Opinion ID: 601816
Heading Depth: 4
Heading Rank: 2

Heading: Are Chevron's plug and abandon indemnity claims ripe?

Text: 71 At oral argument, Rocky Mountain also suggested that Chevron's plug and abandon indemnity claims are not ripe for adjudication. Rocky Mountain's argument in this regard is related to the mootness argument raised by Tellurogenic and Spencer Oil. Specifically, Rocky Mountain contends that, because no one has yet threatened to require Chevron to plug and abandon the wells on the Bayou Couba lease, their request for a declaratory judgment is not yet ripe for review. 72 In New Orleans Public Service, Inc. v. Council of New Orleans, 833 F.2d 583 (5th Cir.1987), this court set forth the prevailing standards for determining whether a dispute is ripe. We stated: 73 A court should dismiss a case for lack of ripeness when the case is abstract or hypothetical. The key considerations are the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration. A case is generally ripe if any remaining questions are purely legal ones; conversely, a case is not ripe if further factual development is required. 74 Id. at 586-87 (citations omitted). Thus, the ripeness inquiry focuses on whether an injury that has not yet occurred is sufficiently likely to happen to justify judicial intervention. See 13A C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3531.12, at 50 (1984). 75 We hold that Chevron's plug and abandon indemnity claims, which present an actual controversy as to the obligations of successive holders of the Bayou Couba lease to Chevron, are ripe for adjudication. As already discussed, there is a substantial possibility that Chevron will be required to plug and abandon the wells on the Bayou Couba lease. Moreover, the only remaining question is a legal one--namely, whether Rocky Mountain and the investors are liable, as transferees of interests in the Bayou Couba lease, to indemnify Chevron for any subsequently incurred plug and abandon obligations. Finally, judicial resolution of Chevron's plug and abandon indemnity claims at this time is consistent with the purpose of Declaratory Judgment Act itself. See Hardware Mut. Cas. Co. v. Schantz, 178 F.2d 779, 780 (5th Cir.1949) (The purpose of the Declaratory Judgment Act is to settle 'actual controversies' before they ripen into violations of law or breach of some contractual duty.). 76 (c) Should the district court have abstained from ruling on Chevron's plug and abandon indemnity claims? 77 Tellurogenic and Spencer Oil also argue that, under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), the district court should have abstained from determining who is liable to plug and abandon Louisiana oil wells. 11 They argue specifically, citing Magnolia Coal Terminal v. Phillips Oil Co., 561 So.2d 732 (La.App. 4th Cir.1990), aff'd in part and rev'd in part, 576 So.2d 475 (La.1991), that only the Louisiana Commissioner of Conservation can make and enforce plug and abandon rules and regulations. They further reason that, because the district court decided matters within the Louisiana Commissioner's jurisdiction, there is the possibility of conflicting results and standards between the Louisiana Commissioner and the federal courts on the issue of who is obligated to plug and abandon the wells on the Bayou Couba lease. 78 Tellurogenic and Spencer Oil misconstrue the nature of the district court's ruling. The district court did not order Rocky Mountain and the investors to plug and abandon the wells on the Bayou Couba lease, nor did it determine who is ultimately obligated to plug and abandon the wells under Louisiana law. Rather, the district court held only that, if Chevron is required to expend money to plug and abandon the wells on the Bayou Couba lease, Rocky Mountain and the investors must indemnify Chevron. Contrary to the assertion by Tellurogenic and Spencer Oil, then, the district court did not exercise jurisdiction or render a judgment in a manner that potentially conflicts with the authority of the Commissioner of Conservation. Therefore, the district court was not required to abstain under Burford.