IN RE: the Department of Energy Stripper Well Exemption Litigation

Case MDL No. 378 Document 2 Filed 05/18/15 Page 1 of 10
JUDICIAL PANTL ON EAN «os
MULTICIS TRICT LITISATIIN bo
FIED A	# / I.
BEFORE THE JUDICIAL PANEL JUN29 1878 Po
ON 3 . i. :
MULTIDISTRICT LITIGATION PATRCALL HLWARY Po. RECLERK	CF Trz rant ; Sn
IN RE THE DEPARTMENT OF ENERGY STRIPPER ) DOCKET NO. 378
WELL EXEMPTION LITIGATION )
OPINION AND ORDER
BEFORE MURRAY I. GURFEIN, CHAIRMAN, AND EDWIN A. ROBSON,
STANLEY A. WEIGEL,* ANDREW A. CAFFREY,* ROY W. HARPER, : : Co
AND CHARLES R. WEINER, JUDGES OF THE PANEL. ERE
PER CURIAM
This litigation consists of nineteen actions pending
in four districts as follows:
District of Kansas 11 actions | : oo }
Northern District } oo
of Texas 6 actions Co
Central District oo
of California 1 action
District of Delaware 1 action
The same United States Department of Energy (DOE) regulation So
is challenged in each action in this docket. .
In a number of different statutory enactments,
Congress has exempted from price controls the first »
sales of domestic crude oil produced and sold from
a property whose maximum average daily production of SE : BS
crude oil per well does not exceed ten barrels. A :
well whose output does not exceed ten barrels per day
is a "stripper" well, and the price control exemption )
is colloquially referred to as the "stripper well exemption."
In December, 1974, the general counsel of the Federal
*Judges Weigel and Caffrey took no part in the decision |
of this matter. ||
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2 Energy Administration (a predecessor of DOE) issued
3 Ruling 1974-29 which held that certain wells denominated | ooa4 "injection wellsnl/ were not wells for the purposes |
5 of determining whether the average daily production |
6 of a property was ten barrels or less per well. Each | THEIR. action in this docket is brought against DOE, the Federal | : a. |
Energy Administration and/or their officials by crude | EE
8 oil producers that own marginally producing properties
° which would qualify under the stripper well exemption
10 from price controls if injection wells were counted :
11 as oil wells. |
12 The first three actions in this litigation were |
13 filed in the District of Kansas and assigned to the | .
14 Honorable Frank G. Theis. Plaintiffs in these actions | .
sought, inter alia, 1) a declaratory judgment to the | 8
te effect that Ruling 1974-29 was invalid because the |
16 Ruling was in contravention of federal energy laws, |17 | had been adopted without compliance with the Administrative oo
18 Procedure Act (APA), and/or was adopted in a manner | EER
19 so arbitrary and capricious as to deny plaintiffs due |
20 process of law; and 2) injunctive relief enjoining |
1 the enforcement of Ruling 1974-29 pending the court's | oo
22
1/An injection well is a well through which water, |23 natural gas or other material is injected into the
ground, thereby creating pressure in the geological
v4 | formation that forces crude oil out from another well. i
| |Foitate	27 anes ge

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( ) determination of the Ruling's validity. On January
3 26, 1978, Judge Theis held that Ruling 1974-29 was
4 procedurally invalid because of the failure of the
5 Federal Energy Administration to comply with the notice
and hearing requirements of the APA, and he enjoined
© the defendants from enforcement of Ruling 1974-29 against
’ the plaintiffs. On October 31, 1978, the Temporary
8 Emergency Court of Appeals reversed Judge Theis's ruling.
9 The appellate court held that Ruling 1974-29 was an
10 "interpretative", rather than '"legislative', rule,
11 and was therefore exempt from the notice and comment
12 rule-making requirements of the APA. The actions were
¢ remanded to Judge Theis for a determination of whetherthe Ruling was invalid on one of the other grounds
14 advanced by plaintiffs. Energy Reserves Group, Inc.
15 v. Department of Energy, 589 F. 2d. 1082 (T.E.C.A.
16 1978).
17 The eight other Kansas actions were filed subsequent |
18 to Judge Theis's January, 1978 decision and were apparently
19 instituted as a result of the DOE's decision to continue
20 to apply Ruling 1974-29, pending the outcome of DOE's
appeal of Judge Theis's decision, to properties of
21 producers not party to the three earlier filed Kansas
22 actions. In these eight other actions plaintiffs also
23 seek a declaration of the Ruling's invalidity and an
C injunction against the DOE's enforcement of the Ruling25 against them. Ten of the eleven Kansas actions are |
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®2 now consolidated before Judge Theis. The eleventh
3 Kansas action (Cities Service) was reassigned to the
4 Honorable Wesley E. Brown after Judge Theis recused
5 himself from presiding in the action. Judge Brown
6 has granted plaintiffs' motion for a preliminary injunction
against DOE and has stayed all further proceedings	7
in that action until a final decision is reached in
8
the actions before Judge Theis.
° The actions in Texas, Delaware, and California
10 were filed after Judge Theis's January, 1978 decision,
11 and plaintiffs there too seek, inter alia, a declaration
12 of Ruling 1974-29'sg invalidity and injunctive relief
13 against the DOE's continued application of the Ruling. CThe Texas actions have been consolidated for pretrial	14
purposes.
15
Presently before the Panel is a motion by Union
16
0il Company of California (Union), plaintiff in the
17 California action, to centralize pursuant to 28 U.S.C.
18 §1407 the actions in this docket in the District of
2/
19 Kansas for coordinated or consolidated pretrial proceedings.
20 2/ Union's motion was somewhat ambiguous concerning
whether it included the Delaware and Texas actions.
21 Union's motion referred specifically only to transfer
of the California action to the District of Kansas,
but the Delaware and Texas actions were listed on Union's
22 Schedule of Actions, and the counsel in those actions
were served by Union. In light of these circumstances,
23 the Delaware and Texas actions were included in the
Panel's Notice of Hearing. Thus, in any event, the
24 Delaware and Texas actions are properly before us under
the authority granted the Panel pursuant to 28 U.S.C.
§1407 (c)(i) to act on its own initiative. We note
25 that the parties, both in their briefs and at oral
argument, addressed the question of centralizing under
Section 1407 all the actions listed on the Notice of
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@. |DOE supports centralization.’ Plaintiffs in. the Delaware
3 action and plaintiffs in five of the six Texas actions
4 do not oppose transfer of the California action to
5 the District of Kansas, but they do oppose inclusion
6 of their respective actions in centralized proceedings.
7 Plaintiffs in the Kansas actions do not oppose centralization
under Section 1407.
8
We find that the nineteen actions in this litigation
9
raise common questions of fact and that centralization
10 under Section 1407 of all actions in the District of
11 Kansas will best serve the convenience of the parties
12 and witnesses and promote the just and efficient conduct
®: of the litigation.
14 Opponents to centralization of some of the actions
argue that the predominating shared questions among
15
actions in this docket are questions of law rather
16
than fact, and that therefore the statutory criteria
17
for Section 1407 transfer have not been met. Opponents
18 urge that voluntary cooperation among the parties,
19 counsel and courts regarding any common issues or discovery
20
3/ DOE has informed the Panel of ten other actions,
21 filed in the District of Delaware, the Eastern District
of Illinois, the District of Kansas, the Eastern District
29 of Michigan, the Eastern District of Oklahoma, the
Northern District of Oklahoma, the Northern District
of Texas, or the Southern District of Texas, that allegedly
23 also challenge the validity of Ruling 1974-29. These
ten actions will be treated as potential tag-along
4 actions. See Rules 10(d), 1, 9 and the remaining portions
of 10, R.P.J.P.M.L., 78 F.R.D. 561, 562, 567-68 (1978).
25
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2 is a preferable alternative to transfer because the
3 Kansas actions and, to a lesser extent, the Texas actions
4 are far advanced and would be subjected to lengthy
delays in the event of transfer, while receiving no
> substantial benefits. Opponents in some of the Texas
6 actions also argue that transfer of their actions is
7 inappropriate because of the presence of unique issues
8 in those actions.
9 We find these arguments unpersuasive. All actions
10 in this litigation share questions of fact and law
11 arising under a complicated series of statutes and
regulations relating to the highly technical engineering
12 and geological problems that attend secondary recovery
13 of 0il that is nearing a state of depletion. Specific
14 common questions of fact relate to: 1) the role played
15 by injection wells in the secondary recovery process;
16 2) the importance of secondary recovery production
17 in general, and the effect of Ruling 1974-29 on the
18 premature abandonment of marginal wells and the con-
comitant loss of known recoverable reserves; and 3)
to the knowledge of the various federal officials who
20 drafted Ruling 1974-29 regarding the state of the art
21 in the industry, and how those officials allegedly
22 acted arbitrarily and capriciously. Transfer is thus
23 necessary in order to prevent duplicative discovery,
24 eliminate the possibility of conflicting pretrial rulings,
25 and conserve the efforts of the parties, the witnesses
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0 and the judiciary. While voluntary coordination of
3 discovery efforts among parties and their counsel is
4 always commendable, transfer of these actions to a
single district under Section 1407 will ensure the
° streamlining of discovery and all other pretrial proceedings
6 as well. See In re Ascot Oils, Inc. Securities Litigation,
7 433 F.Supp. 1118, 1120 (J.P.M.L. 1977). Any pretrial
8 proceedings regarding any issues unique to any action,
9 claim or party may be scheduled by the transferee court
10 to proceed concurrently with pretrial proceedings on
11 the common issues, and thereby all aspects of the litigation
can proceed expeditiously. See In re Capital Underwriters,
"'Y Inc. Securities Litigation, 464 F.Supp. 955, 960 (J.P.M.L.3
1979).
14 On the basis of the record before us, no action
15 in this litigation appears sufficiently advanced to
16 warrant its exclusion from transfer. While all actions
17 may not be at the same stage of pretrial, we conclude
18 that all actions in this litigation will benefit from
19 transfer under Section 1407. We note that if and when
an action or claim is, in fact, ready for trial, or
20 otherwise ready for remand because the transferee judge
21 finds that the centralized pretrial proceedings pertaining
22 to that action or claim are completed, the transferee
23 judge may suggest to the Panel that the Panel remand
®: the action or claim to its transferor district. See
55 28 U.S.C. §1407(a); Rule 11(c)(ii), R.P.J.P.M.L., 78
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1 F.R.D. 561, 569 (1978). See, e.9., In re A.H. Robins
2 Co., Inc. "Dalkon Shield" IUD Products Liability Litigation,
3. 453 F.Supp. 108 (J.P.M.L. 1978). And, of course, the
4 transferee judge has power to provide that any discovery
5 heretofore completed in any action may be made applicable
6 to all actions by utilizing the procedures recommended in
7 the Manual for Complex Litigation, Parts I and II, §§3.11
8 (rev. ed. 1977).
9 The concern raised by opponents to transfer over
10 the impact that participation in Section 1407 proceedings
11 will have on the conduct of the actions to which they
12 are parties is unwarranted. The transferee judge also
13 has the power to provide that plaintiffs in the actions
14 in this docket need not participate in discovery or
15 other pretrial proceedings unrelated to their respective
16 actions. See id. at Parts I and II, §§2.31. And we
17 are confident that prudent counsel in all actions can
18 apportion their workload and otherwise combine forces
19 to minimize inconveniences and to effectuate an overall
20 savings of cost and time. See id. at Part I, §§1.90-1.93.
21 We conclude that the District of Kansas is the
22 appropriate transferee forum for this litigation.
23 The majority of the actions are already pending there.
24 More importantly, Judge Theis has had an opportunity
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® 2 to become familiar with the legal and technical questions
3 in this litigation, and is therefore in the best position
4 to supervise the pretrial proceedings in this litigation
5 to their just and expeditious termination. See In
6 re Griseofulvin Antitrust Litigation, 395 F.Supp. 1402,
7 1403 (J.P.M.L. 1975). Since this litigation is nationwide,
8 the geographically central location of the District
9 of Kansas also commends its selection as the transferee
10 district. See In re A.H. Robins Co., Inc. "Dalkon
11 Shield" IUD Products Liability Litigation, 406 F.Supp.
12 540, 543 (J.P.M.L. 1977).
@- IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C.
14 §1407, the actions listed on the following Schedule
15 A and pending in districts other than the District
16 of Kansas be, and the same hereby are, transferred to
17 the District of Kansas and, with the consent of that
18 court, assigned to the Honorable Frank G. Theis for
19 coordinated or consolidated pretrial proceedings with |
20 the actions pending in that district and listed on |
4/
21 Schedule A.
22
23
4/ our ruling, of course, does not upset the assignment
@: of the Cities Service action to Judge Brown.
25

Case MDL No. 378 Document 2 Filed 05/18/15 Page 10 of 10 = =
Scheduls A
1 .
MDL-378 -- In re The Department of Energy Stripper Well
5 TT Exemption Litigation
3
Central District of California
4 Union Oil Company of California v. The Department of
Energy, et al., C.A. No. 78-1487-HP
5 District	of Delaware :
Coastal States Gas Corp., et al. v. The Department of
6 "Energy,	et al., C.A. No. 78-133
"Northern District of Texas
Exxon Corp. v. The Department of Energy, et al.,
7 ANo CATIA
Continental Oil Co. v. The Department of Energy, et al.,8 ~C.A. No. CA3=78= -1
Hunt 0il Co. v. The Department of Energy, et al.,9 C.A. No. CA3=78=0375-%
Prosper Energy Corp. v. The Department of Energy, et	10 al., C.A. No. CA3-/3- —W
Roy	L. Hunt, etc. v. The Department of Energy, et al.,
11 C.A. No. CA3=78= -W TT
Crystal Oil Company, et al. v. The Department of Energy,et al., C.A. No. CA3-79-0059 wn
12 District of Kansas
Braden-Zenith, Inc., et al. v. The Federal Energ Admin. ,
13 et al., C.A. No. 76-429-C6 To )
Sierra Petroleum Co., et al. v. The Federal Ener
14 Admin., et al., C.A. No. 77-1087 ’
Energy Reserves Group, Inc., et al. v. The Federal Energy
15 Admin, et al., C.A. No. -
Mobil Oil Corp., et al. v. The Department of Energy,et al., C.A. No. - )
16 Robert Johnson and Phillips Petroleum Corp. v. The
Department of Energy, et al., C.A. No. E1150
17 Cities Service Co. and L. B. McCune v. The Departmentof Energy, et al., C.A. No. 78-1145 TT
18 Stelbar oxi Corp. and Standard 0il Co., Inc., et al.
v. The Department of Energ , et al., C.A. No. 78-1176
19 Robert Dale Brandenburg and Texaco, Inc. v. The Departmentof Energy, et al., C.A. No. 78-1730 TT
20 George W. Waite and Amoco Production Co. v. The De artment
of Energy, et al., C.A. No. 78-1357
21 Otis Peavey, et al. and Sun 0il of Delaware v. The
Department of Energy, et al., C.A. No. 78-1410
Howard Stout, ef al. and Gulf 0il Corp. v. The Department
22 of Energy,	et al., C.A. No. 78-1513
23
24
25