Algonquin SNG, Inc. v. Federal Energy Administration
| Decision Date | 11 August 1975 |
| Docket Number | 75-1206,Nos. 75-1202,75-1281 and 75-1282,s. 75-1202 |
| Citation | 171 U.S.App.D.C. 113,518 F.2d 1051 |
| Parties | , Energy Mgt. P 26,012 Algonquin SNG, INC., et al., Petitioners v. FEDERAL ENERGY ADMINISTRATION, Respondent. COMMONWEALTH OF MASSACHUSETTS and Michael S. Dukakis, Governor, et al., Petitioners, v. FEDERAL ENERGY ADMINISTRATION, Respondent. COMMONWEALTH OF MASSACHUSETTS et al., Appellants, v. William E. SIMON, et al. ALGONQUIN SNG, INC., et al., Appellants, v. William E. SIMON et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Harold B. Dondis, Boston, Mass., of the bar of the Supreme Judicial Court of Mass., pro hac vice, by special leave of court, with whom William R. Connole, Washington, D. C., was on the brief for petitioners in Nos. 75-1202 and 75-1282. Ernest C. Baynard, III, Washington, D. C., for all petitioners.
Francis X. Bellotti, Atty. Gen., of Mass., with whom James S. Hostetler, Washington, D. C., was on the brief, for petitioners in Nos. 75-1206 and 75- 1281. Albert D. Sturtevant, Washington, D. C., for petitioners in No. 75-1281. William R. Connole, Washington, D. C., for petitioners in Nos. 75-1206 and 75-1281.
Irwin Goldbloom, Deputy Asst. Atty. Gen., with whom Rex E. Lee, Asst. Atty. Gen. and Barrie L. Goldstein, Atty. Dept. of Justice, were on the brief, for respondents.
Before TAMM, LEVENTHAL and ROBB, Circuit Judges.
Opinion for the Court filed by Circuit Judge TAMM.
In these consolidated appeals, plaintiffs-appellants Commonwealth of Massachusetts, et al. seek to overturn the imposition of license fees for importation of oil and petroleum products as required by certain Proclamations of President Ford and former President Nixon and as implemented through regulations adopted by the Federal Energy Administration (FEA). Appellants assert that the challenged presidential actions were beyond their claimed statutory authority under 19 U.S.C. § 1862(b) (1970) and that the Proclamation and regulations in question were promulgated without adherence to certain procedural prerequisites. We hold today that the executive is without substantive authority to impose license fees of the magnitude at issue here.
The operative statute, 19 U.S.C. § 1862(b) (1970), authorizes the President to
take such action, and for such time, as he deems necessary to adjust the imports of (an) article and its derivatives so that . . . imports (of such article) will not so threaten to impair the national security.
The program under which the challenged fees were imposed was initiated in 1959 by President Eisenhower under his section 1862(b) authority in Presidential Proclamation 3279. See 19 U.S.C. § 1862 note. The so-called Mandatory Oil Import Program (MOIP) was based on a determination that foreign petroleum 1 was being imported into the United States in such quantities and at such low costs as to threaten to impair national security by inhibiting the development of domestic production and refinery capacity. Proclamation 3279 required each petroleum importer to secure a license, divided the country into five districts, and established an import quota for each district. The Secretary of Interior was directed to allocate the quota among individuals with an existing refining capacity or import history. Although subsequently amended twenty-five times, 2 the MOIP quota system remained in effect from 1959 to May 1, 1973.
Proclamation 4210, effective May 1, 1973, announced by former President Nixon, inaugurated a radical change in the system. See 19 U.S.C.A. § 1862 note; 38 Fed.Reg. 10725 (1973). Under this new plan, the quota system was abolished. Instead, the issuance of import licenses was conditioned on a schedule of license fees to be phased in during the period May 1, 1973 through November 1, 1975. 3 The impact of the fee system was tempered by a provision that allowed fee-free imports up to a person's previous quota allocation; these fee-free allocations were to be phased out gradually until 1980, when license fees would be required on all imports covered under the Proclamation. Finally, Proclamation 4210 abolished the tariff on petroleum. Proc. 4210 § 16.
Section 1862(b) authorizes presidential action only after receipt of advice from the Secretary of the Treasury that an article is being imported in quantities or under circumstances as to threaten to impair the national security. The Secretary may not transmit such advice to the President under this section until he has made an appropriate investigation to determine the effects on national security, during which he must consult with the Secretaries of Defense and Commerce and other appropriate officers. 4 Finally, the Trade Act of 1974, 88 Stat. 1978, effective January 3, 1975, amended section 1862(b) to include the provision that "(t)he Secretary shall, if it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation."
On January 4, 1975, the day after the amendment became effective, Secretary of the Treasury, William E. Simon, undertook an investigation to determine whether the current level of petroleum imports threatened national security. In a letter delegating the investigation to Assistant Secretary David R. MacDonald, Secretary Simon stated:
In my judgment, national security interests require that the procedures requiring public notice and opportunity for public comment or hearings . . . not be followed in this case. I further find that it would be inappropriate to hold public hearings, or otherwise afford interested parties an opportunity to present information and advice relevant to the investigation as provided by Section 232, as amended by the Trade Act of 1974.
Thereafter, comments were solicited from the Departments of State, Defense, Interior, Commerce and Labor, the Council of Economic Advisors, and the Federal Energy Administration. 5 On January 14, 1975, Secretary Simon reported as the result of his investigation that petroleum products were "being imported into the United States in such quantities as to threaten to impair the national security" and recommended that
appropriate action be taken to reduce imports of crude oil, principal crude oil derivatives and products, and related products derived from natural gas and coal tar into the United States, to promote a lessened reliance upon such imports to reduce the payments outflow and to create incentives for the use of alternative sources of energy to such imports. I understand that a Presidential Proclamation pursuant to (section 1862(b)) is being drafted by the Federal Energy Administration consistent with these recommendations.
A. 44.
On January 23, 1975, President Ford signed Proclamation No. 4341 which provided for a significant increase in the license fees initially imposed by former President Nixon. First, the fee schedule announced in 1973 was accelerated to their maximum levels of $0.21 per barrel on imported crude oil and $0.63 per barrel on petroleum products. Second, Proclamation 4341 imposed supplemental fees of $3 per barrel on imported crude oil and $1.20 per barrel on petroleum products. The supplemental fee on crude oil was to be instituted in three monthly dollar steps from February to April, while the petroleum products fee was to be added in March and April, 1975. 6
On January 27, 1975, plaintiffs-appellants filed suit in district court. Plaintiffs, including eight states and their governors, 7 ten utility companies, 8 and one member of Congress, 9 asserted that the fees imposed by Presidents Nixon and Ford in Proclamations 4210 and 4341 exceeded their authority under 19 U.S.C. § 1862(b), that the Secretary of the Treasury failed to comply with the procedural requirements of that section, and that the government had failed to file a required environmental impact statement.
In a February 21st Order, the district court found jurisdiction under 28 U.S.C. §§ 1331 and 1340 and rejected the contention that the action was barred by the Tax Anti-Injunction Act, 26 U.S.C. § 7421 (1970). Although finding that appellants would suffer irreparable injury by the implementation of the program, the court refused to grant injunctive relief. The court found that the scope of presidential authority under section 1862(b) encompassed the power to impose license fees, "a regulatory measure enacted for the protection of national security." J.A. 290. The court also held that the Secretary of the Treasury had fulfilled the procedural requirements of section 1862(b) and that the failure to file an environmental impact statement was excused by an "emergency situation." J.A. 293. Final judgment was entered on March 11, 1975, 10 and this appeal followed. On February 27, 1975, appellants also filed, pursuant to 15 U.S.C. § 766(i)(2)(A), a Petition for Review of emergency regulations promulgated by the Federal Energy Administration to implement the Ford supplemental fee program. See 40 Fed.Reg. 10437 (1975). In both appeals, now consolidated, appellants renew the contentions made to the district court. 11
There is no controversy over the need for action to extricate this country from its increasingly dangerous dependence on foreign petroleum. Spending on foreign oil has increased from.$2.7 billion in 1970 to about $24 billion in 1974, J.A. 187. In 1973, the United States was subjected to an oil embargo with disasterous economic consequences. As the district court stated: "The grave necessity of decreasing our dependence on foreign oil, and developing our own domestic industry and alternative sources of energy was and is a matter of primary national importance." J.A. 288-89.
Appellants do not challenge the Presidents' findings in this area but argue that the license fee program...
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