Texaco, Inc. v. Department of Energy

• Decision Date: 30 May 1986
• Docket Number: No. 3-44 through 3-49.,3-44 through 3-49.
• Parties: TEXACO, INC., et al., Plaintiffs-Appellees, v. DEPARTMENT OF ENERGY, Defendant-Appellant; and Ashland Oil, Inc., et al., Intervenors-Appellants.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

795 F.2d 1021

TEXACO, INC., et al., Plaintiffs-Appellees, v. DEPARTMENT OF ENERGY, Defendant-Appellant; and Ashland Oil, Inc., et al., Intervenors-Appellants.

Nos. 3-44 through 3-49.

Temporary Emergency Court of Appeals.

Argued November 26, 1985.

Decided May 30, 1986.

Catherine C. Cook, with whom Henry A. Gill, Samuel Soopper, Dennis M. Moore, James B. McRae, Joann Scott and Lorna J. Hadlock, Office of General Counsel, U.S. Dept. of Energy, Washington, D.C., were on brief, for defendants-appellants.

Daniel Joseph, P.C., with whom R. Bruce McLean, P.C. and David A. Holzworth, Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., and William C. Streets, Gail F. Schulz, Mobil Oil Corp., Fairfax, Va., were on brief, for intervenor-defendant-appellant, Mobil Oil Corp.

Kenneth L. Bachman, Jr., with whom Sara D. Schotland and Eugene M. Goott, Cleary, Gottlieb, Steen & Hamilton, Washington, D.C., were on brief for plaintiffs-appellees, American Petrofina, Inc. and Tosco Corp.

Although not presenting Argument, the following counsel were listed on the briefs for Intervenor-Appellants and Plaintiffs-Appellees:

Thomas A. Donovan, Judith A. Mackarey, Kenneth M. Argentieri, Susan D. Glimcher, Kirkpatrick, Lockhart, Johnson & Hutchinson, Pittsburgh, Pa., and Robert H. Compton and Kathleen C. Gilmore, Ashland Petroleum Co., Ashland, Ky., were counsel, for intervenor-appellant Ashland Oil, Inc.

J. Furman Lewis and John A. Evans, Marathon Petroleum Co., Findlay, Ohio, and James A. Wilderotter, Thomas E. Fennell, Kathryn M. Fenton and Mary Ellen Conway, Jones, Day, Reavis & Pogue, Washington, D.C., were counsel, for intervenor-appellant, Marathon Petroleum Co.

Richard P. Noland, Robert R. Morrow, Laurel W. Glassman, Sutherland, Asbill & Brennan, Washington, D.C., were counsel, for intervenor-appellant, Texas City Refining, Inc.

Alvin B. Gibson, Shell Oil Company, Houston, Tex., and Stephen E. Herrmann, Richards, Layton & Finger, Wilmington, Del., were counsel, for intervenor-appellant, Shell Oil Co.

Stephen H. Bard, Texaco, Inc., White Plains, N.Y., was counsel, for plaintiff-appellee, Texaco, Inc.

John P. Mathis and Catherine C. Wakelyn, Baker & Botts, Washington, D.C., were counsel, for plaintiffs-appellees, Pennzoil Co. and Tenneco Oil Co.

Leonard P. Steuart, II, President, Independent Fuel Terminal Operators Ass'n, Washington, D.C., for amicus curiae Independent Fuel Terminal Operators Assn.

Jacob Dweck and Beverly J. Rudy, Milgrim Thomajan Jacobs & Lee, P.C., Washington, D.C., and James P. Zakoura, Weeks, Thomas & Lysaught, Chartered, Kansas City, Kan., for amici curiae, National Council of Farmer Cooperatives, Farmland Industries, Inc., Farmers Union Cent. Exchange, Indiana Farm Bureau Co-op. Ass'n, Inc., and National Co-op. Refinery Ass'n.

Melvin Goldstein, Breed, Abbott & Morgan, Washington, D.C., for amici curiae, Cibro Petroleum Products, Inc., Crown Cent. Petroleum Corp., Hawaiian Independent Refinery, Inc., Howell Corp., Kentucky Oil and Refining Co., La Gloria Oil and Gas Co., Laketon Asphalt Refining, Inc., Little America Refining Co., Manatee Energy Co., Pester Refining Co., RMT Properties, Inc., Rock Island Refining Corp., Sabre Refining, Inc., Southern Union Refining Co., The Somerset Refinery, Inc., and Young Refining Corp.

Paul J. Mode, Jr. and Bruce E. Coolidge, Wilmer, Cutler & Pickering, Washington, D.C., and Same A. Snyder and Anthony G. Melas, of counsel, Union Oil Co. of California, Los Angeles, Cal., for amicus curiae, Union Oil Co. of California.

Craig G. Goodman and Marcy J. Firth, Mitchell Energy Corp., The Woodlands, Tex., for amicus curiae, Mitchell Energy Corp.

Edwin Jason Dryer, Jack L. Lahr and Dennis A. Henigan, Foley & Lardner, Washington, D.C., for amicus curiae, Southland Oil Co.

Lyle Schlyer, USA Petroleum Co., Santa Monica, Cal., for amicus curiae, USA Petroleum Co.

Ronald C. Barker, Salt Lake City, Utah, for amicus curiae, Caribou Four Corners, Inc.

Thomas D. Manford III, Darci L. Rock and Gerard R. McConnell, Bracewell & Patterson, Washington, D.C., for amicus curiae, The Louisiana Land and Exploration Co.

Before METZNER,^* THORNBERRY and POINTER, Judges.

POINTER, Judge.

Executive Order 12287 exempted as of January 28, 1981, all crude oil and refined petroleum products from further price and allocation controls under the EPAA.¹ Plaintiffs brought these actions to challenge the subsequent decision of the Department of Energy (DOE) not to publish a list of entitlements under the EPAA for the first twenty-seven days of January 1981 or a "clean-up" list of final adjustments in the entitlements program. The District Court held that DOE, having failed to rescind its regulation before October 1, 1981, was required to publish the two lists. 604 F.Supp. 1493 (Del.1985). We reverse.

I. THE ENTITLEMENTS PROGRAM

The regulations establishing the entitlements program were promulgated in late 1974 by the Federal Energy Administration, DOE's predecessor. 10 C.F.R. § 211.67. Operation of the program has been discussed by this court in several decisions² and need not be described in detail here. In general, it established a mechanism for allocating the benefits of lower-cost price-controlled crude oil equitably throughout the country—not by physically allocating oil, but by a system of cash transfers among the refiners based upon their relative access to such oil.

Refiners having access to a disproportionately large share of price-controlled crude were required to buy "entitlements" from refiners having access to a disproportionately small share of such oil. Entitlements were calculated monthly, with the list of payments published during the second month after the transactions on which the calculations were based; e.g., the entitlements published in January 1975 (the first published) were based on purchases of price-controlled crude in November 1974.

Although included within the allocation regulations, the program also played a significant role under the pricing regulations: amounts paid by refiners required to buy entitlements could be added to the prices at which they could sell their products, while amounts received by refiners had to be deducted in determining the maximum prices they could charge. In this manner, the economic consequences of the program were in essence passed by the refiners to their customers, who shared the ultimate benefits of price-controlled crude without regard to whether particular refiners serving their region of the country had access to such oil.

II. DECONTROL

Although terminating the allocation and price controls as of January 28, 1981, Executive Order 12287 clearly authorized DOE to publish, if it chose to do so, further entitlements based on refiners' purchases of crude oil prior to that date.³ DOE did in fact publish in February a list of entitlements based on purchases of crude oil by refiners during December 1980 and—but for several legal proceedings—it no doubt would have also published the lists at issue in this litigation. However, DOE was enjoined from issuing these additional lists until December 7, 1981, the date when certiorari was denied in the Mobil Oil case.⁴ After that date, DOE on its own initiative delayed issuance of the lists pending a resolution of other litigation involving the post-decontrol status of the "Tertiary Incentive Program."⁵ By the time these cases had been concluded, the Department had begun to reassess its basic position regarding the additional entitlements. Ultimately, in June 1984 following public hearings, it decided not to publish either list.⁶

III. THIS LITIGATION

The amounts at stake are substantial— more than $400 million. Not surprisingly, several of the companies that would receive payments brought actions to compel publication of the notices, and several that would be obliged to make payments intervened to support DOE's new position. The critical disputes, involving questions of law, were submitted to the district court on cross motions for summary judgment. Ruling in favor of the plaintiffs, the court held that DOE was required by its regulations to issue these notices⁷ and that DOE lacked the power to revoke those regulations after September 30, 1981, the expiration date for the EPAA prescribed by 15 U.S.C.A. § 760g. The district court did not reach the secondary issue as to whether, if DOE had the power to do so in 1984, it acted legally in deciding to revoke the entitlements regulations.

IV. THE POWER OF DOE TO ACT AFTER SEPTEMBER 30, 1981

Section 18 of the EPAA, as last amended, reads in pertinent part as follows:

The authority to promulgate and amend any regulation or to issue any order under this Act shall expire at midnight September 30, 1981, but such expiration shall not affect any action or pending proceedings, administrative, civil or criminal, not finally determined on such date, nor any administrative, civil, or criminal action or proceeding, whether or not pending, based upon any act committed or liability incurred prior to such expiration date. 15 U.S.C. § 760g.

Plaintiffs argue that this language authorized DOE to issue further entitlement notices after September 30, 1981, but deprived DOE after that date of any power to decide not to issue such notices.⁸ We disagree. That DOE's general regulatory powers under the EPAA expired on September 30, 1981, is, of course, clear. However, the two "savings" clauses in Section 18 empowered DOE to decide after that date what action, if any, to take on matters such as these entitlements.⁹ Issuance—or non-issuance—of a January 1981 entitlements list and of a clean-up list was an administrative proceeding that (1) was pending (but not finally determined) on the expiration date and (2) was based upon acts occurring prior to such expiration date. Moreover, the particular procedure which DOE utilized, equivalent to that of formal rulemaking,¹⁰ was an administrative proceeding regarding acts occurring or potential liabilities incurred prior...