Superior Oil Co. v. Transco Energy Co.

616 F. Supp. 98
CourtDistrict Court, W.D. Louisiana
DecidedMarch 25, 1985
DocketCiv. A. 84-2138 L
StatusPublished
Cited by23 cases

This text of 616 F. Supp. 98 (Superior Oil Co. v. Transco Energy Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Superior Oil Co. v. Transco Energy Co., 616 F. Supp. 98 (W.D. La. 1985).

Opinions

MEMORANDUM RULING

DUHE, District Judge.

This matter involves an action by plaintiff, Superior Oil Company (“Superior”), against defendants Transcontinental Gas Pipe Line Corporation (“Pipe Line”), Transco Exploration Company (“TXC”), TXP Operating Company (“TXPO”), Transco Exploration Partners, Ltd. (“Partners”), and the Transco Energy Company (“TEC”), for injunctive relief and damages for alleged violations of the Natural Gas Policy Act of 1978 (NGPA), 15 U.S.C. 3301 et seq., and the Sherman Anti-Trust Act, 15 U.S.C. § 1 et seq. In addition, through § 1349 of the Outer Continental Shelf Lands Act (OCS-LA), 43 U.S.C. § 1331 et seq., and the pendent jurisdiction of this Court, there are state law claims for damages and specific performance for the alleged breach of six contracts for the sale of natural gas from onshore and offshore fields of Louisiana and Texas. Presently before the Court are various motions:

(1) A motion by the defendants to stay certain elements of this action and refer them to the Federal Energy Regulatory Commission (FERC);
(2) A motion by defendant Pipe Line to stay certain elements of this action pending arbitration;
(3) A motion by plaintiff for partial summary judgment;

Each of these will be considered in turn. As a preliminary inquiry, however, this Court will review its jurisdiction over this matter.

JURISDICTION

Superior is seeking relief for the breach of six contracts for the sale of natural gas. Four of these contracts—the Eugene Island, West Cameron, Brazos and Vermilion—are for production fields on the Outer Continental Shelf (OCS) of Louisiana and Texas. The two remaining contracts— the Schwarz and Raccourci Island—are for onshore fields in Texas and Louisiana, respectively.

43 U.S.C. § 1349(b)(1) provides, in pertinent part, that:

(1) ... [T ]he district courts of the United States shall have jurisdiction of cases and controversies arising out of, or in connection with (A) any operation conducted on the Outer Continental Shelf which involves exploration, development, or production of minerals, of the subsoil and seabed of the Outer Continental Shelf ... (emphasis added).

This Court has little difficulty in concluding that a contract for the sale of natural gas produced on the OCS arises out of and [101]*101is connected with the “exploration, development, or production of the minerals” of the Outer Continental Shelf. Hence this Court has original jurisdiction over the four OCS contacts at issue in this matter.

This Court has no such independent jurisdiction over plaintiff’s claims arising out of the two onshore contracts. However, Superior has also alleged in its amended complaint that defendants’ breach of these two contracts is part of a larger violation of the Federal antitrust laws, 15 U.S.C. § 1 and 2 (Sherman Act), and 15 U.S.C. § 14 (Clayton Act). Since Superior’s state-law claims for breach of the two onshore contracts derive from a common nucleus of operative fact with its federal antitrust claims, this Court has pendent jurisdiction over the former. Transource International, Inc., v. Trinity Industries, Inc., 725 F.2d 274 (5th Cir.1984). In the interests of judicial economy, this Court will exercise its discretionary pendent jurisdiction over the Schwarz and Raccourci Island contract claims in this matter.

I. DEFENDANTS’ MOTION TO STAY AND REFER TO FERC

The defendants have moved on the grounds of the “primary jurisdiction” doctrine that certain issues in this matter be stayed and referred to FERC. Those issues are:

(a) Whether any of the defendants have violated § 315 of NGPA, 15 U.S.C. § 3375, 18 C.F.R. § 277.101, by participating in short-term sales of new or high cost natural gas from the Outer Continental Shelf temporarily released from long-term contracts; and
(b) Whether maximum lawful price ceilings established under Title I of the NGPA would be exceeded if Superior were to receive “take or pay” payments for natural gas, whether or not such payments may be recouped or made up by Pipe Line.

In weighing this motion, this Court is guided by the principles enunciated by the Fifth Circuit in Mississippi Power and Light Co. v. United Gas Pipe Line Co., 532 F.2d 412 (5th Cir.1976).

In M P & L the Court declared:

“No fixed formula exists for applying the doctrine of primary jurisdiction. In every case the question is whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application in the particular litigation.” Id. at 419.

However,

“there are a few general situations in which referral is often unwarranted ... when the agency’s position is sufficiently clear or nontechnical or when the issue is peripheral to the main litigation, Court should be very reluctant to refer [citations omitted ]. Finally, the Court must always balance the benefits of seeking the agency’s aid with the need to resolve disputes fairly yet as expeditiously as possible [citations omitted ].” Id.

There are two questions that defendants seek to refer to FERC. The first—whether or not the short-term special marketing programs of defendants violate the NGPA of 1978—is peripheral to the central litigation, that is, the question of defendants’ non-performance of their obligations. Hence, this Court has little difficulty in denying the defendants’ motion as to this issue.

The second candidate for referral is the defendants’ affirmative defense that the price ceilings of the NGPA of 1978 void their obligation to pay in the absence of taking, regardless of whether those payments are ultimately recoupable. Defendants contend that the technical nature of this question, and the fact that its resolution has industry-wide implications, augurs in favor of referral.

Various other district courts have wrestled with this question, and while at least one court has referred the issue to FERC— see Post v. Perry Gas Transmission, Inc., 616 F.Supp. 1 (N.D.Tex.1983)—the weight of authority stands for the proposition that denial of the referral motion is proper. Cf. Exxon Corp. v. Tenneco, Inc. # 83-1640 [102]*102(W.D.La.1983); Southport Exploration, Inc. v. Producers Gas Co., #

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Bluebook (online)
616 F. Supp. 98, Counsel Stack Legal Research, https://law.counselstack.com/opinion/superior-oil-co-v-transco-energy-co-lawd-1985.