IN RE DEPT. OF ENERGY STRIPPER WELL EXEMPTION LIT., 10-39.

• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals
• Writing for the Court: GRANT, LARSON and LACEY
• Citation: Energy Reserves Group, Inc. v. Dep't of Energy (In re Dep't of Energy), 690 F.2d 1375 (Temp. Emer. Ct. App. 1982)
• Decision Date: 29 July 1982
• Docket Number: No. 10-39.,10-39.
• Parties: In re the DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION. ENERGY RESERVES GROUP, INC., et al., Plaintiffs-Appellees, v. DEPARTMENT OF ENERGY, et al., Defendants-Appellants.

690 F.2d 1375

In re the DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION ENERGY RESERVES GROUP, INC., et al., Plaintiffs-Appellees, v. DEPARTMENT OF ENERGY, et al., Defendants-Appellants.

No. 10-39.

Temporary Emergency Court of Appeals.

Argued April 9, 1982.

Decided July 29, 1982.

Rehearing and Rehearing Denied September 10, 1982.

Certiorari Denied January 10, 1983.

Nancy C. Crisman, Dept. of Energy, with whom John P. McKenna, Frank W. Krogh, Marcia K. Sowles, Samuel Soopper and John L. Gurney of the same agency; and Paul M. Geier and Stephen W. Godoff, Dept. of Energy, Washington, D. C., of counsel, were on the brief for the defendants-appellants.

Joseph W. Kennedy, Morris, Laing, Evans, Brock & Kennedy, Chartered, with whom Dennis M. Feeney and John P. Bowman, Wichita, Kan., of the same firm; David J. Beck, Fulbright & Jaworski, with whom Ronald D. Secrest, Houston, Tex., of the same firm; Edward De LaGarza, Exxon Corp., Houston, Tex.; Daniel Joseph and Warren E. Connelly, Akin, Gump, Strauss, Hauer & Feld, Michael J. Henke and Ann M. Ashton, Vinson & Elkins, Washington, D. C.; Robert F. Ochs and Edward T. Cotham, Jr., The Gulf Companies Law Dept., Houston, Tex.; Richard L. Bohanon, Andrews, Davis, Legg, Bixler, Milsten & Murrah, Oklahoma City, Okl.; Herbert H. Hopper, Hopper, Shawver & Rathbun, Wichita, Kan.; Gerald Sawatsky, Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan.; John C. Cirone and Kerry R. Brittain, Champlin Petroleum Company; Fort Worth, Tex., John E. Sparks and G. Stewart Stone, Jr., Brobeck, Phleger & Harrison, San Francisco, Cal.; Keith A. Jones, Fulbright & Jaworski, Washington, D. C.; H. V. Schaefer, Marathon Oil Company, Findlay, Ohio; D. Frank Frisina, The Standard Oil Company, Ohio, Cleveland, Ohio; John M. Shuey, Shuey, Smith & Fleming, Shreveport, La.; Arthur M. Meyer, Jr., Bracewell & Patterson, Washington, D. C.; Richard Jones and Evan J. Olson, Hershberger, Patterson, Jones & Roth, Wichita, Kan.; A. B. Conant, Jr. and Karen S. Bedell, Shank, Irwin, Conant, Williamson & Grevel, Dallas, Tex.; Mark J. Forsch, Mobil Oil Corporation, Dallas, Tex.; Tom P. Hamill, Mobil Producing Texas & New Mexico, Inc., Houston, Tex.; J. Frederick Lawson, Texaco, Inc., Tulsa, Okl.; Elaine Boze, Sun Oil Company, Dallas, Tex.; Philip E. Pankoff, Wood, Ris & Hames, Denver, Colo.; James B. Harris, Thompson & Knight, John McReynolds, Worsham, Forsythe & Sampels, Dallas, Tex.; Irley A. Bonnette, Anadarko Production Company, Houston, Tex.; George G. Olsen, Williams & Jensen, P. C., Washington, D. C.; Ronald A. Lane, Gus Svolos and Richard E. Weicher, Santa Fe Energy Company, Chicago, Ill.; James D. Voorhees, Davis, Graham & Stubbs, Denver, Colo.; Clark R. Mandigo, Energy Reserves Group, Inc., Wichita, Kan.; R. Kennedy Bridwell, Suburban Propane Gas Corporation, Morristown, N. J.; and Fred A. Gipson, Seminole, Okl., were on the brief for the plaintiffs-appellees.

Before GRANT, LARSON and LACEY, Judges.

Rehearing and Rehearing En Banc Denied September 10, 1982.

Certiorari Denied January 10, 1983. See 103 S.Ct. 763.

GRANT, Judge:

These multidistrict litigation cases, consolidated for disposition by the Judicial Panel on Multidistrict Litigation at the United States District Court for the District of Kansas, present the issue of the validity of Federal Energy Administration (now the Department of Energy (DOE)) Ruling 1974-29 which interprets the stripper well exemption as excluding injection wells from well count, for purposes of applying the exemption from allocation and price regulation which is accorded crude petroleum produced from stripper well leases.¹

Background

The origin of these cases is with the decision of the United States District Court for the District of Kansas in Energy Reserves Group, Inc. v. Federal Energy Administration, 447 F.Supp. 1135 (D.Kan. 1978). In that case, Judge Theis invalidated Ruling 1974-29 on the basis that it was promulgated without satisfying the rulemaking requirements of the Administrative Procedure Act (APA). Importantly, Judge Theis did not, in his ruling, reach other challenges to the validity of Ruling 1974-29 but instead rested his decision solely upon nonconformity with the APA. On appeal, this court reversed that decision, in a plurality opinion, holding that the Ruling was "Clearly Interpretative and Exempted From the Requirements" of the APA. Energy Reserves Group, Inc. v. Department of Energy, 589 F.2d 1082, 1091 (Em.App.1978) (Energy Reserves I).² In that appeal, the appellees argued that Ruling 1974-29 was legislative in nature and effect and thus subject to the notice and comment requirements of the APA. 5 U.S.C. § 553(b) and (c). That argument was rejected, with Judge Becker writing:

Assuming for purposes of discussion only that the "substantial impact" test determines whether an administrative rule is "interpretative" or "legislative," Ruling 1974-29 had no substantial impact on appellees.

If Ruling 1974-29 was a reasonable interpretation of the stripper well statutory exception of EPAA and TAPAA, or of 10 C.F.R. § 210.32, or both, it had no impact. In that event the impact came from the statute and valid legislative regulation being interpreted, not from the interpretative ruling.

It is submitted that Ruling 1974-29 is a reasonable interpretation of the term "average daily production" as used in § 406 of TAPAA, § 4(e)(2)(A) of EPAA, and in 10 C.F.R. § 210.32(b). As such it had no "impact" if such be a test. The "impact," if any, resulted earlier from the statute and from the regulation 10 C.F.R. § 210.32(b) found to be valid by the district court. The interpretation of § 406 of TAPAA and § 4(e)(2)(A) of EPAA to exclude injection wells in computing "average daily production" was a reasonable contemporaneous construction of the statute and created no new law or legislative rule.

589 F.2d at 1098.

Additionally, Judge Christensen, in his concurring opinion, wrote:

Notwithstanding some cross currents engendered by a considerable stirring of waters in the arguments, no significant impacts appear to operate against the ruling in question. And a holding that "a well which produces crude petroleum" means, as contemplated by the properly adopted and subsisting regulations and in view of the seminal statute, a well that produces or yields such petroleum directly rather than one which may be utilized as a part of a system to obtain indirectly crude petroleum from a producing well, seems essentially the sort of an interpretation that must have been intended by the APA exception to the rulemaking requirement.

589 F.2d at 1103 (emphasis supplied).

Following remand of these cases to the district court, the DOE filed with this court a petition for writ of mandamus directing the district judge to execute the mandate of our previous decision. It argued that Energy Reserves I definitively and conclusively established the validity of Ruling 1974-29, and the district court was without any authority to reach a different result. This court, with Judge Christensen now writing for a unanimous panel, denied the DOE's petition for the writ. Duncan v. Theis, 613 F.2d 305 (Em.App.1979). Recognizing that the previous mandate could pose some interpretation difficulties as to what exactly was decided and what was not, id. at 308, the court went on to declare:

It may well be beyond the issues thus clearly resolved by this court's decision on appeal that in line with Judge Becker's persuasive analysis and reasoning and as he has suggested, 589 F.2d at 1092, the administrative regulation and its interpretation constituted not only a reasonable construction of the statute as well, but in addition "may be the construction ultimately preferred by the courts." But since our decision did not definitely resolve any statutory problem, there is presently no basis to cut off further proceedings in the district court except for the mandated judgment sought by the petitioners.

We deny the government's petition for a writ of mandamus because of the narrow reach of this extraordinary remedy, unresolved issues as to whether the ruling in question is arbitrary, capricious or unreasonable in the light of, or is in conflict with, or is beyond the authority granted by controlling statutory provisions, the province and duty of the district court, consistent with the mandate of this court and the doctrine of stare decisis, to exercise its reasonable discretion in determining interlocutory proceedings, record making and judgments in the first instance, the consolidation and addition of parties plaintiff following the determination of the prior appeal and the issuance of the mandate of this court, and our confidence that Judge Theis upon this clarification of what we thought was manifest in our prior decision will not transgress the fair meaning and effect of our mandate or proper application of the doctrine of stare decisis.

Id. at 309 (emphasis supplied) (footnotes omitted).

Thus, while denying the petition for a writ of mandamus, the court expressed a rather strong belief that it had previously implicitly held Ruling 1974-29 to be valid in all respects. This is most clearly evidenced by footnote 4 which quotes approvingly from Judges Becker and Christensen's opinions in Energy Reserves I:

Judge Becker expressly held that "Ruling 1974-29 is a reasonable interpretation of the term 'average daily production' as used in § 406 of TAPAA, § 4(e)(2)(A) of EPAA, and in 10 C.F.R. § 210.32(b), found to be valid by the district court." 589 F.2d at 1098. Judge Christensen clearly stated his agreement that no significant impact operated against the ruling in question because "a holding that 'a well which produces crude petroleum' means, as contemplated by the properly adopted and subsisting regulations and in view of the seminal statute, a well that produces or yields such petroleum directly rather than one which may be utilized as a part of a system to obtain indirectly crude petroleum from

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