District of Kansas found the ruling invalid because it was promulgated without satisfying the rulemaking requirements of the Administrative Procedure Act. The court enjoined enforcement of the regulations in question, but ordered the oil producers to deposit into escrow the difference between the stripper well price and the controlled price of crude oil affected by the injunction. As of October 31, 1982, the escrow fund contained over one billion dollars. See In re Dep't of Energy Stripper Well Exemption Lit., 578 F.Supp. 586, 589 (D.Kan.1983) (summarizes the early stages of this case).

This appellate court ultimately upheld the validity of Ruling 1974-29. In re Dep't of Energy Stripper Well Exemption Lit., 690 F.2d 1375, 1392 (TECA 1982), cert. denied, 459 U.S. 1127, 103 S.Ct. 763, 74 L.Ed.2d 978 (1983). Upon remand, the district court saw its duty thus:

The effect of TECA's decision is to declare the funds deposited in escrow to be overcharges received due to violations of the petroleum pricing regulations. The remaining task is the appropriate dispensation of the escrowed funds.

578 F.Supp. at 589. Recognizing the expertise of DOE's Office of Hearings and Appeals (OHA), which had developed procedures for refund claims in overcharge cases, the court ordered OHA to make preliminary findings concerning the particular impact of overcharges on various parties. The court retained jurisdiction over the action and over the escrow fund. Id. at 596-97.

After years of consideration of the proper restitution to be made and after extensive negotiations among the parties, a Final Settlement Agreement was created, signed by the parties, and approved by the district court on July 7, 1986. See In re Dep't of Energy Stripper Well Lit., 653 F.Supp. 108 (D.Kan.1986). The Agreement provided for the distribution of approximately $1.4 billion, most of which had been held in escrowed accounts under the control of the district court. It established refund procedures, including the method by which individual claimants (such as appellants herein) could apply directly to DOE for refunds of crude oil overcharges.

However, the states took issue with DOE's implementation of certain provisions in the Agreement concerning individual claims. As a consequence, on May 26, 1987, they filed in district court "States' Motion to Enforce the Department of Energy's Obligations Relating to Crude Oil Overcharge Refund Proceedings Under the Final Settlement Agreement." TECA No. 10-76. On June 17, 1987, appellants sought to intervene or to participate as amici curiae in this case for the purpose of opposing States' Motion.

On July 8, 1987, the district court granted appellants leave to participate in the briefing as amici curiae. However, by order of July 23, 1987, the court denied appellants' motion to intervene on the ground that they had failed to satisfy all the elements required for intervention under Federal Rules of Civil Procedure 24(a)(2). The court specifically found that appellants were adequately represented by the Department of Energy, and that their motion to intervene was untimely. It further held that appellants, nonparties to the Settlement Agreement, had no right to inject themselves into a dispute between the DOE and the states as to the meaning of the Agreement between those two parties. Utilities, Transporters, and Manufacturers appeal that denial of the application to intervene.³

II. Jurisdiction

As a preliminary matter, appellants assert that one reason for seeking intervention is to raise the issue of jurisdiction. They have not questioned the district court's federal-question jurisdiction under 28 U.S.C. § 1331, ⁴ or its exclusive jurisdiction under the Economic Stabilization Act, 12 U.S.C. § 1904 note.⁵ Rather, they challenge the authority of the district court to make judgments that affect nonparties to that action. Specifically, they claim that the district court lacks jurisdiction to resolve a dispute between parties to the Settlement Agreement, namely the states and DOE, when such resolution will affect the rights of persons not parties to the Agreement, namely Utilities, Transporters, and Manufacturers.

The Supreme Court has consistently applied the general rule that one who is not a party to a judgment has no right to appeal therefrom. Karcher v. May, 484 U.S. 72, 108 S.Ct. 388, 392, 98 L.Ed.2d 327 (1987) (citing relevant cases). More specifically, this court has recognized that an entity that fails in the attempt to intervene in a case cannot appeal issues arising from the merits of the case. Cities Service Co. v. Dep't of Energy, 715 F.2d 572, 574 (TECA 1983), citing Commonwealth of Pennsylvania v. Rizzo, 530 F.2d 501, 508 (3d Cir.1976), cert. denied, 426 U.S. 921, 96 S.Ct. 2628, 49 L.Ed.2d 375 (1976). However, the question of jurisdiction is a threshold issue, one which this court has the responsibility to raise sua sponte before it considers the merits of a case. See, e.g., United States v. Storer Broadcasting Co., 351 U.S. 192, 206, 76 S.Ct. 763, 772, 100 L.Ed. 1081 (1956) (Harlan, J., concurring); In re Miscott Corp., 848 F.2d 1190, 1192 (11th Cir.1988); Arctic Corner, Inc. v. United States, 845 F.2d 999, 1000 (Fed.Cir.1988); Sector Refining, Inc. v. Enterprise Refining Co., 771 F.2d 496, 501 (TECA 1985). Thus we will consider the district court's jurisdiction as a preliminary matter.

We first find that the case before the district court of Kansas in No. 10-76, seeking interpretation of the Final Settlement Agreement to resolve a dispute between two signatories to that Agreement, was a cause of action arising out of federal law, specifically out of the laws and regulations concerning the Economic Stabilization Act. Under section 211 of the Act, Congress vested federal district courts and the Temporary Emergency Court of Appeals with exclusive jurisdiction over "cases and controversies arising under this title or under regulations or orders issued thereunder." Section 209 permits the court to order "restitution of monies received in violation of any such order or regulation." 12 U.S.C. § 1904 note. The restitutionary phase of the Stripper Well case was resolved by the Final Settlement Agreement, and the States' Motion in 10-76 sought to enforce that Agreement against DOE. The Act mandates that jurisdiction of such cases lies in the federal district courts. Neither party nor non-party has challenged the district court's authority on the grounds of federal-question or exclusive jurisdiction; nor do we.

The argument made by appellants is that the court does not have jurisdiction to make a determination that would...