Opinion
Civil Action No: 01-270, Section: "R"
September 19, 2001
ORDER AND REASONS
Before the Court are cross-motions for summary judgment filed by the plaintiff Hawthorne Land Company and defendants Equilon Pipeline Company, LLC ("Equilon") and the United States Department of Energy ("DOE"). Also before the Court are DOE's motions to dismiss and to strike the jury. For the reasons stated below, the Court grants defendants' motions for summary judgment, denies the motion to dismiss and denies the motion to strike the jury as moot.
I. BACKGROUND
This case revolves around the ownership of a pipeline and underlying servitude located in the Louisiana Parishes of St. James and Assumption. In 1975, Congress enacted the Energy Policy and Conservation Act ("EPCA"), 42 U.S.C. 16201, et seq., pursuant to which the government established the Strategic Petroleum Reserve Program ("SPRP"). The SPRP was intended to serve as a reserve to reduce the impact of energy supply interruptions or reductions in imports of crude oil and refined petroleum products. Under the EPCA, and to the extent necessary or appropriate to implement the SPEP, the government is authorized to "acquire by purchase, condemnation, or otherwise, land or interests in land for the location of storage and related facilities." 42 U.S.C. § 6239 (f)(5)(B). The government may also "construct, purchase, lease, or otherwise acquire storage and related facilities," and "use, lease, maintain, sell, or otherwise dispose of storage and related facilities acquired pursuant to this part." 42 U.S.C. § 6239 (f)(5)(C), (D). Further, the government is authorized to "execute any contracts necessary to carry out the provisions" of the SPEP. Id.. 16239(f)(5)(G).
Under this statutory authority, the Government accepted donations of easements and servitudes from owners of land located in the Louisiana Parishes of Iberia, St. Martin, St. James, and Assumption. Hawthorne Oil and Gas, the predecessor in interest of the plaintiff in this action, was the grantor of a pipeline servitude and easement under a donation dated September 11, 1978. The donation states:
[T]hey [Hawthorne Oil and Gas Corporation], by this act, do donate, convey, transfer, set over and deliver, without warranty, liability, or recourse, but with full substitution and subrogation in and to all the rights and actions of warranty which said grantors have or may have against all preceding owners and vendors, unto the UNITED STATES OF AMERICA, and its assigns, including its officers, agents, servants and contractors, the full, complete and perpetual and assignable right, power, privilege of easement or servitude in, on, and over and across the lands described below for the location, construction, operation, maintenance, alteration, repair and patrol of two pipelines for the purpose of the establishment, management and maintenance of the Strategic Petroleum Reserve . . . Donation at 1.
The Donation also specifies the ways in which the easement may terminate:
This donation is made and accepted for and in consideration of Grantors' desire to aid their country in the establishment of a Strategic Petroleum Reserve and in further consideration of Grantee's agreement to construct and operate said pipeline in accordance with the following specific requirements: 1. The rights herein donated to Grantee shall expire, terminate and cease and this act shall be rendered null and void and unenforceable on December 31, 1981 if by such date Grantee shall have not commenced construction of the Strategic Petroleum Reserve pipelines. 2. The causes for termination of this easement shall include, but not limited to, the following: (a) abandonment, (b) removal of the pipeline, (c) ten years non-use, or (d) execution of an affidavit by an authorized representative of the United States of America stating that the pipelines have been abandoned. Upon termination for any reason the United States of America shall have the election at its sole discretion of abandoning the pipelines and related improvements in place or removing them at its own expense. Such removal, if so elected, shall be completed within one year after termination. If abandonment in place is elected, Grantee shall have no claim against Grantor for compensation or damages, and the pipelines and related improvements shall become the property of the Grantor without any payment to the Grantee. Donation at 4.
The DOE constructed the Bayou Choctaw pipeline as part of. the Strategic Petroleum Reserve Plan. The Bayou Choctaw pipeline crosses plaintiff's property. The pipeline was completed in 1980, and it was in continuous service as part of the SPRP until 1997. During this time, the pipeline was used to transport SPR crude oil between the St. James Terminal and the SPR storage facility at Bayou Choctaw. In the early 1990's, the DOE reviewed SPR assets to determine whether there were assets that were not fully utilized and that could be commercialized through sale or lease. The DOE determined that commercializing the Bayou Choctaw pipeline would reduce operating costs and enhance the pipeline's value through continual use. As a result, the DOE leased the pipeline to Equilon in May 1997.
Under the lease, Equilon is responsible for maintaining, operating, repairing, and inspecting the pipeline. Equilon also has the right to transport crude oil through the pipeline for its own use. The DOE retains ownership of the pipeline and the Bayou Choctaw storage facility. Further, the DOE must be given full use of the pipeline for the movement of SPR oil in the event of national emergency, and the DOE retains the right to ship oil through the pipeline for nonemergency reasons. In fact, after a recent decision by the Government to release crude oil from the SPR, the DOE used the Bayou Choctaw pipeline to carry out the Government's directive. The DOE has also used the pipeline for nonemergency shipments since 1999. Furthermore, the DOE retains the right to monitor and inspect the condition of the pipeline.
Plaintiff initiated this action on January 30, 2001. On August 23, 2001, the Court permitted DOE to intervene in the action, and plaintiff filed a second amended complaint on August 27, 2001. Count I of plaintiff's second amended complaint states that Equilon, by operating the Pipeline for purposes other than those set forth in the Donation, is in wrongful possession of plaintiff's property:
Equilon is operating pipelines on the affected property for the non-exclusive purpose of transporting petroleum that was never stored in the Strategic Petroleum Reserve. Equilon is operating pipelines on the affected property for the non-exclusive purpose of transporting petroleum that was never intended to be stored in the Strategic Petroleum Reserve. Equilon is operating pipelines on the affected property for the non-exclusive purpose of deriving revenue that at least some of which is solely for the benefit of Equilon. Equilon is operating pipelines on the affected property for deriving revenue that at lease some of which will not be used for the benefit of the Strategic Petroleum Reserve. Equilon's actions described herein constitute possession beyond the extent of any claimed title. Equilon has and continues to wrongfully possess the affected property. Eguilon's wrongful possession was and continues to be in bad faith. (Cmpl. ¶ 12-12f)
Plaintiff seeks a permanent injunction prohibiting Equilon from operating its pipelines "on the affected property other than for purposes necessary for the strategic petroleum reserve." (Compl. ¶ 13) In Count II, plaintiff seeks money damages from Equilon. Plaintiff alleges it suffered damages as a result of "Equilon's use of the affected property for purposes other than specified" in the donation. (Compl. ¶ 24)
II. Discussion
A. Legal Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986)). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 B. Ct. at 2553. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue exists for trial. See Id. at 325, 106 S.Ct. at 2553-54; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1996).
B. The Nature of the Servitude
Plaintiff argues that the donation granted to the DOE the limited right to use the property for SPR purposes only. ( See Pl.'s Corrected Hem. in Supp. Sum. Judg. at 2). In plaintiff's view, any commercial use of the pipeline, such as that conducted by Equilon pursuant the 1997 lease with the DOE, is therefore unauthorized. To support its contentions, plaintiff urges the Court to reevaluate its decision in Lafargue v. United States, 4 F. Supp.2d 593 (S.D. La. 1998), aff'd In unpublished opinion, 193 F.3d 516 (5th Cir. 1999), cert. denied, 529 U.S. 1108, 120 S.Ct. 1959 (2000). Plaintiff claims that in LaFargue, this Court improperly interpreted a nearly identical donation to the one at issue here.
Under Louisiana law, "[w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. C.C. art. 2046. The Civil Code also provides that "[t]he words of a contract must be given their prevailing meaning." Id.. art. 2047. Furthermore, in Louisiana, explicit language is required in order to impose either a restrictive or dissolving condition. See, e.g., Farrell v. Hodges Stock Yards, Inc., 343 So.2d 1364, 1367-69 (La. 1977); Noel Estate v. Kansas city Southern Gulf Ry. Co., 187 La. 717, 175 So. 468 (1937) (finding that contract limited use of land to railroad purposes only when contract stated that land was "conveyed for railroad purposes only and this grant shall be in perpetuity or so long as it is used by said Company, its successors, or assigns, for railroad purposes, but if abandoned by said Company for such use and purpose, then said land shall revert to grantor").
The donation from plaintiff to the Government grants a perpetual and assignable servitude or easement over the property and does not provide that it is conditioned on the donee's continuous use of the property exclusively for the SPRP. Nor does it provide that the easement terminates, or is abandoned, dissolved or breached, if it is no longer used 100% for SPR purposes. See Donation at 1-4; LaFargue, 4 F. Supp.2d at 603-604 (donation contained the same language, except "single pipeline" substituted for "two pipelines"). Further, the donation's language that it was made to aid the United States in the establishment of the SPR, like identical language in LaFargue, simply expresses the existence of a public purpose for the donation. See id. The donation contains no language to suggest that the easement was to be used solely and continuously in connection with the SPRP. See id. Indeed, the United States in fact built the pipeline for the SPR project and established the SPR.
Plaintiff's attacks on LaFargue and its application are misplaced. The cases cited by plaintiff deal with different contract language or different issues. See Orleans Parish School Board v. Kanson, 132 So.2d 885 (1961) (no language that rights transferred were perpetual and assignable or listing specific cause for termination); Parish of Jefferson v. Texas Co., 192 La. 934, 189 So. 580 (La. 1939) (issue was whether document transferred a servitude or fee title). "While plaintiff cites Manson for the proposition. that a donation need not contain a reversionary clause to permit revocation upon nonfulfillment of a condition, plaintiff cannot gainsay that any such condition must be express. Again, this donation does not state that it is conditioned on the continuous and exclusive use of the servitude for the SPR. Furthermore, plaintiff does not seek to revoke the donation.
Therefore, the Court finds that the donation was not conditioned on the exclusive use of the servitude for SPR purposes.
C. Equilon's Use of the Pipeline
The Court further finds Equilon's use of the pipeline under the 1997 lease to be within the rights granted by the donation. See Canova v. Shell Pipeline Co, No. 98-718A, 15 (M.D. La. 2001) (identical Equilon pipeline lease did not grant use beyond scope of servitude taken by government for SPR). The DOE retains ownership of the pipeline and of the right to use it in connection with the SPRP. Lease Part III. Since 1999, the DOE has used the pipeline on occasion to ship oil to replenish the SPR and to transport oil released from the SPR. (Hays Affidavit at ¶ 11-12) Equilon maintains the pipeline, but the DOE retains inspection rights. (Lease at Part II) The DON thus continues to maintain and use the pipeline for purposes of the SPRP. Under the lease of the pipeline, Equilon's use contributes to the maintenance of the SPRP because Equilon is obligated to maintain the pipeline to the satisfaction of the DOE and to make rental payments to DOE. This arrangement enables DOE to keep the pipeline at its disposal in a condition ready for use and to earn revenue from it at the same time. Even under its narrowest reading, the donation expressly contemplates that the DOE could use the servitude to maintain pipelines for the maintenance of the SPR, which is what the DOE accomplishes through the Equilon lease. Further, Equilon's transportation of crude oil through the pipeline when DOE does not need it is no more burdensome than the DOE's use of the pipeline and contributes to maintaining it by keeping it in use.
III. Conclusion
For the foregoing reasons, the motions of Equilon and DOE for summary judgment are GPANTED, and the plaintiff's motion for summary judgment is DENIED. Also, DOE's motion to dismiss for lack of subject matter jurisdiction is DENIED, and its motion to strike the jury is dismissed as moot.