Court Opinion

ID: 9308798
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:23:17.820908+00
Date Added: 2024-06-11T17:14:03.585227
License: Public Domain

THORNBERRY, Judge,
dissenting.
The Temporary Emergency Court of Appeals (TECA) does not have jurisdiction over Pennzoil’s appeal unless the district court interpreted or applied the Emergency Petroleum Allocation Act of 1973 (EPAA), the Economic Stabilization Act of 1970 (ESA), or regulations promulgated under these statutes. See EPAA, § 5(a)(1), 15 U.S.C.A. § 754(a)(1) (West 1976), incorporating ESA, § 211(a), 12 U.S.C.A. § 1904 note (West 1989); United States v. Wyatt, 680 F.2d 1080, 1083, 1085 (5th Cir.1982).1 The majority and I agree on that first premise. See Majority Opinion at 1142. We part company, however, on the second premise: whether the district court has interpreted or applied the EPAA or a regulation promulgated under it.
Pennzoil is the lessee of an oil and gas lease located on the outer continental shelf off the coast of Louisiana. The Department of Interior (DOI) leased this land to Pennzoil under the authority of the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C.A. § 1344 (West 1986). Pennzoil’s lease agreement required it to pay the government, as royalty, sixteen and two-*1145thirds percent of the value of the oil removed from the lease.
Ordinarily, Pennzoil’s price for the first sale of the oil it removed from the continental shelf would have been restrained by regulations promulgated under the EPAA, but in the Energy Conservation and Production Act, enacted in 1976, Congress directed the President to allow a “qualified producer” to charge a price higher than the ceiling price for “tertiary enhanced recovery techniques.” See 15 U.S.C. § 757(j)(l)(A) (Supp.1981). “Tertiary enhanced recovery techniques are higher cost production methods which maximize oil production from a depleting field.” Union Oil Co. v. United States Dep’t of Energy, 688 F.2d 797, 800 (Temp.Emer.Ct.App. 1982), cert. denied, 459 U.S. 1202, 103 S.Ct. 1186, 75 L.Ed.2d 433 (1983). The Department of Energy (DOE) administered the tertiary incentive program and promulgated regulations that allowed an oil producer to recover three-fourths of its expenses for this high-cost drilling by selling any of the oil it produced at the unregulated market price, including oil not produced on the property where the tertiary project was located. See 10 C.F.R. § 212.78(c) (1981), supplemented by 40 Fed.Reg. 51, 148 (1979).
From August 1980 to January 1981, Pennzoil sold crude oil recovered from the outer continental shelf at unregulated prices in order to recover its expenses for tertiary enhanced recovery projects on other oil producing properties. But when Pennzoil remitted royalties to the DOI, it used the regulated price as the basis for its calculation. Pennzoil did this because the DOE regulation, 10 C.F.R. § 212.78, prohibits an owner of a royalty interest from sharing the revenue obtained from the tertiary incentive program unless the owner has invested in the enhanced recovery project. See Interpretation 1980-7, Fed. Energy Guidelines 1156,487 (April 22, 1980). Under the DOI regulations, however, the government is entitled to a royalty interest on tertiary incentives because these incentives were part of the revenue that Pennzoil received for selling its oil. See 30 C.F.R. § 250.64 (1979) (current version at 30 C.F.R. §§ 206.150 to 206.159 (1990)).
For the majority, the existence of the DOE regulation and the fact that Pennzoil has relied on it is enough to confer jurisdiction on this court, but in my view, we do not have jurisdiction unless the district court analyzed or interpreted that regulation. See Sector Ref., Inc. v. Enterprise Ref. Co., 771 F.2d 496, 503 (Temp.Emer.Ct.App.1985) (noting that “[o]ur jurisdiction depends not on whether an EPAA issue exists, but on whether an EPAA issue was adjudicated”). This constraint flows implicitly from the TECA’s raison d’etre. The TECA exists “to assure uniform interpretation of the substantive provisions” of the EPAA and its regulations. See Bray v. United States, 423 U.S. 73, 75, 96 S.Ct. 307, 309, 46 L.Ed.2d 215 (1975). Our expertise is unnecessary if the district court has not interpreted the EPAA or its regulations.
I believe that the legion of cases which have discussed the TECA’s jurisdiction also support a narrower view of its jurisdictional authority. Even if the EPAA or an EPAA regulation formed the basis for an appellant’s cause of action, the Supreme Court, the circuit courts, and the TECA have consistently refused to allow the TECA to decide the appeal unless an interpretation of the statute or regulation was required. See Bray, 423 U.S. at 75, 96 S.Ct. at 310 (holding that the TECA did not have jurisdiction to review criminal contempt conviction of defendant who was being investigated for possible violations of the ESA); In re Seneca Oil Co., 906 F.2d 1445, 1453-55 (10th Cir.1990) (holding that the TECA did not have jurisdiction to decide whether the DOE’s claim of restitution for overcharges, pursuant to the ESA, was a fine, penalty, or forfeiture under the Bankruptcy Code);2 Atlantic Richfield *1146Co. v. United States Dep’t of Energy, 769 F.2d 771, 778-79 (D.C.Cir.1984) (holding that even though the “underlying controversy” involved alleged violations of the EPAA, the question before the court involved an interpretation of the DOE Organization Act, and, therefore, the TECA’s jurisdiction was not invoked); United States v. Uni Oil, Inc., 646 F.2d 946, 949 (5th Cir.1981) (holding that the TECA did not have jurisdiction of appeal by defendants who were charged with conspiracy and fraud after they allegedly attempted to avoid the EPAA’s price restrictions), cert. denied, 455 U.S. 908, 102 S.Ct. 1254, 71 L.Ed.2d 446 (1982); United States v. Zang, 645 F.2d 999, 1002-03 (Temp.Emer.Ct.App.1981) (same).
Conversely, the TECA has been held to have jurisdiction only in those cases in which an interpretation of the EPAA or its regulations resolved the case. See Tully v. Mobil Oil Corp., 455 U.S. 245, 248, 102 S.Ct. 1047, 1050, 71 L.Ed.2d 120 (1982) (noting that the TECA has jurisdiction to interpret the EPAA to determine whether it pre-empted a state tax on the gross receipts of oil companies); Isla Petroleum Corp. v. Puerto Rico Dep’t of Consumer Affairs, 811 F.2d 1511, 1513 (Temp.Emer.Ct.App.1986) (holding that the TECA had jurisdiction to examine the purpose of the EPAA in order to decide whether Puerto Rico could regulate the wholesale price of gas after the President’s regulatory authority expired, or whether the field of price regulation was pre-empted by Congress’s decision to leave the field), rev’d on other grounds, 485 U.S. 495, 108 S.Ct. 1350, 99 L.Ed.2d 582 (1988).
The district court held that Pennzoil was required to include the excess revenue it received from the tertiary incentive program in calculating the royalty it owed to the government. See Pennzoil Exploration & Prod. Co. v. Lujan, 751 F.Supp. 602 (E.D.La.1990). The court did two things to reach this conclusion. First, it interpreted the DOI regulation, 30 C.F.R. § 250.64, and concluded that the regulation required Pennzoil to calculate royalty based on all the revenue it received, regardless of the form or substance of that revenue. See id. at 605. Second, it concluded that the Secretary of Interior had “explicit statutory authority to determine the value of production for royalty purposes,” and that Pennzoil’s arguments were not sufficiently compelling to overrule that authority. See id. at 606.
The TECA only “takes jurisdiction over those issues which it has authority to decide.” Texaco, Inc. v. Department of Energy, 616 F.2d 1193, 1197 (Temp.Emer.Ct. App.1979). Only the second of the district court’s two foundations for its decision possibly could present a TECA issue. In its second premise, the court was holding that the DOE's tertiary incentive program could not supersede the authority of the Secretary of Interior to prescribe royalties for federal oil and gas leases on the outer continental shelf. But the court did not analyze the DOE regulation in order to make this decision. It did not say that Pennzoil’s interpretation of the regulation to exclude royalty owners from the profits of the tertiary incentive program was wrong, nor did it say that the DOE intended to exclude the government from the ambit of its regulation. It said that the DOE did not have the statutory authority to affect the royalty required by the DOI.
The statute to which the court is referring is the OCSLA. See id. at 603. When it enacted the OCSLA, Congress gave the Secretary of Interior the power to enact regulations that would award oil and gas leases on submerged lands of the outer continental shelf through competitive bidding. See OCSLA, § 8(a)(1), 43 U.S.C.A. § 1337(a)(1) (West 1986). The DOE’s tertiary incentive program cannot encroach on the Secretary of Interior’s authority under *1147the OCSLA because the Department of Energy Organization Act of 1977, which established the DOE, prohibits the DOE from promulgating any regulation that would restrict or limit the Secretary of Interior’s authority to supervise federal oil leases. See § 303(a), 42 U.S.C.A. § 7153(a) (West 1983).3 The TECA does not have jurisdiction to interpret either the OCSLA or the DOE Organization Act in order to determine whether the district court correctly held that the DOE did not have the statutory authority to affect the DOI’s administration of federal oil leases on the outer continental shelf. See Texaco, 616 F.2d at 1196 (holding that the TECA does not have jurisdiction to interpret the DOE Organization Act); Atlantic Richfield Co. v. United States Dep’t of Energy, 769 F.2d 771, 779 (D.C.Cir.1985) (same).
Consequently, I would hold that the TECA did not have jurisdiction over either of the foundations on which the district court based its decision. Pennzoil should have appealed the district court’s decision to the Fifth Circuit and filed a protective appeal with this court. If the Fifth Circuit were to resolve the case in such a way that an interpretation of the DOE regulation becomes necessary, Pennzoil could then return to the TECA. See Scallop Corp. v. Tully, 705 F.2d 645, 650 (2d Cir.1983).
The jurisdictional mandate of the TECA is confusing and time-consuming, see Texaco, 616 F.2d at 1199 (Hoffman, J., dissenting), but we must operate within its confines. I believe that we would be exceeding those boundaries by asserting jurisdiction in this case. Therefore, I respectfully dissent.

. Because the EPAA incorporated the ESA, an ESA issue is also an EPAA issue.

. One panel of the TECA held that the question whether a claim by the DOE should be subordinated to the claims of other creditors did arise under the EPAA. See United States Dep’t of Energy v. West Texas Marketing Corp., 763 F.2d 1411, 1420-24 (Temp.Emer.Ct.App.1985) (Christensen, J., specially concurring). Although the analysis of West Texas may be inconsistent with *1146a narrow interpretation of the TECA’s jurisdiction, it was noted that the provisions of the ESA and the EPAA and its regulations would have to be examined to determine whether “there could be restitution beyond the ‘disgorgement’ of profits illegally obtained by the oil company.” See id. at 1423. But see id. at 1429 (Sear, J., dissenting) (stating that the TECA did not have jurisdiction over the DOE’s claim); In re Seneca Oil Co., 906 F.2d 1445, 1455 (10th Cir.1990) (disagreeing with the jurisdictional analysis of West Texas Marketing).

. The district court did not discuss the DOE Organization Act, but the relationship between the OCSLA and that Act was addressed by the Interior Board of Land Appeals, which first heard this case. See Pennzoil Oil & Gas, Inc., 109 I.B.L.A. 147, 149 (June 8, 1989).