AMOCO CORPORATION v. US DEPARTMENT OF ENERGY, 7-18.

• Decision Date: 06 July 1990
• Docket Number: No. 7-18.,7-18.
• Citation: 912 F.2d 472
• Parties: AMOCO CORPORATION, Plaintiff-Appellee, v. U.S. DEPARTMENT OF ENERGY and James V. Watkins, Secretary of Energy, Defendants-Appellants.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

912 F.2d 472

AMOCO CORPORATION, Plaintiff-Appellee, v. U.S. DEPARTMENT OF ENERGY and James V. Watkins, Secretary of Energy, Defendants-Appellants.

No. 7-18.

Temporary Emergency Court of Appeals.

Argued March 13, 1990.

Decided July 6, 1990.

Rehearing and Rehearing Denied August 15, 1990.

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

Melvin Goldstein, Goldstein and Claxton, Washington, D.C., with whom Charles R. Claxton of the same firm was on the brief, for plaintiff-appellee Amoco.

Before PECK, DAUGHERTY, and BROWN, Judges.

Rehearing and Rehearing En Banc Denied August 15, 1990.

PECK, Judge:

This appeal arose from the denial by the Office of Hearings and Appeals (OHA) of Amoco's late application in the Aminoil restitutionary fund proceeding pursuant to 10 C.F.R. Part 205, Subpart V. Amoco appealed the OHA ruling and it was reversed by the district court. For the reasons stated below, we now reverse the district court.

FACTS

During the period that petroleum price controls were in effect, Amoco bought substantial quantities of natural gas liquids from Solar Gas, Inc. Solar Gas was a subsidiary of Burmah Oil, which later changed its name to Aminoil. In July 1975, the Department of Energy (DOE) issued two Notices of Probable Violation (NOPV) to Solar Gas charging that it had violated DOE regulations in overcharging its customers for butane and natural gasoline. Amoco was named in these NOPVs as an overcharged customer. In June 1976, the DOE rescinded the NOPVs in order to combine the Solar Gas investigation in a larger investigation involving Solar's parent company.

On April 6, 1981, DOE and Aminoil entered into a consent decree in which Aminoil agreed to deposit $16.5 million with DOE for disbursement to overcharged customers. A notice announcing the proposed consent order and soliciting comments was published in the Federal Register on April 29, 1981. 46 Fed.Reg. 23,970 (1981). Although the consent order covered overcharges by Aminoil and its affiliates and subsidiaries, only Aminoil was actually named in the notice. On June 15, 1981, the DOE published a notice of final action on the consent decree in the Federal Register. 46 Fed.Reg. 31,321 (1981). Again, none of Aminoil's subsidiaries were named.

In 1983, DOE's Office of Hearings and Appeals (OHA) began a proceeding under 10 C.F.R. Part 205, Subpart V to identify the injured parties and effect restitution. On July 1, 1983, OHA published a Proposed Decision and Order for implementing the refund procedure in the Federal Register. 48 Fed.Reg. 30,428 (1983). Aminoil's subsidiaries including Solar Gas were identified in a footnote at the end of the notice. On April 8, 1985, DOE published the final Decision and Order regarding the implementation of the refund procedure in the Federal Register and the Federal Energy Guidelines, the official reporter for DOE decisions. 50 Fed.Reg. 13,855 (1985). The deadline for refund applications was July 8, 1985. In addition to the published notices, OHA requested relevant information from the Kansas City enforcement office and received a list of seven companies who had contacted the office about the Federal Register notice on the consent order. OHA mailed a copy of the order to all organizations who had contacted OHA about the Aminoil fund. By the deadline only thirty-six applications had been received. Under 10 C.F.R. § 205.285, OHA may accept late applications for "good cause shown." OHA routinely granted filing extensions through 1985. Through 1987 an additional thirty late applications were accepted for good cause shown. Two additional late applications were accepted early in 1988.

Amoco learned of the Aminoil refund in August 1988 when Mr. Barron, an attorney who handled many of the Aminoil claims, called Amoco to offer his services. Mr. Barron declined to identify the refund proceeding unless Amoco agreed to pay him a contingency fee. Amoco refused Mr. Barron's offer. Further investigation led Amoco to the Aminoil proceeding, however, Amoco decided that its dealings with Aminoil were too small to justify filing for a refund. Amoco received a second solicitation from Energy Refunds, Inc. and at that time learned that purchases from Solar Gas were also eligible for the refund. On September 23, 1988, Amoco filed a Request for Leave to File Application for Refund, stating that it "had not been made aware of the Aminoil refund procedure by any government or trade publication."

OHA ruling

On November 16, 1988, OHA issued a Decision and Order dismissing twelve late Aminoil refund applications, including Amoco's. Aminoil U.S.A., Inc./Amerada Hess Corp. et al., 18 DOE § 85,254 (1988). In its decision, OHA stated that the public had been given sufficient notice of the proceeding and deadline through the various Federal Register notices. OHA noted the difficulty in giving notice to all affected customers because many are individuals or small, unsophisticated firms unaccustomed to dealing with federal agencies. OHA acknowledged that late filings in the Aminoil and similar proceedings had been routinely accepted for good cause shown as long as the proceeding was not near completion. OHA also noted that these considerations were not applicable to the twelve submissions under consideration and invoked the need for administrative finality. In addressing Amoco's claim, OHA noted Amoco's "very substantial legal and other resources" and the fact that Amoco had participated in numerous DOE proceedings over the years. On this basis, OHA opined that Amoco should be "intimately familiar with the DOE's rules and proceedings" and could not sustain its claim that it "could not have known about the Aminoil proceeding until this point." Thus, OHA concluded that Amoco could not justify its late application and dismissed it.

District court decision

Amoco sought review of OHA's decision in district court. By agreement of the parties, the case was decided by a magistrate without subsequent review by the district court. DOE made a motion for summary judgment which the magistrate denied on the grounds that Amoco was entitled to actual notice of its right to make a claim and that factual issues existed concerning Amoco's claims. The case proceeded to trial.

The magistrate found that there was no substantial basis for the findings OHA used to justify its decision to dismiss Amoco's application. Amoco v. Department of Energy, Civ. No. H89-0003, slip op. at 14, 28 (N.D.Ind. June 28, 1989). Furthermore, the magistrate ruled that DOE had a statutory duty to give Amoco actual notice of the pendency of the Aminoil Subpart V proceeding and that DOE had failed to fulfill its duty to Amoco in this case. Id. at 20. In light of DOE's failure to fulfill its statutory duty and the lack of substantial basis for OHA's findings, the magistrate held that OHA's denial of Amoco's application was arbitrary and capricious and could not stand. Id. at 28. DOE appealed.

ANALYSIS

DOE asserts that the primary issue before this court is whether OHA's dismissal of Amoco's late application was within its discretionary authority. DOE notes that this court has affirmed OHA's discretionary authority to reject untimely applications for intervention in enforcement proceedings. Consolidated Edison Co. v. Breznay, 873 F.2d 301 (Temp. Emer. Ct.App.1989). DOE urges that OHA similarly exercised its lawful discretion in dismissing Amoco's application because Amoco had failed to show good cause for its delay. Additionally, DOE asserts that the magistrate erred in finding that DOE had a statutory duty to give Amoco actual notice of the Aminoil Subpart V proceeding. DOE contends that publication of the Federal Register notices regarding the Aminoil proceeding fulfills its duty to attempt to identify overcharge victims.

Amoco argues that the question of whether DOE fulfilled its duty to attempt to identify potential participants in the Aminoil proceeding must be answered before OHA's discretion to deny Amoco's application comes into play. Amoco contends that DOE has a statutory duty to give actual notice to overcharge victims and that Amoco was clearly not afforded such notice. Amoco complains that the early Federal Register notices were misleading and inadequate because they did not name Solar as an subsidiary of Aminoil involved in the refund proceeding. In the later notices, Amoco complains that Solar was not named in the caption. A reader had to consult the footnotes or the summary to ascertain that Solar's customers were eligible for the refund proceeding. Furthermore, since the Kansas City office had information in its files in connection with the 1975 NOPVs that Amoco was an overcharged customer of Solar, DOE should have notified Amoco of the proceeding. Thus, Amoco concludes that because DOE's statutory duty was not fulfilled, OHA did not have the discretionary authority to dismiss Amoco's application. Additionally, Amoco argues that other late applications were accepted reciting the same reason that Amoco offered: the applicant did not learn about the pendency of the proceeding until after the deadline for applications. Thus, OHA's dismissal of Amoco's application was arbitrary and capricious.

Standard of review

Administrative orders of the DOE are reviewed in accordance with the Economic Stabilization Act (ESA) which provides that no order shall be set aside "unless a final judgment determines that such order is in excess of the agency's authority, or is based upon findings which are not supported by substantial evidence." § 211(d)(1), 12 U.S.C. § 1904, note, incorporated by reference in the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. § 754(a)(1). The matter before us is procedural. A court may exercise greater independent judgment when reviewing agency action on procedural rather than substantive grounds. Mobil Oil...