Pacific Supply Co-Op. v. Shell Oil Co.
| Decision Date | 07 December 1982 |
| Docket Number | No. 9-66.,9-66. |
| Citation | 697 F.2d 1084 |
| Parties | PACIFIC SUPPLY COOPERATIVE, et al., Plaintiffs-Appellants, v. SHELL OIL COMPANY, Defendant-Appellee. |
| Court | U.S. Temporary Emergency Court of Appeals Court of Appeals |
Jess M. Glaeser, Portland, Or., with whom John R. Gilbertson, David J. Sweeney of Gilbertson, Brownstein, Rask, Sweeney, Kerr & Grim, Portland, Or., were on the brief for plaintiffs-appellants.
William N. Mehlhaf, Portland, Or., with whom John D. Burns, Portland, Or. and William G. Riddoch, C.D. Walz, Jr., Houston, Tex., were on the brief for defendant-appellee.
Before GRANT, PECK and MAXWELL, Judges.
The principal issue Pacific Supply Cooperative (Pacific) raises in its appeal of the entry of orders of summary judgment for Shell Oil Company (Shell) is whether Shell violated the Mandatory Petroleum Price Regulations, 10 C.F.R. pt. 212, promulgated pursuant to the Emergency Petroleum Allocation Act (EPAA), 15 U.S.C. §§ 751 et seq., by not placing Pacific in a "class of purchaser" of which Pacific would be the sole member. Pacific also raises as issues whether there exists a genuine issue of material fact concerning Shell's alleged violation of Special Rule No. 1, Appendix to Subpart K of 6 C.F.R. pt. 130, and whether the district court abused its discretion in refusing to open discovery, and granting summary judgment for Shell, on the issue of cost pass-throughs. Because we find that the district judge properly resolved each of these issues, we affirm.
On April 1, 1971, Shell, a petroleum products refiner and distributor, entered into a one-year supply contract with Pacific, an agricultural cooperative engaged in the business of selling petroleum and agricultural products to its members. A second one-year supply agreement was entered into in 1972. The prices established under this fixed-price contract were:
Vancouver, Wash. Eugene, Or. Albany, Or
Premium Gasoline $ .132 $ .1400 $ .1379
Regular Gasoline .108 .1160 .1139
Diesel Fuel (No. 2) .099 .1095 .1074
Stove Oil _____ .1250 .1229
During the contract period Pacific purchased from Shell almost exclusively from Shell's Eugene and Albany terminals. The prices in both the 1971 and the 1972 contracts contained a discount from the regular job listing for Shell products. Shell declined to renew the 1972 contract so that the contractual relationship between Pacific and Shell terminated on March 31, 1973.
From 1971 until 1973 Shell also sold petroleum to Farmers Union Central Exchange, Inc. (CENEX), which, like Pacific, was an agricultural cooperative that supplied petroleum products to its members. On April 6, 1973 Shell and CENEX renewed a variable-price supply contract that was effective until December 31, 1973. The contract provided that the prices in effect on April 1, 1973 at the Eugene terminal were:
Eugene, Or
Premium Gasoline $ .1745
Regular Gasoline .1470
Diesel Fuel (No. 2) .1402
Stove Oil .1577
Shell sold no petroleum products to Pacific until November 1973 when interim federal regulations required Shell to resume sales of middle distillate fuels to Pacific. 38 Fed.Reg. 28,660 (1973). On November 14, 1973 Shell and Pacific entered into a supply contract for middle distillate fuels. This contract established the following prices:
Portland, Or. Eugene, Or. Albany, Or
Diesel Fuel (No. 2) $ .1435 $ .1532 $ .1530
Stove Oil .1640 .1737 .1735
Pursuant to the Mandatory Petroleum Allocation Regulations, 10 C.F.R. pt. 211, which became effective January 15, 1974, Shell and Pacific on February 26, 1974 entered into a supply contract for the resumption of sales of automotive gasoline to Pacific. This contract established the following prices:
Eugene, Or. Albany, Or
Premium Gasoline $ .2655 $ .2655
Regular Gasoline .2380 .2380
The Mandatory Petroleum Price Regulations required Shell, as a supplier, to designate "classes of purchasers" that existed on May 15, 1973 and to classify its purchasers accordingly so that maximum allowable prices for petroleum products could be determined. 10 C.F.R. § 212.82(6). Shell determined that Pacific belonged in its "071" classification, an "other" classification that included Shell sales to resellers not provided for in other classifications, but defined specifically by Shell as including farm cooperatives. Because the Mandatory Petroleum Price Regulations required computation of the maximum allowable price for products to a particular class of purchaser on the basis of the most recent transaction with a member of the class prior to May 15, 1973, if there were no transactions on that date, Shell based the prices in the contracts with Pacific on the April 6, 1973 CENEX transaction price. 10 C.F.R. § 212.83(a)(3).
Shell continued to supply petroleum products to Pacific until October 1, 1977 when Pacific assigned its assets to CENEX. In July 1978, Pacific filed suit against Shell alleging that Shell had overcharged Pacific by wrongly placing Pacific in Shell's "071" class of purchaser, by charging CENEX prices in violation of Special Rule No. 1, and by adding charges in excess of increased costs as cost pass-throughs.1 By orders entered January 25, 1982 and April 13, 1982, the district judge granted summary judgment to Shell on all counts. By an order entered May 20, 1982, the district judge denied a motion for reconsideration and modification. Pacific filed a timely notice of appeal to this court.
In large part, this case has arisen because the federal regulations promulgated to enforce the EPAA use different dates as benchmarks in the allocation of and the pricing of petroleum sales. The Mandatory Petroleum Price Regulations establish May 15, 1973 as the date for use in setting price limitations for sales by refiners. 10 C.F.R. § 212.82(6). The Mandatory Petroleum Allocation Regulations, however, establish the months of 1972 as the dates for use in setting allocation requirements. 10 C.F.R. §§ 211.102, 211.122. In this case Pacific had a contractual relationship with Shell throughout 1972, but it had no ongoing commercial relationship with Shell on May 15, 1973.
The concept of a "class of purchaser" is central to the issues presented here. 10 C.F.R. § 212.31 defines a "class of purchaser" as "the purchasers to whom a person has charged a comparable price for comparable property or service pursuant to customary price differentials between those purchasers and other purchasers." 10 C.F.R. § 212.83(a)(1) establishes price limitations for petroleum purchases with respect to classes of purchaser.
In granting summary judgment on the issue of whether Shell's placement of Pacific in its "071" classification created impermissible overcharges the district judge wrote:
Shell was required to select the most similar, existing classification for Pacific Supply. Shell's selection need only be reasonable. Under the circumstances of this case, I hold that Shell's selection of the CENEX classification for Pacific Supply was reasonable.
Order of January 25, 1982, at 2 (citations omitted).
On appeal, Pacific first contends that as a matter of law it was entitled to be placed in a class of purchaser of which it was the sole member. Pacific's contention rests on two propositions: first, that there was a Pacific class of purchaser in existence on May 15, 1982 separate from the "071" CENEX class, and second, that the differences between CENEX and Pacific were such that federal regulations and rulings required that Pacific not be classified with CENEX. With respect to the first proposition, Pacific concedes that Federal Energy Administration (FEA) Rulings 1974-1 and 1975-2 require suppliers to place purchasers within a class of purchaser existing on May 15, 1973. 39 Fed.Reg. 3,910 (1974); 40 Fed.Reg. 10,655 (1975). See Naph-Sol Refining Co. v. Cities Service Oil Co., 495 F.Supp. 882, 889-90 (W.D.Mich.1980); Champlin Petroleum Co., 4 DOE ¶ 80,101 (1979). Pacific further concedes that Ruling 1974-1 requires that for there to be a class of purchaser in existence on May 15, 1973 of which Pacific was the only member, Pacific must have been a "present customer" of Shell on that date. Naph-Sol Refining Co. v. Cities Service Oil Co., 495 F.Supp. at 890. Pacific, citing Chevron U.S.A., Inc. & Time Oil Co., 5 DOE ¶ 83,007 (1980) and Champlin Petroleum Co., 4 DOE ¶ 80,101 (1979), contends that it was a "present customer" of Shell on May 15, 1973, even though no contractual relationship existed between Pacific and Shell on that date, because Pacific had purchased petroleum from Shell in 1973.
The Department of Energy and its predecessor agencies are entitled to "great deference" in interpreting the statutes they enforce and the regulations they have promulgated. Bulzan v. Atlantic Richfield Co., 620 F.2d 278, 284 (Em.App.1980); General Crude Oil Co. v. Department of Energy, 585 F.2d 508, 515 (Em.App.1978), cert. denied, 440 U.S. 912, 99 S.Ct. 1226, 59 L.Ed.2d 461 (1979). Nevertheless, we read neither Champlin nor Chevron as supporting Pacific's position. In Champlin the supplier treated the distributor as a customer in its records on May 15, 1973 even though there was neither a sales contract nor sales after January 30, 1973. 4 DOE ¶ 80,101 at 80,-504-05. In Chevron there were spot sales by the supplier to the distributor both after the contract was terminated on April 23, 1973 and after May 15, 1973. 5 DOE ¶ 83,007, at 86,035; Time Oil Co., 3 DOE ¶ 82,512, at 85,029 (1979). Accordingly, in neither Champlin nor Chevron was there the complete absence of an ongoing commercial relationship between the supplier and the distributor...
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