Sun Co. v. United States

594 F. Supp. 652, 1984 U.S. Dist. LEXIS 23055
CourtDistrict Court, D. Delaware
DecidedOctober 3, 1984
DocketCiv. A. No. 83-204-WKS
StatusPublished
Cited by1 cases

This text of 594 F. Supp. 652 (Sun Co. v. United States) 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
Sun Co. v. United States, 594 F. Supp. 652, 1984 U.S. Dist. LEXIS 23055 (D. Del. 1984).

Opinion

OPINION

STAPLETON, Chief Judge:

Plaintiff, Sun Company, Inc. and its wholly owned subsidiary, Sun Exploration and Production Company (collectively “Sun”), brought this civil action against the United States of America, Department of Energy (“DOE”) and certain DOE officials seeking enforcement of a settlement agreement embodied in a Consent Order entered by the Agency on September 11, 1980 (“the Consent Order”). Sun alleges that DOE has repeatedly violated the agreement and, accordingly, seeks declaratory relief, injunctive relief and money damages.

This action is currently before the Court on Sun’s motion for summary judgment. Sun claims that the language of the Consent Order at issue is clear and unambiguous, that the DOE is pursuing a course of action that clearly violates the plain meaning of the Consent Order, and that, therefore, Sun is entitled to summary judgment as a matter of law.

I

In 1973, the DOE imposed price controls on the “first sale” of crude oil produced within the United States. While the sellers in a “first sale” are ordinarily the working interest or royalty owners, it is normally the operator of a particular producing property who controls the day-to-day operations of the property and makes the various pricing and other decisions which are important under the DOE’s price regulations. Because of the operator’s unique position,. the DOE has a policy of proceeding against an operator to satisfy all alleged overcharges on sales of oil from a given property, instead of proceeding against the often numerous other companies that hold working or royalty interests in, but do not operate, the property in question. By proceeding against the operator for one hundred percent of the alleged overcharges, the DOE can effectively recover for all pricing violations at a given property in a single enforcement action and avoid the heavy burden of multiple enforcement actions against each individual interest owner.

The DOE’s adjudicatory bodies have consistently ruled that the DOE may recover all overcharges from the operator of a property. E.g., Braden-Zenith, Inc., 5 FEC ¶ 80,522 (1977); Sun Company, Inc., 11 DOE ¶ 82,531 (1983). The operator liability doctrine has also received approval from the federal judiciary. E.g., Sauder v. DOE, 648 F.2d 1341, 1347-48 (TECA 1981); United States v. Exxon Corp., 561 F.Supp. 816, 849-50 (D.D.C.1983).

In addition to owning interests in property that it operates, Sun owns working and royalty interests in numerous properties operated by other firms. The DOE has brought enforcement actions against several operators of properties in which Sun has working or royalty interests. In these enforcement actions, the DOE has, consistent with the operator liability doctrine, sought to recover all alleged overcharges stemming from the properties in question, including alleged overcharges attributable to the oil that Sun owned in its capacity as a working or royalty interest owner.

As stated in its “Introduction,” the purpose of the Consent Order entered into between Sun and the DOE was to “settle and ... finally resolve ... all civil claims, whether or not heretofore asserted, against Sun by DOE arising out of Sun’s compliance with the federal petroleum price and allocation regulations administered and enforced by • DOE for the period March 6, 1973, through June 30, 1980.” Sun and the DOE are in agreement that the Consent Order, subject to several explicit exceptions, bars the DOE from bringing claims against Sun on Sun’s capacity both as an interest owner in properties that Sun itself operates, and as an interest owner in properties operated by others.

At issue here is Sun’s contention that the plain and unambiguous language of the Consent Order also prohibits the DOE from asserting claims against third party [654]*654operators for alleged overcharges attributable to Sun’s working or royalty interests. Accordingly, Sun argues that the DOE’s claims against operators must be reduced by any amount attributable to Sun’s interest in the property in question.

Sun argues that in ruling upon its motion for summary judgment the Consent Order must be construed as written without resort to any extrinsic evidence. The DOE offers a different interpretation of the disputed language of the Consent Order and urges this Court to consider extrinsic evidence in determining the intent of the parties.

II

As the Supreme Court explained in Armour United States v. Armour & Co., 402 U.S. 673, 681-82, 91 S.Ct. 1752, 1757-58, 29 L.Ed.2d 256 (1971), the scope of a Consent Order must be construed as written:

Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms. The parties waive their right to litigate the issues involved in the case and thus save themselves the time, expense, and inevitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve. For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it.

As our Court of Appeals. recently explained in Fox v. United States, 680 F.2d 315, 319-20 (3d Cir.1982), these teachings from the Armour case leave room for . the consideration of extrinsic evidence when the Consent Order is ambiguous:

The “four corners” rule of Armour is consistent with the ordinary principle of contract construction that resort to extrinsic evidence is permissible only when the instrument itself is ambiguous, although frequently the circumstances surrounding its formation will be relevant to its meaning. “Such reliance does not in any way depart from the ‘four corners’ rule of Armour.” ITT Continental Baking, 420 U.S. [223] at 238, 95 S.Ct. [926] at 935 [43 L.Ed.2d 148 (1975)].
Interpretation of a contract is ordinarily a question of law for the courts. But when the contract is ambiguous, extrinsic evidence may be required to discern its meaning, transforming the question into one of fact to be resolved by the fact finder, except where the evidence and resulting inferences are uncontroverted. Barco Urban Renewal Corp. v. Housing Authority, 674 F.2d 1001, 1007-08 (3d Cir.1982). Whether a contract or consent decree requires’extrinsic evidence in aid of interpretation is, of course, itself a question of interpretation subject to plenary review. The first task, therefore, is to determine whether the instrument by its terms unambiguously covers the dispute.

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Bluebook (online)
594 F. Supp. 652, 1984 U.S. Dist. LEXIS 23055, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sun-co-v-united-states-ded-1984.