Citronelle-Mobile Gathering, Inc. v. Gulf Oil Corp.

• Decision Date: 20 October 1976
• Docket Number: Civ. A. No. 75-483-P.
• Parties: CITRONELLE-MOBILE GATHERING, INC., Plaintiff, v. GULF OIL CORPORATION, Defendant/Counterclaimant, and Federal Energy Administration, Defendant.
• Court: U.S. District Court — Southern District of Alabama

420 F. Supp. 162

CITRONELLE-MOBILE GATHERING, INC., Plaintiff, v. GULF OIL CORPORATION, Defendant/Counterclaimant, and Federal Energy Administration, Defendant.

Civ. A. No. 75-483-P.

United States District Court, S. D. Alabama, S. D.

August 20, 1976.

As Amended October 20, 1976.

COPYRIGHT MATERIAL OMITTED

Harold D. Parkman and David A. Bagwell, Mobile, Ala., Lester M. Bridgeman, Washington, D.C., Lewis G. Odom, Jr., Montgomery, Ala., for plaintiff.

W. B. Edwards, Asst. Gen. Counsel, John E. Bailey and Catherine C. McCulley, Houston, Tex., for Gulf Oil Corp.

C. S. White-Spunner, Jr., U.S. Atty., Mobile, Ala., Rex E. Lee, Asst. Atty. Gen., Stanley D. Rose and Marvin L. Coan, Dept. of Justice, Washington, D.C., for Federal Energy Administration.

OPINION AND ORDER

PITTMAN, Chief Judge.

The plaintiff is Citronelle-Mobile Gathering, Inc. (Citmoco), a corporation organized and existing under the laws of the State of Delaware and with its principal place of business in Mobile, Alabama. Citmoco is engaged in the business, in this district, of purchasing of crude oil from the Citronelle field, Citronelle, Mobile County, Alabama. It also transports such crude oil to a terminal in Mobile, Alabama, for storage and resale on tidewater in Mobile.

The defendant Gulf Oil Corporation (Gulf) is a corporation organized and existing under the laws of Pennsylvania with its principal place of business in Pittsburgh. Gulf is engaged in the business of producing, refining, and selling crude oil and petroleum products. Gulf is qualified to do, and is doing, business in Mobile, Alabama. The jurisdiction of this court is invoked pursuant to the provisions of 28 U.S.C. § 1332(a). The complaint alleges an amount in controversy exceeding $10,000 exclusive of interest and costs. The venue is in this district pursuant to 28 U.S.C. § 1391(a), § 1391(c), and § 1393.

Citmoco proceeds on three causes of action. First, they seek damages in the amount of $4,390,540.83 for an alleged breach of contract by Gulf with Citmoco for the purchase of crude oil. Citmoco sold 337,734 net barrels of Citronelle crude oil to Gulf at Mobile, Alabama, at an agreed price of $13.00 a barrel on September 9, and September 29, 1975. Citronelle claims Gulf on September 30, 1975, repudiated that contract and refused to pay Citmoco more than $5.40 a barrel on Citronelle crude.

In the second cause of action Citmoco claims that during the period of September 29 to December 21, 1975, it sold 691,395.3 additional net barrels of crude oil to Gulf under the terms of an agreement for $13.00 a barrel, but that Gulf paid instead $5.40 per net barrel. Citmoco seeks recovery of the difference between the $5.40 and $13.00 a barrel.

Gulf claims that the recovery sought by Citmoco in all three causes of action is barred by the Emergency Petroleum Allocation Act of 1975 (EPAA), P.L. 94-99, Federal Energy Administration (FEA) Regulations 10 C.F.R., Part 212 and FEA Ruling 1975-17.

Gulf has filed a counter-claim in the amount of $558,583.95 for a September 1, 1975, purchase for which Gulf paid Citmoco $13.00 per barrel. Under the above regulations Gulf claims a refund which represents a difference between the regulated price of $5.40 per barrel and the paid price of $13.00 per barrel. They have demanded and been refused the refund by Citmoco.

Gulf invokes jurisdiction of this court pursuant to 15 U.S.C. § 754 as amended by P.L. 94-99 and 28 U.S.C. § 1332(a). Gulf contends that FEA Regulation 10 C.F.R., Part 212, prohibits Gulf from paying Citmoco more than $5.40 per barrel. Venue is claimed in accordance with 28 U.S.C. § 1391.

The Federal Energy Administration (FEA) was permitted to intervene as Intervenor-defendant. FEA took no position with respect to the total amounts of oil delivered, the total amount paid, or the total claimed in an alleged overpayment by Gulf. FEA is an agency and instrumentality of the United States under the Federal Energy Administration Act of 1974, 15 U.S.C., § 761, et seq., and was established by Executive Order 11790, June 27, 1974.

FEA contends there was a valid ceiling price of $5.40 during the period set out in the complaint and counter-claim. It also contends that if there were "substantial constitutional issues" during the September 1-29, 1975, period, this court is bound to certify the issues to the Temporary Emergency Court of Appeals (TECA). FEA further contends that if there are no substantial constitutional issues, the sales of "old" crude oil could not exceed the Agency's maximum lawful ceiling price of $5.40 per barrel.

FINDINGS OF FACT

During the period when the nation's energy policy was being hotly debated and before the Regulations expired on August 31, 1975, Citmoco and Gulf entered into an agreement providing that effective September 1, 1975, and until any later imposition of valid price controls on the sale of crude oil, Citmoco would sell, and Gulf would purchase, any and all Citronelle crude that Citmoco had available for resale at Mobile, at $13.00 per barrel. On September 1, 1975, Gulf purchased and accepted delivery from plaintiff of 313,466.72 barrels of Citronelle crude. On September 2, 1975, Gulf was invoiced for this crude oil at the rate of $13.00 per barrel for a total amount of $4,075,067.36, which amount was paid to Citmoco prior to September 29, 1975. On September 9 and 29, 1975, Citmoco sold and delivered to Gulf a total of 337,733.91 barrels of Citronelle crude for which Citmoco invoiced Gulf at the agreed rate of $13.00 per barrel. Gulf has not paid Citmoco the invoiced purchase price for the September 9 and 29 delivery of crude oil. On October 26, November 22, and December 14, 1975, Citmoco sold and delivered to Gulf a total of 691,395.3 barrels of Citronelle crude oil for which Gulf paid Citmoco at the rate of $5.40 per barrel.

As of September 29, 1975, the date of the enactment of EPAA of 1975, Gulf had not paid Citmoco the charges invoiced to Gulf for the September 9 and September 29 purchases of crude oil. Gulf thereafter notified Citmoco that it could not pay such invoices, asserting that it was prohibited by reason of the enactment of EPAA of 1975. Citmoco is also claiming the difference between the $5.40 paid and the agreed $13.00 per barrel as a balance due for the October, November, and December 1975 deliveries. This would be a valid claim based on an agreed price if there were not valid regulations of the price of crude oil at a lesser price. Citmoco claims there were no effective price controls during this period.

Gulf claims it is prohibited by law from paying more than the EPAA ceiling of $5.40 per barrel, and has filed a counterclaim for the excess over $5.40 per barrel paid to Citmoco for the September 1, 1975 purchase. It claims the EPAA regulation is retroactive.

CONCLUSIONS OF LAW

Plaintiff asserts jurisdiction pursuant to the provisions of Title 28 U.S.C. § 1332(a).

This court has jurisdiction of defendant Gulf's counter-claim under Section 210 of the Economic Stabilization Act of 1970, as amended 12 U.S.C. § 1904, note, and as incorporated into the Emergency Petroleum Allocation Act of 1973, as amended by P.L. 94-99, 15 U.S.C. § 751, et seq., which incorporated Federal Energy Administration, 10 C.F.R. Part 212.

Venue is properly laid in this district under 28 U.S.C. § 1391 and § 1393. Under § 210(a) of the Economic Stabilization Act:

"Any person suffering legal wrong because of any act or practice arising out of EPAA of 1973, as amended . . . or any order or regulation issued pursuant thereto, may bring an action in a district court of the United States, without regard to the amount in controversy, for appropriate relief . . . and/or damages."

The Emergency Petroleum Allocation Act of 1975 reinstated FEA price control (10 C.F.R., Part 212) retroactive to September 1, 1975.

FEA has been delegated all authority under the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. §§ 751, et seq., as recently amended by the Energy Policy and Conservation Act, 15 U.S.C. § 754, to promulgate and enforce price regulations relating to petroleum and petroleum products. The authority to regulate the prices of petroleum and petroleum products was formerly exercised by the Cost of Living Council (COLC) pursuant to duly delegated authority under the Economic Stabilization Act of 1970, as amended, 12 U.S.C. § 1904, note.

Pursuant to the Economic Stabilization Act, Executive Orders issued pursuant thereto, and various delegations of authority, the COLC promulgated "Phase IV Price Regulations" relating to petroleum and petroleum products, shown as 6 C.F.R. Part 150, Subpart L., § 150.351, et seq., (promulgated 38 F.R. 22536, August 22, 1973, as amended 38 F.R. 23794, September 4, 1973).

Pursuant to the EPAA and the delegations of authority contained in Executive Order 11790, the COLC price regulations relating to petroleum and petroleum products were re-enacted in substance by the FEA at 10 C.F.R. Part 212, subpart D, § 212.91, et seq. (39 F.R. 1924, et seq., January 15, 1974). The President was authorized by Section 4(a) of the EPAA of 1973 to promulgate a "regulation providing for the mandatory allocation of crude oil, residual fuel oil, and each refined petroleum product, in amounts specified in . . . and at prices specified in . . . such regulation." 15 U.S.C. § 753(a).

Under FEA price regulations pertaining to the pricing of crude oil, a two-tier pricing system was adopted. Under the two-tier pricing system, the Regulations prescribed a ceiling price on domestic crude oil produced from a given property when production is at or below the level of production from the same property in the same month of 1972 ("old" crude). Crude oil produced in excess of 1972 production levels from the same property ("new" crude) was exempt from price controls and could be sold at an uncontrolled or free market price. During the period January 15, 1974, through August 31, 1975, the ceiling price for old oil...