International Drilling & Energy Corp. v. Watkins

• Decision Date: 12 September 1990
• Docket Number: No. 3-57.,3-57.
• Citation: 920 F.2d 14
• Parties: INTERNATIONAL DRILLING & ENERGY CORPORATION, Plaintiff-Appellant, v. James WATKINS, Secretary of Energy; United States Department of Energy; George B. Breznay, Director of the Office of Hearings and Appeals; and Office of Hearings and Appeals, Defendants-Appellees.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

920 F.2d 14

INTERNATIONAL DRILLING & ENERGY CORPORATION, Plaintiff-Appellant, v. James WATKINS, Secretary of Energy; United States Department of Energy; George B. Breznay, Director of the Office of Hearings and Appeals; and Office of Hearings and Appeals, Defendants-Appellees.

No. 3-57.

Temporary Emergency Court of Appeals.

Argued May 15, 1990.

Decided September 12, 1990.

Richard A. Drom, Grove, Jaskiewicz, Gilliam and Cobert, Washington, D.C., with whom Craig W. Hulvey of the same firm was on the brief, for plaintiff-appellant International Drilling and Energy Corp.

Don W. Crockett, U.S. Dept. of Energy, Washington, D.C., with whom Marc Kasischke of the same office was on the brief, for defendants-appellees U.S. Dept. of Energy, et al.

Before CHRISTENSEN, GRANT^* and THORNBERRY, Judges.

PER CURIAM.

Plaintiff-Appellant International Drilling and Energy Corporation IDEC filed a complaint against the Department of Energy DOE in the United States District Court for the District of Delaware, seeking judicial review of a final order by the DOE's Office of Hearings and Appeals OHA denying IDEC's refund application. The district court granted the summary judgment motion of the defendant DOE on October 25, 1989. For the reasons explained below, we affirm the decision of the district court.

Background

On January 10, 1983, the DOE entered into a Consent Order with Petrolane-Lomita Gasoline Company and its parent, Petrolane Incorporated Petrolane, settling all claims of Petrolane's alleged violation of the federal petroleum allocation and pricing regulations. Under the terms of that Order, Petrolane transferred over $3 million into an escrow fund to compensate its injured customers. In order to disburse those funds to the victims of the violations, the Office of Hearings and Appeals implemented Subpart V procedures pursuant to 10 C.F.R. Part 205 for the submission and review of claims¹. IDEC, a propane reseller that purchased propane from Petrolane and resold it to residential customers, filed a formal refund application on January 16, 1987, claiming that it was injured by Petrolane's failure to supply it with 14 million gallons of propane and seeking over $1.4 million in restitution.

In its Order of October 20, 1988, the OHA rejected IDEC's application because IDEC had failed to meet the DOE's 2-prong test of proving both a supplier/purchaser relationship with Petrolane and injury caused by the alleged violations. Petrolane-Lomita Gasoline Company/International Drilling and Energy Corp., 18 DOE ¶ 85,091 (1988).

Initially, an allocation claimant must demonstrate the existence of a supplier/purchaser relationship with the consent order firm during the consent order period. See 10 C.F.R. § 211.9. We also have stated that "it is advisable to presume that any party claiming injury due to alleged allocation violations who had not previously notified the Department of Energy or otherwise sought redress was not injured by the allocation violation." OKC Corp., 9 DOE ¶ 82,531 at 85,268.

18 DOE at 88,152. Specifically, the agency found that there was no basis in the record for claiming a supplier/purchaser relationship prior to August 4, 1975. Even though IDEC had entered into a contract in 1972 with another reseller, H.W. Lemens, to purchase certain assets, the OHA noted that the contract did not include the acquisition of Lemens' propane allocation from Petrolane. It was not until the Region VI Office of the Federal Energy Administration FEA issued an order on August 4, 1975, releasing Petrolane from its obligation to supply Lemens and directing it to supply IDEC instead that Petrolane had a direct obligation to supply propane to IDEC. Therefore, with the FEA order of August 4, 1975, the required supplier/purchaser relationship was established and the first prong of the test was met. Id. at 88,153.

Turning then to the period following that date, the OHA considered whether the applicant had demonstrated that Petrolane's alleged failure to supply IDEC with propane caused IDEC any injury. It found no evidence in the record that IDEC had filed a contemporaneous complaint against Petrolane alleging an allocation violation, and thereupon concluded that IDEC did not rebut the presumption that a party failing to make a contemporaneous complaint of injury was not in fact injured by the alleged violation. Id. Without evidence of a complaint or a credible showing of injury, the OHA concluded that the record did not establish injury to IDEC as a result of Petrolane's alleged allocation violation, and denied IDEC's application in its entirety. Id. at 88,153-54.

Following this decision, IDEC sought reconsideration by presenting documentation of an April 1977 complaint it had filed with the DOE against Petrolane. With this new submission before it, the OHA again reviewed all the evidence presented by IDEC. 19 DOE ¶ 85,004 (1989).

As we pointed out in IDEC, an allocation claimant must demonstrate (i) the existence of a supplier/purchaser relationship, (ii) a colorable claim that an allocation violation occurred and (iii) injury as a result of the failure to receive its allocated volume of regulated products. See id., 18 DOE at 88,152.

19 DOE at 88,007. However, on June 1, 1989, the OHA denied IDEC's motion for reconsideration. 19 DOE at 88,013. It rejected IDEC's renewed claim of a supplier/purchaser relationship with Petrolane prior to August 4, 1975, finding once more that the Federal Energy Administration's formal transfer of the propane allocation to IDEC on August 4, 1975 had created the beginning of Petrolane's obligation to IDEC. 19 DOE at 88,009.

As to the post-1975 period, however, IDEC's documentation of the April 1977 complaint filed against Petrolane, together with the DOE's response, was considered sufficient proof of a contemporaneous complaint. This evidence was a proper rebuttal of the presumption incorporated in the OHA analysis of applications that a claimant with no previous complaint was not injured. Nevertheless, according to the OHA, IDEC was still unable to present a colorable claim of actual violation.

The mere fact that such a complaint was filed does not establish the validity of the claim for purposes of a special refund proceeding or necessarily entitle the applicant to a refund. As we have repeatedly pointed out, the applicant must show not only that it filed a complaint, but also the claim itself must be "colorable" and not "spurious." UTP, 14 DOE at 88,306; Tenneco Oil Co./Kern Oil & Refining Co., 10 DOE ¶ 85,003 (1982).

19 DOE at 88,010. The evidence proffered by IDEC included a letter from DOE administrator Wayne Gifford responding to the complaint by analyzing IDEC's claim. The correspondence described the DOE investigation, the IDEC and Petrolane records Gifford reviewed, and his reasons for concluding that Petrolane did not deliver product to IDEC for a limited period because IDEC had an outstanding balance owed. Id. at 88,010. The OHA pointed out that such a justification for refusing product was proper under the DOE regulations found at 10 C.F.R. § 210.62(d).²

When the agency reviewed the records of IDEC purchases reflecting other time periods, it found that IDEC never formally demanded product from Petrolane, and did obtain propane from other suppliers. It also discovered that, in some years, IDEC was not purchasing the full volume of propane to which it was entitled. With this information, the OHA concluded that IDEC made internal business decisions not to purchase propane, and could not now claim that Petrolane failed to supply product to IDEC. Without a showing in the record of IDEC's demand for propane or Petrolane's improper refusal to sell it, the OHA found that IDEC failed to show a colorable claim of actual allocation violation in connection with the contemporaneous complaint. It therefore denied IDEC's motion for reconsideration. Id. at 88,012.

IDEC instituted a civil action against the DOE in federal district court on March 15, 1989. On October 25, 1989, the district court dismissed IDEC's complaint by granting summary judgment in favor of the DOE. The court found that the OHA's decisions were not made in a manner that exceeded its authority and were supported by substantial evidence. Moreover, agreeing with the OHA that the plaintiff failed to meet its burden of persuasion, the court found that there was a rational basis for the OHA's conclusion that the applicant had not submitted sufficient evidence of its injury as required. It is this ruling that IDEC now challenges on appeal.

Standard of Judicial Review

We begin our consideration of this appeal by setting out the standards clearly established for such a review. An appellate court's examination of the summary judgment determination of the district court below is a de novo review of the record and controlling law. Behm Family Corp. v. Department of Energy, 903 F.2d 830, 833 (TECA 1990); Hatoff v. Texaco Inc., 889 F.2d 1102, 1103 (TECA 1989). Under this scope of review, no particular deference is accorded to the conclusions of the district court; we are free to make an independent determination of whether the agency's action was reasonably supported by the administrative record. Amoco Corp. v. Department of Energy, 912 F.2d 472, 474-75 (TECA 1990); County Fuel Co., Inc. v. Department of Energy, 829 F.2d 44, 44-45 (TECA 1987); Mobil Oil Corporation v. Department of Energy, 728 F.2d 1477, 1486 (TECA 1983), cert. denied, Murphy Oil Corp. v. Naph-Sol Refining Co., 467 U.S. 1255, 104 S.Ct. 3545, 82 L.Ed.2d 849 (1984) (Mobil II).

Considering the agency action on the identical basis as did the district court, therefore, we examine the full administrative record of the OHA that was before the district court. See Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973); Citizens To Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 825, 28 L.Ed.2d 136 (1971); U.S. Department of Energy v....