National Helium Corporation v. Morton

• Decision Date: 27 March 1971
• Docket Number: Civ. A. No. W-4568.
• Citation: 326 F. Supp. 151
• Parties: NATIONAL HELIUM CORPORATION, Plaintiff, and Phillips Petroleum Company and Cities Service Helex, Inc., Intervenors-Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, and Elburt F. Osborn, Director, Bureau of Mines, Department of the Interior, Defendants.
• Court: U.S. District Court — District of Kansas

326 F. Supp. 151

NATIONAL HELIUM CORPORATION, Plaintiff,

and

Phillips Petroleum Company

and

Cities Service Helex, Inc., Intervenors-Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, and Elburt F. Osborn, Director, Bureau of Mines, Department of the Interior, Defendants.

Civ. A. No. W-4568.

United States District Court, D. Kansas.

March 27, 1971.

Emmet A. Blaes, of Jochems, Sargent & Blaes, Wichita, Kan., Harvey G. Sherzer, Herbert L. Fenster, Robert L. Ackerly, of Sellers, Conner & Cuneo, Washington, D. C., Wendell J. Doggett, Houston, Tex., Gen. Counsel and Secretary, National Helium Corp., for plaintiff.

Ferd E. Evans, Jr., of Morris, Laing, Evans & Brock, Wichita, Kan., William H. Allen, of Covington & Burling, Washington, D. C., R. Price Howard, Asst. Gen. Atty., Phillips Petroleum Co., Bartlesville, Okl., for Phillips Petroleum Co.

Jack W. Wertz, George E. Peabody, Oklahoma City, Okl., Mark H. Adams, Mark H. Adams II, of Adams, Jones, Robinson & Manka, Wichita, Kan., for Cities Service Helex, Inc.

L. Patrick Gray, III, Asst. Atty. Gen., Harland F. Leathers, Stuart E. Schiffer, Attys., Dept. of Justice, Washington, D. C., Robert J. Roth, U. S. Atty., E. Edward Johnson, Asst. U. S. Atty., Wichita, Kan., for defendants.

MEMORANDUM AND ORDER GRANTING PRELIMINARY INJUNCTION

THEIS, District Judge.

On March 17, 1971, National Helium Corporation filed the instant action against the defendants, Rogers C. B. Morton, Secretary of the Interior, and Elburt F. Osborn, Director of the Bureau of Mines, Department of the Interior. In its complaint National Helium Corporation seeks judicial review of certain actions of the defendants and declaratory and injunctive relief against the defendants. Since the original complaint was filed, Phillips Petroleum Company and Cities Service Helex, Inc. were allowed to intervene as parties plaintiff. They seek identical relief. All of the plaintiffs have requested this Court to issue a temporary injunction pending final disposition of the cause. A hearing was held on March 25, 1971, to determine whether interim relief in the form of a temporary injunction was warranted. For reasons appearing more fully herein, this relief must be either granted or denied before Sunday, March 28, 1971. This decision calls into question the National Helium Act, 50 U.S.C. § 167 et seq., the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., and the Administrative Procedure Act, 5 U. S.C. § 551 et seq. Virtually the entire national program of helium conservation under the National Helium Act is involved.

FACTS

Plaintiffs are each engaged in helium extraction operations in the Kansas-Hugoton gas field in southwest Kansas. This field is apparently the greatest source of helium in the free world. Helium extraction is a highly technical and complicated operation whereby the helium is extracted from natural gas prior to the gas being sold as a fuel source.

Pursuant to the National Helium Act the plaintiffs were awarded contracts for the extraction and sale of helium to the Federal Government. The contracts provided in part as follows:

"12.1 Buyer Federal Government may, at its option, terminate this contract at any time if, (1) in the opinion of the Secretary of the Interior, the discovery of large new helium resources or a substantial diminution in helium requirements or any circumstance of similar nature should occur which would make the continued operation of Seller's plant and the continued purchase of helium-gas mixture extracted therein unnecessary to accomplish the purposes of the Act or any amendment thereto, or (2) a material circumstance of force majeure making it impracticable or impossible for either Buyer or Seller to carry out its obligations under this contract which circumstance cannot be remedied with reasonable dispatch."

On January 26, 1971, the Department of the Interior, through its then Under Secretary, Fred J. Russell, advised the National Helium Corporation that, pursuant to the termination clause of the helium contract, the contract would be terminated, effective sixty days from January 26, 1971. Enclosed with the termination notice was a statement of the reasons for the termination. The substance of the statement was that all four of the helium conservation contracts were being terminated since the continued operation of the contractors' plants and the continued purchase of the helium-gas mixture extracted in such plants was unnecessary to accomplish the purposes of the Helium Act. The statement cited, as factors underlying the decision to terminate the contracts, a substantial diminution in the requirements of helium for essential government activities, the discovery of new helium resources that had been made since the contracts were entered into, and the availability of helium within economic limits because of improved technology from natural gases which would previously have been impractical because of their low helium content.

By letter of February 19, 1971, from the president of National Helium Corporation, Mr. J. F. McElhatton, to the Honorable Rogers C. B. Morton, Secretary of the Interior, National Helium stated its position that "proper grounds for termination do not exist and that procedural steps necessarily precedent to termination have not been taken."

On March 11, 1971, the defendant Morton, Secretary of the Interior, advised National Helium that the decision was final and would be effective March 28, 1971. The plaintiffs seek review of this action and injunctive relief preventing the contract termination until the defendants comply with the Administrative Procedure Act, the National Helium Act, and the National Environmental Policy Act. They also seek a temporary injunction pending this Court's review of the action of the defendants, which is alleged to be arbitrary and capricious.

JURISDICTION

Before this Court can determine whether the plaintiffs are entitled to a preliminary injunction, it must be determined that they have the right of judicial review of the Secretary's action in terminating the contract in question. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136, March 2, 1971. This Court concludes, for the reasons stated below, that the plaintiffs are entitled to judicial review.

The Helium Act provides in pertinent part as follows:

"(a) For the purpose of conserving, producing, buying, and selling helium, the secretary is authorized—

(1) to acquire by purchase, lease, gift, exchange, or eminent domain, lands or interests therein or options thereon, including but not limited to sites, rights-of-way, and oil or gas leases containing obligations to pay rental in advance or damages arising out of the use and operation of such properties * * *

(2) to make just and reasonable contracts and agreements for the acquisition, processing, transportation, or conservation of helium * * *."

50 U.S.C. § 167a.

* * * * * *

"(a) The provisions of the Administrative Procedure Act of June 11, 1946, as amended, shall apply to any agency proceeding and any agency action taken under this chapter * * * and the terms `agency proceeding' and `agency action' shall have the meaning specified in the Administrative Procedure Act."

50 U.S.C. § 167h.

The Administrative Procedure Act defines "agency action" as "an agency, rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act." 5 U.S.C. § 551. That Act also provides that a person "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." 5 U.S.C. § 702. As recently stated by the Supreme Court in Citizens to Preserve Overton Park, Inc. v. Volpe, supra:

"5 U.S.C. § 701 (Supp. V.), provides that the action of `each authority of the Government of the United States' * * * is subject to judicial review except where there is a statutory prohibition on review or where `agency action is committed to agency discretion by law.'"

The Secretary's acts in the case at bar do not fall within the exception for action "committed to agency discretion." This is a very narrow exception and not applicable to this case for the reason that there is "law to apply" in the Helium Act itself. Only where there is no "law to apply," due to the fact that the statute conferring the authority upon the Secretary is extremely broad, will this exception preclude judicial review.

As was the situation in Overton Park, there is no indication of Congressional prohibition of judicial review and no showing has been made that Congress intended to restrict access to judicial review. See Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). As stated by the Supreme Court in that case:

"The question is phrased in terms of `prohibition' rather than `authorization' because a survey of our cases shows that judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress." Id., p. 140, 87 S.Ct. p. 1510.

The availability of judicial review to one suffering a legal wrong as a result of agency action is presumed.

The defendants argue that the case at bar does not involve an "agency action," but rather, an action taken pursuant to a valid contract. Although many acts may be done pursuant to a contract which do not amount to "agency action" within the meaning of the Administrative Procedure Act, and for which no judicial review would be available, the Secretary's actions in the present case are clearly "agency actions" and may be tantamount to an absolute frustration of the purposes set forth in the Helium Act. The Court is cognizant of the fact that the Secretary has the authority to implement such a policy decision, but not without first demonstrating that his actions are in fact the implementation of...