Conoco, Inc. v. Hodel

626 F. Supp. 287, 88 Oil & Gas Rep. 236, 1986 U.S. Dist. LEXIS 30444
CourtDistrict Court, D. Delaware
DecidedJanuary 14, 1986
DocketCiv. A. 85-277 MMS
StatusPublished
Cited by1 cases

This text of 626 F. Supp. 287 (Conoco, Inc. v. Hodel) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Conoco, Inc. v. Hodel, 626 F. Supp. 287, 88 Oil & Gas Rep. 236, 1986 U.S. Dist. LEXIS 30444 (D. Del. 1986).

Opinion

OPINION

MURRAY M. SCHWARTZ, Chief Judge.

Plaintiffs Conoco, Inc. (“Conoco”) and Consolidated Coal Company (“Consolidated”) seek declaratory relief to prevent defendant the Secretary of the Interior (“the Secretary”) from applying Section 2 of the Mineral Lands Leasing Act (“MLLA”), codified as amended at 30 U.S.C. § 201(a)(2)(A) (1982), to federal, leases of minerals other than coal.

The matter is before this Court on cross-motions for summary judgment. For the reasons explained below, the Court will deny plaintiffs’ motion and will grant defendant's motion for summary judgment.

Facts

Under the authority of the Mineral Lands Leasing Act of 1920 (“MLLA”), 30 U.S.C. § 181 et seq. (1982), the Secretary of the Interior leases federal lands containing certain types of mineral deposits. Sub-chapter I of the MLLA contains generally applicable mineral leasing provisions; sub-chapters II, III, IV, V, VII, VIII, and IX cover the leasing of coal, phosphates, oil and gas, oil shale, sodium, sulphur, and potash, respectively.

In 1976 Congress enacted the Federal Coal Leasing Amendments Act (“the FCLAA”). Section 3 of the FCLAA amended subchapter II of the MLLA and established additional requirements for the issuance of new federal coal leases. 1 One of the purposes of the FCLAA was to promote the “diligent development” of federal coal leases. See 30 U.S.C. §§ 202a(2), (3); H.R.Rep. No. 681, 94th Cong., 2d Sess. 9-13 (1976), reprinted in 1976 U.S.Code Cong. & Ad.News pp. 1943, 1945-48. To achieve that goal, Section 2 of the MLLA as amended penalizes companies that have held a federal coal lease for more than ten years from the effective date of the statute, August 4,1976, without producing coal therefrom in commercial quantities. 2

Under the Secretary’s interpretation of Section 2, any holder of federal coal leases acquired prior to August 4, 1976 who fails adequately to develop those leases by August 4, 1986 3 is precluded from acquiring new federal leases for coal and for every other mineral covered by the MLLA. Companies “controlled by or under common control with” such a holder (“associated companies”) are similarly precluded. See 30 U.S.C. § 201(a)(2)(A). Under the final guidelines issued by the Secretary, “a subsidiary’s violation [of Section 2] is charged to a controlling parent____” 50 Fed.Reg. 35144 (Aug. 29, 1985).

Conoco is an energy company incorporated in Delaware with its principal place of business in Houston, Texas. Conoco engages in the exploration, production, refining, and marketing of oil and gas products, and derives substantial revenue from its holdings of federal onshore oil and gas leases. Consolidated, a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania, is a wholly owned subsidiary of Conoco and a major coal producer and marketer.

*289 Consolidated holds thirty undeveloped federal coal leases issued prior to 1976 which contain an estimated 1.3 billion tons of recoverable coal. To avoid the penalty of Section 2(a)(2)(A), Consolidated must have these properties in production by August 4, 1986. Consolidated asserts it cannot produce coal from these leaseholds in commercial quantities by that date. For purposes of this litigation, Consolidated does not dispute that it will not be permitted to require additional federal coal leases after August 4, 1986. 4 Complaint at 1122.

At present, twenty percent of Conoco’s total oil and gas leases, encompassing some one and one-half million acres, are held in federal onshore leases. In addition, Conoco adds over 10,000 leases to its inventory per year. Between 1981 and 1985, Conoco annually acquired federal onshore oil and gas leases ranging from 48,000 to 365,000 acres. If Consolidated continues to hold its nonproducing pre-1976 federal coal leases after December 4, 1986, 5 Conoco, as the parent of Consolidated, will be required to forgo the opportunity to obtain new federal oil and gas leases. Conversely, if Consolidated divests itself of the pre-1976 leases in order to allow Conoco to continue to acquire new federal oil and gas leases, it alleges the divestiture, even if feasible, “would result in substantial financial losses.” Id. 1123.

Plaintiffs assert the Secretary has wrongfully interpreted the federal lease-exclusion provisions of Section 2(a)(2)(A) of the MLLA by extending it to companies such as Conoco which are affiliated with companies holding federal coal leases, but which themselves own no coal leases and seek only non-coal federal mineral leases. Further, plaintiffs charge that in February, 1985, the Secretary suddenly changed his longstanding interpretation that the Section 2(a)(2)(A) prohibition applied only to coal leases.

Plaintiffs seek a declaration from this. Court that the Secretary’s interpretation is arbitrary and capricious, an abuse of discretion, beyond the Secretary’s authority and contrary to law, and that the prohibition of Section 2(a)(2)(A) of the MLLA applies to federal coal leases only. Conoco also seeks a declaratory judgment that the Secretary shall allow it to apply for federal non-coal leases without regard to the status of Consolidated’s pre-1976 federal coal leases. 6

The Secretary denies his statutory interpretation of Section 2(a)(2)(A) to include federal non-coal leases is either new or erroneous. The Secretary claims the plain language of the statute and the legislative history negate the plaintiff's interpretation and that the Department’s interpretation has been consistent since the statute was enacted.

Analysis

1. Statutory Language

In all cases involving statutory con- ■ struetion, a court’s starting point must be the language employed by Congress. See, e.g., North Dakota v. United States, 460 U.S. 300, 311, 103 S.Ct. 1095, 1102, 75 L.Ed.2d 77 (1983). The ordinary presumption is that the words of the statute are conclusive evidence of the legislative purpose. See, e.g., Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973 (1982).

Section 3 of the Federal Coal Leasing Amendment Act of 1975 amended the last sentence of Section 2(a) of the Mineral Lands Leasing Act (30 U.S.C. § 201(a)) to read:

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Cite This Page — Counsel Stack

Bluebook (online)
626 F. Supp. 287, 88 Oil & Gas Rep. 236, 1986 U.S. Dist. LEXIS 30444, Counsel Stack Legal Research, https://law.counselstack.com/opinion/conoco-inc-v-hodel-ded-1986.