Goodyear Tire & Rubber Co. v. Department of Energy, 96-1389

• Decision Date: 30 June 1997
• Docket Number: No. 96-1389,96-1389
• Citation: 118 F.3d 1531
• Parties: GOODYEAR TIRE & RUBBER COMPANY, Plaintiff-Appellant, v. DEPARTMENT OF ENERGY, Federico F. Pena, Secretary of Energy and George B. Breznay, Director, Office of Hearing and Appeals, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1531

118 F.3d 1531

GOODYEAR TIRE & RUBBER COMPANY, Plaintiff-Appellant, v. DEPARTMENT OF ENERGY, Federico F. Pena, Secretary of Energy and George B. Breznay, Director, Office of Hearing and Appeals, Defendants-Appellees.

No. 96-1389.

United States Court of Appeals, Federal Circuit.

June 30, 1997.

Rehearing Denied Aug. 26, 1997.

James Baller, The Baller Law Group, P.C., Washington, DC, argued, for plaintiff-appellant. With him on the brief was Lana L. Meller.

Don W. Crockett, Office of General Counsel, United States Department of Energy, Washington, DC, argued, for defendants-appellees.

Before NEWMAN, LOURIE and BRYSON, Circuit Judges.

LOURIE, Circuit Judge.

The Goodyear Tire & Rubber Company (Goodyear) appeals from the summary judgment of the United States District Court for the District of Columbia, Goodyear Tire & Rubber Co. v. Department of Energy, 942 F.Supp. 629 (D.D.C.1996), holding that (1) the Department of Energy's (DOE's) Office

of Hearings and Appeals (OHA) lawfully applied its newly-adopted crude oil overcharge refund eligibility rule to Goodyear's refund claims, which were filed before that rule was adopted, and (2) OHA did not err in applying that rule in denying the bulk of Goodyear's refund claims. We conclude that OHA's application of the rule was not unlawfully retroactive and that OHA properly declined to apply a broad, non-specific presumption of overcharge injury based solely on the fact that Goodyear's suppliers were affiliates of crude oil refineries. We also conclude that substantial evidence exists to support OHA's denial of a presumption with respect to certain purchases of petroleum products, but that substantial evidence is lacking for OHA's finding that Goodyear was not entitled to a presumption of overcharge injury for its purchases of two petroleum products from two of its suppliers. We therefore affirm-in-part and reverse-in-part.

BACKGROUND

This action arises under Section 5(a)(1) of the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. § 751-760h (1982), which incorporated § 211 of the Economic Stabilization Act (ESA), 12 U.S.C. § 1904 note (1976). These provisions had the effect of temporarily setting prices for and controlling the allocation of crude oil and refined petroleum products. ¹

In August 1973, the Cost of Living Council, acting pursuant to its authority under the ESA, issued its so-called "Phase IV" petroleum and petroleum product price regulations. See 38 Fed.Reg. 22,536 (1973) (adding 6 C.F.R. §§ 150.351-150.363). These regulations set prices for a variety of petroleum products including those described in Industry Code 2911 of the 1972 edition of the Standard Industrial Classification Manual (SICM). Of relevance to this case are the SICM Code 2911 listing for "butadiene, from petroleum"; "mineral waxes, natural"; "paraffin waxes, from petroleum refining"; and "liquified petroleum gases" including ethylene and propylene.

In November 1973, Congress enacted the EPAA, Pub.L. No. 93-159, 87 Stat. 627 (1973), which gave the President authority to regulate the price and allocation of crude oil, residual fuel oil, and "refined petroleum product." 15 U.S.C. § 753 (1983). A refined petroleum product was defined more narrowly than under the ESA as "gasoline, kerosene, distillates (including Number 2 fuel oil), [propane, butane], refined lubricating oils, or diesel fuel." 15 U.S.C. § 752(5)-(6) (1983). The relevant SICM-based "Phase IV" price control regulations established under the ESA continued in effect until they were amended during the staged decontrol of petroleum products, which began in January 1974 and continued through January 1981. See 15 U.S.C. § 755(a) (1974); H.R. Conf. Rep. No. 93-628, at 15 (1973), reprinted in 1973 U.S.C.C.A.N. 2688, 2702; see also 46 Fed.Reg. 9,909 (1981); 39 Fed.Reg. 4,129 (1974).

In 1986, in light of the court-approved settlement agreement in In re Department of Energy Stripper Well Exemption Litigation, 653 F.Supp. 108, 113 (D.Kan.1986), aff'd, 855 F.2d 865 (Temp.Emer.Ct.App.1988), which mandated, inter alia, that DOE provide special crude oil refund proceedings for parties not involved in the settlement, Congress enacted the Petroleum Overcharge Distribution and Restitution Act of 1986 (PODRA), Pub.L. No. 99-509, 100 Stat. 1881 (codified at 15 U.S.C §§ 4501-07 (1994)). See H.R.Rep. No. 99-727, at 56-59 (1986) reprinted in 1986 U.S.C.C.A.N. 3607, 3652-55. Under this legislation, OHA was authorized to identify and make restitution to parties who were injured by petroleum overcharges with funds recovered from those who violated the petroleum price control and allocation provisions of the ESA and EPAA. 15 U.S.C. § 4502(b) (1994); see also 10 C.F.R. § 205.280-205.288 (1996) (Subpart V-Special Procedures for Distribution of Refunds).

To implement this legislation, OHA initially established the following requirements for refund applications, consistent with existing practice under Subpart V As in non-crude oil cases, applicants will be required to document their purchase volumes and demonstrate that they were injured.... Applicants who were end users (ultimate consumers) of petroleum products whose businesses are unrelated to the petroleum industry and who were not subject to the DOE price regulations are presumed to have absorbed rather than passed on alleged crude oil overcharges, and need not submit any further evidence of injury beyond volumes of product purchased in order to receive a refund. It is not necessary for applicants to identify their suppliers of petroleum products in order to receive a refund.

6 Fed. Energy Guidelines (CCH) p 90,718 (1987) (citations omitted); see also 52 Fed.Reg. 13,291 (1987); 51 Fed.Reg. 27,899 (1986). In one of its first crude oil refund decisions, OHA stated:

As a general principle, any product that was covered by the [EPAA], and that was produced from a crude oil refinery qualifies as a product that may be considered for a refund.... We will presume that any product that was regulated by the DOE at any time during the August 19, 1973 through January 27, 1981 [Stripper Well ] Settlement Period meets that standard.

Hartsville Oil Mill, 17 DOE (CCH) p 85,110, at 88,237 (1988). Thus, for so-called "end user" refund applicants (i.e., ultimate consumers of petroleum products whose businesses were unrelated to the petroleum industry and who were not subject to the DOE price regulations), OHA presumed that any product covered by the ESA, even if that product was subsequently exempted by regulations promulgated under the EPAA, was produced in a crude oil refinery. Therefore, when an end user applicant simply documented the purchase of a product regulated under either the ESA or EPAA, it would qualify for a refund.

Soon thereafter OHA was confronted with a refund claim based on the purchase of what it called an "esoteric" petroleum product, viz., "refinery fuel gas," and it was forced to reexamine its refund eligibility rule. See Montana Sulfur & Chem. Co., 20 DOE (CCH) p 85,625, at 89,417 (1990). After reexamining the rule, OHA concluded that even though refinery fuel gas was listed in SICM Industry Code 2911 and therefore was "regulated for a small portion of the price control period," the presumption articulated in Hartsville should not necessarily end OHA's inquiry. Indeed, OHA found that the 1974 EPAA-based amendments to the "Phase IV" regulations conflicted with the presumption that a purchase of refinery fuel gas was refund-eligible. Id. The preamble to these amendments stated, in relevant part, that "[c]ertain products such as ... refinery gas ... are not subject to the provisions of the [EPAA]." Id. (citing 39 Fed.Reg. 12,353 (1974)). Therefore, OHA found that refinery gas was not subject to the price regulations promulgated pursuant to the EPAA and thus that the presumption of eligibility was inapplicable. Id.

Less than two years later, DOE further indicated in the district court in Great Lakes Carbon Corp. v. Department of Energy, No. 91-22601(SS) (D.D.C. Feb. 19, 1992), remanding appeal from 20 DOE (CCH) p 85,748 (1990), that it was experiencing difficulties in applying its eligibility rule and hence had not adequately addressed refund eligibility in a number of pending cases. Pursuant to the district court's remand order, OHA initiated formal rulemaking procedures to devise a more workable and equitable eligibility rule that would faithfully implement PODRA. See 57 Fed.Reg. 19,124 (1992). After receiving comments from several parties, including Goodyear, OHA issued a revised refund eligibility rule (hereinafter, "the 1992 rule") in which the presumption stated in Hartsville was replaced. Under the 1992 rule, OHA stated:

We will presume that a claimant incurred a crude oil overcharge in the purchase of a product during the relevant period if either that product was named as a covered product in regulations promulgated pursuant to EPAA, or (a) was purchased from a crude oil refinery or (b) originated in a crude oil refinery and was purchased from a reseller who did not substantially change its form.

57 Fed.Reg. 30,731, 30,732 (1992). Accordingly, OHA would treat the purchase of all products "covered by EPAA" as eligible for a refund. Id. Alternatively, "[i]t will be the burden of the applicant to establish that a product not within the definition of covered products under the EPAA was in fact produced at a crude oil refinery," and that the product was purchased either from a crude oil refinery or from a reseller who did not substantially change the product's form. Id. Thus, an applicant would qualify for a refund based on the purchase of a non-EPAA product only if it presented a sufficient reasoned argument based on reliable, probative evidence that it purchased the product directly from a crude oil refinery or that it, not its supplier, bore the impact of an overcharge for the product (i.e., that the reseller actually passed on the overcharge to the...