IN RE DEPT. OF ENERGY STRIPPER WELL EXEMPTION LIT.

• Citation: 722 F. Supp. 649
• Decision Date: 25 August 1989
• Docket Number: M.D.L. 378. Civ. A. No. 78-1070.
• Parties: In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION. MOBIL OIL CORPORATION, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Defendants.
• Court: U.S. District Court — District of Kansas

722 F. Supp. 649

In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION MOBIL OIL CORPORATION, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Defendants.

M.D.L. 378. Civ. A. No. 78-1070.

United States District Court, D. Kansas.

August 25, 1989.

COPYRIGHT MATERIAL OMITTED

OPINION AND ORDER

THEIS, District Judge.

This case is before the court on cross motions for summary judgment. Defendant Department of Energy (DOE) has moved for summary judgment on its counterclaim against plaintiff Mobil Oil Corporation (Mobil). DOE requests that the court enter an order requiring Mobil to deposit into the escrow account established by the court the sum of $10,214,510 plus interest accruing after March 31, 1989 through the date of payment. Mobil opposes DOE's motion and seeks summary judgment in its favor on DOE's counterclaim. The court has considered the briefs, including the brief filed by third party defendant Sun Company, Inc. (Sun), heard oral argument on the motions, and is now prepared to rule.

I. INTRODUCTION AND BACKGROUND

The court previously denied DOE's motion to sever its claim from Mobil's claims against the third party defendants. In the order denying the motion to sever, the court noted that it was retaining the discretion to sever at any time and proceed with DOE's claim against Mobil. Dk. No. 1625, at p. 4, 1989 WL 65609 (May 31, 1989). The court will now sever DOE's claim from the remaining claims in Civil Action No. 78-1070. The court has determined that DOE's claim against Mobil may be resolved independently of the claims remaining in this action.

A brief history of this litigation is in order. M.D.L. 378 is a consolidation of a number of cases brought by oil producers to enjoin the Federal Energy Administration, now the DOE, from enforcing Ruling 1974-29. This Ruling, and the regulations it interpreted, required the exclusion of injection wells from the well count in calculating the average daily production per well for qualification for the stripper well exemption from price controls. This court enjoined enforcement of the regulations in question, but ordered the plaintiff oil producers to deposit into escrow the difference between the stripper well price and the controlled price of crude oil affected by the injunction.

The Temporary Emergency Court of Appeals (TECA) upheld the validity of the regulations and Ruling 1974-29 in In re The Department of Energy Stripper Well Exemption Litigation, 690 F.2d 1375 (TECA 1982), cert. denied sub nom. Energy Reserves Group, Inc. v. Hodel, 459 U.S. 1127, 103 S.Ct. 763, 74 L.Ed.2d 978 (1983) hereinafter Stripper Well Exemption Litigation. Pursuant to TECA's mandate, the court entered judgment for DOE. At that point, the court considered the action to be, in effect, a government enforcement action under § 209 of the Economic Stabilization Act (ESA), 12 U.S.C. § 1904 note, in which the fact of overcharge had been determined and the court was faced with effecting restitution. See Stripper Well Exemption Litigation, 578 F.Supp. 586, 593 (D. Kan.1983).

Following negotiations among the parties as to the proper distribution of the escrowed overcharge funds, the parties reached a settlement. The court approved the Final Settlement Agreement (FSA) on July 7, 1986. See Stripper Well Exemption Litigation, 653 F.Supp. 108 (D. Kan. 1986). The FSA did not resolve the issue of any remaining liability of the parties for payment of overcharge funds into escrow. The parties to M.D.L. 378 specifically reserved their rights to litigate the issue of remaining liability for overcharges. FSA ¶ II.A.6. A number of parties have settled their liability for overcharges with DOE and have paid funds into the court's escrow for distribution via the mechanism set up by the FSA.

In September 1988, the United States of America filed a counterclaim on behalf of DOE against the remaining parties, pursuant to §§ 209 and 211 of the Economic Stabilization Act (ESA), 12 U.S.C. § 1904 note, as incorporated into section 5(a)(1) of the Emergency Petroleum Allocation Act (EPAA), 15 U.S.C. § 754(a)(1). The DOE's counterclaim alleges that the remaining parties have not deposited sufficient funds into the court's escrow to satisfy their overcharge liability. Dk. No. 1447. DOE now seeks summary judgment on its counterclaim against Mobil.

In the present case, Mobil has filed a third party complaint against the State of Oklahoma, the Oklahoma Tax Commission, Sun Company, Inc., Koch Industries, Inc., and Kerr-McGee Corporation. Mobil's third party complaint seeks a money judgment against the State of Oklahoma and the Oklahoma Tax Commission and, in the event DOE prevails on its counterclaim, Mobil seeks to hold the remaining third party defendants liable for any payments Mobil is required to make. Dk. No. 1493.

According to Mobil's memorandum in support of its motion for summary judgment and in opposition to DOE's motion for summary judgment, the funds which DOE seeks fall into five categories: (1) severance taxes paid by Mobil as first purchaser to the State of Oklahoma that have not been refunded to Mobil for which DOE claims principal and interest at DOE policy rates; (2) severance taxes paid by Sun as first purchaser to the State of Oklahoma that were refunded with interest at Oklahoma statutory interest rates and paid into the escrow for which DOE claims interest at DOE policy rates; (3) Oklahoma severance taxes, paid or retained by Koch and Kerr-McGee as first purchasers, that have not been remitted to Mobil for deposit to the escrow, for which DOE claims principal and interest at DOE policy rates; (4) Texas and New Mexico severance taxes that were refunded to Mobil without interest and were deposited in the escrow for which DOE claims interest at DOE policy rates; and (5) additional interest on certain delayed deposits, including Wyoming severance taxes, for which Mobil acknowledges responsibility and has offered to pay with interest at rates comparable to the escrow rate. Dk. No. 1561.

The present dispute arises out of the following factual situation. On September 6, 1978, the court granted Mobil's motion for preliminary injunction. The court enjoined DOE from enforcing Ruling 1974-29 against Mobil, thus enabling Mobil to charge the higher stripper well price for crude oil from certain properties which would not otherwise qualify for the stripper well exemption from price controls. The court additionally ordered Mobil to pay to the clerk of this court "the difference between the price received for crude oil sold pursuant to any and all certifications of a property as a stripper well property and the price for which such crude oil would have been sold had the same been sold pursuant to a certification of the property as a non-stripper property." Mobil Oil Corp. v. Department of Energy, No. 78-1070 (D. Kan. Sept. 6, 1978).

During the litigation of the validity of the stripper well regulations and Ruling 1974-29, the first purchasers of the crude oil remitted severance taxes on the incremental value of the oil to the states where the oil was produced. Mobil then deposited into escrow the net, after-tax difference between the stripper well price and the controlled price for the crude oil affected by the injunction. Mobil has obtained refunds of some of the severance taxes and has deposited those funds into the escrow. DOE's motion seeks to hold Mobil responsible for depositing into escrow the entire differential between the stripper and controlled prices, plus interest at DOE's policy rates.

II. SUMMARY JUDGMENT STANDARDS

The Federal Rules of Civil Procedure provide that summary judgment is appropriate when the documentary evidence filed with the motion "shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A principal purpose "of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, ..." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The court's inquiry is to determine "whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

The burden at the summary judgment stage is similar to the burden of proof at trial. The court must enter summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact on its claim(s). Rule 56, however, imposes no requirement on the moving party to "support its motion with affidavits or other similar materials negating the opponent's claim." Id. at 323, 106 S.Ct. at 2553 (emphasis in original). Each party must demonstrate to the court the existence of contested facts on each claim it will have to prove at trial. Id. at 324, 106 S.Ct. at 2553. The court reviews the evidence on summary judgment under the substantive law and based on the evidentiary burden the party will face at trial on the particular claim. Anderson, 477 U.S. at 254, 106 S.Ct. at 2513.

III. STATEMENT OF FACTS

DOE has supported its motion for summary judgment with a statement of uncontroverted facts as required by D.Kan. Rule 206(c). Mobil specifically does not dispute the arithmetical accuracy of the calculations appearing as Exhibit 29 to the Affidavit of Buford A. Shively, the DOE auditor who calculated the total amount of overcharges which DOE is seeking. The remainder of Mobil's response to DOE's statement of facts is...