National Petroleum Refiners Association v. Dunlop, DC-16.

• Decision Date: 23 October 1973
• Docket Number: No. DC-16.,DC-16.
• Parties: NATIONAL PETROLEUM REFINERS ASSOCIATION et al., Plaintiffs-Appellants, v. John T. DUNLOP, Director, President's Cost of Living Council, et al., Defendants-Appellees.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

486 F.2d 1388 (1973)

NATIONAL PETROLEUM REFINERS ASSOCIATION et al., Plaintiffs-Appellants, v. John T. DUNLOP, Director, President's Cost of Living Council, et al., Defendants-Appellees.

No. DC-16.

Temporary Emergency Court of Appeals.

October 23, 1973.

William Simon, Howrey, Simon, Baker & Murchison, Washington, D. C. (Alan Wiseman, Washington, D. C., on the brief), for plaintiffs-appellants.

William C. White, Atty., U. S. Dept. of Justice (Irving Jaffe, Acting Asst. Atty. Gen., William E. Nelson and John N. Hanson, Attys., Dept. of Justice, Washington, D. C., on the brief), for defendants-appellees.

Before TAMM, Chief Judge, and VAN OOSTERHOUT and HASTINGS, Judges.

HASTINGS, Judge.

This case, involving challenges to certain Cost of Living Council (CLC) Phase IV petroleum regulations, is before us on certification from the district court pursuant to § 211(c) of the Economic Stabilization Act of 1970, as amended. Section 211(c) requires such certification where "substantial constitutional issues" are raised in suits brought under the Act.¹

Plaintiffs have strenuously argued, both here and in the court below, that certification is improper here inasmuch as the constitutional issues are "peripheral" to this lawsuit. The CLC agrees that the case was improperly certified, but for the reason that plaintiffs' constitutional claims are without merit and thus are not "substantial" within the meaning of the Act. The parties of necessity have fully briefed and argued the entire case before this court, including the substantial nonconstitutional questions involved, and the CLC urges that we now decide the case on the merits in the interest of judicial economy. This we decline to do. Rather, we agree with the parties that the case was improperly certified and, for the reasons stated below, shall remand for a trial on the merits.

Initially, we observe that the trial court has incorrectly certified the entire case to this court.² Section 211(c) states that when the trial court "determines that a substantial constitutional issue exists, the court shall certify such issue to the Temporary Emergency Court of Appeals." (Emphasis supplied.) The appeals court may then, in its discretion, direct that the "entire action be sent to it for consideration," or it may treat the certified issues and remand the case for further disposition below. In disposing of this case we shall view the procedure here as one of certifying all constitutional issues raised by the parties in their pleadings and memoranda filed in the trial court.

Plaintiffs brought this action on August 27, 1973, seeking a declaratory judgment and injunctive relief to prevent defendants from enforcing against them section 150.352 and subsections 150.355(e), 150.358(k), and 150.359(d) of Subpart L, Part 150 of the CLC Phase IV regulations.³ These sections require, inter alia, that retailers of gasoline post on their pumps the octane number of the gasoline (§ 150.355(e));⁴ that refiners and resellers of gasoline certify to purchasers in writing the octane number of gasoline sold (§ 150.358(k) and § 150.359(d)); and that the octane number which is posted or certified be computed by dividing by two the sum of the "research" and "motor" octane numbers as described by the American Society for Testing and Materials (§ 150.352). On brief the CLC asserts that the purpose of the regulations is to "assist in precluding reductions in quality without corresponding price reductions."

A hearing on plaintiffs' motion for a preliminary injunction was scheduled for August 29, 1973. At the hearing the district court on its own motion and over plaintiffs' objection decided to certify the case to this court. The district court denied plaintiffs' motion for a temporary restraining order but did not rule on the motion for a preliminary injunction. On August 30, plaintiffs filed a motion for a preliminary injunction in this court, which we denied on September 4, with the notation that such denial "reflects in no degree or manner a decision on the merits of this case." The case was consolidated for oral argument with T.E.C.A. Nos. DC-14,⁵ DC-15,⁶ and 6-3,⁷ each of which challenged some or all of the Subpart L petroleum regulations.

With deference, we have concluded that the district court, in certifying this case, has misconceived the nature of the challenge to the regulations brought by these plaintiffs. Unlike DC-14, DC-15, and 6-3, which challenge the pricing provisions of Subpart L primarily on the grounds of unconstitutional discrimination, the principal issues here involve statutory interpretation and agency discretion.

The major portion of plaintiffs' lengthy complaint is devoted to developing two basic claims, which may be summarized as follows:

1. The challenged regulations are in excess of the statutory authority of the Council, in that a statutory mandate to stabilize prices cannot be read to authorize regulations which require the certification and posting of product ingredients (paragraphs 8, 16, and 29); and

2. The challenged regulations are arbitrary and capricious, primarily because octane is only one of twelve characteristics of gasoline which are indicative of quality (paragraphs 8, 16-24, 28, 30-31).⁸

Both claims are grounded, not on the Constitution, but on § 211(d)(1) of the Act, which provides in pertinent part:

* * * no regulation of any agency exercising authority under this title shall be enjoined or set aside, in whole or in part, unless a final judgment determines that the issuance of such regulation was in excess of the agency\'s authority, was arbitrary or capricious, or was otherwise unlawful under the criteria set forth in section 706(2) of title 5, United States Code * * *.⁹

It is true that the complaint also raises several constitutional issues. Paragraphs 26 and 32 claim a denial of due process in violation of the Fifth Amendment, in that the regulation "invidiously discriminates" against plaintiffs by requiring the gasoline industry alone to certify and post product ingredients. The prayer for relief seeks a declaration, inter alia, that the CLC failed to establish "adequate standards," in violation of the due process clause. Also, paragraphs 25 and 32 allege, inter alia, that the "regulation constitutes an improper delegation of legislative authority," presumably in violation of Article I of the Constitution. Nevertheless, a review of the complaint as a whole compels the conclusion that the constitutional issues here are in fact peripheral to this lawsuit. Two of these issues are not discussed at all in plaintiffs' fifteen page memorandum to the trial court, and the sole constitutional issue there treated is relegated to a single, five line paragraph. We think it clear that in the context of this litigation, the constitutional issues are not substantial within the meaning of § 211(c), and that the certification was improper.

In thus disposing of the case, we express no opinion on the merits of plaintiffs' claims, constitutional or otherwise. Section 211(c) grants this court wide discretion in disposing of certified constitutional issues. An issue which is "substantial," in the sense that it is not without merit, may nevertheless be remanded to the trial court where the need for factual development so dictates.¹⁰ Here, for example, the discrimination question likely turns on whether the CLC possessed a rational basis for its alleged singling out of the gasoline industry for imposition of an ingredients posting requirement. See United States v. Lieb, 462 F.2d 1161, 1167 (T.E.C.A.1972), citing Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971). Resolution of the rational basis question in turn requires consideration of the often complex economic data which prompted the CLC action. Such consideration is best performed in the first instance by the district court. Cf. Western States Meat Packers Association, Inc. v. Dunlop, 482 F.2d 1401 (T.E.C.A.1973), where in deciding a certified due process issue we relied heavily on the district court record and findings reported in Pacific Coast Meat...