Federal Energy Administration v. Algonquin Sng, Inc

• Decision Date: 17 June 1976
• Docket Number: No. 75-382,75-382
• Parties: FEDERAL ENERGY ADMINISTRATION et al., Petitioners, v. ALGONQUIN SNG, INC., et al
• Court: U.S. Supreme Court

426 U.S. 548

96 S.Ct. 2295

49 L.Ed.2d 49

FEDERAL ENERGY ADMINISTRATION et al., Petitioners,

v ALGONQUIN SNG, INC., et al.

No. 75-382.

Argued April 20, 1976.

Decided June 17, 1976.

Syllabus

Section 232(b) of the Trade Expansion Act of 1962, as amended by the Trade Act of 1974, provides that if the Secretary of the Treasury finds that an "article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," the President is authorized to "take such action, and for such time, as he deems necessary to adjust the imports of (the) article and its derivatives so that . . . imports (of the article) will not threaten to impair the national security." When it appeared that a prior program established under § 232(b) for adjusting oil imports was not fulfilling its objectives, the Secretary of the Treasury initiated an investigation. On the basis of this investigation the Secretary found that crude oil and its derivatives and related products were being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security, and accordingly recommended to the President that appropriate action be taken to reduce the imports. Following this recommendation, the President promptly issued a Proclamation, Inter alia, raising the license fees on imported oil. Thereafter, respondents eight States and their Governors, 10 utility companies, and a Congressman brought suits against petitioners challenging the license fees on the ground, Inter alia, that they were beyond the President's authority under § 232(b). The District Court denied relief, holding that § 232(b) is a valid delegation to the President of the power to impose license fees on imports, and that the procedures followed by the President and the Secretary in imposing the fees fully complied with the statute. The Court of Appeals reversed, holding that § 232(b) does not authorize the President to impose a license fee scheme as a method of adjusting imports, but encompasses only the use of "direct" controls such as quotas. Held : Section 232(b) authorizes the action taken by the President. Pp. 558-571.

(a) Section 232(b) does not constitute an improper delegation of power, since it establishes clear preconditions to Presidential action, including a finding by the Secretary of the Treasury that an article is being imported in such quantities or under such circumstances as to threaten to impair the national security. Moreover, even if these preconditions are met, the President can act only to the extent he deems necessary to adjust the imports so that they will not threaten to impair the national security, and § 232(c) sets forth specific factors for him to consider in exercising his authority. Pp. 558-560.

(b) In authorizing the President to "take such action and for such time, as he deems necessary to adjust the imports of (an) article and its derivatives," § 232(b)'s language clearly grants him a measure of discretion in determining the method used to adjust imports, and there is no support in the statute's language that the authorization to the President to "adjust" imports should be read to encompass only quantitative methods, I. e., quotas, as opposed to monetary methods, I. e., license fees, of effecting such adjustments; so to limit the word "adjust" would not comport with the range of factors that can trigger the President's authority under § 232(b)'s language. Pp. 561-562.

(c) Furthermore, § 232(b)'s legislative history amply indicates that the President's authority extends to the imposition of monetary exactions, I. e., license fees and duties, and belies any suggestion that Congress, despite its use of broad language in the statute itself, intended to confine the President's authority to the imposition of quotas and to bar him from imposing a license fee system such as the one in question. Pp. 562-571.

171 U.S.App.D.C. 113, 518 F.2d 1051, reversed and remanded.

Sol. Gen. Robert H. Bork, Washington, D. C., for petitioners.

Francis X. Bellotti, Atty. Gen., and Harold B. Dondis, Boston, Mass., for respondents.

Mr. Justice MARSHALL delivered the opinion of the Court.

Section 232(b) of the Trade Expansion Act of 1962, 76 Stat. 877, as amended by § 127(d) of the Trade Act of 1974, 88 Stat. 1993, 19 U.S.C. § 1862(b) (1970 ed., Supp. IV), provides that if the Secretary of the Treasury finds that an "article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," the President is authorized to

"take such action, and for such time, as he deems necessary to adjust the imports of (the) article and its derivatives so that . . . imports (of the article) will not threaten to impair the national security." ¹

All parties to this case agree that § 232(b) authorizes the President to adjust the imports of petroleum and petroleum products by imposing quotas on such imports. What we must decide is whether § 232(b) also author- izes the President to control such imports by imposing on them a system of monetary exactions in the form of license fees.

I

The predecessor statute to § 232(b) was originally enacted by Congress as § 7 of the Trade Agreements Extension Act of 1955, c. 169, § 7, 69 Stat. 166 (see n. 21, Infra ), and amended by § 8 of the Trade Agreements Extension Act of 1958, Pub.L. 85-686, 72 Stat. 678. The advisory function currently performed under § 232(b) by the Secretary of the Treasury was performed by the Director of the Office of Defense Mobilization (ODM) under the 1955 and 1958 statutes. But, like § 232(b), those statutes allowed the President, on a finding that imports of an article were threatening "to impair the national security," to "take such action as he deem(ed) necessary to adjust the imports of (the) article . . . ." In 1959, President Eisenhower, having been advised by the Director of ODM that " 'crude oil and the principal crude oil derivatives and products are being imported in such quantities and under such circumstances as to threaten to impair the national security,' " invoked the 1958 version of the provision and established the Mandatory Oil Import Program (MOIP). Presidential Proclamation No. 3279, 3 CFR 11 (1959-1963 Comp.); U.S.Code Cong. & Admin.News 1959, p. 948. The MOIP, designed to reduce the gap between domestic supply and demand by encouraging the development of domestic production and refinery capacity, imposed a system of quotas on the importation of petroleum and petroleum products. The program was not wholly successful, however, and in the face of domestic consumption which continued to grow faster than domestic production, Presidents Kennedy, Johnson, and Nixon each felt compelled to amend it by raising the permissible quota levels. App. 211-212.

In light of a Cabinet task force conclusion that the MOIP, as then constituted, was not fulfilling its objectives,² President Nixon, acting pursuant to § 232(b), radically amended the program in 1973. Presidential Proclamation No. 4210, 3 CFR 31 (1974); U.S.Code Cong. & Admin.News 1973, p. 3407. The President suspended existing tariffs on oil imports and provided "for a gradual transition from the existing quota method of adjusting imports of petroleum and petroleum products to a long-term program for adjustment of imports of petroleum and petroleum products through . .. the institution of a system of fees applicable to imports of crude oil, unfinished oils, and finished products . . . ." Id., At 32, U.S.Code Cong. & Admin.News 1973, p. 3407. This amended program established a gradually increasing schedule of license fees for importers. With respect to crude oil, the fee was scheduled to increase from an initial 10 1/2 cents per barrel on May 1, 1973, to 21 cents per barrel on May 1, 1975. With respect to most finished petroleum products, the fee was to rise gradually from 15 cents per barrel on May 1, 1973, to 63 cents per barrel on November 1, 1975.³ Id., At 36. While initially some oil imports were exempted from the license fee requirements, the exemption levels were scheduled to decrease annually so that by 1980 the fees would be applicable to all oil imports.

President Nixon's 1973 program apparently did not wholly fulfill the objectives to which it was directed. Accordingly, the Secretary of the Treasury, acting pursuant to § 232(b), see n. 1, Supra, initiated an investigation on January 4, 1975, "to determine the effects on the national security of imports of petroleum and petroleum products." Memorandum from Secretary of the Treasury Simon to Assistant Secretary of the Treasury MacDonald (Simon Memorandum), App. 154. While § 232(b), directs the Secretary "if it is appropriate (to do so, to) hold public hearings or otherwise afford ierested parties an opportunity to present information and advice" as part of such an investigation, 19 U.S.C. § 1862(b) (1970 ed., Supp. IV), the Secretary found that such procedures would interfere with "national security interests" and were "inappropriate" in this case. Simon Memorandum, App. 154. The investigation therefore proceeded without any public hearing or call for submissions from interested nongovernmental parties.

The Secretary submitted a report on his investigation to President Ford on January 14, 1975. Intimating that the measures then in force under § 232(b) had indeed not solved the problems to which they were directed, the Secretary indicated that the United States' dependence on foreign oil had continued to increase since 1966 and that foreign sources currently accounted for well over a third of domestic consumption. The Secretary concluded that

"crude oil, principal crude oil derivatives and products, and related products derived from natural gas and coal tar are being imported into the United States in such quantities as to threaten to impair the national security (and) the foregoing products are being...