North Michigan Land & Oil Corporation the Ray D. Markel Testamentary Residual Trust B, by Ron D. Markel and James W. Markel, Co-Trustees Nielson Enterprises Corporation Nielson Enterprises Limited Partnership North Michigan Gas & Oil, a Limited Partnership David E. Nielson Dale M. Nielson Gerald J. Talbot Cmk Enterprises, Inc. The Idonea Hersee Trust, by Idonea Hersee as Trustee Dennis Olson Sandra Olson, and Energy Reserves, Inc., Intervening v. Consumers Power Company Michigan Public Service Commission Steven M. Fetter, Chairman Ronald E. Russell, Commissioner John L. O'donnell, Commissioner

35 F.3d 566, 1994 U.S. App. LEXIS 32563
CourtCourt of Appeals for the Sixth Circuit
DecidedAugust 26, 1994
Docket93-1705
StatusUnpublished

This text of 35 F.3d 566 (North Michigan Land & Oil Corporation the Ray D. Markel Testamentary Residual Trust B, by Ron D. Markel and James W. Markel, Co-Trustees Nielson Enterprises Corporation Nielson Enterprises Limited Partnership North Michigan Gas & Oil, a Limited Partnership David E. Nielson Dale M. Nielson Gerald J. Talbot Cmk Enterprises, Inc. The Idonea Hersee Trust, by Idonea Hersee as Trustee Dennis Olson Sandra Olson, and Energy Reserves, Inc., Intervening v. Consumers Power Company Michigan Public Service Commission Steven M. Fetter, Chairman Ronald E. Russell, Commissioner John L. O'donnell, Commissioner) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
North Michigan Land & Oil Corporation the Ray D. Markel Testamentary Residual Trust B, by Ron D. Markel and James W. Markel, Co-Trustees Nielson Enterprises Corporation Nielson Enterprises Limited Partnership North Michigan Gas & Oil, a Limited Partnership David E. Nielson Dale M. Nielson Gerald J. Talbot Cmk Enterprises, Inc. The Idonea Hersee Trust, by Idonea Hersee as Trustee Dennis Olson Sandra Olson, and Energy Reserves, Inc., Intervening v. Consumers Power Company Michigan Public Service Commission Steven M. Fetter, Chairman Ronald E. Russell, Commissioner John L. O'donnell, Commissioner, 35 F.3d 566, 1994 U.S. App. LEXIS 32563 (6th Cir. 1994).

Opinion

35 F.3d 566

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.
NORTH MICHIGAN LAND & OIL CORPORATION; the Ray D. Markel
Testamentary Residual Trust B, by Ron D. Markel and James W.
Markel, Co-Trustees; Nielson Enterprises Corporation;
Nielson Enterprises Limited Partnership; North Michigan Gas
& Oil, a Limited Partnership; David E. Nielson; Dale M.
Nielson; Gerald J. Talbot; CMK Enterprises, Inc.; the
Idonea Hersee Trust, by Idonea Hersee as Trustee; Dennis
Olson; Sandra Olson, Plaintiffs-Appellants,
and Energy Reserves, Inc., Intervening Plaintiff-Appellant,
v.
CONSUMERS POWER COMPANY; Michigan Public Service
Commission; Steven M. Fetter, Chairman; Ronald
E. Russell, Commissioner; John L.
O'Donnell, Commissioner,
Defendants-Appellees.

Nos. 93-1705, 93-1775.

United States Court of Appeals, Sixth Circuit.

Aug. 26, 1994.

Before: KEITH and MILBURN, Circuit Judges; and WELLFORD, Senior Circuit Judge.

PER CURIAM.

The district court had federal question jurisdiction to entertain this action but dismissed it relying on the Burford abstention doctrine. On appeal, the issue is whether the district court erred by dismissing this action under the Burford abstention doctrine. For the reasons that follow, we hold that the district court did not commit error, and, therefore, we affirm.

I.

Plaintiffs are natural gas producers in Michigan that supply gas to defendant Consumers Power Company pursuant to a Gas Purchase Contract dated July 1, 1977. In 1987, the Michigan Public Service Commission (MPSC), through gas cost recovery proceedings, reduced the price Consumers could charge its customers. The effect of this reduction was to prevent Consumers from passing the full cost of its gas purchases from plaintiffs on to its customers. In other words, the price the MPSC allowed Consumers to charge was less than the price Consumers was obligated to pay under the Gas Purchase Contract. Consumers then filed applications with the MPSC under Act 9, Mich.Comp.Laws Ann. Sec. 483.101 et seq., seeking to have its obligations under the Gas Purchase Contract reduced. In 1989 after negotiations between the gas producers, including plaintiffs herein, and the MPSC staff, a Settlement Agreement was reached which set a lower price for the period from 1986 through November 1991 than that provided in the Gas Purchase Contract. However, plaintiffs and Consumers also entered a Letter Agreement dated August 7, 1989, which provided that the price for gas sold and purchased under the contract after the period provided in the Settlement Agreement would be the full contract price. Thus, the Gas Purchase Contract was amended to provide for a lower price until December 1991 and to extend the term of the contract until 1995, during which additional term the price would be the full contract price before the Settlement Agreement reduction.

On November 27, 1991, Consumers filed an application with the MPSC under Act 9, seeking to avoid the price increase called for by the Letter Agreement (MPSC Case No. U-10029). Plaintiffs intervened in U-10029 and challenged the MPSC's jurisdiction. On June 29, 1992, an administrative law judge determined that the MPSC did have jurisdiction. After they were unsuccessful in having the MPSC dismiss the case, plaintiffs filed the present action in the district court against Consumers, the MPSC, the MPSC chairman, and two MPSC commissioners. The complaint alleged that application of Act 9 by Consumers and the MPSC in U-10029 would violate the Contracts, Due Process, and Equal Protection Clauses and the Separation of Powers principle of the United States and Michigan Constitutions. The complaint further alleged that the MPSC's consideration of a new gas price was barred by res judicata or collateral estoppel, that Consumers was estopped from utilizing Act 9, and that U-10029 was barred because the area had been preempted by Congress. The complaint sought a declaratory judgment that U-10029 was barred by those grounds and an injunction prohibiting defendants from proceeding with U-10029. The complaint also contained a claim for damages under 42 U.S.C. Sec. 1983 for deprivation of constitutional rights and pendent state claims for breach of contract and breach of the duty of good faith.

Upon defendants' motion, the district court dismissed the case holding that it would abstain from exercising jurisdiction under the Burford doctrine. Although not mentioned in the district court's opinion, the MPSC had already issued an order relieving Consumers from having to pay the full contract price. This timely appeal followed.

II.

Generally, a district court must adjudicate the claims within its jurisdiction. However, there are several abstention doctrines that provide exceptions to this rule and allow a district court to decline to exercise its jurisdiction. We review a district court's decision to abstain de novo. Traughber v. Beauchane, 760 F.2d 673, 676 (6th Cir.1985).

The abstention doctrine relied on by the district court in this case was first used by the Supreme Court in Burford v. Sun Oil Co., 319 U.S. 315 (1943), and has come to be known as the Burford doctrine. In Burford, an oil company brought an action in district court to enjoin the enforcement of the Texas Railroad Commission's order granting an oil drilling permit. Administration of the state's comprehensive oil and gas regulatory scheme was centralized in the Texas Railroad Commission, and state law provided for judicial review of the Commission's decisions in a single state trial court with appeal rights to the state appellate courts. The Supreme Court held that even though the federal district court had subject matter jurisdiction, based on diversity of citizenship and on the oil company's contention that the Commission's order denied it due process, it should abstain from hearing the case because the state had centralized the regulation of oil and gas matters in the Commission and provided for adequate review of the Commission's decisions in state court. Review by the federal court would inevitably lead to conflicts in the interpretation of state law, resulting in frustration of important state policy, whereas allowing review in the state court would still preserve any federal questions for ultimate review by the Supreme Court. Id. at 333-34.

The Supreme Court has described the circumstances under which Burford abstention is appropriate as follows:

Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar"; or (2) where the "exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern."

New Orleans Public Serv., Inc. v.

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Related

Burford v. Sun Oil Co.
319 U.S. 315 (Supreme Court, 1943)
Wronski v. Sun Oil Co.
310 N.W.2d 321 (Michigan Court of Appeals, 1981)
Golembiowski v. Madison Heights Civil Service Commission
286 N.W.2d 69 (Michigan Court of Appeals, 1979)
Antrim Resources v. Public Service Commission
446 N.W.2d 515 (Michigan Court of Appeals, 1989)
Miller Bros. v. Public Service Commission
446 N.W.2d 640 (Michigan Court of Appeals, 1989)
Traughber v. Beauchane
760 F.2d 673 (Sixth Circuit, 1985)

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