IN RE DEPT. OF ENERGY STRIPPER WELL EXEMPTION LIT.

• Decision Date: 26 August 1991
• Docket Number: No. 10-85.,10-85.
• Citation: 945 F.2d 1575
• Parties: In re DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION. ATLANTIC RICHFIELD COMPANY AND EXXON CORPORATION v. STATE OF ALASKA and U.S. Department of Energy.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

945 F.2d 1575

In re DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION ATLANTIC RICHFIELD COMPANY AND EXXON CORPORATION v. STATE OF ALASKA and U.S. Department of Energy.

No. 10-85.

Temporary Emergency Court of Appeals.

Argued April 17, 1991.

Decided August 26, 1991.

Judgment Entered September 4, 1991.

COPYRIGHT MATERIAL OMITTED

Joseph W. Kennedy and Gerald N. Capps, Morris, Laing, Evans, Brock and Kennedy, Wichita, Kansas, Edward de la Garza and Tom O. Foster, Exxon Co., U.S.A., Houston, Tex., Donald B. Craven, Emmett B. Lewis, Robert K. Huffman and Kathryn Bucher, Miller and Chevalier, Washington, D.C., F. Steven Mahoney and Peter J. Turner, ARCO Alaska, Inc., Anchorage, Alaska, Robert E. Jordan, III, Samuel T. Perkins and Alfred M. Mamlet, Steptoe and Johnson, Washington, D.C., were on the brief, for appellants.

Ellen Toll, Asst. Atty. Gen. and Charles E. Cole, Atty. Gen., State of Alaska, Anchorage, Alaska, James F. Flug, Lobel, Novins, Lamont and Flug, Washington, D.C., and John R. Messenger, Preston, Thorgrimson, Shidler, Gates and Ellis, Anchorage, Alaska, were on the brief, for appellee State of Alaska.

Before GRANT, METZNER and PECK, Judges.

GRANT, Judge.

Appellants Exxon Corporation Exxon and Atlantic Richfield Co. ARCO appeal from the district court's dismissal, for lack of subject matter jurisdiction, of their motion to enforce the obligations of appellee the State of Alaska under the Final Settlement Agreement FSA or Agreement. The oil companies contend that the district court had subject matter jurisdiction to consider FSA violations and should have issued both declaratory and injunctive relief. The State of Alaska seeks affirmance of the judgment below, reasserting its argument that the district court lacked jurisdiction over the action. For the reasons presented below, we affirm the dismissal with respect to those issues within our exclusive jurisdiction, and decline to rule on those over which our jurisdiction does not extend.

I. FACTS

Both appellant corporations and the State of Alaska are parties to the Final Settlement Agreement in Stripper Well M.D.L. 378. In June 1989, in the United States District Court for the District of Kansas, Exxon and ARCO challenged Alaska's tax assessment on the entitlements benefits they received as refiners of Alaska North Slope crude oil under the Entitlements Program. They alleged that Alaska had breached its obligations under the FSA by taxing them on both the Department of Energy DOE ceiling price and the added value of the entitlements benefits, the sum of which created an imputed wellhead value substantially in excess of the federally mandated price. As relief they sought both a declaration of Alaska's breach of the Agreement and an injunction against Alaska's further prosecution of the tax claim or any action inconsistent with the Agreement.¹

On September 9, 1990, the district court granted Alaska's motion to dismiss, holding that it did not have jurisdiction under the Agreement or the Economic Stabilization Act, and that, in any case, it was a state tax matter to be settled in state court. It specifically found that the motions of Exxon and ARCO were barred by the Tax Injunction Act, the eleventh amendment, and principles of comity. In re Department of Energy Stripper Well Litigation, 746 F.Supp. 1462, 1470 (D.Kan.1990). On appeal the oil companies claim that the court wrongly focused on express waiver rather than implied contractual obligation, and this error requires reversal. Appellants have filed concurrent appeals in this court and in the United States Court of Appeals for the Tenth Circuit. On November 16, 1990, the Tenth Circuit stayed its proceedings pending the resolution of this appeal.

II. APPELLATE JURISDICTION

In the 1971 amendments to the Economic Stabilization Act ESA Congress created the Temporary Emergency Court of Appeals TECA and vested it with "exclusive jurisdiction of all appeals from the district courts of the United States in cases and controversies arising under this title or under regulations or orders issued thereunder." 12 U.S.C. § 1904 note, § 211(b)(2) (incorporated in section 5(a)(1) of the Emergency Petroleum Allocation Act EPAA, 15 U.S.C. § 754(a)(1)).

This judicial-review provision, "designed to provide speedy resolution" of cases brought under the ESA and the EPAA, Bray v. United States, 423 U.S. 73, 74, 96 S.Ct. 307, 308, 46 L.Ed.2d 215 (1975), has led to frequent reassessment of the extent of TECA's jurisdictional grant.² Under § 211 TECA's appellate jurisdiction is narrowly limited to the determination of issues "arising under" the ESA, the EPAA and their corresponding regulations. United States Department of Energy v. Brimmer, 776 F.2d 1554, 1556 (TECA 1985), cert. denied sub nom. Inexco Oil Co. v. United States Department of Energy, 475 U.S. 1045, 106 S.Ct. 1261, 89 L.Ed.2d 571 (1986) (citing MGPC, Inc. v. Department of Energy, 673 F.2d 1277, 1280 (TECA 1982)). An issue "arising under" those acts is one which involves the construction, applicability or effect of the acts or regulations. Isla Petroleum Corp. v. Puerto Rico Department of Consumer Affairs, 811 F.2d 1511, 1513 (TECA 1986), rev'd on other grounds, 485 U.S. 495, 108 S.Ct. 1350, 99 L.Ed.2d 582 (1988). The two principal inquiries to be made in TECA's jurisdictional determination are:

whether resolution of the litigation requires the application or interpretation of the EPAA or its regulations and whether any EPAA issue presented to this Court has been adjudicated in the court below.

Pennzoil Exploration and Production Co. v. Lujan, 928 F.2d 1139, 1141 (TECA 1991) (citations omitted). Moreover, we must consider "the nature of the issue that is presented to us and not the nature of the case or controversy presented below." MGPC, 673 F.2d at 1281, quoted in Placid Oil Co. v. Ashland Oil, Inc., 792 F.2d 1127, 1132 (TECA 1986).

When some issues fall within TECA's exclusive jurisdiction and others do not, there arises the possibility of dual appellate review or bifurcated appeals from unitary judgments. RJG Cab, Inc. v. Hodel, 797 F.2d 111, 117 (3rd Cir.1986); Atlantic Richfield Corp. v. Department of Energy, 769 F.2d 771, 778 (D.C.Cir.1984). In these circumstances we exercise our jurisdiction narrowly, declining those issues not arising under the ESA and EPAA. In Pennzoil we enumerated possible exceptional circumstances to this limitation:

(1) a meaningful ruling requires consideration of the issues as a whole, (2) the construction of the EPAA will control the litigation, (3) the issues are so commingled as to render separate treatment impractical, or (4) non-EPAA issues are subsidiary, preliminary or threshold to an EPAA issue. When discrete EPAA and non-EPAA issues otherwise are involved on appeal, review must be bifurcated between the TECA and the United States Court of Appeals.

Pennzoil Exploration, 928 F.2d at 1141-42 (numerals added, citations omitted). See, e.g., Petroleum Products Antitrust Litigation, 830 F.2d 198 (TECA), cert. denied sub nom. City of Long Beach v. Exxon Corp., 484 U.S. 969, 108 S.Ct. 466, 98 L.Ed.2d 405 (1987) (determination of antitrust damages issue within exclusive jurisdiction of Ninth Circuit; TECA dismisses case).

Such a situation, with appeals filed both in this court and in the Tenth Circuit, is presented herein. We note, as well, that ARCO and Exxon have filed state administrative challenges to the assessment of this tax in Alaska. ARCO has appealed the Alaska Department of Revenue's upholding of the tax in the Superior Court in Anchorage.

In spite of the narrowness of its special and exclusive jurisdictional range, within the jurisdictional confines of the ESA and EPAA, this court has been granted full powers of a circuit court of appeals under ESA § 211(b)(1). Tully v. Mobil Oil Corp., 455 U.S. 245, 247 n. 1, 102 S.Ct. 1047, 1049 n. 1, 71 L.Ed.2d 120 (1982) (per curiam); Navajo Refining Co. v. Department of Energy, 750 F.2d 966, 968 (TECA 1984). Included in those powers is TECA's ability to consider its own jurisdiction.

It is a fundamental principle that a court created under Article III of the United States Constitution always has the necessary jurisdiction to determine whether it has jurisdiction over the parties to and the subject matter of a case or controversy.

Petroleum Products Antitrust Litigation, 830 F.2d at 202 (citing United States v. United Mine Workers of America, 330 U.S. 258, 290-92, 67 S.Ct. 677, 694-95, 91 L.Ed. 884, 910-12 (1947)). If its jurisdiction is lacking, TECA will dismiss an appeal. City of Long Beach v. Department of Energy, 754 F.2d 379, 394 (TECA 1985).

TECA has long recognized its jurisdiction to review district court dismissals of an action for lack of jurisdiction. See, e.g., TransAmerican Natural Gas Corp. v. U.S. Department of Interior, 816 F.2d 689 (TECA), cert. denied, 484 U.S. 871, 108 S.Ct. 198, 98 L.Ed.2d 150 (1987); Placid Oil Co. v. Ashland Oil, Inc., 792 F.2d 1127 (TECA 1986); United States v. Hollingsworth Oil Co., 760 F.2d 1295 (TECA 1985). It is clearly within our jurisdictional purview to reconsider the district court's rulings that the FSA was not breached and that the "exclusive jurisdiction" provision of the ESA was not applicable to the issues raised by Exxon and ARCO.

However, the question of the applicability of the Tax Injunction Act, an issue that has been treated as independent and severable from the ESA-based claims, does not fall within our jurisdiction. See Mobil Oil Corp. v. Tully, 639 F.2d 912, 916-17 (2d Cir.), cert. denied, 452 U.S. 967, 101 S.Ct. 3123, 69 L.Ed.2d 981 (1981); Mobil Oil Corp. v. Dubno, 639 F.2d 919, 921 (2d Cir), cert. denied, 452 U.S. 967, 101 S.Ct. 3122, 69 L.Ed.2d 980 (1981).³ Consequently, we decline to consider that issue.

III. DISTRICT COURT'S SUBJECT MATTER JURISDICTION

Exxon and ARCO brought their motions to the Kansas district court that had supervised and approved the Final Settlement Agreement in ...