Petition for Writ of Certiorari — Alabama v. Department of Energy
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i FILED
NO. 99-
INTHE ” Fe COrS © 2000
Supreme Court of the Anita Statescrerx
STATES OF ALABAMA, CALIFORNIA,
CONNECTICUT, IDAHO, INDIANA,
MARYLAND, MICHIGAN, MISSISSIPPI,
MONTANA, OHIO, SOUTH DAKOTA,
VERMONT, WISCONSIN, and WYOMING,
Petitioners,
Vv.
UNITED STATES DEPARTMENT OF ENERGY
and CHEVRON U.S.A. INC.,
Respondents,
ON PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Bill Lockyer, James F. Flug
Attorney General Counsel of Record
Yeoryios Apallas, Paula N. Dinerstein
Deputy Attorney General DUNCAN, WEINBERG, GENZER &
50 Fremont St., PEMBROKE, P.C.
Suite 300 1615 M Street NW, Suite 800
San Francisco, CA 94105 Washington, D.C. 20036
(415) 703-5527 (202) 467-6370
Attorneys for Petitioner, Attorneys for Petitioners,
the State of California the States of Alabama,
Connecticut, Idaho, Indiana,
Maryland, Michigan,
Mississippi, Montana, Ohio,
South Dakota, Vermont,
Wisconsin, and Wyoming,
by and through their respective
Attorneys General
}
54 pP
QUESTIONS PRESENTED
1. Whether, where the assignment of jurisdiction to the Federal
Circuit is “issue jurisdiction,” that court has exclusive jurisdiction
over an appeal to the Tenth Circuit in which the original claims in
the district court related to a statute assigned to the Federal Circuit,
but the appeal challenges the district court’s interpretation of a
Statute not assigned to the Federal Circuit.
2. Whether, if the Federal Circuit and the Tenth Circuit are deemed
to have concurrent jurisdiction over an appeal filed in the Tenth
Circuit, the Tenth Circuit may abstain from the exercise of
jurisdiction where there is no possibility of duplicative proceedings
because no new appeal can be filed in the Federal Circuit, and the
Federal Circuit cannot provide an adequate alternative forum
because the Tenth Circuit intends not to transfer the case.
3. Whether, in a case potentially involving hundreds of millions of
dollars of restitution for the energy programs of all States, the
federal treasury and oil consumers, the “interest of justice” standard
in the Transfer Statute, 28 U.S.C. § 1631, can be applied to
exclude appellant states from all appellate forums because they
declined to proceed on the merits in two courts simultaneously.
li
TABLE OF CONTENTS .
SE I gi. gc os seit hee ae eee i
WE I ss 6s & 60s en n kooks ea be ee li
Re eee er er iv
Potion Ber 6 Wel Ol Corre cw... a ids Beene ]
CINE INE gna xs bdo sane enc eee ]
PRT Tre re re rN Ke ]
rr es et ]
gt err rer ee ]
Reasons for Granting the Writ ....................00:. 1]
INTRODUCTION: _ Beyond the Strong Rule 10
Reasons, Review is Merited Because, by Denying
Both Junsdiction And Transfer, the Tenth Circuit
Left No Forum For an Important Case by Public
Officials Seeking to Vindicate Public Rights........ 1]
I. Decisions on Allocation of Jurisdiction
Among Federal Courts Present Important Issues of
Judicial Management, Fairness and Predictability
Which This Court Should Address in the Context
of the Senous Departure Here From The Accepted
And Usual Course of Judicial Proceedings. ........ 13
I. The Challenged Decision Directly
Conflicts With This Court’s Basic Abstention
Rules: Even If the Tenth Circuit Had Some
Discretion to Defer to Another Federal Court,
Such Abstention Is Not Appropriate Where There
Is No Threat of Duplicative Proceedings and
Where the Other Court Cannot Provide an
Adequate Alternative Forum. ................... 20
Il. This Court Should Exercise Supervisory
Power to Prevent The Transfer Statute -- Intended
to Insure a Proper Forum For Litigants Who Find
Themselves in The Wrong Court and to Avoid the
Need to Proceed in Two Courts at Once -- From
Being Turned on Its Head So as to Deny Any
Forum Because a Litigant Chose Not to Proceed in
NETS. 5 coe vec cs deduce tas Veceee 23
SE SS cia Sob S 4 <6 hk eh Ul enews died OX 26
APPENDIX
Order denying rehearing and attaching Amended Opinion
ee IIS: ics SACS ois ciGieieuwid. A-1
Onginal Order and Judgment of the Tenth Circuit ........ B-1
Memorandum and Order of the District Court in
ag eae ae ae Re Ce ree C-]
iv
TABLE OF AUTHORITIES
Cases Page
Akenbrandt v. Richards, $04 U.S. 689 (1992) ........... 15
Arizona v. San Carlos Apache Tribe, 463 U.S. 545 (1983) . 23
Atari, Inc. v. JS& A Group, Inc., 747 F.2d 1422
Ped Ge. Te iii CORREO Peas .
Atlantic Richfield Co. v. DOE, 769 F.2d 771
Gs Se Ge oe a ERR 4,17
Baris v. Sulpicio Lines. Inc., 74 F.3d 567 (Sth Cir. ),
aff'd en banc, 101 F.3d 367 (Sth Cir. 1996),
cert denied, 520 U.S. 1168 (1997) ................. 26
Bowen v. Massachusetts, 487 U.S. 879 (1988) .......... 15
Bray v. United States, 423 U.S. 73 (1975) ........... 12,15.
Christianson v. Colt Industries,
een recres 17, 19, 25
Clinton v. Goldsmith, 526 U.S. 529 (1999) ............. 14
Coastal States Marketing v. New England Petroleum Corp.,
604 F268 179 GO Ce. WTP: oo ks A 7, 16,17
Cohens v. Virginia, 6 Wheat 264, 5 L.E. 257(1821) ...... 21
Coleman v. United States, 106 F.3d 339 (10th Cir. 1997) .. 24
Colorado River Waier Conservation District
v. United States, 424 U.S. 800 (1976) ........ 12, 21, 22
Vv
Consolidated Edison v. O'Leary,
131 F.3d 1475 (Fed. Cir. 1997) ............ 5, 6, 11, 19
Consumers Power Co. v. DOE,
SOOT we BOF e Cath LOO ok 5G ee eh 18
Continental Grain Co. v. Barge FBL-585,
Pee Ree, REE Gi sie eerie ss err corre 25
Costello v. United States, 365 U.S. 265(1961) .......... 25
Criales v. American Airlines, Inc., 105 F.3d 93 (2d Cir.),
OE I, ee ie PEED io wk cca hc ckeends 26
Deakins v. Monaghan, 484 U.S. 193 (1988) ............ 22
In re Department of Energy Stripper Well Exemption
Litigation, MDL 378, 653 F. Supp. 108 (D. Kan. 1986) . 2
In re Department of Energy Stripper Well Exemption
Litigation, 880 F. Supp. 1466 (D. Kan. 1995) ......... 2
Ferens v. John Deere, 494 U.S. 516 (1990) ............. 24
Gold v. Local 7 United Food and Commercial Workers
Union, 159 F.3d 1307 (10th Cir. 1997) ............. 10
Goldlawr, Inc. v. Heiman, 369 U.S. 463 (1962) ......... 24
MGPC, Inc. v. DOE, 673 F.2d 1277 (TECA 1982) ....... 16
Miller v. Hambrick, 905 F.2d 259 (9th Cir. 1990) ........ 24
Mobil Oil Corp. v. DOE, 983 F.2d 172 (10th Cir. 1992) ... 18
vi
Moses H. Cone Mem'! Hosp. v. Mercury Constr. Corp.,
i gt | Ree Gare s bee aera e 22, 23
Mountain Fuel Supply Co. v. Johnson, 586 F.2d 1375
(10th Cir. 1978), cert. denied, 441 U.S. 952 (1979) ... 18
Navarro Savings Assn v. Lee, 446 U.S. 458 (1980) ....... 19
Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493 (1971) . 2
Phoenix Petroleum Corp. v. Federal Energy Regulatory
Commission, 95 F.3d 1555 (Fed. Cir. 1996) ....... 7,17, 20
RJG Cab, Inc. v. Hodel, 797 F.2d 111 (3rd Cir. 1986) ..... Be:
Scallop Corp. v. Tully, 705 F.2d 645 (2d Cir. 1983) ...... 16
Shellman v. United States, 528 F.2d 675 (9th Cir. 1975),
cert. denied, 425 U.S. 936 (1976) ...........0..... 26
Steel Co. v. Citizens for a Better Environment,
eee he Mo ee eee eters 10, 12, 18, 19
Texaco v. DOE, 616 F.2d 1193 (TECA 1979) ........ 13, 17
Texas American Oil Corp. v. DOE,
44 F.3d 1557 (Fed. Cir. 1995) (en banc).......... 16, 18
Turner Entertainment Co. v. Degeto Film, 25 F.3d i512
(ie. Tope is Sh ES ee eee 21
United States v. Cooper, 482 F.2d 1393 (TECA 1973) .... 15
United States v. Wyatt, 680 F.2d 1080 (Sth Cir. 1982) ..... 16
Wilton v. Seven Falls Co., 515 U.S. 277 (1995) .......... 21
Statutes and Rules
RI i i iris n'a) hina nraieng kh eee deck hes 14
Re NE Sid ss nici th ics asin nak we hens 5
Emergency Petroleum Allocation Act,
EP Renae POE ECON 65555 0s ew ween 5
a Be oe i SS 14
SE US.C. 8 TOG FO in isi hekcias WPinp at 14
PE ace ED ekg CE Lk 65 Betws FEW as week ES ]
Ne 1,15
28 U.S.C.§ 1295(aX11) and(12) ................ 1, 15, 20
rb Sak Eee te bey el a ee ee ae 5
28 U.S.C.§ 1361 ..... inkeiss tered tain bt pada 5
RR ME BIG 55 as COURS ge Se BEV, CEA 08 passim
SRB Pe oes ire ect dvas cei ddtieess 14
I Me i a ee ut bans wh 14
Department of Energy Organization Act, §502(a),
Oe ss hci sos 4 an bin che ds isa X 5
Department of Energy Organization Act, §503,
RPE Ad inti neki ah suvaoiennld ENa's tp ave 3,6
| 14
a IE Soaieiis tess seni dis ted <i
vill
PO te PEED os ks vias cece wdvaeses ia eee 22
Pe ID bls CE ARCA ee eek 8
Legislative Materials
S. Rep. No. 275, 97th Cong. Ist Sess. (1981),
reprinted in 1982 U.S. Code Cong. & Admin.
News sascha esapetbh sand aaind Oe el bead ter 23
H. Rep. No. 97-312, 97th Cong. Ist Sess. (1981) ......... 17
Miscellaneous
DOE Delegation Order No. 0204-24 .................... 4
DOE Delegation Order No. 0204-126 ................... 4
17 James Wm. Moore, et al., Moore's Federal Practice,
§ 122 (M. Bender 3d ed. 2000) ................ 21, 23
19 James Wm. Moore, et al., Moore's Federal Practice,
§ 208 (M. Bender 3d ed. 2000) ................... 14
PETITION FOR WRIT OF CERTIORARI
The States of Alabama, California, Connecticut, Idaho,
Indiana, Maryland, Michigan, Mississippi, Montana, Ohio, South
Dakota, Vermont, Wisconsin, and Wyoming, through their
respective Attorneys General, respectfully petition for a writ of
certiorari to review the Order and Opinion of the United States
Court of Appeals for the Tenth Circuit entered in that court’s
docket Nos. 99-3065 and 99-3066 on March 6, 2000.
OPINIONS BELOW
The order of the court of appeals denying appellants’ petition
for rehearing, attaching an amended opinion dismissing the appeals
and denying the motions for transfer, is reproduced in Appendix A,
and is reported at 206 F.3d 1345 (10th Cir. 2000). The initial Order
and Judgment of the court of appeals, later amended, dismissing
the appeals, is set forth in Appendix B, and is not reported. The
unreported Memorandum and Order of the District Court for the
District of Kansas in MDL 378 is set forth in Appendix C.
JURISDICTION
The Order of the court of appeals, denying Petitioners’ timely
petition for rehearing, and amending and reissuing its original
Order and Judgment, was entered on March 6, 2000. This Court’s
jurisdiction is invoked under 28 U.S.C. § 1254(1).
STATUTORY PROVISIONS INVOLVED
The texts of 28 U.S.C. § 1291 (Final Decisions of District Courts),
28 U.S.C. § 1295(a\(11) & (12) (Jurisdiction of the United States
Court of Appeals for the Federal Circuit), and 28 U.S.C. § 1631
(Transfer to Cure Want of Jurisdiction) are set out in Appendix D.
STATEMENT OF THE CASE
This case involves the effort of fourteen states (“the States”)
to enforce a 1986 Final Settlement Agreement (“FSA”) among all
the states, the federal government (through the Department of
Energy (“DOE”)), virtually the entire oil industry, including
2
respondent Chevron U.S.A., Inc. (“Chevron”), and thousands of
other parties. If left undisturbed, the Tenth Circuit’s action here
would deprive the States of any forum to hear the appeal of their
claim that DOE violated that Agreement in an enforcement
proceeding now valued at over six hundred million dollars, which,
in accordance with the FSA, would, if recovered, be disbursed to
benefit the energy-consuming public of this nation.
The FSA was “a settlement agreement of historic proportions”
resolving “monumental multidistrict litigation.” In re Department
of Energy Stnipper Well Exemption Litigation, MDL 378, 653 F.
Supp. 108, 109 (D. Kan. 1986)(“MDL 378").' The FSA
determined the distribution of over one billion dollars of oil
overcharges in the district court’s escrow. Jd. It also resolved two
other major matters: the distribution of crude oil overcharges
recovered by DOE in future enforcement cases and separate
litigation involving DOE’s “Entitlements Program.” The
Agreement was made subject to “the Court’s continuing equity
power to insure compliance,” id. at 121, which the Kansas district
court has exercised in numerous later proceedings.’
Under the FSA, 40% of all crude oil refunds collected by DOE
. is allocated among all of the states and territories as indirect
' Relevant portions of the FSA are reprinted in the Appellate Appendix
in No. 99-3065 (hereinafter “99-3065 App”) 148-161.
2 Jd. at 109, 112, 117. The court concluded that the Agreement would
“inure to the public good” in part because “groups and entities specifically
designated to represent the public interest -- such as the Department of Energy
and the fifty States” attorneys general -- have participated extensively in these
proceedings and have subjected the settlement agreement to the closest
scrutiny.” Jd. at 119, 118.
880 F. Supp. 1466, 1471 (D. Kan. 1995) (“Since the entry of the FSA, the
court has issued numerous opinions adjudicating disputes among various
signatories to the FSA regarding the interpretation of the FSA.”).
3
restitution for use in energy-related programs to benefit their oil-
consuming citizens.‘ Since 1986, the states have received
approximately two billion dollars under the FSA.° The FSA also
allocates 40% of the funds received to the United States Treasury
as indirect restitution to the public at large, and the remaining 20%
is set aside for a claims process for individuals who did not become
parties to the FSA and who assert injury from the violations at
issue. Jd. at 113. All Parties to the FSA -- except the States and
DOE -- waived any further claims to crude oil refunds. Jd. at 114.
All of the refiner Parties, such as Chevron, also settled all of their
claims under the Entitlements Program, signing waivers in “full
accord and satisfaction” of any claims based upon that program,
and particularly and explicitly arising from termination of that
program. 99-30€5 App 155, 157.
This case began with a Proposed Remedial Order (“PRO”)
brought in 1992 by DOE’s prosecutorial arm, the Economic
Regulatory Administration (“ERA”), against Chevron. ERA
charged that Chevron had violated continuing obligations it had
incurred under DOE’s pnior crude oil price controls. The PRO
sought restitution in an amount which with interest now exceeds
$600 million.®
The statutory authority for remedial order proceedings at DOE
is Section 503 of the 1977 Department of Energy Organization Act
(“DOE Act”), 42 U.S.C. § 7193. Pursuant to Delegation Orders
from the Secretary of Energy implementing the DOE Act, DOE’s
Office of Hearings and Appeals (“OHA”) has for over 20 years
* 653 F. Supp. at 113; 99-3065 App. 152-53. The States which are
petitioners here are entitled to 28.8% of the amount due to all of the states,
pursuant to the FSA. See, 653 F. Supp. at 113.
> See 653 F. Supp. at 12 (DOE estimated total crude oil overcharge
funds distributed under the Agreement would be $4-5 billion.)
® App A-5-6.
4
conducted “adjudicatory” proceedings in which oil companies can
contest PRO’s on factual and legal grounds.’
Here, Chevron availed itself of the opportunity to have the case
“adjudicated in an administrative proceeding before the OHA.”*
The States, because of their substantial financial interest, became
parties. 99-3065 App 52, n.10. OHA conducted a lengthy
adversarial proceeding, including extensive discovery, testimony,
cross-examination, briefing and oral argument, in which the States
participated actively. Jd. at 51-55. Chevron’s principal defense in
the proceeding was that, because of the termination of DOE’s
Entitlements Program, it was prevented from receiving the
regulatory benefit it had anticipated. See, App C-7; 99-3065 App
53. ERA and the States replied that in the FSA, Chevron had
explicitly waived any claims, including offsets to other liabilities,
based on the termination of the Entitlements Program, and that
DOE had likewise promised not to grant any further benefits based
on entitlements. See App C-3; 99-3065 App 80-81. ERA
characterized Chevron’s assertion of this defense as
“unconscionable” in light of its FSA waivers. 99-3065 App 16.
On March 25, 1996, OHA issued a “Decision and Order”
dismissing the enforcement action, based upon its acceptance of
Chevron’s entitlements defense. See, App C-8; 99-3065 App 53,
60-61, 69-70. OHA stated repeatedly that it was making “legal”
rulings, e.g., id. at 76, 82, and did sot claim to be exercising
prosecutorial discretion or departing in any way from its customary
adjudicatory role.
” See Atlantic Richfield Co. v. DOE, 769 F.2d 771 (D.C. Cir. 1984)
(“ARCO”); Delegation Order No. 0204-24 at § 9, 99-3065 App 185. DOE
delegated to ERA its prosecutorial powers and discretion, including the
“formulation and establishment of enforcement policy,” DOE Delegation
Order 0204-126 at § (a)(11), 99-3065 App 179, and the authority to initiate
(§ (a)(3)) and to settle (§ (a)(7)) enforcement cases. 99-3065 App 178, 179.
* As DOE described it to the district court. 99-3065 App 118-19.
* The OHA decision is reprinted in full at 99-3065 App 44-85.
5
C. The States’ Court Challenges to OHA’s Decision
On May 24, 1996, the States filed in U.S. District Court in
Kansas a “Motion to Enforce the Fina! Settlement Agreement” in
the existing MDL 378 docket, asserting that OHA’s action,
dismissing the PRO on the basis of Chevron’s entitlements defense,
violated the FSA as approved by that court, as well as other
Statutory and regulatory provisions. At the same time, anticipating
objections to the court’s considering all of the States’ claims in the
MDL 378 docket, the States also filed a separate complaint, No.
96-1180, which asserted-the same claims as those in the Motion to
Enforce. The two matters were consolidated for hearing. The
district court had jurisdiction of the MDL 378 action pursuant to
28 U.S.C.§§ 1331 and 1361, and also under the jurisdictional
provisions of the Emergency Petroleum Allocation Act (“EPAA”),
15 U.S.C. § 754(a)(1), and the DOE Act, § 502(a), 42 U.S.C. §
7192(a). The District Court’s jurisdiction in No. 96-1180 was
invoked under those same statutory provisions and under sections
210(a) and 211(b) of the Economic Stabilization Act (“ESA”),
formerly 12 U.S.C. § 1904 note.
D. The District Court’s Decisi
On January 21, 1999, the district court issued a decision in
each docket. In MDL 378 the court addressed only the States’
claims of violation of the FSA. It held that “OHA’s dismissal of
the remedial order against Chevron was a part of DOE’s
prosecutorial function and as such, was unreviewable.” App C-12.
In its decision in the separate docket, the District Court adopted the
MDL 378 decision dismissing the FSA claim, and dismissed the
States’ claims not based on the FSA for lack of standing, and
alternatively, for improper venue.
The district court’s dispositive ruling that OHA’s decision was
unreviewable prosecutorial discretion relied solely and entirely on
upon a particular passage on page 1481 of Consolidated Edison v.
Q’Leary, 131 F.3d 1475 (Fed. Cir. 1997) (“Con Ed”). That case
involved a challenge to the same OHA decision involved here, but
6
by private plaintiffs who were not parties to the FSA and who thus
could not and did not raise any alleged violations of that
Agreement. In affirming the dismissal of their complaint for lack
of standing, the Federal Circuit, based on the legislative history and
terms of Seetion 503 of the DOE Act, 42 U.S.C. § 7193, had
concluded that:
the exercise of enforcement discretion ends, and the
adjudication of the alleged violation begins, after the
Office of Hearings and Appeals issues the Department’s
remedial order, not after the Economic Regulatory
Administration issues its proposed remedial order. . . .
[T]he task of reviewing the remedial order was
commutted to the Federal Energy Regulatory Commission
.... Congress [in the DOE Act] contemplated that those
procedures leading up to the issuance of the remedial
order would all be part of the “prosecutorial” function of
the Secretary of Energy. [131 F.3d at 1481.]
This passage was cited and quoted from by the district court
here as the basis of its unreviewability ruling. App C-12.
Despite its conclusion that it was statutorily barred from
reviewing the challenged OHA decision, the district court
nevertheless proceeded to address the States’ claims and DOE’s
and Chevron’s defenses on the merits. It rejected the claims and
accepted the defenses based upon its analysis of the OHA decision
and of certain provisions of the FSA, including Section IV(a)(2),
which stated that the Agreement did not “limit or render reviewable
the exercise of DOE’s prosecutorial discretion . . . with regard to
any enforcement matter.”"°
E. The States’ Appeals
The States timely appealed both district court decisions to the
Tenth Circuit. The States also filed “protective” notices of appeal
'° FSA IV.A.2, 99-3065 App 154, quoted in the district court opinion at
App C-12-13.
7
to the Federal Circuit. The States then moved to stay the protective
appeals pending final dispositive action by the Tenth Circuit, stating
that they had no Federal Circuit issues to raise unless and until
Tenth Circuit action left issues to be determined by the Federal
Circuit, and that a stay while the main action proceeded was the
routine practice with regard to protective appeals in the price
control field.'' DOE and Chevron opposed the stay motions.
In the Tenth Circuit, DOE and Chevron moved for summary
dismissal, claiming that exclusive jurisdiction lay in the Federal
Circuit. The States responded that under the “issue jurisdiction”
which the Federal Circuit had inherited from the Temporary
Emergency Court of Appeals (“TECA”), App A-8, it was the
issues actually raised on appeal, and not the issues involved in the
proceeding below, which determined appellate jurisdiction. The
States explained that the primary issue in their appeal was the
district court’s ruling, based on the DOE Act, that OHA’s decision
was not adjudicatory, but was an exercise of prosecutorial
discretion, and thus wholly unreviewable. Since the DOE Act is
undisputedly mot among the statutes assigned to the Federal
Circuit, the States argued, the appeal was clearly within the
jurisdiction of the Tenth Circuit.
On June 30, 1999, after briefing on the jurisdictional motions,
the Tenth Circuit “reserve[d] judgment” on the motions to dismiss,
referred the junsdictional issue to the merits panel, set the due date
for the States’ merits briefs as August 9, 1999, and stated its
intention to hear oral argument on the appeals in November 1999.
Subsequently, on July 22, 1999, a Federal Circuit panel issued a
'! “Protective appeals” in this field have a long history recognized by the
courts of appeals. See, e.g., Coastal States Marketing v. New England
604 F.2d 179, 186 n.9 (2d Cir. 1979); RJG Cab. Inc. v.
Hodel, 797 F.2d 111, 117 (3rd Cir. 1986). This practice has continued since
the Peay re was re Ni aca esa See, e.g., Phoenix
ission, 95 F.3d 1555,
1558-59 Fed. Cir. 1996). Suneaea tendiistn eaatindiy aged dieiiliog
completion of the primary appeal. £.g., Coastal States, 604 F.2d at 186 n.9.
8
non-precedential order, without explanation, denying the States’
motions to stay the protective appeais, and setting the due date for
the States’ initial briefs as August 12, 1999, three days after the
due date for their merits briefs in the Tenth Circuit.
F. Dismissal of the } is in the Federal Circui
On August 11, 1999, prior to the due date for their bnefs and
prior to any designation of issues, briefing, or rulings on any merits
or jurisdictional issues in the Federal Circuit, the States, in order to
avoid having both sets of appeals go forward on the merits
simultaneously, moved for voluntarily dismissal of their protective
appeals in the Federal Circuit. DOE and Chevron opposed this
motion, and Chevron also separately moved to dismiss the Federal
Circuit appeals with prejudice due to failure to file briefs.
The Federal Circuit issued a non-precedential order ruling on
the States’ and Chevron’s motions on August 31, 1999. Paragraph
(1) of the ordering language stated that “absent objection by
Alabama within 10 days,” the court would “grant Alabama’s
motion to withdraw its appeals and dismiss them with prejudice.”
The Federal Circuit also denied “Chevron’s motion to dismiss ...
due to Alabama’s failure to file briefs.”’* In its introductory
language prior to the ordering paragraphs, the Federal Circuit’s
non-precedential order commented that:
[a]s Chevron and DOE point out, if a dismissal is entered
without prejudice, Alabama could, in the event of an
adverse ruling by the 10th Circuit, seek to resurrect its
appeal here by way of transfer. That would be an
impermissible result, given our prior rulings’ and the fact
12 Pursuant to Fed. Cir. Rule 31(c), te States’ motion to voluntarily,
withdraw their appeals suspended the time for filing the briefs, and thus the
States’ briefs had not become due at the time of the dismissal of the appeals.
'3 The only “prior rulings” by the Federal Circuit were unexplained non-
precedential orders relating to the States’ stay and extension motions.
9
that appeal no. 99-1327 is proceeding in this court.'*
The States’ acceded to the court’s ordering language, ut
reserved all objections to the remainder of the August 31
issuance.'* On September 13, 1999 the Federal Circuit entered a
non-precedential order which did not reiterate its prior discussion
or question the States’ reservation of nghts. It stated only:
“Pursuant to the court order of August 31, 1999, appeal #99-1328
is dismissed with prejudice. Each party shall bear its own costs.”’®
G. TI Origi IT i Ci it D aoe t
On November 5, 1999, after full briefing on both jurisdiction
and merits, but before the scheduled argument, the Tenth Circuit
issued a non-precedential opinion granting Appellees’ motions to
dismiss the appeals, and holding that the Federal Circuit had
exclusive appellate jurisdiction, because the district court had
addressed and decided Federal Circuit issues. App B-10-11. The
court disclaimed jurisdiction, based on “the reasoning... [the
district court] offered in support of its decision”: “interpretation of
the FSA was integral to its decisionmaking process” as to whether
“substantive nghts under the FSA” were violated, App B-10, and
whether the FSA itself precluded review of the OHA decision.
App B-11.
4 No. 99-1327 was an appeal of a separate case brought by other states
and territories (“the Jurisdictions”), also as a Motion to Enforce the FSA in
MDL 378. That motion did not challenge the OHA decision at issue in the
States’ motion, but claimed that Chevron had received its funds under the FSA
by fraud. The District Court heard both matters together, and dismissed the
Jurisdictions’ claims in a separate portion of the decision which denied the
States’ Motion to Enforce. 99-1327 did not raise any DOE Act issues.
'S The States, on September 1, 1999, stated that “[w]ithout forgoing any
other rights or objections they may have in these or any other proceedings, the
States have no objection to the entry forthwith of an order in the form specified
in paragraph ‘(1)’ of the August 31 order.”
'6 The same day, an order to the same effect was entered with regard to
No. 99-1356, the appeal of the separate complaint.
10
The States filed a timely Petition for Rehearing En Banc, and
in the Alternative, for Panel Rehearing, asserting that the panel
decision was contrary to this Court’s decision in Steel Co. v.
Citizens for a Better Environment, 523 U.S. 83 (1998), and the
Tenth Circuit decision in Gold v. Local 7 United Food and
Commercial Workers Union, 159 F.3d 1307 (10th Cir. 1997).
The Petition argued that under these cases, the District Court’s
DOE Act determination that it lacked authority to hear the case
nullified discussion of any merits issues, and the court of appeals
was thus barred from considering those merits discussions in
assessing appellate junsdiction. The States also filed a conditional
motion pursuant to 28 U.S.C. § 1631, requesting transfer to the
Federal Circuit if the Tenth Circuit adhered to its position that the
Federal Circuit had exclusive jurisdiction.
H The/ led Tenth Circuit Decisi
On March 6, 2000, the Tenth Circuit panel issued an order
purportedly denying the petition for rehearing,- but also
withdrawing and substantially and substantively amending the
original opinion (“to clarify certain issues”), and re-issuing it as a
published opinion. App A. The amended opinion acknowledged,
as the States had urged, that under Steel, “the district court need
only have announced that it lacked jurisdiction over the matter and
dismissed the case. ... As such, we must consider the remainder
of the district court’s decision dicta.” App A-12. The new opinion
therefore eliminated the prior opinion’s explicit reliance on the
district court’s merits discussions as implicating the Federal
Circuit’s exclusive jurisdiction. However, referring to the States’
“claims” in the district court, App A-4, A-7, the Tenth Circuit still
found “exclusive jurisdiction over these claims” in the Federal
Circuit, App A-4, 7-8, because “only where these [Federal Circuit]
Statutes and their regulations are mere background will this court
exercise jurisdiction.” App A-9. It saw the case as an “FSA
dispute,” over which “appellate jurisdiction . . . is exclusively
vested in the Federal Circuit.” App. A-10. It speculated that if it
took the case it would have to face Federal Circuit issues not raised
1]
by the appellants because parts of the Con Ed standing decision
(other than the portion relied on by the District Court here) had
addressed such issues, and because a provision of the FSA
preserved “DOE'’s prosecutorial discretion,” and also because, it
claimed, Chevron had raised a defense implicating the FSA. App
A-12-13.
Finally, the amended decision denied the States’ conditional
motion for a § 1631 transfer to the Federal.Circuit. The Tenth
Circuit ruled that transfer would not be “in the interest of justice,”
because of what it viewed as the Federal Circuit’s “unequivocal
declaration . . . that it intended to finally dispose of the States’
appeals,” and “the States’ ample opportunity to pursue these cases
in the proper forum.” App A-17-18. The court did not address the
States’ argument that the protective appeals to the Federal Circuit
were withdrawn to avoid duplicative litigation of the merits of their
appeals at a time when the Tenth Circuit had ordered full briefing
and argument of the case on its merits.
It is this amended and reissued decision by the Tenth Circuit,
leaving the States without any forum to hear the merits of their
appeal, which is the basis for this Petition.
REASONS FOR GRANTING THE WRIT
INTRODUCTION: BEYOND THE STRONG RULE 10 REASONS,
REVIEW IS MERITED BECAUSE, BY DENYING BOTH
JURISDICTION AND TRANSFER, THE TENTH CIRCUIT LEFT No
FORUM FOR AN IMPORTANT CASE BY PUBLIC release
SEEKING TO VINDICATE PUBLIC RIGHTS.
Fourteen states, on behalf of all the states and their oil
consuming citizens, have asked a federal court to enforce a massive
settlement agreement among the states, the federal government, the
oil industry, and most of the nation’s largest oil consumers. If the
States’ case succeeds, and the underlying enforcement case is
ultimately won by DOE, the states as a group would receive some
$240 million in restitution for their energy conservation and
assistance programs, federal — would receive $240 million
12
through the U.S. Treasury, and individual oil users claiming injury
would share some $120 million. The District Court dismissed the
case as involving unreviewable prosecutorial discretion, based on
its interpretation of the 1977 DOE Acct, a statute indisputably within
the Tenth Circuit’s appellate authority and outside the Federal
Circuit’s exclusive junsdiction. The States asked the Tenth Circuit
to review that DOE Act ruling. The Tenth Circuit ruled that it
could not do so because the case in the district court made claims
under a different statute, and appeals involving that statute are
within the Federal Circuit’s exclusive jurisdiction. But, as noted
below, in 1984, faced with the same jurisdictional objections, the
D.C. Circuit, in a case later endorsed by the Federal Circuit, had no
problem separating out and deciding (by confirming that OHA is
an adjudicator) the same statutory issue raised by the States here.
Unless this Court intervenes, the merits of this appeal by
public officials in the public interest will never be heard anywhere.
For the Tenth Circuit also ruled that the States’ voluntary
withdrawal of a protective appeal in the Federal Circuit, to avoid
duplicative proceedings at a time when the Tenth Circuit had
ordered the case heard on the merits and when issue had not been
joined in the Federal Circuit, precluded transfer to the latter court.
The Tenth Circuit has conceded that its first decision in this
case was wrong because its reliance on merits discussions below
transgressed this Court’s rule in Steel. That concession should
have removed the perceived bar to Tenth Circuit jurisdiction, but
the court retreated to a general assertion that because the
underlying dispute involved a Federal Circuit statute, 1t should cede
junisdiction to that court, a basis which ignores this Court’s warning
in Bray v. United States that specialized jurisdiction should be
construed narrowly, and twenty-five years of decisions in other
circuits applying “issue jurisdiction” as the relevant standard.
Moreover, even assuming there were concurrent jurisdiction in the
two circuits, the Tenth Circuit decision to abstain in favor of the
Federal Circuit, when that court cannot hear the case, directly
conflicts with this Court’s clear declaration in Colorado River that
13
the critical element in federal-federal abstention is the threat of
duplicative proceedings, and with this Court’s repeated rulings in
other abstention contexts that a sine qua non for any abstention is
the availability of an adequate alternative forum for the case. Here,
of course, there is neither such a threat nor, because the Tenth
Circuit will not transfer the case, such an alternative forum.
With all due respect to the court of appeals, a large public case
for public benefit should not be treated so cavalierly. The States
deserved a straightforward decision on the appeal actually brought,
based on an issue clearly within the court’s jurisdiction. The D.C.
Circuit did so long ago in the same circumstances, without any
subsequent serious claim that it was usurping another court’s
jurisdiction. Had the Tenth Circuit decided the issue, there could
have been no serious jurisdictional challenge. Instead, the court has
taken a course which subjects it to serious challenge on three
different grounds: 1) its violation of the well-established rules of
appellate “issue jurisdiction” applicable here, 2) even giving it the
benefit of the doubt by assuming there is concurrent jurisdiction, its
total disregard for basic standards for abstention, and 3) its total
frustration of the intent of the transfer statute. If only to discourage
such squandering of judicial resources’’ and judicial credibility and
to promote orderly judicial management, this Court should grant
certiorari and give the States a chance to have their appeal heard.
I. DECISIONS ON ALLOCATION OF JURISDICTION AMONG FEDERAL
COURTS PRESENT IMPORTANT ISSUES OF JUDICIAL MANAGEMENT,
FAIRNESS AND PREDICTABILITY WHICH THIS COURT SHOULD
ADDRESS IN THE CONTEXT OF THE SERIOUS DEPARTURE HERE
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS.
It is important to the efficient operations of the federal judicial
system that courts follow, and appellants can rely on, a consistent
'7 It was estimated that jurisdictional disputes occupied a third of the
decided cases in this field. Texaco v. DOE, 616 F.2d 1193, 1199 (TECA
1979) (Hoffman, J., dissenting).
14
interpretation of jurisdictional assignments so that cases are initially
taken to the proper forum as often as possible, and so that the
expenditure of litigants’ and judicial resources on jurisdictional
disputes is minimized. Issues of divided jurisdiction arise with
increasing frequency as Congress establishes more specialized
courts, and assigns special tasks to existing courts. See, e.g.,
Clinton v. Goldsmith, 526 U.S. 529 (1999) (discussing U.S. Court
of Appeals for Armed Forces jurisdiction).'* This Court should
grant certiorari to assure consistency in the approach to divided
junsdiction, to prevent erosion of the general appellate jurisdiction
of the regional circuits, and to assure that the federal court system
in general, and this Court in particular, is not burdened with
unnecessary jurisdictional disputes in cases that can and should be
decided by the courts which first receive them.
Here, the Tenth Circuit created a jurisdictional morass by
conjuring up problems that a straightforward approach would have
avoided. It ignored the rulings of this Court and the longstanding
practices of the other circuits; it abdicated its own broad
junsdiction without any statutory basis for doing so; it created an
avoidable jurisdictional conundrum which only this Court can
remedy; it left undecided a legal issue within its jurisdiction on
which two other circuits have split; and it left the States with no
forum for their appeal. This Court’s intervention to provide clear
procedural guidance for this and similar cases would prevent this
kind of unnecessary jurisdictional improvisation that harms both
litigants and the entire judicial system.
'® Many, but not all, aspects of Federal Circuit jurisdiction are addressed
in 19 James Wm. Moore et al., Moore’s Federal Practice, § 208 (Matthew
Bender 3d ed. 2000). Other issues of divided jurisdiction arise regarding, for
example, the Court of Appeals for the Armed Forces, see, 10 U.S.C. § 867, the
Court of Appeals for Veterans Claims, see, 38 U.S.C. § 7252 (2000), the
United States Tax Court, see, 26 U.S.C. §§ 7441, 7442, and the United States
Court of International Trade, see, 28 U.S.C. §§ 251, et seq., and with respect
to challenges to actions of, for example, the Federal Energy Regulatory
Commission, see, 16 U.S.C. § 825/(b), and the Environmental Protection
Agency, 33 U.S.C. § 1369(b) (2000); 42 U.S.C. § 7607(1).
is
Federal courts do not create their own jurisdictional
boundaries: Congress has “‘the sole power of creating the tribunals
(inferior to the Supreme Court) . . . and of investing them with
jurisdiction either limited, concurrent, or exclusive, and of
withholding jurisdiction from them in the exact degrees and
character which to Congress may seem proper for the public
good.’”” Akenbrandt v. Richards, 504 U.S. 689, 698 (1992)
(citations omitted). The basic statutory jurisdictional assignments
to the circuit courts are simple: Congress assigned general
jurisdiction over “appeals from all final decisions of the district
courts” to the courts of appeals “other than the United States Court
of Appeals for the Federal Circuit.” 28 U.S.C. § 1291. “The
jurisdiction of the United States Court of Appeals for the Federal
Circuit shall be limited to the jurisdiction described in sections
1292(c) and (d) and 1295 of this title.” Jd.
General grants of jurisdiction, which cover all subjects unless
specified otherwise, differ from specialized grants, which are
strictly limited to the specified subjects or statutes. Bowen v.
Massachusetts, 487 U.S. 879, 908, n. 46 (1988) (citation omitted)
(statute conferring general jurisdiction on district courts is
interpreted broadly, while Statute conferring limited subject matter
jurisdiction must be given a “narrow interpretation’” and “‘strictly
construed’”). The specialized Federal Circuit jurisdiction at issue
here, 28 U.S.C.§ 1295(aX(11) and (12), was inherited from TECA.
App A-8. This Court ruled 25 years ago that the grant to TECA
“carved out a limited exception to the broad jurisdiction of the
courts of appeals over ‘appeals from all final decisions of the
district courts of the United States.”” Bray v. United States, 423
U.S. 73, 74 (1975) (citation omitted). This Court, id. at 75, also
approved TECA’s prior narrow interpretation of its jurisdiction in
United States v. Cooper, 482 F.2d 1393, 1398 (TECA
1973)(“loose construction [of TECA jurisdiction] is unacceptable
in light of the traditional rule that courts of special jurisdiction
should strictly construe their statutory grants of jurisdiction”).
The courts of appeals, including TECA and the Federal
16
Circuit, as well as Congress, recognize that the grant of limited
jurisdiction to TECA was “issue” jurisdiction, i.e., determined as
to each issue actually raised on appeal, as opposed to “case”
junsdiction, determined by the presence of the assigned subject in
the underlying case and extending to the entire case, including
issues falling outside of the subjects assigned to the special court.
For example, Federal Circuit patent jurisdiction covers all issues in
a case brought at least in part under the patent statute, because the
Statutory language applies to “‘cases’ in which the district court’s
jurisdiction ‘was based, in whole or in part, on Section 1338.’”
Atari, Inc. v. JS& A Group, Inc., 747 F.2d 1422, 1430 (Fed. Cir.
1984) (en banc)(emph. in onginal). That “case” jurisdiction
contrasts with the “issue jurisdiction” the Federal Circuit inherited
from TECA, because “[tJhe clause ‘in whole or in part’ is absent
from the TECA authorization.” Texas American Oil Corp. v.
DOE, 44 F.3d 1557, 1564 (Fed. Cir. 1995) (en banc).
Thus the uniform view of courts of appeals until this case has
been that in this type of assignment, “[t]o decide whether or not we
have jurisdiction to hear an appeal, we look at the nature of the
issue presented to us and not to the nature of the case or
controversy below.” MGPC, Inc. v. DOE, 673 F.2d 1277, 1281
(TECA 1982). The court must “conduct a jurisdictional inquiry
into each claim raised . . . on appeal.” United States v. Wyatt, 680
F.2d 1080, 1085 n.7 (Sth Cir. 1982). This Congressional direction
is SO strong that the courts of appeals have not hesitated to bifurcate
cases when necessary to have the proper issues decided in the
proper court. See, e.g., Coastal States Marketing. Inc. v. New
England Petroleum, 604 F.2d 179, 185 (2d Cir. 1979) (TECA’s
issue jurisdiction has resulted in “the development of a system of
bifurcated appeals from unitary judgments”); see also, Scallop
Corp. v. Tully, 705 F.2d 645, 650 (2d Cir. 1983). This clear
dichotomy between patent-type appellate jurisdiction and that under
the price control statutes was evident to members of this Court and
17
to Congress,’® which reassigned the TECA authority to the Federal
Circuit without altering this feature.
In this case, the Tenth Circuit had clear precedent for
accepting jurisdiction over the issue raised by the States, an issue
outside the Federal Circuit’s limited assignment. In ARCO, the
D.C. Circuit had also been asked to determine whether the DOE
Act permitted DOE to delegate adjudicatory authority to the Office
of Hearings and Appeals, or restricted OHA to a prosecutorial role,
the precise question raised in this case. That appeal also raised
other issues within TECA’s jurisdiction, but the D.C. Circuit ruled
that it was required to address the DOE Acct issue, and to leave the
other issues to TECA (where a protective appeal had been stayed).
The D.C. Circuit had no problem separating and deciding the DOE
Act issue.” Moreover, the Federal Circuit later endorsed ARCO’s
jurisdictional holding. Phoenix Petroleum, 95 F.3d at 1564-65.
(Fed. Cir. 1996).
Thus, the Tenth Circuit had before it an appeal (a) within its
general appellate authority, and outside the specific authority of the
Federal Circuit, (b) in a field where this Court had instructed that
'? Christianson v. Colt Industries, 486 U.S. 800, 820, n. 1 (1988)
(Stevens, J., joined by Blackmun, J., concurring) (TECA “has jurisdiction over
issues not claims”) (emph. in original), citing H.R. Rep. No. 97-312, 97th
Cong., Ist Sess. 41 (1981), in turn citing Coastal States Marketing, Inc.
- Reviewing the same statutory history and terms of the DOE Act as
control here, ARCO concluded, as DOE urged, that although the Act provided
for FERC review of remedial orders, it did not preclude a further level of
adjudication within DOE, or limit DOE to investigatory and prosecutorial
functions. 769 F.2d at 785-791. Thus DOE could, through OHA, provide a
“two-tiered adjudication.” 769 F.2d at 796. In Texaco, TECA itself declined
jurisdiction over the reviewability under the DOE Acct (in that case, by FERC)
of an OHA order involving the statutes assigned to TECA. The court rejected
the argument that “because . . . [the DOE Act] issue is part of a larger ‘case or
controversy” arising under the Emergency Petroleum Allocation Act (EPAA),”
it had jurisdiction. 616 F.2d at 1195. Rather, because “[j]urisdiction is to be
strictly construed,” the DOE Act issue fell within the general jurisdiction of the
regional circuits. 616 F.2d at 1198.
18
the specialized jurisdiction was to be construed narrowly, (c) where
numerous appellate decisions, recognized by Congress and
members of this Court, established that the focus is on “issues not
claims,” n.19, supra, (d) where bifurcation of cases was
customary, (e) where a regional circuit had long ago exercised
jurisdiction on the precisely the same issue, with the subsequent
endorsement of the specialized court, and (f) under circumstances
in which no regional circuit had ever declined jurisdiction.”'_ In this
Situation, a strong presumption should have attached that
junsdiction lay in the Tenth Circuit. What could overcome that
presumption? Certainly it could not be Congress’ desire to have
the specialized court decide DOE Act issues: Congress had simply
not chosen to add this subject to TECA’s authority when it wrote
the DOE Act in 1977. In fact, if this case were transferred to the
Federal Circuit, its own precedents would require it to look to
Tenth Circuit law in deciding the DOE Act issue,” the very law
which the Tenth Circuit has declined to declare. Certainly, the
Tenth Circuit was not looking for the other court’s guidance: it had
no intention to transfer the case to that court. The Tenth Circuit’s
reliance on the nature of the underlying case (FSA issues more than
“mere background”), was clearly inconsistent with the nature of its
“issue” jurisdiction. The court’s speculative (and on its face
unjustified) apprehension that other Federal Circuit issues might
anise if it took the case -- issues not raised by appellants (and, even
if discussed by the district court, nullified by Steel)-- could not be
a sufficient basis for abdicating clearly available issue jurisdiction,
*! The other Tenth Circuit cases relied upon by the court here, Mobil Oil
Corp. v. DOE, 983 F.2d 172 (10th Cir. 1992) and Mountain Fuel Supply Co.
v. Johnson, 586 F.2d 1375 (10th Cir. 1978), cert. denied, 441 U.S. 952
(1979), involved appeals in which the specialized court issues were central to
the district court decisions and essential to resolution of the appeals. See App.
A-8-9.
22 See, Consumers Power Co, v. DOE, 894 F.2d 1571, 1579 (TECA
1990). In Texas American, 44 F.3d at 1561, the Federal Circuit adopted
TECA precedent on both substantive and jurisdictional matters in cases that
reach the Federal Circuit as successor to TECA. .
19
especially when remand or bifurcation were fully available in the
event such issues did arise.”
A court “may not in any case, even in the interest of justice,
extend its jurisdiction where none exists.” Christianson v. Colt
Industnes, 486 U.S. at 818. But it is not required to, and should
not, search for new rationales -- not mandated by Congress and
inconsistent with the precedents -- to restrict its jurisdiction. If
federal courts improvise rules for allocating jurisdiction, the
credibility, efficiency, and predictability of the judicial system will
be at risk. The goal should be, as this Court has noted in another
junsdictional context, a simple rule “‘that will not invite extensive
threshold litigation over jurisdiction” because ““‘litigation over
whether the case is in the right court is essentially a waste of time
and resources.” Navarro Savings Ass'n v. Lee, 446 U.S. 458, 464
n.13 (1980) (citations omitted).
Here, the result is more than “exasperating for the litigants
(and wasteful for all concerned).” Christianson, , 486 U.S. at 818.
The litigants here lost even the chance for the “jurisdictional ping
pong” this Court decried in Christianson. Since appellants cannot
proceed in the other forum, the States’ case will be set adrift in a
Bermuda triangle from which there is no return. The Tenth
Circuit’s departure from the normal course of judicial proceedings
and the need for an exercise of this Court’s supervisory power to
assure the integrity, efficiency and fairness of the federal court
system are manifest. Only the grant of this petition can provide a
remedy that wiil resolve this case fairly and also provide general
guidance to avoid future such departures from logic and justice.
Plainly, the only such issues it listed, App A-12-14; pp.10-11, supra,
were not present. The district court’s reviewability decision relied on none of
the non-DOE Act holdings in Con Ed, see pp.5-6, supra; on its face, the
FSA’s reference to prosecutorial discretion (if reachable at all under Steel) did
not purport to alter the status quo, see p. 6, supra, and the purported FSA
defense was in fact a DOE Act defense. See App A-13, citing Chevron’s 99-
3065 Brief at 35.
20
II. THE CHALLENGED DECISION DIRECTLY CONFLICTS WITH THIS
COURT’S BASIC ABSTENTION RULES: EVEN IF THE TENTH CIRCUIT
HAD SOME DISCRETION TO DEFER TO ANOTHER FEDERAL COURT,
SUCH ABSTENTION IS NOT APPROPRIATE WHERE THERE IS No
THREAT OF DUPLICATIVE PROCEEDINGS AND WHERE THE OTHER
COURT CANNOT PROVIDE AN ADEQUATE ALTERNATIVE FORUM.
Respondents will surely invoke, as they did below, TECA and
Federal Circuit decisions holding that, presented with an appeal
within its junsdiction, the specialized court could assert jurisdiction
over “subsidiary” or other issues required to be considered “‘in the
course of deciding the issue before the court.” Phoenix Petroleum
Co. v. FERC, 95 F.3d at 1563. Even assuming these decisions can
be reconciled with this Court’s decisions barring judicial extensions
of jurisdiction, see pp. 15, 19, supra, they do not require or even
authorize the abdication of jurisdiction by the Tenth Circuit here.
The fact that the Federal Circuit, in a case properly before it
because the central issues on appeal are Federal Circuit issues,
might also decide an ancillary issue outside its exclusive
junsdiction does not mean that the Tenth Circuit, presented with an
appeal centered on that non-exclusive issue, is required, or even
allowed, not to decide that issue. Nothing in §1291, § 1295, or this
Court’s relevant decisions or in any other regional circuit’s
decisions suggests such a rule.
On the contrary, even if its action is deemed to be a case of
discretionary abstention in favor of a court with concurrent
junsdiction, the Tenth Circuit would have, in the words of Rule 10,
decided an important federal question either in a way that conflicts
with relevant decisions of this Court, or that has not been, but
should be settled by this Court. In the field of abstention, this Court
has spoken frequently and in detail and has given certain bnght-line
answers with which the Tenth Circuit’s decision clearly and
directly conflicts. The Court should therefore grant the Writ in
order to cure that conflict and to provide supervisory guidance to
the appellate courts so that they do not begin down a new, perilous,
and impermissible path of abstention from their Congressionally-
21
granted jurisdiction.
In dealing with abstention, this Court begins with the
proposition that “the normal principle [is] that federal courts should
adjudicate claims within their jurisdiction. . . .” Wilton v. Seven
Falls Co,, 515 U.S. 277, 288 (1995). They have a “virtually
eaingyny Congueen . . to exercise the jurisdiction ~ eastggenl
U. S. 800, 817 (1976) (Opinion of Court) and at 821 (Stewart, Be
dissenting but agreeing on this point). While that case and most
abstention cases deal with various forms of federal-state abstention
based on principles of federalism and avoidance of unnecessary
federal constitutional interpretation (see generally, 17 Moore’s
Federal Practice, supra, at § 122) the basic “unflagging obligation”
principle has also been applied to federal-foreign abstention, e.g. ,
Tumer Entertainment Co. v, Degeto Film, 25 F.3d 1512 (11th Cir.
1994), and generally to all federal cases. See, e.g, Ohio v.
Wyandotte Chemicals Corp., 401 U.S. 493, 496-97 (1971) (“it is
a time honored maxim of the Anglo-American common-law
tradition that a court possessed of jurisdiction generally must
exercise it. Cohens y. Virginia, 6 Wheat. 264, 404, 5 L.Ed. 257,
291 (1821)”).
As it has expanded its abstention rules to new needs of “wise
judicial administration,” this Court has listed factors to be applied:
“No one factor is necessarily determinative; a carefully considered
judgment taking into account both the obligation to exercise
jurisdiction and the combination of factors counseling against that
exercise is required... . Only the clearest of justifications will
warrant dismissal.” Colorado River, 424 U.S. at 818-19.
In this Court’s most specific discussion of federal-federal
deference, in Colorado River, the Court stated that
there are principles unrelated to considerations of proper
constitutional adjudication and regard for federal-state
relations which govern in situations involving the
contemporaneous exercise of concurrent jurisdictions,
22
either by federal courts or by state and federal courts.
These principles rest on considerations of “[w]ise judicial
administration giving regard to conservation of judicial
resources and comprehensive disposition of litigation.” .
. . [citations omitted] .... As between federal district
courts, however, though no precise rule has evolved, the
general principle is to avoid duplicative litigation.
[424 U.S. at 817 (emph. added)]
Since there is no difference between district courts and circuit
courts for these purposes, the first question in a federal-federal
deference context must be: is abstention necessary to avoid
duplicative proceedings? Here the answer is clearly no. No other
proceeding is pending or even possible. Since the protective
appeals in the Federal Circuit were dismissed “with prejudice”
(presumably meaning “with prejudice to reinstatement,” see, Fed.
Cir. Rule 27(h)(1)), and the time for filing a new appeal has
expired, no action at all is possible in that court, let alone a
duplicative action. Only if the Tenth Circuit transfers all or part of
the case to the Federal Circuit can there be any case there, and the
Tenth Circuit will not do so. Thus the threshold test of this Court’s
“general principle” is not met.
But there is more. In every variation of its abstention rules,
both federal-state and federal-foreign, a central factor applied by
this Court and uniformly by the courts of appeals “counseling
against’ abstention is the fact that the alternative forum to which a
federal court might defer is “in some respect inadequate to resolve”
the matters at issue. See, e.g., Colorado River, 424 U.S. at 820;
Deakins v. Monaghan, 484 U.S. 193, 204-05 (1988) (the district
court has no discretion to dismiss rather than to stay claims that
cannot be redressed in the alternative state proceeding); Moses H.
Cone Mem’] Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 28
(1983) (in order to abstain from jurisdiction, a federal court must
determine whether the “parallel state-court litigation will be an
adequate vehicle for the complete and prompt resolution of the
issues between the parties... . If there is any substantial doubt as
23
to this, it would be a serious abuse of discretion to grant the stay
or dismissal at all.”) (emph. supplied); see generally, 17 Moore’s
Federal Practice, supra, § 122.
The importance of an adequate alternative forum to deal with
the litigant’s claims is almost definitional: a key element of a
court’s decision whether to defer to another court with concurrent
jurisdiction must be whether the court deferred to can and will
exercise the jurisdiction being ceded to it. See, e.g., Arizona v. San
Carlos Apache Tbe, 463 U.S. 545, 559-60 (1983). The present
case presents a clear and compelling opportunity for this court to
clarify and explicitly apply its generic abstention rules to federal-
federal abstention, so as to serve both the interests of wise judicial
admunistration and fairness to litigants. The Tenth Circuit’s failure
to consider any relevant abstention factors,” and the resulting total
extinguishment of a claim by sovereign states for public benefit
because the Tenth Circuit declined to exercise its available
jurisdiction and deferred to a court with no ability to take the case,
commends the case for this Court’s review.
Ill. THIS COURT SHOULD EXERCISE SUPERVISORY POWER TO
PREVENT THE TRANSFER STATUTE -- INTENDED TO INSURE A
PROPER FORUM FOR LITIGANTS WHO FIND THEMSELVES IN THE
WRONG COURT AND TO AVOID THE NEED TO PROCEED IN TWO
COURTS AT ONCE -- FROM BEING TURNED ON ITS HEAD SO AS TO
DENY ANY FORUM BECAUSE A LITIGANT CHOSE NOT TO PROCEED
IN TWO COURTS AT ONCE. .
The Transfer Statute, 28 U.S.C. § 1631, provides that when
a federal court finds want of jurisdiction, “the court shall, if it is in
the interest of justice, transfer such action or appeal to any other
court in which the action or appeal could have been brought at the
* Besides the inadequate alternative forum, other factors counsel against
abstention here: the case was, in good faith, filed first in the Tenth Circuit, and
had been fully briefed and was ready for argument in that court, whereas only
the filmg (and withdrawal) of the protective appeals had occurred in the
alternative forum. See, e.g., Moses H. Cone, 460 U.S. at 21-2.
24
time it was filed.” The intent of Congress in §1631, with TECA
explicitly in mind, was to preserve causes of action, without the
necessity of proceeding in two courts at once, by providing a
proper forum when, because of uncertainty as to jurisdiction as
between courts, a litigant finds itself in the wrong forum. See,
S.Rep. No. 275, 97th Cong. Ist Sess. 11 (1981), reprinted in, 1982
U.S. Code Cong. & Admin. News at 21.
Here, although the Tenth Circuit thought the basic conditions
of §1631 were met, it applied the “interest of justice” standard to
refuse transfer solely because the States, in order to avoid going
forward on the merits in two courts at once, withdrew protective
appeals to the Federal Circuit before issue was joined in that court.
Plainly this result directly contradicts congressional intent in §
1631. “Normally transfer [under § 1631] will be in the interest of
justice because normally dismissal of an action that could be
brought elsewhere is ‘time consuming and justice-defeating.’”
Miller v. Hambrick, 905 F.2d 259, 262 (9th Cir. 1990), citing,
Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962). The
“interest of justice” standard is satisfied where suit was filed in
good faith in what was later ruled to be the “wrong” forum, and a
new appeal to the court with jurisdiction would be time-barred.
See, e.g., Coleman v. United States, 106 F.3d 339, 341 (10th Cir.
1997).
Nothing in the text of §1631, its legislative history, or its
judicial interpretation indicates that the withdrawal of a protective
notice of appeal in another court, in order to avoid duplicative
litigation on the merits of the case, removes the protections
Congress intended for litigants who find themselves in the wrong
forum. On the contrary, the States’ action comported with
Congress’ intent: as this Court stated with regard to the analogous
venue transfer statute, “[w]e have made quite clear that ‘[t]o permit
a situation in which two cases involving precisely the same issues
are simultaneously pending in different District Courts leads to the
wastefulness of time, energy and money that § 1404(a) was
designed to prevent.”” Ferens v. John Deere, 494 U.S. 516, 531
25
(1990), quoting Continental Grain Co. v. Barge FBL-585, 364 U.S.
19, 26 (1960). Congress enacted § 1631 so that proceeding in two
courts at the same time would no longer be “the litigant’s main
protective device.” S.Rep. No. 275, supra, at 11.7
Moreover, the denial of transfer here, based on the prospective
transferee court’s dicta in prefatory comments to a nonprecedential
proposed order granting a voluntary dismissal, is in conflict with
this Court’s decision in Christianson and with basic legal principles
applicable to claim preclusion. In Christianson, this Court made
clear that when a transferor court makes the decision on transfer,
the transferee court must treat it as the “law of the case,” to be
accepted unless “clearly erroneous.” 486 U.S. at 819. Therefore,
had the Tenth Circuit transferred the case to the Federal Circuit,
that court would have been required to accept it as long as it found
the jurisdictional findings “plausible.” Jd. The Tenth Circuit
tumed this principle on its head, by considering itself barred from
transfer based on informal comments not contained in the Federal
Circuit’s final order. The Federal Circuit never had the issue of
transfer properly before it, nor could it decide or preclude any issue
in the protective appeals, since they were withdrawn before issue
was joined. Thus, the Tenth Circuit’s statement that the Federal
Circuit intended to “finally dispose” of the States’ claims is legally
erroneous and makes no sense: this Court has made clear that “[i]f
the first suit . . . was disposed of on any ground which did not go
to the menits of the action, the judgment rendered will prove no bar
to another suit.” Costello v. United States, 365 U.S. 265, 286
> Despite this added protection, as noted above, n.11, supra, the clear
judicial mstructions in this field and consistent practice for over 20 years, pre-
and post- §1631, has been to file protective appeals. The Tenth Circuit placed
the States im a worse position than they would have been had they not followed
this standard procedure, even though the choice the States faced -- which court
to proceed in -- was the same choice protected by §1631.
26
(1961) (citation omitted). Voluntary dismissal prior to even the
designation of any issues presented for review, much less briefing
or decision of those issues, cannot be transmuted into a decision on
the merits of the States’ claims foreclosing the assertion of those
claims in a later-transferred case.’
In sum, the lower court’s unprecedented interpretation of the
“interest of justice” standard in § 1631, in flagrant violation of
Congressional intent and of judicial precedent, calls for an exercise
of this Court’s supervisory powers, especially when the dismissal
truncates without any possible forum an appeal seeking to vindicate
the public’s interest and the States’ nghts in a massive court-
approved settlement between the states and the federal government.
CONCLUSION
For the reasons stated herein, this Petition for Writ of
Certiorani should be granted with respect to each of the questions
presented, and, if appropriate, the decision below dismissing the
appeals for lack of jurisdiction should be summarily reversed.
6 Moreover, the conditions which can be placed upon a voluntary
dismissal are limited to the payment of costs and other fees. Shellman v.
United States, 528 F.2d 675 (9th Cir. 1975), cert. denied, 425 U.S. 936
(1976). No case suggests that such dismissals can be conditioned upon a
prohibition of any later transfer.
7” Obviously, since its ruling on the dismissal motion acknowledged that
the Tenth Circuit case would proceed, the Federal Circuit understood that it
was not adjudicating the merits, and it rejected Chevron’s invitation to dismiss
for failure to file briefs. The label “with prejudice” cannot change the fact that
the merits were not adjudicated, and cannot bar a future action. Baris v.
Sulpicio Lines, Inc., 74 F.3d 567, 570, 572 (Sth Cir.), aff'd en banc, 101 F.3d
367 (Sth Cir. 1996), cert. denied, 520 U.S. 1168 (1997) (dismissal designated
as “with prejudice” on forum non conveniens grounds is not a res judicata bar
because not “on the merits”). See also, Cniales v. American Airlines, Inc., 105
F.3d 93, 97, 98 (2d Cir.), cert. denied, 522 U.S. 906 (1997) (citation omitted)
(“[W]e would not permit the choice of labels to distort substance, especially
where the consequences would be so drastic as to deprive a party of the
opportunity to be heard.... ‘In properly seeking to deny a litigant two ‘days
in court,’ courts must be careful not to deprive him of one””).
27
Respectfully submitted,
James F. Flug
Counsel of Record
Paula N. Dinerstein
Duncan, Weinberg, Genzer
& Pembroke, P.C.
1615 M Street NW,Suite 800
Washington, D.C. 20036
(202) 467-6370
Attorneys for Petitioners,
the States of Alabama,
Connecticut, Idaho, Indiana,
Maryland, Michigan,
Mississippi, Montana, Ohio,
South Dakota, Vermont,
Wisconsin, and Wyoming
June 5, 2000
Bill Lockyer,
Attorney General
Yeoryios Apallas,
Deputy Attorney General
50 Fremont St., Suite 300
San Francisco, CA 94105
(415) 703-5527
Attorneys for Petitioner,
the State of California
APPENDIX
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A-l
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
IN RE: THE DEPARTMENT OF ENERGY
STRIPPER WELL LITIGATION.
THE STATES OF ALABAMA,
CALIFORNIA, CONNECTICUT, IDAHO,
INDIANA, MARYLAND, MICHIGAN,
MISSISSIPPI, MONTANA, OHIO,
SOUTH DAKOTA, VERMONT,
WISCONSIN and WYOMING,
Plaintiffs-Appellants,
V.
UNITED STATES DEPARTMENT OF
ENERGY and CHEVRON U.S.A. INC.,
Defendants-Appellees. No. 99-3065
THE STATES OF ALABAMA, No. 99-3066
CALIFORNIA, CONNECTICUT, IDAHO,
INDIANA, MARYLAND, MICHIGAN,
MISSISSIPPI, MONTANA, OHIO,
SOUTH DAKOTA, VERMONT,
WISCONSIN and WYOMING,
Plaintiffs - Appellants,
v.
UNITED STATES DEPARTMENT OF
ENERGY, Hazel O'Leary, Secretary;
OFFICE OF HEARINGS AND APPEALS,
Department of Energy, George B. Breznay,
T,
Defendants - Appellees,
and
CHEVRON, USA, INC.,
Intervenor-Defendant- Appellee.
A-2 -
DELAWARE, HAWAIL ILLINOIS, No. 99-3102
KANSAS, NEBRASKA, NEVADA,
NORTH CAROLINA, RHODE ISLAND
and WEST VIRGINIA, THE TERRITORY
OF GUAM AND THE VIRGIN ISLANDS,
Plaintiffs-Appellants,
v.
UNITED STATES DEPARTMENT OF
ENERGY, and CHEVRON U:S.A., INC.
Defendants-Appellees.
ORDER
Filed March 6, 2000
Before EBEL, HOLLOWAY, and KELLY, Circuit Judges.
These matters are before the court on appellants’ petition for
rehearing with suggestion for rehearing en banc. Upon review, the
panel has determined rehearing is not warranted. Consequently,
the petition is denied. We have decided, however, that amendment
of our original Order and Judgment, filed on November 5, 1999, is
appropriate to clarify certain issues. We have also determined
publication is warranted. Accordingly, an amended published
opinion is attached to this order.
The mandate issued on November 5, 1999 is recalled and reissued
forthwith in accord with our amended disposition. A copy of the
rehearing petition was circulated to ali the active members of the
court. No judge having called for a poll, the en banc suggestion is
denied.
Entered for the Court
PATRICK FISHER, Clerk
by:
Elisabeth A. Shumaker
Chief Deputy Clerk
A-3
PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
[SAME CAPTION AS ABOVE]
Appeal from the United States District Court
for the District of Kansas
(D.C. Nos. 79-CV-378, 96-CV-1180-MLB, and 97-CV-378)
Submitted on the briefs:'(*)
Bill Lockyer, Attorney General, and Yeoryios Apallas, Deputy
Attorney General, San Francisco, California, for Plaintiff-Appellant
State of California.
James F. Flug and Paula Dinerstein, Duncan, Weinberg, Genzer &
Pembroke, P.C., Washington, D.C., for Plaintiffs-Appellants States
of Alabama, Connecticut, Idaho, Indiana, Maryland, Michigan,
Mississippi, Montana, Ohio, South Dakota, Vermont, Wisconsin
and Wyoming.
Stephen C. Skubel and Paul T. Michael, United States Department
of Energy, Washington, D.C., for Defendant-Appellee United
States Department of Energy.
Robert M. Westberg, Pillsbury, Madison & Sutro LLP, San
Francisco, California, for | Defendant-Appellee and
Intervenor-Defendant-Appellee Chevron U.S.A. Inc.
Berard Nash and Andrew P. Miller, Dickstein, Shapiro, Morin &
Oshinsky LLP Washington, D.C., for Plaintiffs-Appellants States
of Delaware, Hawaii, Illinois, Kansas, Nebraska, Nevada, North
'(*) After examining the briefs and appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R.
34.1(G). The cause therefore is ordered submitted without oral argument.
A-4
Carolina, Rhode Island and West Virginia, the Territory of Guam
and the Virgin Islands.
Before EBEL, HOLLOWAY and KELLY, Circuit Judges.
EBEL, Circuit Judge.
Plaintiffs-Appellants challenged a decision by the Department of
Energy; the District of Kansas denied their claims, and they now
seek review in this court. Defendant-Appellees have moved this
court to dismiss these appeals for lack of appellate jurisdiction, and
Appellants have opposed these motions. .We find that the Federal
Circuit has exclusive jurisdiction over these claims pursuant to 28
U.S.C. § 1295(a)(11)-(12), and Appellees’ motions to dismiss
cases 99-3065,
99-3102, and 99-3066 are therefore GRANTED.
BACKGROUND
Plaintiffs-Appellants in cases 99-3065 and 99-3066 are the states
of Alabama, California, Connecticut, Idaho, Indiana, Maryland,
Michigan, Mississippi, Montana, Ohio, South Dakota, Vermont,
Wisconsin, and Wyoming (the "States"). Plaintiffs-Appellants in
case 99-3102 are the states of Delaware, Hawaii, Illinois, Kansas,
Nebraska, Nevada, North Carolina, Rhode Island, and West
Virginia, as well as the territories of Guam and the Virgin Islands
(the "Jurisdictions;” the States and the Jurisdictions are collectively
referred to as "Appellants"). Appellants sued Defendants-Appellees
United States Department of Energy ("DOE") and Chevron U.S.A.
Inc. ("Chevron;" DOE and Chevron are collectively referred to as
"Appellees") in connection with a settlement agreement purporting
to resolve the Stripper Well Litigation. '(1) That litigation concerned
'The present controversy between Appellants and Appellees took the form
of three separate lawsuits. First, the States filed a motion to enforce the
agreement in the District of Kansas, which was responsible for approving and
overseeing the agreement under its Multi-District Litigation 378 ("MDL 378")
A-5
the proper disbursement of over $1 billion in overcharge funds
collected by DOE pursuant to crude oil price controls imposed
under the Economic Stabilization Act of 1970 ("ESA") and the
Emergency Petroleum Allocation Act of 1973 ("EPAA"). In 1986,
a multitude of interested parties, including the States and the
Junsdictions, entered into the Final Settlement Agreement ("FSA"),
which apportioned these and subsequently recovered funds among
DOE (40%), the fifty states and several territories (40%), and
reserved the remainder to settle individual claims (primarily those
of utilities and oil refineries). The FSA was approved by Judge
Theis of the District of Kansas, pursuant to that court's MDL 378
jurisdiction. Although intended to end this controversy, the FSA
has itself been the subject of extended litigation.
At the center of the present case is a decision by the Department of
Energy not to seek from Chevron some $500 million, which
Appellants maintain should then be disbursed under the FSA. In
1992, DOE's Economic Regulatory Administration ("ERA") issued
a Proposed Remedial Order ("PRO") alleging that Chevron had
improperly represented its status under the now-defunct Tertiary
Incentive Program ("TIP"),’and that it therefore must disgorge
docket. That is now case No. 99-3065 before this court. Second, the States
filed an original complaint in the same district court, docket No. 96-CV-1180,
which is now case No.
99-3066 before this court. Third, the Jurisdictions filed a separate motion to
enforce the agreement under the MDL 378 docket, advancing a different theory
than the States. That is now case No. 99-3102 before this court. All of these
cases concern the same disputed DOE decision. We consolidated cases
‘99-3065 and 99-3102, and companioned 99-3066 for oral argument. This
opinion addresses the Appellees’ Motions to Dismiss for Lack of Appellate
Jurisdiction filed in each case.
*The TIP was a DOE program designed to increase domestic oil
production and thus reduce the country’s dependence on foreign oil. Under
TIP, companies that extracted oil using more difficult and costly “tertiary”
methods were allowed to sell that oil at full market value, instead of at the
government-imposed price, in order to recoup the additional expense. Because
some refiners had greater access to price-controlled oil than others (who were
A-6
$124,989,588 it had received under the program (with interest, the
sum exceeds $500 million). Chevron challenged the PRO and the
matter was referred to DOE's Office of Hearings and Appeals
("OHA").
The OHA declined to enforce the PRO as a final Remedial Order,
finding that "the ERA has failed to establish[{] that Chevron was in
fact unjustly enriched by its participation in the TIP as alleged in
the PRO." (OHA Decision at 12-13.) As a result, none of the
Appellants received additional disbursements under the FSA. After
the OHA issued its decision in 1996, a group of private parties,
who stood to recover additional funds as individual claimants under
the FSA, directly challenged the ruling in the District of Columbia
District Court. That claim, however, was rejected by the Federal
Circuit. See Consolidated Edison v. O'Leary, 131 F.3d 1475 (Fed.
Cir. 1997) (dismissing plaintiffs’ claim because the OHA's decision
was not reviewable); cf. Consolidated Edison v. O'Leary, 117 F.3d
538 (Fed. Cir. 1997) (dismissing claims for lack of a private nght
of action and because the OHA's decision was not justiciable).
In 1996, the States and Jurisdictions brought the present actions in
the Distnct of Kansas, challenging the same OHA decision. That
court, however, dismissed all three suits. In its order denying both
the States’ and the Jurisdictions’ motions to enforce the FSA (Nos.
99-3065 & 99-3102 before this court), the district court identified
several reasons why these actions were improper. First addressing
the States' claims, it cited the Federal Circuit's recent decisions
regarding this controversy and found that "OHA's dismissal of the
forced to pay full market value), DOE also implemented the Entitlements
Program, which required that refiners with such greater access purchase
“entitlements” from other refiners. The price of the entitlements corresponded
with the difference between the market and controlled prices, the goal being
to avoid penalizing refiners buying TIP oil at full price. DOE issued an annual
Entitlements Notice, detailing which refiners were over or under their allotted
entitlements and requiring settlement of these accounts.
A-7
proposed remedial order against Chevron was a part of DOE's
prosecutorial function and as such, was unreviewable." (/d. at 13.)
Discussing the Jurisdictions’ claims, the court engaged in an
analysis of the FSA. The Jurisdictions alleged that Chevron
"fraudulently misled’ the court and the parties [to the FSA] by
misrepresenting its status as an entitlements seller under the draft
1981 Entitlements Notice [upon which the FSA distributions were
based.]" (/d. at 4.) Specifically, the Jurisdictions argued that when
Chevron claimed certain tax credits after DOE discontinued the
Entitlements Program, it automatically decertified itself as an
entitlements seller under the TIP. (See id.) The court responded,
however, that "[t]he jurisdictions assume that, in 1983; Chevron
had to elect between a windfall profit tax refund and remaining on
the entitlements list. There is nothing in the FSA requiring such an
election." (/d. at 15.) The court further found that “tax matters were
excepted from the settlement by Proviso (E) to the Refiners
_ Release,” and that "the FSA imposed no obligation on Chevron as
a settling refiner to disclose its pending windfall profit tax refund
claim.” (Jd. at 16.) Thus, its denial of the Jurisdictions’ motion
required a close inquiry into the terms of the FSA.
That same day, the district court issued a separate order dismissing
the States’ original complaint (No. 99-3066 before this court). The
court specifically incorporated its findings in the MDL order, and
dismissed the States’ FSA claims on those grounds. (See Order of
Dismissal at 2.) The States had also challenged DOE's
interpretation of the TIP regulations, DOE's legal authority to issue
or amend its regulations, and DOE's compliance with the
Administrative Procedure Act and the Department of Energy
Organization Act. The court dismissed these claims for lack of
standing or, alternatively, for lack of proper venue. (See id. at 1-4.)
The States and Jurisdictions now seek review in this court.
Appellees DOE and Chevron filed motions to dismiss for lack of
appellate junsdiction in each case, alleging that exclusive appellate
A-8
jurisdiction over these claims lies with the Federal Circuit. For the
reasons stated below, we agree.
DISCUSSION
A. Federal Circuit Jurisdiction
28 U.S.C. § 1295(a) provides that "[t]he United States Court of
Appeals forthe Federal Circuit shall have exclusive jurisdiction .
. (11) of an appeal under section 211 of the Economic
Stabilization Act of 1970; (12) of an appeal under section 5 of the
Emergency Petroleum Allocation Act of 1973." Among the relevant
provisions of the ESA and the EPAA were the crude oil price
controls, which formed the basis for the controversy resolved by the
FSA. The Federal Circuit succeeded to this jurisdiction upon
abolition of the Temporary Emergency Court
of Appeals ("TECA") in 1993. See Pub. L. 102-572 § 102(d), (e)
(1992). Thus, this court cannot exercise jurisdiction over appeals
"under" these statutes.
B. Tenth Circuit Authority
The Tenth Circuit has carefully avoided encroaching on the
exclusive jurisdiction of the Federal Circuit and its predecessor,
TECA. In Mobil Oil Corp. v. United States Dep't of Energy, 983
F.2d 172 (10th Cir. 1992), this court found that a dispute over
moneys claimed by DOE in restitution proceedings against an oil
company involved issues arising under the ESA and EPAA and
required interpretation of the ESA and EPAA, and was therefore
subject to TECA's exclusive jurisdiction. See id. at 175-76. The
court found that the issue of liability for restitution was "intertwined
with the ESA and EPAA," and therefore could not properly be
— from TECA's domain. Jd. at 176. The court also noted
that "[a]Jnother Tenth Circuit decision recognizes TECA's
jurisdiction when interpretation of price ceilings regulations
imposed by the ESA and EPAA cause a contract dispute between
A-9
the parties.” Jd. (citing Mountain Fuel Supply Co. v. Johnson, 586
F.2d 1375 (10th Cir. 1978), cert. denied, 441 U.S. 952 (1979)).
The Tenth Circuit has never exercised jurisdiction over a disputed
issue arising under the FSA.
Appellants argue that our decision in In re Seneca Oil, 906 F.2d
1445 (10th Cir. 1990), points in favor of jurisdiction over the
present case. This argument is incorrect. In Seneca Oil, the court
held that where ESA/EPAA issues are merely a backdrop to an
wrote, "is not from an action to enforce DOE regulations or to
obtain an order of restitution; rather it is from a decision regarding
the priority of the restitution claim in bankruptcy." Jd. at 1454.
Moreover, the court was careful to note that TECA's exclusive
jurisdiction with respect to the ESA and EPAA is not to be
narrowly construed: "Thus, the phrase ‘arising under’ is interpreted
more expansively for purposes of TECA's jurisdiction than it is for
purposes of the federal question jurisdiction of the district courts.
For example, unlike federal question jurisdiction, the TECA's
jurisdiction can be created by defenses that raise ESA/EPAA
issues.” Jd. at 1454 n.i (emphasis added). In sum, only where these
Statutes and their regulations are mere background will this court
exercise jurisdiction.
The question remains, therefore, whether appeals relating to the
FSA arise under the ESA and EPAA, or whether those statutes
merely provide a backdrop for independent claims. In the absence
of Tenth Circuit precedent speaking directly to this issue, we find
it useful to seek guidance from the Federal Circuit's extensive
dealings with the FSA. As a preliminary matter, we note that the
Federal Circuit expressly held "that the TECA precedent and
practice on jurisdictional matters shall continue to apply to cases
Se ee
44 F 3d 1557, 1564 (Fed. Cir. 1995). Accordingly, we look to both
Federal Circuit and TECA authority in making this inquiry.
A-10
Such a review reveals that appellate jurisdiction over FSA disputes
is exclusively vested in the Federal Circuit. In In re Dep't of Energy
Stripper Well Exemption Litigation, 864 F.2d 796 (Temp. Emer.
Ct. App. 1988), the court held that "the case before the district
court of Kansas, No. 10-76 [MDL 378 Stripper Well Litigation]
seeking interpretation of the Final Settlement Agreement to resolve
a dispute between two signatories to that Agreement, [is] a cause
of action arising out of federal law, specifically out of the laws and
regulations conceming the Economic Stabilization Act." Jd. at 799.
Given the plain logic of this conclusion, as well as the experience
and expertise of the Federal Circuit in interpreting the FSA, we
hold that if a controversy presents an issue of interpretation of the
FSA, 28 U.S.C. § 1295(a)(11) grants exclusive appellate
jurisdiction to the Federal Circuit.
We also note that the exclusive jurisdiction of the Federal Circuit
obtains where a party raises an ESA/EPAA issue as a defense. See
In_re Seneca Oil, 906 F.2d at 1454 n11 ("[Tyhe TECA's
jurisdiction can be created by defenses that raise ESA/EPAA
issues."); Texas American Oil Corp. v. United States Dep't of
Energy, 44 F.3d 1557, 1563 (Fed Cir. 1995) ("The TECA has
exercised jurisdiction of any EPAA/ESA issue whether presented
nf — as a —— or aS a en Phoenix
95 F.3d 1555, 1563 (Fed. Cir. 1996). It follows from the above
discussion that where a party raises the FSA as a defense, the claim
"arises under" the ESA and EPAA and therefore vests exclusive
jurisdiction in the Federal Circuit.
C. Nature of the Present Case
(1) The Jurisdictions’ MDL 378 Case (No. 99-3102)
In their opposition to Appellees’ motion to dismiss, the Jurisdictions
admut that "[t]he Jurisdictions’ claims are all based on enforcing the
FSA." (Jurisdictions' Opposition at 3.) As we have previously
A-11
stated, claims under the FSA are within the exclusive jurisdiction
of the Federal Circuit and thus cannot be considered by this court.
The Jurisdictions cite several TECA and Federal Circuit cases for
the proposition that FSA claims do not arise under the ESA or
EPAA. (See Jurisdictions’ Opposition at 3-4.) None of these cases,
fail to discuss TECA's 1988 In re Stripper Well case explicitly
finding that FSA claims do indeed arise under those statutes. Thus,
because the Jurisdictions’ claims are based on the FSA, the Federal
Circuit has exclusive jurisdiction.
(2) The States' MDL 378 Case (No. 99-3065)
In their brief, the States have carefully phrased the issues presented
to this court to avoid any mention of the FSA. They ask this court:
"Did the lower court err in ruling that the 1977 Department of
Energy Organization Act ("DOEOA") requires the challenged
order of the Department of Energy's Office of Hearings and
Appeals to be deemed an unreviewable act of prosecutorial
discretion?” (States' 99-3065 Br. at 3.) Moreover, they urge that in
evaluating jurisdiction we must "look at the nature of the issue
presented to us and not to the nature of the
case or controversy presented below.” (States' 99-3065 Opposition
at 2 (quoting MGPC, Inc. v. DOE, 673 F.2d 1277, 1281 (Temp.
Emer. Ct. App. 1982).) The issues before this court, they argue,
“are discrete and severable from any ESA/EPAA issues raised by
the underlying claims or in the lower court's decision." (Jd. at 3-4.)
A careful review of the case, however, reveals otherwise.
Under the case or controversy requirement of Article III, courts
decide cases in the context of a particular dispute and not in a legal
vacuum. Thus, notwithstanding the States’ careful semantics, we
understand the primary question presented in this appeal to be:
"Did the district court err in determining that the OHA's decision
that Chevron did not receive excess tertiary incentive revenue and
A-12
therefore need not make restitution to the Stripper Well escrow
fund was unreviewable?"
The district court listed a variety of grounds for dismissing the
States' claims, including that the OHA's decision not to enforce the
PRO was an norte act of prosecutorial discretion. Under
= ) , 523 U.S. 83 (1998),
betta ea-heniet dettanhdbadthphan announced that it lacked
jJunsdiction over the matter and dismissed the case. Steel rejected
the use of so-called "hypothetical jurisdiction" to reach the merits
of a case, and a jurisdictional dismissal is all that is necessary to the
holding. As such, we must consider the remainder of the district
court's decision dicta. See also Gold v. Local 7 United Food and
Commercial Workers Union, 159 F.3d 1307, 1310 (10th Cir. 1998)
(noting Steel requires that jurisdictional issues must be resolved
first).
Nevertheless, determining whether the OHA's decision in this case
is properly reviewable would require this court to consider issues
arising both under the ESA and EPAA directly and under the FSA.
The district court based its ruling that the decision was not
reviewable on Consolidated Edison Co. v. O'Leary, 131 F.3d 1475
(Fed. Cir. 1997), and the States ask us to reject this authority. (See
States’ 99-3065 Br. at 27-29.) However, even a brief glance at that
case reveals that the Federal Circuit relied heavily on interpretation
of ESA/EPAA issues to reach its result. See O'Leary, 131 F.3d at
1478 ("Four statutes are pertinent to this issue: sections 209, 210,
and 211 of the ESA, which were incorporated into the EPAA, and
section 503 of the Department of Energy Organization Act
(DOEOA)."). The States would have us focus only on whether the
DOEOA precludes review of the OHA's decision, but it is clear
that the case relied upon by the district court to dismiss the States’
claims directly involved the ESA and EPAA. As such, this claim
clearly arises under those statutes.
A-13
Moreover, we would have to determine what effect paragraph
IV.A.2 of the FSA should have on our characterization of the
OHA's decision. That paragraph reads:
Foture DOE Actions: What dite soie exception set rortii in IT A.4;
nothing in this Agreement shall be read or construed to limit or
render reviewable the exercise of DOE's prosecutorial discretion in
determining the appropriate action to take, if any, with regard to
any enforcement matter. Further, nothing in this Agreement shall
be read or construed to impose any obligation or duty upon the
DOE regarding the enforcement or non-enforcement of its
regulations, and it remains solely in the DOE's discretion to
determine whether an enforcement proceeding should be initiated,
settled, pursued on particular terms or terminated.
We are at a loss to see how the issue presented to this court could
be decided without reference to this highly probative provision of
the agreement underlying this dispute. (See also FSA § VIB ("[The
FSA] shall not create any nght of action against DOE concerning
the initiation, continuation or conduct of any litigation.").)
Furthermore, Appellee Chevron relies in part on the FSA to
support its assertion that the district court's decision not to review
the OHA's action was correct. (See Aple. Chevron
99-3065/99-3012 Br. at 35.) It is clear that raising an ESA/EPAA
issue (which the FSA clearly is) in a defense is sufficient to invoke
the Federal Circuit's exclusive jurisdiction.
This court declines to participate in the fiction that this dispute does
not tum squarely on the ESA, the EPAA, and the FSA. In order to
grant the relief sought by the States, we would have to conduct
inquiries specifically committed to the expertise of the Federal
Circuit. Specifically, we would have to reject a Federal Circuit
decision explicitly resting on those statutes, interpret and
A-14
distinguish a paragraph of the FSA directly on point, and consider
a defense implicating the FSA.’
The States also contend that the district court erroneously excluded
certain arguments advanced in the States' reply bnef before that
court and that the district court "should have considered all of the
States’ claims together in the MDL 378 docket." While these claims
do not directly turn on an interpretation or application of the FSA,
the Federal Circuit nevertheless has exclusive jurisdiction to
resolve them. In Phoenix Petroleum Co, v. United States Fed'l
Energy Regulatory Comm'n, 95 F.3d 1555 (Fed. Cir. 1996), the
Federal Circuit explained that TECA's exclusive junsdiction
extended to issues that did not themselves arise under the EPAA
when "a meaningful ruling requires consideration of the issues as
a whole, the construction of the EPAA will control the litigation,
the issues are so commingled as to render separate treatment
impractical, or the non-EPAA issues are subsidiary, preliminary or
threshold to an EPAA issue."
Id. at 1563 (quoting Pennzoil Exploration & Prod. Co. v. Lujan,
928 F.2d 1139, 1141 (Temp. Emer. Ct. App. 1991). We hold that
the same is true when issues not otherwise relating to the FSA are
so inextricably linked and subsidiary to the FSA claim that it would
be both impractical
and wasteful to consider those claims separately.
In the present case, whether the district court properly excluded
some of the States’ arguments and whether the district court
properly refused to consider certain claims under its MDL 378
docket are surely subsidiary to the States' primary FSA claims. As
we have explained at length above, it is clear that these appeals are
The States also alleged that "the court's conclusion that OHA was
exercising unreviewable prosecutorial discretion (a) precluded it from
addressing the merits and (b) fatally infected its review of the merits." Because
we have found that this court lacks jurisdiction to review the district court's
A-15
fundamentally based on the FSA, and it would merely waste the
courts’ and the lingants’ resources to remove these secondary issues
from their proper context. Indeed, the States nghtly acknowledge
that the "central issue" is their claim that the district court should
have reviewed the OHA decision. Furthermore, we note that
because the additional claims the States sought to raise were
themselves based on the FSA, whether the district court properly
excluded these claims is merely a threshold inquiry to an FSA
claim. Thus, it appears that the States’ claims that do not on their
face implicate the FSA in fact are so secondary in relevance and
importance to their FSA companions that they must fall within the
Federal Circuit's exclusive jurisdiction.
(3) The States’ Original Complaint (No. 99-3066)
On the same day the district court dismissed the States’ and
Junisdictions' motions to enforce the FSA, it issued a separate order
dismissing the States’ concurrent original complaint. In that order,
the district court held that the States’ allegation that DOE had
violated the FSA failed to state a claim upon which relief could be
granied. The court then dismissed the remainder of the States'
claims for lack of standing, or, alternatively, for lack of proper
venue. (See Order of Dismissal at 2.) The States have appealed
these dismissals to this court.
In dismissing the States' FSA claim, the district court explicitly
adopted the reasoning of its order dismissing the MDL 378 claims.
(See Order of Dismissal at 2.) For the same reasons we cannot
review the MDL 378 decisions, this court does not have
jurisdiction to review the States’ claim that the district court
erroneously adopted the MDL 378 rulings.
The same result obtains with regard to the district court's dismissals
for lack of standing. In its brief, Appellee DOE argues that the
States do indeed lack standing under ESA:
A-16
The standing issue centers on an interpretation of ESA sections
209-11 and the bases on which Congress authorized public and
private actions to enforce the ESA, the EPAA or regulations issued
thereunder. An unbroken line of controlling decisions stand [sic] for
the proposition that private parties, such as the States, lack standing
to seek judicial review of a DOE enforcement decision made under
the purview of the ESA, the EPAA or regulations issued
thereunder.
As noted above, this court has held that "the TECA's jurisdiction
can be created by defenses that raise ESA/EPAA issues." In re
Seneca Oil, 906 F.2d at 1454 n.11. Consideration of Appellees’
counter arguments on appeal would require this court to interpret
statutes that are plainly within the exclusive jurisdiction of the
Federal Circuit. Allowing this appeal to proceed would inevitably
thwart either the will of Congress in granting exclusive jurisdiction
to the Federal Circuit or the Appellees’ right to have their defenses
heard by the appropriate authority. Thus, Appellants’ claims may
not be presented to this court.‘
D. Transfer
28 U.S.C. § 1631 states: $
Whenever a civil action is filed in a court as defined in section 610
of this title or an appeal, including a petition for review of
administrative action, is noticed for or filed with such a court and
that court finds that there is a want of jurisdiction, the court shall,
if it is in the interest of justice, transfer such action or appeal to any
other such court in which the action or appeal could have been
brought at the time it was filed or noticed, and the action or appeal
shall proceed as if it had been filed in or noticed for the court to
“Because we find that the district court's dismissal for lack of standing
cannot be reviewed in this court, it is unnecessary to determine whether the
court's alternative rationale (lack of venue) was correct.
A-17
which it is transferred on the date upon which it was actually filed
in or noticed for the court from which it is transferred.
The plain language of this provision indicates we are required to
consider whether transferring these cases to the Federal Circuit
would be "in the interest of justice."
We note that the States and the Jurisdictions have previously
comunenced proceedings in these cases before the Federal Circuit.
After filing "protective" notices of appeal in that court, Appellants
sought but were denied a stay of those proceedings pending our
disposition. Appellants then sought to voluntarily withdraw those
appeals, but the Federal Circuit ruled that failure to proceed would
result in dismissal with prejudice. The Jurisdictions chose to
continue in that court, while the States accepted a dismissal with
prejudice. In the order directing the States to proceed with the
appeals or face dismissal, the Federal Circuit anticipated that the
States might request that this court transfer the actions back to the
Federal Circuit:
In light of these circumstances, any dismissal entered in appeal nos.
99-1328 and 99-1356 will be with prejudice. As Chevirjon and
DOE point out, if a dismissal is entered without prejudice, [the
States] could, in the event of an adverse ruling by the 10th Circuit,
seek to resurrect [their] appeal here by way of transfer. That would
be an impermissible result, given our prior rulings and the fact that
appeal no. 99-1327 [(the Jurisdictions’ appeal)] is proceeding in
this court.
In light of this unequivocal declaration by the Federal Circuit that
it intended to finally dispose of the States’ appeals, and in light of
the States’ ample opportunity to pursue these cases in the proper
A-18
forum, we cannot say that justice would be served by transfer to the
Federal Circuit. Accordingly, the States' motion is denied.”
CONCLUSION
For the above reasons, we find that all of Appellants’ claims raised
in these three cases are within the Federal Circuit's exclusive
jurisdiction pursuant to 28 U.S.C. § 1295(a). Accordingly,
Appellees’ motions to dismiss these appeals for lack of appellate
jurisdiction are hereby GRANTED, and the States’ motions for
rehearing and transfer are DENIED.
* The DOE's motion to file its responsive brief on the transfer
issue Out of time is granted.
B-1
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
IN RE: THE DEPARTMENT OF ENERGY
STRIPPER WELL LITIGATION.
THE STATES OF ALABAMA,
CALIFORNIA, CONNECTICUT, IDAHO,
INDIANA, MARYLAND, MICHIGAN,
MISSISSIPPI, MONTANA, OHIO,
SOUTH DAKOTA, VERMONT,
WISCONSIN and WYOMING,
Plaintiffs-Appellants, No. 99-3065
v. (D.C. No. 79-CV-378)
UNITED STATES DEPARTMENT OF _ (D. Kan.)
ENERGY and CHEVRON U.S.A. INC.,
Defendants-Appellees
THE STATES OF ALABAMA,
CALIFORNIA, CONNECTICUT, IDAHO,
INDIANA, MARYLAND, MICHIGAN,
MISSISSIPPI, MONTANA, OHIO, No. 99-3066
SOUTH DAKOTA, VERMONT,
WISCONSIN and WYOMING, (D.C. No. 96-CV-
1180-MLB)
Plaintiffs - Appellants, (D. Kan.)
¥.
B-2
UNITED STATES DEPARTMENT OF
ENERGY, Hazel O'Leary, Secretary;
OFFICE OF HEARINGS AND APPEALS,
Department of Energy, George B. Breznay,
Director,
Defendants - Appellees,
and
CHEVRON, USA, INC.,
Intervenor-Defendant-
Appellee.
DELAWARE, HAWAII, ILLINOIS, No. 99-3102
KANSAS, NEBRASKA, NEVADA,
NORTH CAROLINA, RHODE (D.C. No. 97-CV-378)
ISLAND and WEST VIRGINIA,
THE TERRITORY OF GUAM (D. Kan.)
AND THE VIRGIN ISLANDS,
Plaintiffs-Appellants,
v.
UNITED STATES DEPARTMENT OF
ENERGY, and CHEVRON U:S.A., INC.
Defendants-Appellees.
B-3
ORDER AND JUDGMENT()
Before EBEL, HOLLOWAY and KELLY, Circuit Judges.
Plaintiffs-Appellants challenged a decision by the Department of
Energy, the District of Kansas denied their claims, and they now
seek review in this court. Defendants-Appellees have moved
this court to dismiss these appeals for lack of appellate
jurisdiction, and Appellants have opposed these motions. We
find that the Federal Circuit has exclusive jurisdiction over these
claims pursuant to 28 U.S.C. § 1295(a){11)-(12), and
Appellees’ motions to dismiss cases 99-3065, 99-3102, and
99-3066 are therefore GRANTED.
BACKGROUND
Plaintiffs-Appellants in cases 99-3065 and 99-3066 are the
states of Alabama, California, Connecticut, Idaho, Indiana,
Maryland, Michigan, Mississippi, Montana, Ohio, South
Dakota, Vermont, Wisconsin, and Wyoming (the "States").
Plaintiffs-Appellants in case 99-3102 are the states of Delaware,
Hawaii, Illinois, Kansas, Nebraska, Nevada, North Carolina,
Rhode Island, and West Virginia, as well as the territories of
Guam and the Virgin Islands (the "Jurisdictions;" the States and
the Jurisdictions are collectively referred to as "Appellants").
: This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata,
and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and
judgment may be cited under the terms and conditions of 10th
Cir. R. 36.3.
B-4
Appellants sued Defendants-Appellees United States
Department of Energy ("DOE") and Chevron U.S.A. Inc.
("Chevron;" DOE and Chevron are collectively referred to as
"Appellees") in connection with a settlement agreement
purporting to resolve the Stripper Well Litigation.’ That
litigation concerned the proper disbursement of over $1 billion
in overcharge funds collected by DOE pursuant to crude oil
price controls imposed under the Econonuc Stabilization Act of
1970 ("ESA") and the Emergency Petroleum Allocation Act of
1973 ("EPAA"). In 1986, a multitude of interested parties,
including the States and the Jurisdictions, entered into the Final
Settlement Agreement ("FSA"), which apportioned these and
subsequently recovered funds among DOE (40%), the fifty
states and several territories (40%), and reserved the remainder
to settle individual claims (primarily those of utilities and oil
refineries). The FSA was approved by Judge Theis of the
} The present controversy between Appellants and
Appellees took the form of three separate lawsuits. First, the
States filed a motion to enforce the agreement in the District
of Kansas, which was responsible for approving and
overseeing the agreement under its Multi-District Litigation
378 ("MDL-378") docket. That is now case No. 99-3065
before this court. Second, the States filed an original
complaint in the same district court, docket No. 96-CV-1180,
which is now case No. 99-3066 before this court. Third, the
Jurisdictions filed a separate motion to enforce the agreement
under the MDL 378 docket, advancing a different theory than
the States. That is now case No. 99-3102 before this court.
All of these cases concern the same disputed DOE decision.
We consolidated cases 99-3065 and 99-3102, and
companioned 99-3066 for oral argument. This Order
addresses the Appellees’ Motions to Dismiss for Lack of
Appellate Jurisdiction filed in each case.
B-5
District of Kansas, pursuant to that court's MDL 378
jurisdiction. Although intended to end this controversy, the FSA
has itself been the subject of extended litigation.
At the center of the present case is a decision by the Department
of Energy not to seek from Chevron some $500 million, which
Appellants maintain should then be disbursed under the FSA.
In 1992, DOE's Economic Regulatory Administration ("ERA")
issued a Proposed Remedial Order ("PRO") alleging that
Chevron had improperly represented its status under the
now-defunct Tertiary Incentive Program ("TIP"),” and that it
therefore must disgorge $124,989,588 it had received under the
program (with interest, the sum exceeds $500 million). Chevron
challenged the PRO and the matter was referred to DOE's
Office of Hearings and Appeals ("OHA").
. The TIP was a DOE program designed to increase
domestic oil production and thus reduce the country's
dependence on foreign oil. Under TIP, companies that -
extracted oil using more difficult and costly "tertiary"
methods were allowed to sell that oil at full market value,
instead of at the government-imposed price, in order to
recoup the additional expense. Because some refiners had
greater access to price-controlled oil than others (who were
forced to pay full market value), DOE also implemented the
Entitlements Program, which required that refiners with such
greater access purchase "entitlements" from other refiners.
The price of the entitlements corresponded with the
difference between the market and controlled prices, the goal
being to avoid penalizing refiners buying TIP oil at full price.
DOE issued an annual Entitlements Notice, detailing which
refiners were over or under their allotted entitlements and
requiring settlement of these accounts.
ana ENN AO en A REN Ne rt carr —
B-6
The OHA, however, declined to enforce the PRO as a final
Remedial Order, finding that "the ERA has failed to establish[]
that Chevron was in fact unjustly enriched by its participation in
the TIP as alleged in the PRO." (OHA Decision at 12-13.) As
a result, none of the Appellants received additional
disbursements under the FSA. After the OHA issued its decision
in 1996, a group of private parties, who stood to recover
additional funds as individual claimants under the FSA, directly
challenged the ruling in the District of Columbia District Court.
That claim, however, was twice rejected by the Federal Circuit.
See Consolidated Edison v. O'Leary, 117 F.3d 538 (Fed. Cir.
1997) (dismissing plaintiffs’ claims for lack of a private right of
action and because the OHA's decision was not justiciable),
Consolidated Edison v. O'Leary, 131 F.3d 1475 (Fed. Cir.
1997) (dismissing plaintiffs’ claim because the OHA's decision
was not reviewable).
In 1996, the States and Jurisdictions brought the present actions
in the District of Kansas, challenging the same OHA decision.
That court, however, dismissed all three suits. In its order
denying both the States' and the Jurisdictions’ motions to
enforce the FSA (Nos. 99-3065 & 99-3102 before this court),
the district court identified several reasons why these actions
were improper. First addressing the States’ claims, it found that
one provision of the FSA upon which the States relied "does
not provide any substantive rights." (Order at 11.) It further
noted that "[t]he FSA settled the stripper well litigation, along
with the entitlements litigation, but it did not place OHA and its
enforcement proceedings under this court's oversight." (Id.) The
court then turned to the second FSA provision that the States
claimed DOE's decision violated, but found that no such
violation in fact occurred. (See id. at 12-13.) Citing the Federal
Circuit's recent decisions regarding this controversy, the court
found that "OHA's dismissal of the proposed remedial order
against Chevron was a part of DOE's prosecutorial function and
B-7
as such, was unreviewable." (Id. at 13.) "Finally," the court
continued, "paragraph IV.A.2 of the FSA specifically preserves
DOE's prosecutorial discretion and shields it from review." (Id.)
Discussing the Jurisdictions’ claims, the court similarly engaged
in an analysis of the FSA. The ‘Jurisdictions alleged that
Chevron "fraudulently misled’ the court and the parties [to the
FSA] by misrepresenting its status as an entitlements seller
under the draft 1981 Entitlements Notice [upon which the FSA
distributions were based.]" (Id. at 4.) Specifically, the
Jurisdictions argued that when Chevron claimed certain tax
credits after DOE discontinued the Entitlements Program, it
automatically decertified itself as an entitlements seller under the
TIP. (See id.) The court responded, however, that "[t]he
jurisdictions assume that, in 1983, Chevron had to elect
between a windfall profit tax refund and remaining on the
entitlements list. There is nothing in the FSA requiring such an
election." (Id, at 15.) The court further found that “tax matters
were excepted from the settlement by Proviso (E) to the
Refiners Release," and that "the FSA imposed no obligation on
Chevron as a settling refiner to disclose its pending windfall
profit tax refund claim." (Id. at 16.) Thus, its denial of the
Jurisdictions’ motion required a close inquiry into the terms of
the FSA.
That same day, the district court issued a separate order
dismissing the States’ original complaint (No. 99-3066 before
this court). The court specifically incorporated its findings in the
MDL order, and dismissed the States' FSA claims on those
grounds. (See Order of Dismissal at 2.) The States had also
challenged DOE's interpretation of the TIP regulations, DOE's
legal authority to issue or amend its regulations, and DOE's
compliance with the Administrative Procedure Act and the
Department of Energy Organization Act. The court dismissed
B-8
these claims for lack of standing or, alternatively, for lack of
proper venue. (See id. at 1-4.)
The States and Jurisdictions now seek review in this court.
Appellees DOE and Chevron filed motions to dismiss for lack
of appellate jurisdiction in each case, alleging that exclusive
appellate jurisdiction over these claims lies with the Federal
Circuit. For the reasons stated below, we agree.
\. Federal Circuit Jurisdicti
28 U.S.C. § 1295(a) provides that "[t]he United States Court of
Appeals for the Federal Circuit shall have exclusive jurisdiction
of an appeal .. . (11) under section 211 of the Economic
Stabilization Act of 1970; (12) of an appeal under section 5 of
the Emergency Petroleum Allocation Act of 1973." Among the
relevant provisions of the ESA and the EPAA were the crude
oil price controls, which formed the basis for the controversy
resolved by the FSA. The Federal Circuit succeeded to this
_ jurisdiction upon abolition of the Temporary Emergency Court
of Appeals ("TECA") in 1993. See Pub. L. 102-572 § 102(d),
(e) (1992). Thus, this court cannot exercise jurisdiction over
appeals "under" these statutes.
B. Teuth Circuit Author:
The Tenth Circuit has carefully avoided encroaching on the
exclusive jurisdiction of the Federal Circuit and its predecessor,
TECA. In Mobil Oil Corp. v. United States Dep't of Energy,
983 F.2d 172 (10th Cir. 1992), this court found that a dispute
over moneys claimed by DOE in restitution proceedings against
an oil company implicated the ESA and EPAA and was
therefore subject to TECA's exclusive junsdiction. See id. at
175-76. The court found that the issue of liability for restitution
was "intertwined with the ESA and EPAA," and therefore could
B-9
not properly be removed from TECA's domain. Id, at 176. The
court also noted that "[aJnother Tenth Circuit decision
recognizes TECA's jurisdiction when interpretation of price
ceilings regulations imposed by the ESA and EPAA cause a
contract dispute between the parties." Id. (citing Mountain Fuel
Supply Co. v. Johnson, 586 F.2d 1375 (10th Cir. 1978), cert.
denied, 441 U.S. 952 (1979). The Tenth Circuit has never
exercised jurisdiction over a dispute concerning the FSA.
Appellants argue that our decision in In re Seneca Oil, 906 F.2d
1445 (10th Cir. 1990), points in favor of jurisdiction over the
present case. This argument is incorrect. In Seneca Oil, the
court held that where ESA/EPAA issues are merely a backdrop
to an independent claim, jurisdiction may obtain. "This appeal,"
the court wrote "is not from an action to enforce DOE
regulations or to obtain an order of restitution; rather it is from
a decision regarding the priority of the restitution claim in
bankruptcy.” Id. at 1454. Moreover, the court was careful to
note that TECA's exclusive jurisdiction with respect to the ESA
and EPAA is not to be narrowly construed: "Thus, the phrase
‘arising under’ is interpreted more expansively for purposes of
TECA's jurisdiction than it is for purposes of the federal
question jurisdiction of the district courts. For example, unlike
federal question jurisdiction, the TECA's jurisdiction can be
created by defenses that raise ESA/EPAA issues." Id. at 1454
n.1 (emphasis added). In sum, only where these statutes and
their regulations are mere background will this court exercise
jurisdiction.
The question remains, therefore, whether appeals relating to the
FSA arise under the ESA and EPAA, or whether those statutes
merely provide a backdrop for independent claims. In the
absence of Tenth Circuit precedent speaking directly to this
issue, we find it useful to seek guidance from the Federal
Circuit's extensive dealings with the FSA. As a preliminary
B-10
matter, we note that the Federal Circuit expressly held "that the
TECA precedent and practice on jurisdictional matters shall
continue to apply to cases that reach the Federal Circuit by
virtue of succession to the TECA." Texas American Oil Corp.
v. United States Department of Energy, 44 F.3d 1557, 1564
(Fed. Cir. 1995). Accordingly, we look to both Federal Circuit
and TECA authority in making this inquiry.
Such a review reveals that appellate jurisdiction over FSA
disputes is exclusively vested in the Federal Circuit. In In re
Dep't of Energy Stripper Well Exemption Litigation, 864 F.2d
796 (Temp. Emer. Ct. App. 1988), the court held that "seeking
interpretation of the Final Settlement Agreement to resolve a
dispute between two signatories to that Agreement, [is] a cause
of action arising out of federal law, specifically out of the laws
and regulations concerning the Economic Stabilization Act." Id.
at 799. Given the plain logic of this conclusion, as well as the
experience and expertise of the Federal Circuit in interpreting
the FSA, we hold that if a controversy requires interpretation of
the FSA, 28 U.S.C. § 1295(a){11) grants exclusive appellate
jurisdiction to the Federal Circuit.
C. Nature of the Present Case
-1) The Jurisdictions’ MDL 378 Case (No. 99-3102
In their opposition to Appellees' motion to dismiss, the
Jurisdictions admit that "[t]he Jurisdictions’ claims are all based
on enforcing the FSA." (Jurisdictions' Opposition at 3.) As we
have previously stated, claims under the FSA are within the
exclusive jurisdiction of the Federal Circuit and thus cannot be
considered by this court. The Jurisdictions cite several TECA
and Federal Circuit cases for the proposition that FSA claims do
not arise under the ESA or EPAA. (See Jurisdictions’
Opposition at 3-4.) None of these cases, however, directly
B-11
addresses this point; moreover, the Jurisdictions fail to discuss
TECA's 1988 In re Stripper Well case explicitly finding that
FSA claims do indeed arise under those statutes. Thus, because
the Jurisdictions’ claims are based on the FSA, the Federal
Circuit has exclusive jurisdiction.
(2) The States’ MDL 378 Case (No. 99-3065).
In their brief, the States have carefully phrased the issues
presented to this court to avoid any mention of the FSA. They
ask this court: "Did the lower court err in ruling that the 1977
Department of Energy Organization Act ("DOEOA") requires
the challenged order of the Department of Energy's Office of
Hearings and Appeals to be deemed an unreviewable act of
prosecutorial discretion?" Moreover, they urge that in
evaluating jurisdiction we must “look at the nature of the issue
presented to us and not to the nature of the case or controversy
presented below." (States 99-3065 Opposition at 2 (quoting
MGPC, Inc. v. DOE, 673 F.2d 1277, 1281 (Temp. Emer. Ct.
App. 1982).) The issues before this court, they argue, "are
discrete and severable from any ESA/EPAA issues raised by the
underlying claims or in the lower court's decision." (Id. at 3-4.)
A careful review of the case, however, r eveals otherwise.
Under the case or controversy requirement of Article III, courts
decide cases in the context of a particular dispute and not in a
legal vacuum. Thus, notwithstanding the States’ careful
semantics, we understand the primary question presented in this
appeal to be: Did the district court err in determining that the
OHA's decision that Chevron did not receive excess tertiary
incentive revenue and therefore need not make restitution to the
Stripper Well escrow fund was unreviewable? In order to
determine whether the district court erred, we must first
evaluate the reasoning it offered in support of its decision. Even
a cursory review of the district court's Memorandum and Order
B-12
indicates that interpretation of the FSA was integral to its
decisionmaking process, and appellate review is therefore
committed exclusively to the Federal Circuit.
First, we note that before declining to review the OHA's
decision, the district court determined whether a certain
provision of the FSA conferred a substantive nght upon the
plaintiffs. (See Order at 11.) Finding that it did not, the court
went on to analyze a second provision pertaining to the States'
claims, also finding that "DOE did not violate this provision."
(Id. at 12.) Only after determining that other substantive nghts
under the FSA were not infringed did the court examine
whether the OHA decision was unreviewable as prosecutorial
discretion. In order for this court to determine whether the
district court erred in finding that parties to the FSA cannot
challenge such an OHA decision, we would likewise have to
consider the impact of the FSA on this situation. The States
were before the district court on its MDL 378 docket precisely
because they are parties to the FSA, and it was in this context
that the district court reached its decision. This court cannot
don judicial blinders and evaluate merely one part of the district
court's reasoning it offered in -finding the OHA decision
unreviewable. In short, the States ask us not to review the
district court's decision, but simply to reverse it. This court
cannut so abdicate its core appellate function.
Even were we to accept the States’ invitation to decide merely
whether the district court erred in finding an OHA decision
unreviewable, such an examination would require interpretation
of the FSA and thus infringe upon the Federal Circuit's
exclusive jurisdiction over such matters. In support of its finding
that "there is no right for the Secretary of Energy or any other
person to appeal OHA's decision not to issue a remedial order,"
the court noted that "paragraph IV.A.2 of the FSA specifically
preserves DOE's prosecutorial discretion and shields it from
B-13
review." (Id, at 13.) It would be impossible for this court to
discern whether the district court erred without evaluating the
reasoning on which its decision was based.
This court declines to participate in the fiction that this dispute
does not tum squarely on the FSA. As the district court's order
clearly indicates, the holding that the OHA's decision is
unreviewable rested in large part on the provisions of the FSA,
and it is beyond this court's jurisdiction to consider such
matters. Accordingly, this claim may only be presented to the
Federal Circuit.’
The States also contend that the district court erroneously
excluded certain arguments advanced in the States’ reply brief
before that court and that the district court "should have
considered all of the States’ claims together in the MDL 378
docket." (Aplt. Br. 99-3065 at 38, 43.) While these claims do
not directly turn on an interpretation or application of the FSA,
the Federal Circuit nevertheless has exclusive jurisdiction to
resolve them. In Phoenix Petroleum Co. v. United States Fed'l
Energy Regulatory Comm'n, 95 F.3d 1555 (Fed. Cir. 1996), the
Federal Circuit explained that TECA's exclusive jurisdiction
extended to issues that did not themselves arise under the
EPAA when "a meaningful ruling requires consideration of the
issues as a whole, the construction of the EPAA will control the
litigation, the issues are so commingled as to render separate
: The States also alleged that "the court's conclusion
that OHA was exercising unreviewable prosecutorial
discretion (a) precluded it from addressing the merits and (b)
fatally infected its review of the merits." (Aplt. Br. 99-3065 at
33.) Because we have found that this court lacks jurisdiction
to review the district court's primary determination, we
likewise cannot consider these subsidiary claims.
B-14
treatment irnpractical, or the non-EPAA issues are subsidiary,
preliminary or threshold to an EPAA issue."
' Id. at 3563 (quoting Pennzoil Exploration & Prod. Co, v, Lujan,
928 F.2d 1139, 1141 (Temp. Emer. Ct. App. 1991). We hold
that the same is true when issues not otherwise relating to the
FSA are so inextricably linked and subsidiary to the FSA claim
that it would be both impractical and wasteful to consider those
claims separately.
In the present case, whether the district court properly excluded
some of the States’ arguments and whether the district court
properly refused to consider certain claims under its MDL 378
docket are surely subsidiary to the States' primary FSA claims.
As we have explained at length above, it is clear that these
appeals are fundamentally based on the FSA, and it would
merely waste the courts’ and the litigants’ resources to remove
these secondary issues from their proper context. Indeed, the
States nghtly acknowledge that the "central issue" is their claim
that the district court should have reviewed the OHA decision.
(See States' Opposition 99-3065 at 4.) Furthermore, we note
that because the additional claims the States sought to raise
were themselves based on the FSA, whether the district court
properly excluded these claims is merely a threshold inquiry to
an FSA claim. Thus, it appears that the States’ claims that do
not on their face implicate the FSA in fact are so secondary in
relevance and importance to their FSA companions that they
must fall within the Federal Circuit's exclusive jurisdiction.
3) The States’ Original Complaint (No. 99-3066
On the same day the district court dismissed the States' and
Jurisdictions’ motions to enforce the FSA, it issued a separate
order dismissing the States' concurrent original complaint. In
that order, the district court held that the States’ allegation that
B-15
DOE had violated the FSA failed to state a claim upon which
relief could be granted. The court then dismissed the remainder
of the States’ claims for lack of standing, or, alternatively, for
lack of proper venue. (See Order of Dismissal at 2.) The States
have appealed these dismissals to this court.
In dismissing the States' FSA claim, the district court explicitly
adopted the reasoning of its order dismissing the MDL 378
claims. (See Order of Dismissal at 2.) For the same reasons we
cannot review the MDL 378 decisions, this court does not have
jurisdiction to review the States’ claim that the district court
erroneously adopted the MDL 378 rulings.
The same result obtains with regard to the district court's
dismissals for lack of standing. In it brief, Appellee DOE argues
that the States do indeed lack standing under ESA:
The standing issue centers on an interpretation of ESA sections
209-11 and the bases on which Congress authorized public and
private actions to enforce the ESA, the EPAA or regulations
issued thereunder. An unbroken line of controlling decisions
stand [sic] for the proposition that private parties, such as the
States, lack standing to seek judicial review of a DOE
enforcement decision made under the purview of the ESA, the
EPAA or regulations issued thereunder.
(DOE Br. 99-3066 at 10.) As noted above, this court has held
that "the TECA's jurisdiction can be created by defenses that
raise ESA/EPAA issues." In re Seneca Oil, 906 F.2d at 1454
n.11. Consideration of Appellees' counter arguments on appeal
would require this court to interpret statutes that are plainly
within the exclusive jurisdiction of the Federal Circuit. Allowing
this appeal to proceed would inevitably thwart either the will of
Congress in granting exclusive jurisdiction to the Federal Circuit
_ or the Appellees’ right to have their defenses heard by the
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appropriate authority. Thus, Appellants’ claims may not be
presented to this court.‘
CONCLUSION
For the above reasons, we find that all of Appellants’ claims
raised in these three cases are within the Federal Circuit's
exclusive jurisdiction pursuant to 28 U.S.C. § 1295(a).
Accordingly, Appellees’ motions to dismiss these appeals for
lack of appellate jurisdiction are hereby GRANTED.
The mandate shall issue forthwith.
ENTERED FOR THE COURT
David M. Ebel
Circuit Judge
. Because we find that the district court's dismissal for
lack of standing cannot be reviewed in this court, it is
unnecessary to determine whether the court's alternative
rationale (lack of — was correct.
[Filed January 21, 1999]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
)
)
IN RE: THE DEPARTMENT OF ENERGY )
STRIPPER WELL EXEMPTION LITIGATION ) M.D.L. 378
)
)
MEMORANDUM AND ORDER
Before the court are: (1) motion of the states’ to enforce
the Department of energy’s obligations under the Final Settlement
Agreement (Doc. 2264); and (2) motion of the jurisdictions’ to
enforce the Final Settlement Agreement against Chevron U.S.A.
Inc. and the Department of Energy (Doc. 2274). A hearing on the
motions was held on May 7, 1997 before the Honorable Frank G.
Theis. Following oral argument, the court took the matters under
advisement. Supplemental briefs were filed, and the matter was
not fully briefed at the time of Judge Theis’s death. The cases were
subsequently transferred to the undersigned judge. The court has
carefully considered the voluminous briefs and the transcript of the
'This motion is brought by the states of Alabama, California,
Connecticut, Idaho, Indiana, Maryland, Michigan, Mississippi, Montana, Ohio,
South Dakota, Vermont, Wisconsin and Wyoming.
*This motion is brought by the states of Delaware, Hawaii, Illinois,
Kansas, Nebraska, Nevada, North Carolina, Rhode Island and West Virginia,
and the Territory of Guam and the Virgin Islands.
=
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hearing. For the reasons stated herein, the motions to enforce in
M.D.L. 378 shall be denied.
Background
The lengthy history of this case is well known to the parties
and will not be recounted here. Judge Theis’s decision approving
the M.D.L. 378 final Settlement Agreement (FSA) of the litigation
is found at 653 F. Supp. 108 (1986) and may be consulted by
anyone unfamiliar with the case. Judge Theis entered several
subsequent orders, none of which are material to the issues
presented by the motions.
When Judge Theis heard oral argument on the motions, he
made the following observations which give some perspective to
the scope and complexity of this litigation:
As of February of 1996, 2,263 pleadings have been filed in
this case. This Court has entered 77 opinions and orders
resulting in dozens of published opinions. This Court
entered 579 other orders, while 23 orders have been signed
by other judges in this district as a matter of courtesy. A
total of 24 appeals have been filed, and as of February of
1996, 12 mandates have been issued from TECA affirming
substantially all of the Court’s rulings. 10 appeals have
been dismissed by the 10th Circuit Court of Appeals
primarily on jurisdictional grounds. There are 2 appeals
that remain pending in the United States Court of Appeals
for the federal circuit, and those have not dissipated, they
have either been resolved or they are in the process of
being resolved. In addition to the 6-day trial conducted in
1981, a total of 36 additional hearings have been conducted
on the record.
(Doc. 2327 at 5-6.)
Hopefully, this order will be the final chapter in this
protracted case.
Claims of the States
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In their motion and supporting memorandum, the states
make two arguments based on the FSA. They argue that the
Department of Energy (DOE) violated is undertaking in the FSA
to “fully support the procedures and policies set forth herein in all
present and future proceedings involving Alleged Crude Oil
Violations.” FSA J VIB. (Doc. 2264 at 16-19). Additionally, the
states argue that by allowing Chevron to offset its restitutionary
obligations under the TIP program based on Chevron’s entitlements
claims, DOE’s office of Hearings and Appeals’ (OHA) decision
violated DOE’s commitment in the FSA not to grant any benefits
arising out of entitlements claims based on crude oil sales after
December 31, 1980. FSA 9 V.F. (Doc. 2264 at 19-20). Pertinent
aspects of the TIP program and the OHA decision are summarized,
infra.
The states request the court to vacate OHA’s decision and
to remand with directions (1) to conduct the proceedings in
accordance with the provisions of the FSA, along with instructions
that DOE not consider any entitlements benefits to Chevron arising
out of the unissued January 1981 Entitlements Notice or arising out
of post-December 31, 1980 crude oil transfers and (2) to conduct
the proceedings in accordance with the regulatory definition of
tertiary incentive revenue, without regard to the receipt or lack of
receipt of entitlements benefits in connection with the refining of
TIP-certified oil. (Doc. 2264 at 26-27).
The states make several arguments which are not based
upon the FSA. The states argue OHA’s decision violates DOE’s
TIP regulations; constitutes the promulgation or amendment of
regulations after DOE’s authority to do so has expired; violates the
Administrative Procedure Act; violates the Department of Energy
Organization Act; and is beyond the powers of OHA. The court
has no demonstrated jurisdiction to decide these non-FSA claims.
peer nae tare ees ee
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864 F.2d 796, 800 (Temp. Emer. Ct APP 1988)? Cf
F.3d 538, 545 (Fed. Cir. 19997), cert denied 118 S. Ct. 1036
(1998).
laine of the Suites
The jurisdictions make two arguments based on the FSA.
They contend that Chevron “fraudulently misled” the court and the
parties by misrepresenting its status as an entitlements seller under
the draft January 1981 Entitlements Notice. They claim that this
allegedly fraudulent misrepresentation allowed Chevron to share in
the $257-plus million distributed among refineries under the FSA.
653 F. Supp. at 112. The jurisdictions also contend that the federal
goverment should forfeit its right to funds because DOE failed to
uphold the FSA and failed to discharge is enforcement
responsibility against Chevron by reporting Chevron’s allegedly
fraudulent conduct to this court. (Doc. 2274 at 6 and Doc. 2295 at
13-14).
The jurisdictions ask the court to require Chevron to
disgorge $61,665,472, plus interest, the amount Chevron received
pursuant to the FSA, and to deposit that sum into the court’s
escrow account. The jurisdictions argue that because DOE has
failed to fulfill its obligations to “fully support the procedures and
policies set forth herein in all present and future proceedings
>The states also raise several new arguments in a reply brief. one of
the new claims is that Chevron’s attempt to offset its TIP obligations on the
basis of an entitlements claim is barred by paragraph R to the Refiners
Release, FSA, Settlement Exh. A, Attachment A, 2™ proviso, para. R. The
states also take issue with OHA’s computation methodology. The court
declines to address these complex issues raised for the first time in the reply,
since DOE and Chevron did not have an opportunity to respond to those
arguments. Martin v, State of Kansas, 996 F. Supp. 1282, 1296 (D. Kan.
1998); Thurston v. Page, 931 F. Supp. 765, 768 (D. Kan. 1996). The efficacy
of the rule is well demonstrated by this case. The states have had several years
to formulate their positions. There is no excuse for the states to wait to raise
these arguments in a reply brief.
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involving Alleged Crude Oil Violations . . ..” FSA ¥ VLB, the
federal government should not be allowed to share in the funds.
(Doc. 2274 at 13-14).
The TIP Program
In July 1978, DOE promulgated the TIP program to
encourage the use of risky and more expensive tertiary recovery
methods in the production of domestic crude oil. The regulations
allowed ka producer to sell at market prices the oil recovered
through a tertiary recovery project, thus avoiding the price controls
hen in effect. The regulations gave producers an additional
incentive -- producers were allowed to charge market prices on oil
that was being produced before the TIP project was in place,
allowing the producer “front-end” money to recoup the expenses
of the tertiary project, regardless of the success of the tertiary
project. OHA Decision, p. 2.
Beginning January 1, 1980, under the TIP, a producer
could self-certify a qualified tertiary project to the Economic
Regulatory Administration (ERA) and first sales of crude oil were
not subject to ceiling prices, providing the tertiary incentive revenue
from the sales did not exceed the recoupable allowed expenses
attributable to that producer. “Tertiary incentive revenue” meant
in the case of first sales of crude oil the difference between the
market-clearing price and the otherwise applicable ceiling price,
less an ad valorem severance or windfall profit tax attributable to
the excess. 10 C.F.R. 212.78(a)(2). “Recoupable allowed
expenses” were those “allowed expenses” that had been reported.
“Allowed expenses” were 75% of certain specified expenses, not
to exceed $20 million per property. Producers were also allowed
to recover “prepaid expenses” for goods and services to be
delivered in the future in connection with a tertiary incentive
project. The producer was required to file certain reports as a
condition of participating in the TIP. OHA Decision, pp. 2-3.
The DOE Entitlements Program
Interrelated with the TIP was the DOE Entitlements
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Program, 10 C.F.R. 211.67. The Entitlements Program was
established in 1974 to equalize the benefits of access to lower
priced domestic crude oil among domestic refiners. Under the
Entitlements Program, a refiner was required to have one
“entitlement” for each barrel of “deemed old oil” that it refined.
The price of an entitlement was roughly the difference between the
price of controlled and uncontrolled crude oil. If the number of
entitlements issued to a refiner for a month was less than its
adjusted receipts of deemed old oil (defined in 10 C.F.R. 211.62),
the refiner was required to purchase entitlements from other
refiners, a situation which was disadvantageous to a refiner like
Chevron. If the number of entitlements issued was greater than its
adjusted deemed old oil receipts, the refiner received benefits
through the sale of entitlements to other refiners. DOE set the price
of the entitlements and assigned the obligations to buy or sell
through a list (the Entitlements Notice) published during the second
month after the transactions on which the computations were based.
OHA Decision, pp. 16-176.
In February 1981, following the termination of price
controls on January 28, 1981, the DOE issued the December 1980
Entitlements Notice. The DOE also issued a draft January 1981
Entitlements Notice which later became important in the settlement
of the Striper Well Litigation. However, the DOE never issued a
final Entitlements Notice for January 1981. OHA Decision, pp. 3-4
and FSA para. V.
TheF LR lial Order (PRO)
In the PRO, ERA charged Chevron with receiving TIP
revenues substantially in excess of those to which it was entitled.
OHA Decision, p. 4. According to the PRO, the excessive revenue
resulted from wadfall profit and severance tax refunds and other
monies received by Chevron between December 1983 and 1990.
The ERA contended that Chevron should make restitution of
almost $125 million, plus interest. Id, at 8. Chevron, as might be
expected, objected to ERA’s position. If the PRO he been issued
as a final order, the 50 States and 6 Territories ana © ossession of
C-7
the United States would have been entitled to 40% of all
restitutionary funds collected form Chevron. Each of the 23 states
and 2 territories presently before the court would recover its share
of that 40% pursuant to the percentages set forth in the FSA.
OHA scheduled a hearing, with the primary question being
whether Chevron actually received approximately $205 million in
tertiary incentive revenue as a result of its 1981 TIP certifications.
This dollar figure represented the incremental value of the crude oil
attributable to Chevron’s TIP certifications, i.e., the difference
between the value of the crude oil if it had been sold at the
regulatory controlled price and the value of the crude oil if sold at
the unregulated market price authorized by the TIP. Chevron
claimed, inter alia, that it never actually received this amount in
“real money” since it sold most of its crude oil production to its
own refiners. Chevron contended that it was prevented from
benefitting from the TIP certifications as a result of the termination
of other Entitlements Program. OHA Decision, pp. 9-10.
One effect of Chevron’s TIP certification was an immediate
tax liability -- windfall profit taxes were payable to the Internal
Revenue Service (IRS) and severance taxes to the relevant states.
Chevron paid some $178 million in gross windfall profit tax on the
incremental value of the oil. In December 1983, Chevron claimed
a refund of some $84 million from the IRS (by taking a credit
against windfall profit taxes due in December 1983 and early
1984), claiming that is 1981 recertification’ was a mere
bookkeeping matters, since it had not received any economic
benefit. In 1990, the IRS matter was settled, with Chevron
retaining the refund for which it had taken credit in 1983 and
paying some $15.9 million to IRS to settle the claim.
The OHA Decisi
“This term is used several times in the OHA Decision. See, ¢.g., pp.
21-24, 28, 30-31 and 36-39. The court cannot find a specific definition of the
term.
C-8
According to OHA, the issue for the evidentiary hearing
was “whether as a result of its participation in the TIP, Chevron
was unjustly ennched by receipt of excessive TIP revenue in
violation of the TIP regulations, and therefore should be required
to make restitution in the amount of such unjust enrichment.”
OHA ultimately concluded “that the ERA has failed to established
[sic] that Chevron was in fact unjustly enriched by its participation
in the TIP IAs alleged in the PRO and, accordingly, the PRO
should be dismissed.” OHA Decision, pp. 12-13.
The bulk of the OHA decision is devoted to a discussion of
the evidence regarding whether Chevron actually received excess
tertiary revenue. OHA considered two questions: (1) how much,
if any, did Chevron actually receive in money or other valuable
benefit as a result of its 1981 TIP certifications; and (2) whether
Chevron should be held liable for its 1981 TIP certifications under
some alternative theory of restitution, irrespective of its actual
receipt of money. OHA Decision, p. 16.
The decision discusses at length the evidence and
conclusions relative to Chevron’s actually 1981 TIP revenue.
Chevron asserted it did not actually receive tertiary incentive
revenue, since it delivered virtually all of the crude to its own
refineries and sold less than 1.4% of the tertiary crude to third
parties. Instead, Chevron argued that its TIP certifications of
uncontrolled tertiary oil resulted in a benefit by reducing the
number of entitlements it was required to purchase under the
applicable Entitlements Notice. Chevron contended that, by virtue
of its more favorable entitlements position resulting form its 1981
TIP certifications, it would have been a seller of entitlements in the
amount of $114.3 million, had the January 1981 Entitlements
Notice been issued. The termination of price controls intervened,
and the January 1981 Entitlements Notice was never issued. OHA
Decision, pp. 17-18.
The draft January 9181 Entitlements Notice was used as a
basis for dividing the Refiners Escrow in the Stripper Well
Litigation. Chevron’s position on the draft January 1981
C-9
Entitlements Notice was the basis for Chevron receiving
$61,665,472 under the FSA in the Stripper Well Litigation. OHA
counted that figure as being “tertiary incentive revenue” for
purposes of its proceeding. OHA Decision, p. 24. The OHA
determined the FSA settlement amount should be counted as
tertiary incentive revenue for Chevron because Chevron “would not
have received this amount but for its enhanced entitlements position
resulting from the TIP recertifications.” OHA Decision, p. 24.
Nevertheless, the OHA concluded that the evidence had failed to
show that Chevron received excess tertiary incentive revenue as the
result of its participation in TIP. It found that while Chevron may
have violated the letter of the TIP regulations with regard to
certification of TIP crude oil, it never violated the substance of the
regulations because it did not receive an excess amount of actual
revenue. OHA therefore dismissed the PRO. OHA Decision, p.
39.
Discussion of the S FSA Clai
The states contend that OHA’s decision violates DOE’s
duty under paragraph VI.B of the FSA. That paragraph provides:
Support of Agreement. The Parties to this Agreement shall
support approval of all of its provisions, shall take all steps
and make all filings necessary to its implementation at their
own expense or from their respective Escrow funds. DOE
will undertake the defense of this Agreement in response
to any litigation, in which DOE is named as a party,
challenging this Agreement or any action required to be
taken by DOE pursuant thereto. However, DOE’s
agreement to this provision doe not circumscribe the
discretion of the Attorney General to authorize or preclude
the filing of particular pleadings or the making of
arguments by DOE in any litigation, and this Agreement
shall not create any right of action against DOE concerning
the initiation, continuation or conduct of any litigation. All
parties agree to cooperate (1) in defending this Agreement
and (2) in any action required to be taken pursuant thereto
C-10
in any litigation challenging its validity. All parties also
agree that they will fully support the procedures and
policies set forth herein in all present and future
proceedings involving Alleged Crude Oil Violations and,
to the extent any counsel approving the form and content of
this Agreement by signature hereon enters an appearance
in any such proceeding, counsel will not oppose or do
anything inconsistent with such policies and procedures,
the terms of this Agreement, or any orders pursuant
thereto. Any Party may enforce this Agreement against
any other Party but this Agreement confers no such
enforcement nght upon any non-Party hereto.
FSA § VA.B. The language relied upon by the states is
emphasized by italics.
As written, this provision is a commitment by all parties to
the FSA to support the various substantive policies and procedures
contained in the FSA. Paragraph VIB does not provide any
substantive nghts. The states do not identify any procedures and
policies of the FSA not supported by DOE. They just disagree
with the OHA decision (Doc. 2265 at 17-19).
Judge Theis noted on more than one occasion that this court
doe not sit as a court of appeals for OHA decisions: “As this court
noted in denying the States’ second motion to enforce, this court
does not sit as a court of appeals for individual OHA refund
decisions.” In _re the Department of Energy Stripper Well
Exemption Litigation, 746 F. Supp. 1446, 1451 (D. Kan. 1990)
(denying States’ third motion to enforce). This court is not about
to assume that role now. The FSA settled the stripper well
litigation, along with the entitlements litigation, but it did not place
OHA and its enforcement proceedings under this court’s oversight.
The other provision of the FSA relied upon by the states is
paragraph V.F, dealing with the termination of the entitlements
litigation. That paragraph provides:
Termination of Entitlements Actions by DOE. After
C-1]
commencement of the Entitlements Disbursement and
vacation of the judgment in Texaco v. DOE, DOE agrees
that it shall not order the purchase or sale of any further
entitlements, either through entitlements lists or as a result
of any exception decisions, and shall not institute or
voluntarily participate in any judicial or administrative
proceedings pertaining to the publication of any further
entitlements notices. After commencement of the
Entitlements Disbursement and vacation of the judgment
in Texaco v. DOE, DOE shall take no action whatsoever
pertaining to entitlements obligations based on runs-to-
stills or crude oil receipts after December 31, 1980, and
further agrees to take no such action on the basis of any
entitlements report filed by a Refiner with DOE for any re
porting period after December 31, 1980, including reports
filed with respect to the Entitlements Adjustment Notice
(10 C.F.R. § 211.69).
FSA { V.F. Once again, the particular language relied upon by the
states is emphasized. This paragraph does set forth a policy or
procedure for the breach of which DOE could be held liable. The
court finds, however, that DOE did not violate this provision.
First, by taking the action it did, OHA did not take any
“action . . . pertaining to entitlements” benefits. The states argue
that OHA violated FSA 4 V.F by eliminating Chevron’s alleged
restitutionary obligation based on entitlements benefits Chevron
could have received had the January 1981 Notice been issued.
However, OHA did not eliminate Chevron’s alleged restitutionary
obligation based on the entitlements program. OHA’s role was to
conduct a factual review to determine how much Chevron actually
received as a result of its TIP certifications. OHA made a factual
determination that Chevron was not unjustly enriched by the receipt
of TIP revenue in excess of the amount allowed by the TIP
regulations. Restitution is a remedy by which the defendant is
made to disgorge an ill-gotten gain, or to restore the status quo, or
both. See, e.g., Kem Oil & Refining Co. v. Tenneco Oil Co., 868
C-12
F.2d 1279, 12823 (Temp. Emer. Ct. App. 1989). Since there was
no ill-gotten gain under the TIP certifications, there was no factual
basis for an order of restitution. Nothing in the FSA barred
Chevron from showing that it did not receive an unlawful benefit
from the TIP.
Second, OHA was exercising prosecutonal discretion when
it entered its decision. Consolidated Edison Company of New
York, Inc. v. O’Leary, 131 F.3d 1475, 1481 (Fed. Cir. 1997).°
OHA’s dismissal of the proposed remedial order against Chevron
was a part of DOE’s prosecutorial function and as such, was
unreviewable. A determination by OHA not to issue a remedial
order is not appealable under the regulations. There is no nght for
the Secretary of Energy or any other person to appeal OHA’s
decision not to issue a remediai order. As the Federal Circuit
recently stated in discussing this very same OHA proceeding,
“Pursuant to the regulatory scheme, the decision of the Office of
Hearings and Appeals not to issue a remedial order brought the
proceeding against Chevron to an end.” Id at 1477. The
procedures “leading up to the issuance of the remedial order would
all be part of the ‘prosecutorial’ function of the Secretary of
Energy.” Id. at 1481.
Finally, paragraph IV.A.2 of the FSA specifically preserves
DOE’s prosecutorial discretion and shields it from review:
Future DOE Actions. With the sole exception set froth in
IL A.4, nothing in this Agreement shall be read or construed
to limit or render reviewable the exercise of DOE’s
prosecutorial discretion in determining the appropriate
action to take, if any, with regard to any enforcement
matter. Further, nothing in this Agreement shall be read or
construed to impose any obligation or duty upon the DOE
regarding the enforcement or non-enforcement of its
‘This case was brought by the same entities which appear as amicus
before this court. They challenged the same OHA decision in the Chevron
proceeding that is the subject of the states’ motion to enforce.
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regulations, and it remains solely in the DOE’s discretion
to determine whether an enforcement proceeding should be
initiated, settled, pursued on particular terms or terminated.
FSA ¥ IV.A.2. The sole limitation referenced in this paragraph
pertains to DOE’s waiver of civil penalties against all parties to the
FSA arising out of or relating to the counting of injection wells to
qualify a property as a stripper property. FSA ¥ 11.A.4. This
provision is in applicable to the dispute before the court. Further,
paragraph V1.B of the FSA provides that the FSA did not “create
any right of action against DOE conceming the initiation,
continuation or conduct of any litigation.” FSA 4 VLB.
Discussion of the Jurisdictions’ FSA Clai
The junsdictions assert Chevron violated the FSA by
misrepresenting to the states, DOE, and the court its position as an
entitlements seller on the unissued January 1981 Entitlements
Notice and by receiving the $61.7 million distribution under the
FSA. In approving the Final Settlement Agreement, the court
noted that $257 million “will be distributed among those refiners
who would have had the nght to sell entitlements if the remaining
entitlements notices had been issued.” In re the Department of .
Energy Stripper Well Exemption Litigation, 653 F. Supp. 109, 112
(D. Kan. 1986), aff'd, 855 F.2d 865 (Temp. Emer. Ct. App.
19988). The jurisdictions argue Chevron had no “night to sell
entitlements” upon the issuance of the final notice because Chevron
previously decertified its TIP oil.
Following DOE’s November 1983 announcement that it
would not publish the January 1981 Entitlements Notice, Chevron
claimed tax credits from the IRS for its windfall profit tax liability
resulting from its prior TIP certification. The basis for Chevron’s
tax refund claims was its belief that it would not receive economic
value from its prior TIP certification. The jurisdictions’ argument
rests on the assumption that when Chevron claimed a refund of
windfall profit taxes in 1983, it effectively decertified the TIP crude
oil, and that, therefore, in 1986 when the FSA was approved,
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Chevron had no right to sell entitlements if the January 1981 list
had been issued.
OHA considered and rejected a similar argument during
the administrative proceedings. The ERA claimed “that Chevron
was duplicitous in its conduct in seeking from the IRS a refund of
WPT [windfall profit taxes] associated with its 1981 TIP
recertifications while maintaining its entitlements position in the
event the January 1981 Entitlements Notice were ultimately issue.”
OHA Decision, p. 28. OHA found nothing sinister in Chevron’s
decision to “hedge its bets” by seeking an IRS refund of windfail
profit taxes at a time when it was uncertain whether the January
1981 Entitlements Notice would be issued. When DOE
determined not to issue the list, Chevron was vindicated in its
action in seeking a refund of other taxes associated with its 1981
TIP recertifications. Id As a result of its favorable position on the -
draft January 1981 Entitlements Notice, Chevron received $61.6
million under the FSA, and OHA concluded that Chevron must
include that amount as tertiary revenue for 1981. Id.
The junsdictions assume that, in 1983, Chevron had to
elect between a windfall profit tax refund and remaining on the
entitlements list. There is nothing in the FSA requiring such an
election. The jurisdictions cite no authority treating a claim for
windfall profit tax refiind as a downward certification of oil that has
been certified upward. There is no support for the claim that by
filing a claim for windfall profit tax refund, Chevron repudiated its
position as an entitlements seller. The pursuit of alternative courses
of action is not fraud.
Further, tax matters were excepted from the settlement by
Proviso (E) to the Refiners Release. FSA, Settlement Exh. A,
Attachment A, 2™ proviso, para E. The Refiners Release of
Claims preserved to the refiners participating in the settlement the
right to pursue state or federal claims for severance or windfall
profit tax refunds. Judge Theis observed in another context, tax
se ee ied ere ee 8 a eee
xemption
C-15
Litigation, 739 F. Supp. 1449, 1454 (D. Kan. 1990). Windfall
profit tax refunds were outside the scope of the FSA.
Finally, the FSA imposed no obligation on Chevron as a
settling refiner to disclose its pending windfall profit tax refund
claim. Accordingly, Chevron cannot be found to have committed
fraudulent misrepresentation.
Because Chevron did not commit fraud, the jurisdictions’
claim that DOE fezled to report Chevron’s fraud to this court
collapses of its own weight.
Conclusion
The states’ and jurisdictions’ motions to enforce shall be
denied.
A motion for reconsideration is neither invited nor
encouraged. Any motion for reconsideration must comply with
Rule 7.3 of this court and the standards set out in Comeau v. Rupp,
810 F. Supp. 1172, 1174 (D. Kan. 1992). The motion may not
exceed five double-spaced pages in length, including supporting
arguments and authorities, regardless of the number of points
raised. Responses shall be limited to four double-spaced pages. No
replies may be filed. Motions for extension of these time periods
will be viewed with disfavor. The filing of such a motion does not
relieve the party of its obligation to meet the relevant deadline, even
if the motion is not ruled upon prior to the expiration of the
deadline.
IT IS BY THIS COURT THEREFOR ORDERED that
the states’ motion to enforce (Doc. 2264), filed in M.D.L. 378) is
hereby denied.
IT IS FURTHER ORDERED that the jurisdictions’
motion to enforce (Doc. 2274, filed in M.D.L. 378) is hereby
denied.
IT IS SO ORDERED.
Dated this 20th day of January 1999, at Wichita, Kansas
C-16
Monti L. Belot
UNITED STATES DISTRICT JUDGE
D-1
STATUTORY PROVISIONS INVOLVED
United States Code, Title 28:
§ 1291 Final Decisions of District Courts.
The courts of appeals (other than the United States Court
of Appeals for the Federal Circuit) shall have jurisdiction of
appeals from all final decisions of the district courts of the
United States, the United States District Court for the District of
the Canal Zone, the District Court of Guam, and the District
Court of the Virgin Islands, except where a direct review may be
had in the Supreme Court. The jurisdiction of the United States
Court of Appeals for the Federal Circuit shall be limited to the
jurisdiction described in sections 1292(c) and (d) and 1295 of
this title.
§ 1295 Jurisdiction of the United States Court of Appeals for
the Federal Circuit.
(a)The United States Court of Appeals for the Federal
Circuit shall have exclusive jurisdiction --
OE
(11) of an appeal under section 211 of the
Economic Stabilization ‘Act of 1970;
(12) of an appeal under section 5 of the
Emergency Petroleum Allocation Act of 1973; . ..
§ 1631 Transfer to Cure Want of Jurisdiction.
Whenever a civil action is filed in a court as defined in
section 6120 of this title or an appeal, including a petition for
review of administrative action, is noticed for or filed with
D-2
such a court and that court finds that there is a want of
jurisdiction, the court shall, if it is in the interest of justice,
transfer such action or appeal to any other such court in
which the action or appeal could have been brought at the
time it was filed or noticed, and the action or appeal shall
proceed as if it had been filed in or noticed for the court to
which it is transferred on the date upon which it was actually
filed in or noticed for the court form which it is transferred.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.