Total E&P USA, Inc. v. Marubeni Oil & Gas (USA), Inc. et al

REPLY in Support of 157 MOTION for Partial Summary Judgment on Choice of Law

S.D. Tex.January 22, 2018

1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION TOTAL E&P USA, INC. * CIVIL ACTION NO. Plaintiff * 4:16-cv-02674 * v. * JUDGE DAVID HITTNER * MARUBENI OIL & GAS (USA) INC. * Defendant * ************************************* MARUBENI OIL & GAS (USA) LLC’S REPLY IN FURTHER SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT ON CHOICE OF LAW Defendant, Marubeni Oil & Gas (USA) LLC (“MOGUS”), through undersigned counsel, respectfully submits this reply in further support of its Motion for Partial Summary Judgment on Choice of Law (Doc. 157) and in response to the opposition thereto filed by TOTAL E&P USA, Inc. (“TOTAL”) (Doc. 166). MOGUS adopts and incorporates herein by reference its arguments presented in its Motion for Partial Summary Judgment on Choice of Law (Doc. 157) and in its Opposition to TOTAL’s Motion to Apply Louisiana Law under OCSLA (Doc. 161) and all exhibits thereto (collectively, the “Prior MOGUS Choice of Law Filings”). LAW AND ARGUMENT As shown in the Prior MOGUS Choice of Law Filings, Alabama law should be applied in all instances where federal law does not govern. The great weight of the evidence demonstrates that Alabama is the adjacent state to Mississippi Canyon Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 1 of 11 2 Block 305, Mississippi Canyon Block 348, and all of the blocks through which the Canyon Express Pipeline System (“CEPS”) traverses from Mississippi Canyon Block 305 and Mississippi Canyon Block 348 to its termination point on the Canyon Station Platform located on Main Pass Block 261. A further discussion of the Reeves v. B & S Welding, Inc.1 factors is as follows: I. GEOGRAPHIC PROXIMITY. Contrary to TOTAL’s arguments, MOGUS does not ask the Court to ignore the geographic proximity factor. Instead, MOGUS simply argues that geographic proximity alone is not dispositive on the choice of law issue. Because the other three factors in Reeves weigh in favor of the conclusion that Alabama is the adjacent state as to the offshore oil and gas properties impacted by this lawsuit, Alabama law should govern, not Louisiana law. II. AGENCY DETERMINATIONS OF ADJACENCY. TOTAL claims that the Coastal Zone Management (“CZM”) maps cited by MOGUS are only “minimally helpful.” TOTAL is wrong. A. Coastal Zone Management Act Maps. Background on the Coastal Zone Management Act (“CZMA”) can be found on the BOEM website.2 The CZMA is a joint federal act in which several levels of 1 897 F.2d 178 (5th Cir. 1990). 2 See the Coastal Zone Management Act section of the BOEM website: https://www.boem.gov/Coastal-Zone- Management-Act/. Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 2 of 11 3 state and federal government must work together to achieve the objectives of the Act. The BOEM website provides two CZMA maps considering “affected state” status for activities in the OCS: (1) the OCS Plans Map for Coastal Zone Management Program (hereinafter “CZM OCS Plans Map”)3 and (2) the ROW Pipeline Map for Coastal Zone Management (hereinafter “CZM Pipeline Map”).4 These maps are used when the State needs to review OCS Plans for consistency with enforceable policies of each State’s coastal management programs.5 B. BOEM’s OCS Plans Map for the Coastal Zone Management Program. TOTAL argues, without elaboration, that the OCS Plans Map merely “reflects a methodology that is unhelpful.” TOTAL is incorrect. MOGUS emphasizes the CZM OCS Plans Map, which extends State CZM zones from the State waters to the end of the OCS, which is consistent with the dictates of 43 U.S.C. §1333(a)(2)(A). The CZM Plans Map clearly shows that Mississippi Canyon Block 305, Mississippi Canyon Block 348, Main Pass Block 261, and the route of the CEPS all fall within the red “Alabama CZM.”6 Contrary to TOTAL’s assertions, within this area, 3 The OCS Plans Map is attached hereto as Exhibit A and can be found on BOEM’s website at https://www.boem.gov/OCS-Plans-Map-for- CZM/. The Court can take judicial notice of this map pursuant to Fed. R. Evid. 201(b). 4 The OCS Pipeline Map is attached hereto as Exhibit B and can be found on BOEM’s website at https://www.boem.gov/ROW-Pipeline-Map-for-CZM/. The Court can take judicial notice of this map pursuant to Fed. R. Evid. 201(b). 5 See the Coastal Zone Management Act section of the BOEM website: https://www.boem.gov/Coastal-Zone- Management-Act/ (“The CZMA provisions help States develop coastal management programs (Programs) to manage and balance competing uses of the coastal zone.”) 6 See Exhibit A. Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 3 of 11 4 multiple states are not identified as “affected states,” only Alabama is. In addition, this Court in Danos & Curole Marine Contractors, Inc. v. BP Am. Prod. Co.7 considered the CZM OCS Plans Map probative in determining adjacency, especially when the block(s) are delineated as being associated with only one state. By reviewing the map, it is clear that the CZM OCS Plans Map’s state boundaries are north-south, extending to the end of the OCS.8 Mississippi Canyon Block 305, Mississippi Canyon Block 348, Main Pass Block 261 and the route of the CEPS fall exclusively within the Alabama zone of the CZM OCS Plans Map, and this Court should find that this agency determination is deemed probative in a finding for Alabama as the adjacent state. C. BOEM’s ROW Pipeline Map for Coastal Zone Management Program. TOTAL erroneously contends that the CZM Pipeline Map “counsels against applying Alabama law to this dispute.” In addition to the CZM OCS Plans Map, the CZM Pipeline Map was analyzed by the Danos court in determining Alabama the adjacent state. However, the CZM Pipeline Map is not attached to the Notice to Pipeline Right-of-Way Holders (NTL 2007-G20) (hereinafter “NTL 2007-G20”).9 The list of OCS blocks in which Alabama is the affected state is included in 7 61 F. Supp. 3d 679, 690 (S.D. Tex. 2014). 8 See Exhibit A. 9 Upon review of this CZM Pipeline Map in preparation for this reply filing, MOGUS can confirm that it is an accurate representation of the blocks listing Alabama as the “affected state” pursuant to Attachment No. 1 to Appendix A of NTL 2007-G20. Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 4 of 11 5 Attachment No. 1 to Appendix A of NTL 2007-G20. This list (and the CZM Pipeline Map) demonstrates the multitude of properties within CEPS which considered Alabama the “affected state,” demonstrating that they are adjacent to Alabama not Louisiana.10 In Danos, the court takes note of both of BOEM’s current online maps that plot the affected states for each block to determine the relative probative value of the evidence based on whether the lines were drawn closely following § 1333(a)(2)(A).11 Here, all but four properties fall within the red Alabama CZM zone on the CZM Pipeline Map. As such, this Court should find the CZM Pipeline Map also is probative evidence in determining Alabama the adjacent state. The four blocks not included, namely Mississippi Canyon Block 305, Mississippi Canyon Block 348, Mississippi Canyon Block 349, and De Soto Canyon Block 265 are all only one or two rows south and southeast of several blocks on Attachment No. 1 to Appendix A12 to NTL 2007-G20 and on the CZM Pipeline Map. As such, it would make no sense to tie such blocks to Louisiana when there would be several blocks included in the Alabama zone between Mississippi Canyon Block 305, Mississippi 10 See Declaration of Kenneth Kuykendall, attached hereto as Exhibit C. 11 Danos 61 F. Supp. 3d at 690. 12 See Exhibit D hereto, which is the entire NTL 2007-G20 (see Attachment No. 1 to Appendix A at page 6). Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 5 of 11 6 Canyon Block 348, Mississippi Canyon Block 349, and De Soto Canyon Block 265 and the nearest point in Louisiana.13 D. TOTAL’s Reliance on “Projected MMS State Boundaries” as an Agency Determination. TOTAL’s exhibits and references are not persuasive and some have explicitly been dismissed as not probative evidence by the Danos court. This Court in Danos found that the projected state boundaries map did not follow the dictates of § 1333(a)(2)(A) because the projected lines do not extend to the outer margin of the OCS and Mississippi and Alabama’s boundaries stop short of the OCS.14 In fact, none of the maps provided by TOTAL follow the dictates of § 1333(a)(2)(A). Therefore, they are not probative of state agency determinations for choice of law purposes. In finding that Alabama is the adjacent state, MOGUS relies on evidence already determined by courts to be probative, where TOTAL relies, in part, on evidence deemed non-probative and on its own analysis not supported by jurisprudence. For these reasons, and as previously argued in the Prior MOGUS 13 See Declaration of Kenneth Kuykendall, attached to Marubeni Oil & Gas (USA) LLC’s Motion for Partial Summary Judgment on Choice of Law, Exhibit A, paragraph 7 (Doc. 157-1). 14 Danos, 61 F. Supp. 3d at 689-90 (“BP submits the BOEM Outer Continental Shelf Boundaries, the boundaries developed in 2006 and which were published in the Federal Register. Dkt. 21–1 at Ex. B. In terms of whether these boundaries follow the dictates of § 1333(a)(2)(A), the lines drawn in this map do appear to extend seaward from each state’s borders. The lines do not completely follow the statute, however, because the state’s borders do not extend to the outer margin of the OCS, as Mississippi’s boundary and Alabama’s boundary stop short of the OCS.”) Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 6 of 11 7 Choice of Law Filings, the best probative evidence on state adjacency weighs in favor of Alabama as the adjacent state. III. PRIOR COURT DETERMINATIONS. TOTAL relies on the justification that relevant prior court determinations must have decided adjacency for blocks within the same “area” (although they call it “field”), in this case Mississippi Canyon. TOTAL cites no support for this assumption and does not account for the fact that CEPS itself traverses through Mississippi Canon, De Soto Canyon, Viosca Knoll, and Main Pass. Reference to Viosca Knoll Blocks 38 and 983 (neither of which have a direct relationship to the instant lawsuit) demonstrates the failures in TOTAL’s argument. Attached hereto as Exhibit C is the declaration of Kenneth Kuykendall, Vice President of Land and Business Development of MOGUS, showing the location of Viosca Knoll Blocks 38 (clearly closer via geographic proximity to Alabama) and the location of Viosca Knoll Block 983 (clearly closer via geographic proximity to Louisiana).15 Without any jurisprudence to actually substantiate TOTAL’s arguments that every block in any particular area (or “field”) should be tied to a single state, and when viewed in conjunction with the absurd results that would occur with certain blocks wholly 15 See Declaration of Kenneth Kuykendall, attached as Exhibit C, and Exhibit C-1 attached thereto. Exhibit C- 1 is cropped map downloaded from BOEM’s website (https://www.boem.gov/Visual-1-Active-Leases-and- Infrastructure/) and Viosca Knoll Block 38 and Viosca Knoll Block 983 are accurately identified thereon. Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 7 of 11 8 contained in the Viosca Knoll area are subjected to this result, TOTAL’s arguments should be dismissed The cases cited by TOTAL are not in the vicinity of the properties in this case.16 The nearest property in the cases cited and relied upon by TOTAL is nineteen (19) blocks from any of the properties in this case. MOGUS cites to Snyder Oil Corp. v. Samedan Oil Corp.,17 which adjudicated Main Pass 261, a property clearly affected by this litigation, which determined it adjacent to Alabama. Additionally, the cases cited by MOGUS include Alabama adjacency determinations for Viosca Knoll 823, Viosca Knoll 915, Viosca Knoll 786, and Viosca Knoll 956.18 These blocks are all within six (6) blocks of the CEPS, and Mississippi Canyon Block 348 (the further south block included in this lawsuit) is only eleven (11) blocks from Viosca Knoll Block 956.19 It is common sense that prior court determinations deciding state adjacency shall be deemed relevant in terms of the properties at issue and their proximity and vicinity. Therefore, the cases cited by TOTAL are not relevant. The prior court determinations cited by MOGUS demonstrate that all of 16 See Declaration of Kenneth Kuykendall, attached to Marubeni Oil & Gas (USA) LLC’s Opposition to TOTAL E&P USA, Inc.’s Motion to Apply Louisiana Law Under OCSLA, Exhibit A and Exhibit A-3 attached thereto. (Docs. 161-1 and 161-4). 17 208 F. 3d 521 (5th Cir. 2000). 18 See MOGUS’s Opposition to TOTAL’s Motion to Apply Louisiana Law Under OSCLA at footnote 46, page 14. 19 Id. Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 8 of 11 9 the blocks at issue in this lawsuit are more closely associated therewith than with the blocks cited by TOTAL. IV. PROJECTED BOUNDARIES. TOTAL urges that an “equidistance” seaward boundary is the only “logical” method when considering projected boundaries. However, the Fifth Circuit and district courts have used a north-south boundary extended downward from the Mississippi-Alabama boundary and determined that blocks lying to the east of that line are adjacent to Alabama, not Louisiana.20 TOTAL cannot dispute that Mississippi Canyon Block 305, Mississippi Canyon Block 348, and all of the blocks through which CEPS traverses all fall east of such a projected boundary. They should, therefore, be deemed to be adjacent to Alabama. CONCLUSION For the foregoing reasons, and for the reasons articulated in the Prior MOGUS Choice of Law Filings, the Court should determine that Alabama law applies in the absence of federal law on point. 20 See Snyder, 208 F.3d at 528 (“if the Mississippi-Alabama border is extended seaward from the three mile line … due south … Block 261 lies eastward of the extension and hence is in Alabama waters”). Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 9 of 11 10 Respectfully submitted, LOOPER GOODWINE P.C. /s/ Paul J. Goodwine Paul J. Goodwine (Attorney-in-Charge) LA Bar No. 23757; SDTX ID No. 437800 Holly O. Thompson LA Bar No. 31277; SDTX ID No. 2953818 Taylor P. Mouledoux LA Bar No. 31889; SDTX ID No. 1581156 650 Poydras Street, Suite 2400 New Orleans, Louisiana 70130 Telephone: (504) 503-1500 Telecopier: (504) 503-1501 pgoodwine@loopergoodwine.com hthompson@loopergoodwine.com tmouledoux@loopergoodwine.com -and- SCHONEKAS, EVANS, McGOEY & McEACHIN, LLC Kyle Schonekas LA Bar No. 11817; SDTX ID No. 305350 Joelle F. Evans LA Bar No. 23730; SDTX ID No. 436275 909 Poydras Street, Suite 1600 New Orleans, LA 70112 Telephone: (504) 680-6050 Telecopier: (504) 680-6051 kyle@semmlaw.com joelle@semmlaw.com Attorneys for Marubeni Oil & Gas (USA) LLC Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 10 of 11 11 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing pleading has been served on all counsel of record for the parties via e-mail, FedEx and/or by electronic filing in the Court’s electronic filing system on this 22nd day of January, 2018. /s / Paul J. Goodwine Case 4:16-cv-02674 Document 177 Filed in TXSD on 01/22/18 Page 11 of 11