U.S. v. Uni Oil, Inc.

• Citation: 710 F.2d 1078
• Decision Date: 01 August 1983
• Docket Number: No. 82-2295,82-2295
• Parties: Energy Mgt. P 26,436 UNITED STATES of America, Plaintiff-Appellant, v. UNI OIL, INC., Defendant, Thomas M. "Mick" Hajecate, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1078

710 F.2d 1078

Energy Mgt. P 26,436

UNITED STATES of America, Plaintiff-Appellant, v. UNI OIL, INC., Defendant, Thomas M. "Mick" Hajecate, et al., Defendants-Appellees.

No. 82-2295.

United States Court of Appeals, Fifth Circuit.

Aug. 1, 1983.

James R. Gough, Asst. U.S. Atty., Houston, Tex., Jerome Wiener, U.S. Dept. of Energy, Washington, D.C., for plaintiff-appellant.

Michael E. Tigar, Washington, D.C., for Thomas M. Hajecate and Charles R. Akin.

Dan Ryan, John C. Marshall, III, Houston, Tex., Charles Brandt, Lafayette, La., for James E. Fisher.

Appeal from the United States District Court for the Southern District of Texas.

Before GARZA, RANDALL and GARWOOD, Circuit Judges.

RANDALL, Circuit Judge:

This appeal comes to us under 18 U.S.C. Sec. 3731 upon an order of the district court dismissing an eighty-four count fraud indictment against two oil companies and five individual defendants. "The gravamen of the ... charge," as we observed when these proceedings were last before us, "is that [the defendants] purchased 'old' oil and resold it as 'new,' willfully using fraudulent means to miscertify it in the process." United States v. Uni Oil, Inc. (Uni I), 646 F.2d 946, 948 n. 2 (5th Cir.1981), cert. denied, 455 U.S. 908, 102 S.Ct. 1254, 71 L.Ed.2d 446 (1982). The district court dismissed the indictment on the ground that President Reagan's Executive Order No. 12,287, 3 C.F.R. 124 (1982), reprinted in 15 U.S.C. Sec. 757 note (Supp.V 1981), abolished the distinction between "old" and "new" oil, and therefore abated the prosecution. Because we find that the doctrine of abatement does not apply, we vacate the decision of the district court and order that the indictment be reinstated.

I

We have already recounted the facts of this case in Uni I. Briefly, on March 7, 1979, a federal grand jury in Houston returned an eighty-four count indictment against Uni Oil, Ball Marketing Enterprise, Thomas "Mick" Hajecate, Thomas "Tom" Hajecate, James Fisher, Charles Akin, and Charlie Goss. The eighty-four counts variously alleged that the defendants had violated the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. Sec. 1962 (1976), the mail fraud statute, 18 U.S.C. Sec. 1341 (1976), the wire fraud statute, 18 U.S.C. Sec. 1343 (1976), and the statute prohibiting the willful making of false or fraudulent statements to a government agency, 18 U.S.C. Sec. 1001 (1976). The government has charged, in essence, that the defendants have engaged in the business of counterfeiting documentation required by the Emergency Petroleum Allocation Act, 15 U.S.C. Secs. 751-760h (1976) (partially superseded): the defendants allegedly acquired lower-tier or "old" oil (which was worth about $5 per barrel) for the purpose of falsifying its documentation and reselling it as upper-tier or "new" oil (which was worth about $13 per barrel). See 10 C.F.R. Sec. 212.131 (1979) (superseded).

The defendants objected to the indictment on almost every conceivable ground. Apparently because it found some of the objections persuasive, the district court dismissed the entire indictment on June 5, 1979, without opinion. The government appealed from the dismissal. On that first appeal we found merit in none of the objections, vacated the district court's order, and remanded the case for "proceedings consistent with [our] opinion." Uni I, 646 F.2d at 955.

After receiving the case upon remand, the district court again dismissed the indictment, this time because it thought that the ending of oil price controls constituted a common law abatement. The chronology of this case now becomes important. The indictment was returned in 1979. Under the regulatory scheme then in effect--and with certain exceptions not material here--all domestic crude oil had to be certified as either "old" or "new" before it could be sold. See 10 C.F.R. Sec. 212.131 (1979). The regulations required the industry to maintain accurate records of such sales, and provided that those records were subject to inspection "at any time upon the request" of the Department of Energy. 10 C.F.R. Sec. 210.92 (1979). After an initial period when price controls were mandatory, however, the EPAA provided for a transition period during which the President, by executive order, could end controls. In any event, all controls were to expire automatically on September 30, 1981. See EPAA Sec. 18, 15 U.S.C. Sec. 760g (1976) (added by the Energy Policy and Conservation Act in 1975).

Almost immediately after taking office at the beginning of 1981, President Reagan elected to exercise his discretionary authority to end controls early. On January 28, he promulgated Executive Order 12,287, supra, which declared that "[a]ll crude oil and refined petroleum products are exempted from ... price and allocation controls." The Department of Energy duly issued implementing regulations on March 30 and July 9. See Price and Allocation Regulation Revocation, 46 Fed.Reg. 20,508 (1981); Establishment of a Mechanism for Entitlements Adjustments for Periods Prior to Decontrol of Crude Oil, 46 Fed.Reg. 36,092 (1981). Relying on the new regulations, the defendants moved for a dismissal of the indictment on the ground of abatement. What they had allegedly done, they argued, could no longer be considered a crime.

The district court's opinion dismissing this indictment for the second time rested upon two bases. First, the court concluded that Executive Order 12,287 had substituted the right to sell oil in a free market for the crime of selling in a controlled market with falsified certificates, just as Title II of the Civil Rights Act of 1964, as construed in Hamm v. City of Rock Hill, 379 U.S. 306, 314, 85 S.Ct. 384, 390, 13 L.Ed.2d 300 (1964), had substituted the federal right to be served at a public lunch counter for the state-law crime of trespass. The application of abatement in this case, according to the district court, rested not upon some notion of "technical abatement," but rather upon the President's basic decision to substitute a right for a crime. Second, the court concluded that the application of abatement here was especially appropriate in that it would further the salutary goal of "avoiding the infliction of punishment when to punish would no longer serve any purpose and 'would be unnecessarily vindictive' " (quoting Hamm, supra, 379 U.S. at 313, 85 S.Ct. at 390).

The government has again appealed. It argues, first, that this is a Title 18 fraud, not an abatement case; second, that even if this is an abatement case, only congressional intent matters and Congress does not intend for any prosecutions to abate; and third, that even if executive intent does matter, the Executive also does not and has never intended that this prosecution abate. We address each argument in turn. ¹

II

The government first argues that an abatement analysis is out of place in this case because the RICO, mail fraud, wire fraud, and false statement statutes that form the basis of the indictment have been neither repealed nor amended. We disagree.

As the government accurately points out, we have already emphasized that this is a fraud, not a regulatory case:

[Even] [i]n the absence of the existence of the [Emergency Petroleum Allocation Act] or of any [oil price control] regulations, it would presumably be a criminal act to use the mails as part of a scheme to defraud by falsely certifying facts relating to the provenance of oil knowingly and with intent to defraud. What makes the act criminal is not the regulation, but the use of the mails to carry an untrue document fabricated with fraudulent purpose.

....

[The] defendants are charged with Title 18 offenses, not [with] violations of the EPAA.

Uni I, 646 F.2d at 949, 952 n. 4. But this language, as the district court has already observed in reply, only addressed the question whether the case was one "arising under" the EPAA, and therefore within the exclusive jurisdiction of the Temporary Emergency Court of Appeals. See Uni I, 646 F.2d at 949-53. The allegedly fraudulent utterance of the certificates required by 10 C.F.R. Sec. 212.131 (1979) nevertheless remains an important part of the transactions forming the basis of the charges under the Criminal Code. Indeed, we have no doubt that even if Congress or the Executive had intended to abate all prosecutions for acts committed under the ancien regime, they would not have manifested that intent by amending (or recommending the amendment of) any provision of the Criminal Code; rather, that intent would surely have manifested itself through some modification of the EPAA or of the implementing regulations. We do not, in other words, question that this is a fraud case under the Criminal Code and that no relevant part of that Code has been subsequently amended or repealed, but these facts do nothing to help us decide whether Congress (or the Executive) intends this prosecution to proceed unabated.

The three cases that the government cites seemingly to the contrary effect are inapposite. See Kay v. United States, 303 U.S. 1, 58 S.Ct. 468, 82 L.Ed. 607 (1938); United States v. Kapp, 302 U.S. 214, 58 S.Ct. 182, 82 L.Ed. 205 (1937); United States v. Meyer, 140 F.2d 652 (2d Cir.1944); see also United States v. Mandujano, 425 U.S. 564, 577, 96 S.Ct. 1768, 1776, 48 L.Ed.2d 212 (1976) (plurality opinion). In Kapp, for instance, the Supreme Court held that a prosecution under the Criminal Code of defendants who had made false representations to secure benefits under the Agricultural Adjustment Act should proceed, even though the relevant portions of the Act had subsequently been declared unconstitutional in United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477 (1936). The Court commented that "[i]t might as well be said that one could embezzle moneys in the United States Treasury with impunity if it turns out that they were collected in the course of invalid transactions," and concluded that "[i]t is...