Atlantic Richfield Co. v. Fed. Energy Admin.

• Decision Date: 17 May 1977
• Docket Number: No. 9-36.,9-36.
• Citation: 556 F.2d 542
• Parties: ATLANTIC RICHFIELD COMPANY, Plaintiff-Appellant, v. FEDERAL ENERGY ADMINISTRATION et al., Defendants-Appellees, Robert William Spinetti et al., Intervenors-Appellees.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

556 F.2d 542

ATLANTIC RICHFIELD COMPANY, Plaintiff-Appellant, v. FEDERAL ENERGY ADMINISTRATION et al., Defendants-Appellees, Robert William Spinetti et al., Intervenors-Appellees.

No. 9-36.

Temporary Emergency Court of Appeals.

Argued February 16, 1977.

Decided May 17, 1977.

F. Bruce Dodge, Morrison & Foerster, San Francisco, Cal., with whom Kenneth R. Clegg, San Francisco, Cal., was on the brief for appellant.

Linda L. Pence, Dept. of Justice Washington, D.C., with whom Irving Jaffe, Acting Asst. Atty. Gen., and Stanley D. Rose, Washington, D.C., were on the brief for appellees.

Tracy R. Kirkman, Cooper & Scarpulla, San Francisco, Cal., with whom Francis O. Scarpulla and Josef D. Cooper, San Francisco, Cal., were on the brief for intervenors-appellees.

Before CARTER, CHRISTENSEN, and ESTES, Judges.

CHRISTENSEN, Judge.

This case and a related case, Robert W. Spinetti, et al. v. Atlantic Richfield Company, et al., 552 F.2d 927 (Em.App.1976), initially were consolidated for the purposes of pending appeals and jointly decided by this court without oral argument. All parties asked rehearing or clarification of our opinion with respect to the case now before us, No. 9-36. No reconsideration was sought so far as the opinion treated No. 9-35.

A rehearing was granted as to No. 9-36, additional briefs have been filed, and oral arguments have been heard. Being convinced that the consolidated opinion insofar as it disposed of No. 9-36 was erroneous, we have severed the two appeals, amended and supplemented our prior opinion in the consolidated cases to recognize that severance, and eliminated from that opinion any reference to the present case except for brief review of proceedings common to both.¹ We now proceed to decide No. 9-36 upon rehearing.

In the court below Atlantic Richfield Company (ARCO) sought judicial review of two Federal Energy Administration (FEA) "Interpretations" and "Decisions and Orders"² pursuant to § 211 of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note, (ESA) as incorporated in the Emergency Petroleum Allocation Act of 1973 (EPAA) (15 U.S.C. §§ 751, 754). The district court was asked to declare those interpretations and orders invalid and to enjoin preliminarily and finally the FEA from attempting to utilize them as a basis for collateral estoppel against ARCO. The first order determined that firms such as Stanton W. Boyett distributing "Arco-refined petroleum products under the terms of Arco's Commission Distributor Agreement clearly fall within the definition of `wholesale purchaser-reseller'" as defined in the Mandatory Petroleum Allocation Regulations, 10 C.F.R. § 211.51. Record p. (R.) 326. The second order determined that Gordon H. Wallace, an ARCO commission tank truck distributor, qualified as a wholesale purchaser-reseller under the same regulation.³

ARCO's complaint in the district court was answered by FEA, and certain Atlantic Richfield commission distributors and commission tank truck distributors intervened. ARCO filed a motion for a preliminary injunction. The FEA filed a cross-motion to dismiss or, in the alternative, for summary judgment. The district court denied injunctive relief to ARCO, granted the FEA's motion for summary judgment, and dismissed ARCO's action.⁴ Judgment was entered accordingly on July 19, 1976, and ARCO has appealed to this court.

While the Boyett and Wallace problems were treated by the agency in separate proceedings, the sole issue addressed by the district court as to both was whether the distributors involved were wholesale purchaser-resellers within the contemplation of 10 C.F.R. § 211.51 and Energy Ruling 1975-8, 3 CCH Energy Management ¶ 16,048, in the light of which the FEA had indicated it would determine whether a firm is a wholesale purchaser-reseller.⁵

On this appeal ARCO presents the following issues:

1. Whether the FEA's failure to provide ARCO a hearing to determine adjudicatory facts requires that the Boyett and Wallace orders be vacated.

2. Whether the FEA's failure to disclose the facts upon which it relied when granting the Boyett and Wallace orders violated ARCO's due process rights.

3. Whether because ARCO did not have the opportunity to confront and cross-examine persons submitting statements to the FEA their hearsay statements could constitute substantial evidence to support the finding of the agency in the Boyett and Wallace orders.

4. Whether the FEA lacks authority to "regulate . . . ARCO's contractual relationship with its commission distributors and commission tank truck distributors."

The counterpoints formulated by FEA are essentially the same, with varied emphases.⁶ Implicit in ARCO's pleadings below and its briefs here is additional concern for the agency's reliance upon the Boyett and Wallace Interpretations and Orders to collaterally estop ARCO from contesting from the status of its other distributors. This point is extended by the intervenors who state in their brief that "the only issue for this Court to decide is whether the FEA's determination that ARCO's distributors are wholesale purchaser-resellers within the meaning of 10 C.F.R. § 211.51 is binding on ARCO in a subsequent civil action."

Before stating our conclusions concerning the foregoing points and discussing in greater detail the res judicata or collateral estoppel effect of "Interpretations"⁷ which involves a problem of first impression in this court, it may be helpful briefly to put the orders here involved in broad context.

To carry out the congressional mandate of developing an allocation program,⁸ FEA established fixed supplier/purchaser relationships as a frame of reference for allocating products. This supplier/purchaser concept was incorporated into the allocation regulations in an attempt to insure a continued flow of supplies by providing the maximum number of purchasers with currently identifiable suppliers. Regulations were promulgated which defined a variety of supplier/purchaser relationships. The "wholesale purchaser-reseller" category with which this case is concerned is described in 10 C.F.R. § 211.51, supra, as "any firm which purchases, receives through transfer, or otherwise obtains (as by consignment) an allocated product and resells or otherwise transfers it to other purchasers without substantially changing its form."

The FEA issued Ruling 1975-8, 40 Fed.Reg. 30037, 3 CCH Energy Management ¶ 16,048 (July 17, 1975), regarding the applicability of the above-cited supplier/purchaser regulation to firms engaged in the business of marketing allocated products under written consignment agreements and setting forth general guidelines for determining which consignees were wholesale purchaser-resellers.⁹ Noting that the terms of written consignment agreements and the actual practices between the consignees and their suppliers varied greatly, the Ruling invited firms which were in doubt about their status to request an interpretation from FEA with specific reference to their own particular factual situations.

On March 17, 1975, Stanton W. Boyett, of Agent's Alliance, Inc., requested an interpretation of the Mandatory Allocation Regulations with reference to the supplier/purchaser status of distributors operating under ARCO's "Commission Distributor's Agreement". The General Counsel of FEA issued such interpretation determining that firms which sell and distribute ARCO products under that form of agreement were wholesale purchaser-resellers as defined in § 211.51. ARCO appealed this interpretation to the FEA Office of Exceptions and Appeals, the procedure for the "exhaustion of administrative remedies" provided by regulation. 10 C.F.R. § 205.86. That office denied the appeal in a Decision and Order issued August 8, 1975. Atlantic Richfield Company, 2 FEA ¶ 80,647 (1975).

On October 16, 1975, Gordon H. Wallace submitted a request for a similar interpretation of his status under a "Commission Tank Truck Distributor's Agreement" with ARCO. An interpretation furnished by the Regional Counsel on November 11, 1975, determined that Wallace was a wholesale purchaser-reseller. ARCO filed an appeal with the FEA Office of Exceptions and Appeals, which was denied on February 13, 1976. Atlantic Richfield Company, 3 FEA ¶ 80,573 (1976). Resort to the district court and thence to this court followed as above noted.

Appellant's primary complaint during the administrative proceedings and on this appeal seems to be that the FEA did not accord it an evidentiary hearing before ruling upon its appeal from the interpretations. Indeed, as later will be seen, its mistaken insistence upon such a hearing as a claimed matter of right led it into a failure to respond to the invitation of the agency for informal submission of whatever additional facts it may have wished to rely upon. ARCO was afforded ample opportunity to participate in the administrative appeal process. It, as well as Boyett and Wallace, were allowed to forward written statements and documentation in support of the respective positions. ARCO did so, but submitted little evidence in support of its position. There was no constitutional or prejudicial error, nor was it an abuse of discretion, for the agency to decline to grant an evidentiary hearing under the circumstances, particularly in view of the innate nature of "Interpretations" as pointed out hereafter.¹⁰

Appellant next contends that "FEA's failure to disclose the facts on which it relied when rendering the Boyett and Wallace orders violated its due process rights." It may be assumed that this contention relates to its attempt to "discover" everything which was before the General or Regional Counsel when the interpretations in question were issued. If this contention is considered literally, it borders on the frivolous from the very nature of uncontested interpretations in the first instance, and from the fact that the interpretations themselves stated their bases: the respective written agreements between the...