749 F.2d 734 (Fed. Cir. 1984), 3-37, Getty Oil Co. v. Department of Energy

Docket Nº:3-37.
Citation:749 F.2d 734
Party Name:GETTY OIL COMPANY, Plaintiff-Appellant, v. DEPARTMENT OF ENERGY, et al., Defendant-Appellee,and United States of America, Counterclaimant-Appellee.
Case Date:September 26, 1984
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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749 F.2d 734 (Fed. Cir. 1984)

GETTY OIL COMPANY, Plaintiff-Appellant,


DEPARTMENT OF ENERGY, et al., Defendant-Appellee,and

United States of America, Counterclaimant-Appellee.

No. 3-37.

Temporary Emergency Court of Appeals.

Sept. 26, 1984

Argued March 8, 1984.

Certiorari Denied Feb. 19, 1985.

See 105 S.Ct. 1176.

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William E. Wickens, Surrey & Morse, Washington, D.C., with whom William Simon, P.C., and Robert J. Brookhiser of Howrey & Simon, Washington, D.C., Charles F. Richards, Jr. and Stephen E. Herrmann, Richards, Layton & Finger, Wilmington, Del., were on the brief; R. David Copley and Robert E. Hafey, Los Angeles, Cal., of counsel, for plaintiff-appellant.

David A. Engels, Dept. of Energy, Washington, D.C., with whom Larry P. Ellsworth and Charles L. Cope, Washington, D.C., of the same agency; William C. Carpenter, Asst. U.S. Atty., Wilmington, Del., and David M. Glass, Dept. of Justice, Washington, D.C., were on the brief for defendant-appellee and counterclaimant-appellee.

Before HOFFMAN, METZNER and LACEY, Judges.


Getty Oil Company ("Getty") appeals from a final order of the district court granting summary judgment to the Department of Energy 1 ("DOE") and the United States. This order embraces an opinion affirming a decision and order of DOE's Office of Hearings and Appeals ("OHA"), which found that Getty had violated DOE's producer price regulations, 10 C.F.R. Part 212 (1974), in its sales of domestic crude oil to Standard Oil Company (Ohio) ("Sohio"). In this opinion the district court also found that DOE had not abused its discretion in ordering Getty to make repayment of the amount of its overcharges to the Treasury, and that DOE had authority to assess Getty prejudgment interest on the amount found to have been overcharged. The final order also covers a memorandum reaffirming the award of prejudgment interest.


On appeal, DOE relies on the language of two contract documents signed by

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Getty and Sohio on May 16, 1973, to sustain its position. Getty agrees in its reply brief that "the material facts are undisputed," and that only a question of law is presented as to the main question raised on this appeal. That question is whether DOE correctly determined that the 1973 documents jointly comprised one integrated agreement by which Getty traded domestic crude for Sohio's foreign crude with money payments merely equalizing the net values received.

The relevant facts are set forth in the district court's opinion, Getty Oil Co. v. Department of Energy, 569 F.Supp. 1204, 1206-08 (D.Del.1983), and familiarity with that opinion is assumed. Briefly, Getty and Sohio executed two documents on May 16, 1973. One provided for Sohio to sell 25,000 barrels per day of foreign crude oil to Getty to be delivered outside the United States. Getty used this oil to fulfill contracts it had in the Far East. The other provided for Getty to sell an identical amount of domestic crude to Sohio in this country. Similar trades are common in the oil industry. They provide each party with the oil it needs at a place where it is needed, at a cost lower than that which would be incurred if each company had to ship its oil to a distant location. The agreements were for a term from January 1, 1974 to January 1, 1977, with one year extensions subject to termination on twelve months' notice.

These documents were intended to continue a relationship whereby Getty supplied Sohio with domestic oil, while British Petroleum ("BP") supplied Getty with foreign oil. BP's parent company had a 26 per cent interest in Sohio. It was Sohio's assumption of BP's role as supplier to Getty that produced the instant problem.

The price for the purchase of domestic oil by Sohio was "the posted prices" or "the price which Getty Oil may lawfully charge, which may in no event exceed such posted prices." The price for the purchase of foreign oil by Getty was the domestic price less fixed differentials for Iranian Light Export oil and Abu Dhabi Export-Murban oil. The fixed differentials reflected the differences between the domestic and the foreign prices in effect in May 1973. The price of the foreign oil was subject to renegotiation at the request of either party. Cash payments were to be made under the contracts for the oil received.

As the district court observed, the two contracts "were coextensive in duration, expressly related to...

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