McCulloch Gas Processing v. CANADIAN HIDROGAS, ETC., 9-39.

• Decision Date: 09 May 1978
• Docket Number: No. 9-39.,9-39.
• Citation: 577 F.2d 712
• Parties: McCULLOCH GAS PROCESSING CORPORATION, Plaintiff-Appellee, v. CANADIAN HIDROGAS RESOURCES, LTD., a Canadian Corporation, Hidrogas, Ltd., a Canadian Corporation, Hidrogas, Inc., a Montana Corporation, Evan W. G. Bodrug, President of Canadian Hidrogas Resources Ltd., Hidrogas, Ltd. and Hidrogas, Inc., Defendants, and William C. Arntz, Regional Administrator, Federal Energy Administration Region IX, and the United States of America, Federal Defendants-Appellants.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

577 F.2d 712

McCULLOCH GAS PROCESSING CORPORATION, Plaintiff-Appellee, v. CANADIAN HIDROGAS RESOURCES, LTD., a Canadian Corporation, Hidrogas, Ltd., a Canadian Corporation, Hidrogas, Inc., a Montana Corporation, Evan W. G. Bodrug, President of Canadian Hidrogas Resources Ltd., Hidrogas, Ltd. and Hidrogas, Inc., Defendants, and William C. Arntz, Regional Administrator, Federal Energy Administration Region IX, and the United States of America, Federal Defendants-Appellants.

No. 9-39.

Temporary Emergency Court of Appeals.

Argued February 27, 1978.

Decided May 9, 1978.

Stephanie Lachman Golden, Dept. of Justice, Washington, D. C., with whom Barbara Allen Babcock, Asst. Atty. Gen. and Dennis G. Linder, Washington, D. C., were on brief for defendants-appellants.

Richard T. Williams, Kadison, Pfaelzer, Woodward, Quinn & Rossi, Los Angeles, Cal., with whom Thomas J. McDermott, Jr., Los Angeles, Cal., of the same firm, Franklin D. Dodge, Los Angeles, Cal., McCulloch Gas Processing Corp., with whom Don G. Kircher, Los Angeles, Cal., and Charles R. Kocher, Rosemead, Cal., were on brief, for plaintiff-appellee.

Before CARTER, CHRISTENSEN and ZIRPOLI, Judges.

PER CURIAM.

Plaintiff-appellee, McCulloch Gas Processing Corporation, brought this action against Hidrogas¹ and, more significantly for purposes of this appeal, William C. Arntz, Regional Administrator of the Federal Energy Administration, Region IX, and the United States. McCulloch claims that it suffered a legal wrong as a result of certain FEA² orders requiring it to continue supplying Hidrogas with propane despite that purchaser's poor credit posture and history of financial delinquency. McCulloch seeks to recover $897,184.65, plus interest, for propane delivered to Hidrogas in 1974 and 1975. The FEA orders are characterized by plaintiff as having been issued in a manner that denied McCulloch due process of law. Although the parties to the instant appeal³ disagree as to the proper portrayal of the facts of this dispute, the question presented to this court for decision does not require us to resolve this issue.

The federal defendants moved for summary judgment in the district court, where they argued, inter alia, that plaintiff's suit for damages against the United States was barred by the doctrine of sovereign immunity. The district court denied the government's motion, but it certified to this court, pursuant to 28 U.S.C. section 1292(b), the following question:

Whether Griffin v. United States, 537 F.2d 1130 (TECA 1976), cert. denied, 429 U.S. 919, 97 S.Ct. 313, 50 L.Ed.2d 286 holds that § 210 of the Economic Stabilization Act, as incorporated by reference in the Emergency Petroleum Allocation Act, provides a right of damages available in suits against the federal government for damages on a basis other than that of an alleged unconstitutional taking of property for a public purpose without just compensation in violation of the Fifth Amendment and whether damages are available against the federal government under that Act in such suits.

We find that Griffin does not control the outcome of this appeal and that the United States has not exposed itself to damage claims like those brought by McCulloch.

Plaintiffs in Griffin sought damages against the United States for an alleged taking of their property for a public purpose without just compensation. Specifically, plaintiffs complained of the operation of the two-tier pricing system on domestic crude oil, by virtue of which a ceiling price of $5.25 per barrel was imposed on "old" oil while "new" and "released" oil could be sold without regard to the ceiling price.⁴ Before reaching the merits of plaintiffs' claims, the court addressed certain preliminary jurisdictional questions. The government in Griffin, as it does here, contended that section 210⁵ could not provide the foundation for an action against the government, that its sole function was the creation of a private cause of action, by which one private party could sue another private party for the latter's violation of the Act, or regulations and orders issued thereunder. Insofar as a private party sought relief against the government, it was argued that the only available remedy was the declaratory and injunctive relief provided in section 211⁶ of the Economic Stabilization Act.

Had the government's position prevailed in Griffin the victory would have been short-lived. It is unlikely that the defendant would thereby have avoided the immediate threat of a substantial claim for damages,⁷ and the constitutionality of the Act would have been put in serious question, for the Fifth Amendment prohibits the result urged by the government in Griffin.

Absent the provision in section 211(a) investing the district courts with exclusive jurisdiction over cases arising under the EPAA, plaintiffs in Griffin could have brought their action under the Tucker Act,⁸ for that Act would ordinarily provide the jurisdictional basis for a suit alleging an unlawful taking. The government argued, however, that, having withdrawn the Tucker Act remedy, the EPAA left plaintiffs with no damage remedy at all, only the declaratory and injunctive relief provided in section 211.

Plaintiffs in Griffin responded that section 211 operated to waive the jurisdictional amount limitation contained in the Tucker Act but that it did not circumscribe the relief available to them, for their right to sue was contained in section 210, which is not limited to claims for injunctive and declaratory relief, but provides for damage claims as well. Griffin found plaintiffs to be "nearer the mark" on the jurisdictional issue, and held that their right to sue was indeed located in section 210. While plaintiffs herein point to language in Griffin that might suggest a more expansive holding, however, this court did not adopt the view that section 210 could be relied upon to support a damage claim against the United States regardless of the basis for such a claim. The court's language indicates the narrowness of the Griffin holding:

We believe that if or to the extent plaintiffs suffered legal wrong because of any taking of their property as a result of the two-tier oil pricing system, they would have the right to utilize the jurisdiction afforded in the district court by § 211 by bringing the type of action contemplated by § 210(a) for damages, there being no limitations in § 211 to the contrary.

Griffin, supra, 537 F.2d at 1136 (emphasis added).

In reaching the conclusion that plaintiffs alleging a taking could bring an action for damages under section 210, Griffin made pointed reference to the Regional Rail Reorganization Act Cases, 419 U.S. 102, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974), in which the Supreme Court confronted a similar issue. The Court was there concerned with the finding of a three-judge district court that the Rail Act⁹ was unconstitutional because it could not be construed to incorporate the Tucker Act and therefore provided no remedy for a Fifth Amendment taking. The Court observed that the district court had viewed the problem from the wrong perspective. The proper inquiry was not whether the Rail Act had incorporated the Tucker Act but rather whether the latter Act had been affirmatively withdrawn. The Court refused to find an implied withdrawal of Tucker Act jurisdiction in the Rail Act, since a construction upholding constitutionality is favored, and withdrawal of Tucker Act jurisdiction, leaving plaintiffs without a remedy for an alleged taking, would have left the constitutionality of the Rail Act in "grave" doubt. Regional Rail Reorganization Act Cases, supra, 419 U.S. at 134, 95 S.Ct. 335.

The jurisdictional issue in Griffin arose and was resolved by this court in the context of an alleged taking of private property without just compensation. The constraints of that Fifth Amendment provision on occasion require courts to construe statutes in order to reconcile them with the constitutional requirement of just compensation, but such constructions are often of limited applicability, and they are unreliable authority for plaintiffs raising other types of claims. The observation of the Supreme Court in United States v. Testan, 424 U.S. 392, 401, 96 S.Ct. 948, 954, 47 L.Ed.2d 114 (1976), rejecting plaintiffs' attempt to find an implied waiver of sovereign immunity in the Classification Act,¹⁰ is applicable, in somewhat paraphrased form, to the instant case:

We perceive nothing in Griffin, cited . . . with other cases centering in the Just Compensation Clause of the Fifth Amendment ("nor shall private property be taken for public use, without just compensation"), that lends support to the respondents. These Fifth Amendment cases are tied to the language, purpose, and self-executing aspects of that constitutional provision, citation omitted, and are not authority to the effect that § 210 eliminates from consideration the sovereign immunity of the United States.

We thus answer the first part of the question certified in the negative. Griffin does not hold that section 210 provides a right of damages in suits against the government on a basis other than that of an alleged unconstitutional taking of property for a public purpose without just compensation. Moreover, with regard to the second part of the question before this court, we hold that, Griffin aside, damages are not available against the government in such suits.

Plaintiff argues that its right to procedural due process is as basic and as demanding of protection as its right to be compensated for a taking of its property for a public use. With that proposition this court has no dispute. It does not follow, however, as plaintiff would have it, that one who claims a due process violation may seek damages from the United States, for a waiver of sovereign immunity must first be established. Such a waiver is implicit in the taking clause of the Fifth Amendment, but no such waiver is contained in the due process clause....