Total E&P USA, Inc. v. Marubeni Oil & Gas (USA), Inc. et alRESPONSE in Opposition to 157 MOTION for Partial Summary Judgment on Choice of LawS.D. Tex.January 12, 2018 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION TOTAL E&P USA, INC. Plaintiff/Counter-Defendant v. MARUBENI OIL & GAS (USA) INC. Defendant/Counter-Claimant § § § § § § § § § § CIVIL ACTION NO. 4:16-CV-2674 JUDGE DAVID HITTNER TOTAL E&P USA, INC.’s Response in Opposition to MOGUS’s Motion for Partial Summary Judgment on Choice of Law Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 1 of 18 i TABLE OF CONTENTS Page Introduction ................................................................................................................ 1 Legal Standard ........................................................................................................... 2 Argument.................................................................................................................... 3 I. MOGUS’s own arguments reflect that geographic proximity, agency determinations, and projected boundaries (factors 1, 2, and 4) all favor Louisiana. ......................................................................................................... 3 A. MOGUS essentially ignores geographic proximity and overemphasizes Coastal Zone Management maps, which are minimally helpful. ................................................................................. 3 B. TEP USA relies on BOEM’s “Projected MMS State Boundaries” map, which is far more probative and places MC 305, MC 348, and CEPS within Louisiana. .......................................... 6 II. MOGUS relies on prior court determinations (factor 3) that adjudicated blocks in entirely different fields and which are all significantly closer to Alabama than MC 305 and MC 348, whereas TEP USA relies on cases determining that six other blocks in Mississippi Canyon are adjacent to Louisiana. ............................................. 10 Conclusion ............................................................................................................... 11 Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 2 of 18 ii TABLE OF AUTHORITIES Page(s) Cases Brown v. Total E & P USA Inc., No. 07-8133, 2008 WL 4724309 (E.D. La. Oct. 24, 2008) ................................10 Danos & Curole Marine Contractors, Inc. v. BP Am. Prod. Co., 61 F. Supp. 3d 679 (S.D. Tex. 2014) .................................................................... 9 In re ATP Oil & Gas Corp., 2014 WL 61408 (Bankr. S.D. Tex. Jan. 6, 2014) ...............................................11 Mooney v. W & T Offshore, Inc., 2013 WL 828308 (E.D. La. Mar. 6, 2013) .........................................................11 Reeves v. B & S Welding, Inc., 897 F.2d 178 (5th Cir. 1990) ................................................................................ 3 Ronquille v. MMR Offshore Servs., Inc., 353 F. Supp. 2d 680 (E.D. La. 2004) ..................................................................11 Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521 (5th Cir. 2000) ................................................................... 2, 3, 5, 8 Spisak v. Apache Corp., 2017 WL 946714 (W.D. La. Mar. 8, 2017) (MC 773) ........................................11 Texaco Expl. & Prod. Inc. v. AmClyde Engineered Prod., Inc., 2008 WL 782818 (E.D. La. Mar. 20, 2008) .......................................................10 Statutory Authorities 16 U.S.C. §§ 1451–52 ................................................................................................ 4 43 U.S.C. § 1333(a)(2)(A) ................................................................................ 7, 8, 9 43 U.S.C.A. § 1333(a)(2)(A) ..................................................................................... 9 Rules and Regulations 15 CFR § 930.57 ........................................................................................................ 4 71 Fed. Reg. 127-01 (January 3, 2006) ..................................................................... 8 Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 3 of 18 iii Miscellaneous Federal Outer Continental Shelf (OCS) Administrative Boundaries” map (updated April 12, 2012) ........................................................................................ 7 Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 4 of 18 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION TOTAL E&P USA, INC. Plaintiff/Counter-Defendant v. MARUBENI OIL & GAS (USA) INC. Defendant/Counter-Claimant § § § § § § § § § § CIVIL ACTION NO. 4:16-CV-2674 JUDGE DAVID HITTNER TOTAL E&P USA, INC. (“TEP USA”) has pending a motion requesting that this Court apply Louisiana law to any matters governed by state law under the Outer Continental Shelf Lands Act (“OCSLA”). TEP USA Mot. (Dkt. 141). Marubeni Oil & Gas (USA) LLC (“MOGUS”) has requested that the Court apply Alabama law. MOGUS Mot. (Dkt. 157). For the reasons explained in this response to MOGUS’s motion and in TEP USA’s own motion regarding choice of law, MOGUS’s motion should be denied, and TEP USA’s motion should be granted. Introduction The parties do not dispute that a four-factor test applies for determining which state’s law governs this case. However, MOGUS asks the Court to essentially ignore the first and most obvious of these factors—geographic Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 5 of 18 2 proximity. And when analyzing the third factor—prior court cases—MOGUS cites unhelpful opinions deciding the adjacency of blocks well north of MC 305 and MC 348 (and closer geographically to Alabama), which are located in entirely different fields. As part of its analysis of the second and fourth factors—prior agency determinations and projected boundaries, respectively—MOGUS presents a right- of-way Coastal Zone Management (“CZM”) map that expressly excludes MC 305 and MC 348 from the Alabama area. Worse, MOGUS ignores other more probative maps drawn by the Bureau of Ocean Energy Management (“BOEM”) (or its predecessor) that place MC 305 and MC 348 squarely within Louisiana’s boundaries. MOGUS also relies on a second CZM map, which is of limited value given the broad purposes for which the CZM program is designed and the fact that both CZM maps locate numerous blocks within multiple states. As a result, the methodology behind the CZM maps does not necessarily assert a definitive choice of which single state a particular block is adjacent to. In short, the four-factor analysis that controls the Court’s inquiry definitively points to Louisiana as the controlling state law, when and where such law applies. Legal Standard “[C]ourts must adjudicate adjacency in private disputes governed by OCSLA.” Snyder Oil Corp. v. Samedan Oil Corp., 208 F.3d 521, 523 (5th Cir. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 6 of 18 3 2000). The Fifth Circuit has considered “four types of evidence in the ‘adjacency’ analysis: (1) geographic proximity; (2) which coast federal agencies consider the subject [property] to be ‘off of’; (3) prior court determinations; and (4) projected boundaries.” Id. at 524 (citing Reeves v. B & S Welding, Inc., 897 F.2d 178, 180 (5th Cir. 1990)). This is not a strict four-factor test, but instead four categories of relevant evidence for courts to consider. Snyder Oil, 208 F.3d at 525. Argument I. MOGUS’s own arguments reflect that geographic proximity, agency determinations, and projected boundaries (factors 1, 2, and 4) all favor Louisiana. A. MOGUS essentially ignores geographic proximity and overemphasizes Coastal Zone Management maps, which are minimally helpful. MOGUS concedes that the first factor—geographic proximity—squarely favors Louisiana law, when acknowledging that Mississippi Canyon (“MC”) blocks 305 and 348 are closer to Louisiana than Alabama. MOGUS Mot. at 7 (Dkt. 157). But it essentially asks the Court to ignore this factor of the adjacency test in favor of two CZM maps available on BOEM’s website. Contra Snyder, 208 F.3d at 525 (requiring court to consider “all relevant evidence” when determining the adjacent state). MOGUS’s arguments should be rejected. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 7 of 18 4 The first map upon which MOGUS relies is the “ROW Pipeline Map for Coastal Zone Management Program” (“CZM Pipeline Map”).1 See Ex. A (available at https://www.boem.gov/ROW-Pipeline-Map-for-CZM/). Notably, MOGUS did not attach this map to its motion. And once considered, this map counsels against applying Alabama law to this dispute. MOGUS instead cites a Notice to Lessees (“NTL”) that provides in list form the exact same information as the CZM Pipeline Map. MOGUS Mot. at 8–9 (Dkt. 157). The NTL lists specific blocks that are located within Alabama’s “right of way” CZM zone. MOGUS Mot., Ex. B at 6 (Dkt. 157-5). MC 305 and MC 348 are not on that list, necessarily meaning that these blocks are part of a different zone. Moreover, as implied by Alabama being merely “an” affected state, see supra n.1, numerous 1 The CZM Act is administered by the National Oceanic and Atmospheric Administration, not BOEM or BSEE. See Costal Zone Management Act, Office for Coastal Management, https://coast.noaa.gov/czm/act/ (last visited Jan. 10, 2018). As such, it addresses a range of concerns beyond the purview of BOEM and BSEE. See Coastal Zone Management, National Ocean Service, https://oceanservice.noaa.gov/tools/czm/ (last visited Jan. 10, 2018) (explaining that the CZM “addresses a wide range of issues,” including: (1) climate change; (2) energy facility siting; (3) public access; (4) habitat protection; and (5) water quality); see also CZM Act §§ 302–03 (codified at 16 U.S.C. §§ 1451–52) (setting out the many broad findings and purposes for passing the CZM Act). As such, it appears the CZM maps are designed to indicate all of the states that may have a shared interest in activities occurring in the Gulf, consistent with the broad purposes of the CZM Act and the several states in close proximity around the Gulf. See MOGUS Mot., Ex. B at 5 (Dkt. 157-5) (requiring a right-of-way applicant to “[p]rovide a coastal zone consistency certification (15 CFR § 930.57) to each affected State” (emphasis added)). This is quite different than the review undertaken to determine state primacy under OCSLA. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 8 of 18 5 Mississippi Canyon blocks listed on the NTL as associated with Alabama are also located within the color-shading for Mississippi and Louisiana. See Ex. A. This overlap in zones reflects just how unhelpful the CZM Pipeline Map is in identifying which single state the agency has determined for any given location.2 Even so, MOGUS still argues that this map is persuasive because some of the other blocks connected to CEPS are within the Alabama zone. MOGUS Mot. at 8–9 (Dkt 157). As a result, MOGUS argues that the parts of CEPS that pass through MC 305 and MC 348—and even MC 305 and MC 348 themselves— should be treated as within Alabama. Id. But this simply ignores, first, the regulatory fact that the NTL excludes MC 305 and MC 348 from the list of blocks located within Alabama’s purview, and second, the geographical fact that MC 305 and MC 348 are closer to Louisiana.3 The CZM Pipeline Map is simply not helpful for determining adjacency under OCSLA. 2 Indeed, when TEP USA submitted its initial development plan for MC 305 in 2001, it submitted a CZM “consistency certification” for both Mississippi and Louisiana, but not Alabama. Ex. B at 69–70. As for MC 348, the initial exploration plan submitted by Marathon in 1999 contained listings for both Louisiana and Alabama. Ex. C at 50–51. 3 MOGUS’s argument is also not definitive even on its own terms. Indeed, MOGUS ignores the fact that several of the other blocks connected to CEPS are also within both Florida and Alabama—namely, DeSoto Canyon 89, 133, 177, and 221, which were part of CEPS, and some of which were decommissioned by MOGUS as part of the campaign at issue. MOGUS Mot., Ex. A at 2 (Dkt. 157-1) (Decl. of MOGUS Witness, Kirk Kuykendall). Indeed, given the overlapping breadth and scope of this map, which derives from very different legislative Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 9 of 18 6 MOGUS also relies on the “OCS Plans Map for Coastal Zone Management Program” (“CZM Plans Map”). MOGUS Mot. at 9 (Dkt. 157); MOGUS Mot., Ex. C at (Dkt. 157-6). As with the CZM Pipeline Map, the CZM Plans Map contains overlapping zones that reflect the intent to include multiple states which may be interested in certain blocks for purposes of a CZM program. Again, it ultimately reflects a methodology that is unhelpful to understanding that agency’s singular determination for a given location. B. TEP USA relies on BOEM’s “Projected MMS State Boundaries” map, which is far more probative and places MC 305, MC 348, and CEPS within Louisiana. The Minerals Management Service (“MMS”) is the governmental predecessor to BOEM and the Bureau of Safety and Environmental Enforcement (“BSEE”). These agencies are all within the Department of Interior of the Executive Branch. TEP USA included the “MMS Projected State Boundaries” (“MMS State Boundaries Map”) and successor map with its initial motion on choice of law. Ex. D; see also TEP USA Mot., Ex. A (Dkt. 141-2). It is far more probative for purposes of determining adjacency. As of January 9, 2006, MMS published the MMS State Boundaries Map that squarely located MC 305, MC 348, and CEPS within Louisiana’s borders. Ex. D. It should not be lost on the Court that, as of January 2006, both MOGUS and purposes, see supra n.1, it is not possible to argue that it even presents a binary choice between Louisiana and Alabama. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 10 of 18 7 TEP USA simultaneously held interests in MC 305 and MC 348. See Exs. E and F (serial register pages). BOEM is also the agency responsible for mapping, leasing, and planning in the Gulf of Mexico. See TEP USA Mot. at 4 (Dkt. 141). BOEM currently provides a “Federal Outer Continental Shelf (OCS) Administrative Boundaries” map (updated April 12, 2012) (“OCS Boundaries Map”) delineating “Offshore Administrative Boundaries” with red lines that track with the state boundaries in the MMS map.4 Ex. G. As a result, this map also locates MC 305, MC 348, and CEPS within Louisiana’s boundaries. As required by OCSLA, both of these maps publish “projected lines extending seaward and defining” “that portion of the subsoil and seabed … which would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf ….” 43 U.S.C. § 1333(a)(2)(A). And unlike the CZM maps, these maps employ a logical, “equidistance” method for ensuring that any given location within the Gulf of Mexico lies within one, and only one, state’s border.5 See TEP USA Mot. at 9–10 (Dkt. 141). Unlike the CZM 4 Available at https://www.boem.gov/Oil-and-Gas-Energy-Program/ Mapping-and-Data/Administrative-Boundaries/Index.aspx. 5 To be clear, the “equidistance” method employed by the MMS State Boundaries Map and the OCS Boundaries Map draws precise boundary lines that necessarily cut through certain blocks. While blocks located along these boundary lines are not, in their entirety, located within only one jurisdiction, the equidistance Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 11 of 18 8 maps upon which MOGUS relies, these MMS and BOEM maps appropriately continue the angular border between Louisiana and Mississippi in a southeasterly direction—rather than forcing north/south lines that do not naturally follow the land border. See MOGUS Mot. at 7 (Dkt. 157) (acknowledging that one agency’s determination may be more probative than others if the agency more closely followed the dictates of § 1333(a)(2)(A)). The Fifth Circuit has described MMS as the “responsible federal agency” for making the OCSLA adjacency determination. Snyder, 208 F.3d at 524. When publishing these projected boundaries, MMS expressly stated that it was doing so, in part: “for Department of the Interior planning, coordination, and administrative purposes”; to “[p]rovid[e] the basis for more accurate delineation of OCS planning areas”; and to “[a]ssist[ ] in ‘affected State’ status under the Coastal Zone Management Act and the OCS Lands Act.” 71 Fed. Reg. 127-01 (January 3, 2006). These goals, and the obvious role of MMS (and now BOEM), reflect that the MMS and BOEM maps are highly probative of adjacency. Indeed, given that MOGUS pursues claims that it links to BOEM and BSEE regulations, these maps should be unobjectionably definitive. boundary lines do ensure that any given specific location in the Gulf, such as a particular well within a block, will be within only one state. Regardless, as to MC 305, MC 348, and CEPS, both maps locate them entirely within Louisiana. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 12 of 18 9 MOGUS cites Danos & Curole Marine Contractors, Inc. v. BP Am. Prod. Co., 61 F. Supp. 3d 679 (S.D. Tex. 2014). MOGUS Mot. at 10 n.27 (Dkt. 157). Danos involved the Viosca Knoll field, which is well to the north of the Mississippi Canyon field. See Ex. D. The court there downplayed the relevance of the MMS and BOEM maps because, in the court’s view, “the state’s borders do not extend to the outer margin of the OCS.” See Danos, 61 F. Supp. 3d at 690 (noting that Mississippi and Alabama border areas do not extend all the way to outer limit of the Outer Continental Shelf). But with respect, the Danos court was simply wrong to interpret § 1333(a)(2)(A) to in any way require this. The plain language of the statute does not demand that each state have some area that extends all the way to the outer limit. It simply requires that the state boundary lines as a whole extend seaward such that they account for the entire OCS waters, even if two states’ boundaries converge before reaching all the way to the outer limit. See 43 U.S.C.A. § 1333(a)(2)(A) (adjacency is measured as “if [each state’s] boundaries were extended seaward to the outer margin of the outer Continental Shelf”) The MMS State Boundaries Map and the OCS Boundaries Map achieve this by clearly and fairly extending each state’s boundary, and where they merge, applying the principle of equidistance to ensure no overlap. By such method, it is entirely clear within which state any given part of the seafloor is located. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 13 of 18 10 II. MOGUS relies on prior court determinations (factor 3) that adjudicated blocks in entirely different fields and which are all significantly closer to Alabama than MC 305 and MC 348, whereas TEP USA relies on cases determining that six other blocks in Mississippi Canyon are adjacent to Louisiana. MOGUS cites cases that determined Main Pass 261, Viosca Knoll 823, Viosca Knoll 915, and Viosca Knoll 786 are adjacent to Alabama. MOGUS Mot. at 10 (Dkt. 157). But these citations are entirely unhelpful in explaining why those courts made such determinations. Regardless, all of these blocks are well north of MC 305 and MC 348, giving these cases little relevance here. Several of MOGUS’s citations concerning the above blocks contain no independent analysis on choice of law or otherwise reveal the underlying reasons for ruling that Alabama is the adjacent state. For example, in the case addressing VK 786, the parties agreed that Alabama law applied. See Texaco Expl. & Prod. Inc. v. AmClyde Engineered Prod., Inc., 2008 WL 782818, at *5 n.1 (E.D. La. Mar. 20, 2008). In the case addressing VK 823, the court merely referenced its prior decision during trial that Alabama law applied without providing any explanation of its reasoning. See Brown v. Total E & P USA Inc., No. 07-8133, 2008 WL 4724309, at *1 (E.D. La. Oct. 24, 2008); MOGUS Mot., Ex. D (Dkt. 157-7). But more to the point, all of these blocks are located in entirely different fields than Mississippi Canyon. As discussed in TEP USA’s motion, “[t]reating Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 14 of 18 11 blocks in the same field the same, where possible, promotes consistency and predictability in applying OCSLA’s choice of law analysis.” TEP USA Mot. at 11 (Dkt. 141). MOGUS cites no cases deciding adjacency for blocks within Mississippi Canyon. TEP USA, on the other hand, provided a long list of cases determining adjacency for other blocks in Mississippi Canyon, all of which determined Louisiana to be adjacent. Id. at 10 (collecting citations addressing six different blocks).6 Geographically, all of the blocks MOGUS references in its citations are located substantially north of MC 305 and 348, placing them potentially closer to Alabama than Louisiana. See MOGUS Mot., Ex. A-2 (Dkt. 157-3). As a result, the first factor—geographic proximity—might tilt in favor of Alabama over Louisiana for these other properties, changing the outcome of the analysis. Again, the relative geographic proximity of MC 305 and MC 348 to Louisiana, as opposed to Alabama, is a fact and factor that MOGUS simply ignores. Conclusion For the reasons argued above, the Court should deny MOGUS’s motion to apply Alabama law where pertinent to this dispute. 6 See Spisak v. Apache Corp., 2017 WL 946714 (W.D. La. Mar. 8, 2017) (MC 773); Mooney v. W & T Offshore, Inc., 2013 WL 828308 (E.D. La. Mar. 6, 2013) (MC 243); Ronquille v. MMR Offshore Servs., Inc., 353 F. Supp. 2d 680 (E.D. La. 2004) (MC 809); In re ATP Oil & Gas Corp., 2014 WL 61408 (Bankr. S.D. Tex. Jan. 6, 2014) (MC 711, MC 754, and MC 755). Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 15 of 18 12 To the contrary, and in line with TEP USA’s affirmative motion (Dkt. 141), the Court should order that Louisiana is the adjacent state for purposes of OCSLA and that Louisiana law applies to any issues of state law in this dispute. Dated: January 12, 2018. Respectfully submitted, /s/ Charles Eskridge Charles Eskridge Texas Bar No. 06666350 charleseskridge@quinnemanuel.com Karl Stern Texas Bar No. 19175665 karlstern@quinnemanuel.com Kate Kaufmann Shih Texas Bar No. 24066056 kateshih@quinnemanuel.com Jonathan Sink Texas Bar No. 24099968 jonsink@quinnemanuel.com Carl Hennies Texas Bar No. 24104029 carlhennies@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 711 Louisiana St., Suite 500 Houston, Texas 77002 713.221.7000 – Telephone 713.221.7100 – Facsimile Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 16 of 18 13 Philip G. Eisenberg Texas Bar No. 24033923 peisenberg@lockelord.com Alicia Castro acastro@lockelord.com Texas Bar No. 24033923 LOCKE LORD LLP 600 Travis St., Suite 2800 Houston, Texas 77002 713.226.1200 – Telephone 713.223.3717 – Facsimile ATTORNEYS FOR PLAINTIFF/COUNTER- DEFENDANT TOTAL E&P USA, INC. Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 17 of 18 14 CERTIFICATE OF SERVICE A copy of the foregoing response was served on all counsel of record for the parties via email on January 12, 2018. /s/ Jon Sink Jon Sink Case 4:16-cv-02674 Document 166 Filed in TXSD on 01/12/18 Page 18 of 18