UNITED STATES DEPT. OF ENERGY v. Brimmer

• Decision Date: 02 October 1985
• Docket Number: No. 10-60.,10-60.
• Citation: 776 F.2d 1554
• Parties: The UNITED STATES DEPARTMENT OF ENERGY and John S. Herrington, Secretary of Energy, Petitioners, v. The Honorable Clarence A. BRIMMER, Chief Judge of the United States District Court for the District of Wyoming, and Inexco Oil Company, Respondents.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

776 F.2d 1554

The UNITED STATES DEPARTMENT OF ENERGY and John S. Herrington, Secretary of Energy, Petitioners, v. The Honorable Clarence A. BRIMMER, Chief Judge of the United States District Court for the District of Wyoming, and Inexco Oil Company, Respondents.

No. 10-60.

Temporary Emergency Court of Appeals.

Argued April 17, 1985.

Decided October 2, 1985.

Rehearing and Rehearing Denied November 1, 1985.

Thomas C. Newkirk, U.S. Dept. of Energy, Washington, D.C., argued, with whom on brief were Larry P. Ellsworth, Thomas H. Kemp, Charles L. Cope and Rodney L. Solenberger, Washington, D.C., for petitioners.

Roger A. Rider of Mayor, Day & Caldwell, Houston, Tex., argued, with whom on brief were Ronald J. Bigelow and Charles E. Suffling, Houston, Tex., and Stanley K. Hathaway, John B. Speight and Richard J. Barrett, Hathaway, Speight and Kunz, Cheyenne, Wyo., for Respondent, Inexco Oil Co.

Before CHRISTENSEN, JAMESON and MacBRIDE, JJ.

Rehearing and Rehearing En Banc Denied November 1, 1985.

MacBRIDE, Judge:

The petitioners, the United States Department of Energy and the Secretary of Energy (collectively, "DOE"), seek a writ of mandamus directing the respondent district court judge to vacate a discovery order entered in litigation between DOE and the respondent Inexco Oil Company ("Inexco"), which required DOE to produce 63 internal government documents DOE claimed to be privileged. On February 4, 1985, we granted a stay of that order pending disposition of the petition. We now conclude that the requested documents are irrelevant to any issue properly before the district court, and accordingly order that the writ of mandamus issue.

BACKGROUND

The lengthy history of this case is here briefly summarized. In 1979, the Southwest Enforcement District of the Economic Regulatory Administration ("ERA"), an enforcement arm of the Department of Energy, issued a Proposed Remedial Order ("PRO") alleging that in violation of then effective regulations, Inexco had overcharged its customers during the period from September 1973 through December 1975 for "old" crude oil produced at certain of its fields in the Powder River Basin in the State of Wyoming. The effective regulations set the ceiling price for "old" crude oil at the sum of "the highest posted price of that grade of crude oil at that field" on May 15, 1973, and a specified premium. 10 C.F.R. § 212.73(b) (1974). The PRO alleged that Inexco had improperly calculated the applicable ceiling price for its "old" crude by recognizing its own 1973 contract prices as the "highest posted price" in its ceiling price calculations. The PRO alleged that a lower price, appearing in price bulletins of Mobil, Amoco, and Conoco, constituted the appropriate "highest posted price." Accordingly, the PRO alleged that Inexco had been charging its customers in excess of the maximum legal price, and proposed that Inexco be ordered to refund over-charges of nearly $100,000.00 plus interest.

Inexco challenged the PRO in the Office of Hearings and Appeals ("OHA"), the adjudicative agency within the Department of Energy. Before the OHA, Inexco sought an order compelling DOE to produce precisely the same type of documents sought in the district court: internal governmental and other documents construing the regulatory "posted price" term, both in general terms and as applied to Inexco's circumstances. Inexco's discovery request was denied, on the grounds that the requested discovery was irrelevant to the proceedings, since the validity and correct construction of the "posted price" term had previously been authoritatively established. Inexco Oil Co., 6 DOE P 82,581 at 85,248-85,252 (1980) (OHA order denying discovery). The OHA subsequently affirmed the PRO. Inexco Oil Co., 7 DOE P 83,015 (1981).

Inexco appealed the latter OHA decision to the Federal Energy Regulatory Commission ("FERC"). Inexco initially declined to request discovery in preparation for proceedings before FERC, and when later it moved to discover much the same documents sought in the OHA proceedings, its motion was denied as presented too late. Inexco Oil Co., 18 FERC P 62,476 (1982) (presiding officer's order denying discovery). After argument and briefing, FERC upheld the OHA decision. Inexco Oil Co., 25 FERC P 61,146, supplemented, 25 FERC P 61,411, affirming 25 FERC P 62,354 (presiding officer's proposed order) (1983).

Inexco thereupon sought review of the FERC decision in the United States District Court for the District of Wyoming. Inexco Oil Co. v. United States Dep't of Energy, No. C-83-0513 (D.Wyo. filed December 23, 1983). In that court, Inexco sought to compel DOE to produce essentially the same sort of documents previously sought before the OHA and FERC, namely, documents showing internal DOE memoranda discussing or applying the "posted price" term, and internal memoranda pertaining to DOE's application of that regulation to Inexco's circumstances. DOE resisted all discovery, relying on its argument that review of the administrative action must be confined to the record before the administrative decision-maker. DOE's position was overruled by the presiding magistrate, and DOE was ordered to produce the requested documents. DOE produced 165 documents, but ultimately claimed the governmental deliberations privilege as to 63 documents. Inexco thereupon sought an order compelling discovery. The presiding magistrate granted the order.

On appeal of the magistrate's ruling to the respondent district judge, the court conducted an in camera review of all the documents in question and determined that all of them should be produced. As to four of the documents, the court concluded that they should have been included in the administrative record. As to each of the other 59 documents, the court made an individualized decision either that the governmental deliberations privilege did not apply to the document, or that if the privilege applied, Inexco's need outweighed the petitioners' interest in non-disclosure. The court ordered disclosure conditioned by a limited protective order which forbade Inexco from communicating the documents to any other party.

Petitioners thereupon filed this petition for writ of mandamus seeking vacation of the contested discovery order. We ordered a stay of the district court's order pending our disposition of this petition.

DISCUSSION

Inexco contends that (1) this court lacks jurisdiction over the issues raised by this petition; (2) the district court did not abuse its discretion in ordering production of the disputed documents, and (3) even if the district court's order was error, mandamus does not lie to correct it. We address these points in order.

JURISDICTION

The Temporary Emergency Court of Appeals ("TECA") is a court of special and narrowly limited jurisdiction. MGPC, Inc. v. Dep't of Energy, 673 F.2d 1277, 1280 (TECA 1982). With respect to the circumstances of this case, our jurisdiction extends only to the determination of issues arising under the Emergency Petroleum Allocation Act ("EPAA"), 15 U.S.C. § 751 et seq., and the regulations promulgated pursuant to its authority, which issues were actually adjudicated in the district court. Inexco's jurisdictional argument has two, somewhat related, prongs. Inexco first asserts that the district court's discovery and privilege decisions did not adjudicate any EPAA issue. We reject that contention. Discovery is appropriate only where the material sought is "relevant to the subject-matter of the litigation." Fed.R.Civ.Proc. 26(b)(1). Where a district court's finding of relevance is grounded on the production request's materiality to an issue of law arising under the EPAA, that decision necessarily involves an adjudication of an EPAA issue. See United States Dep't of Energy v. Crocker, 629 F.2d 1341, 1344 (TECA 1980) (per curiam). Likewise, where a claim of qualified privilege is overruled on the grounds that the requestor's need for the discovery outweighs the opponent's interest in non-disclosure, and where the finding of need is based on a conclusion that the discovery sought is material to establishing a claim or defense under the EPAA or its appurtenant regulations, that legal conclusion involves the adjudication of an EPAA issue, and as such is subject to our appellate authority.

In this case, as is more fully discussed below, it appears that the district court concluded that the requested documents were relevant to determining the validity of, or the correct interpretation and application of DOE's regulations, promulgated under the authority of the EPAA, defining the disputed "posted price" term. Under the legal standards described above, that conclusion of relevance to a claim or defense relating to the validity, construction, or application of an EPAA-authorized regulation represents the decision of an EPAA issue, and hence is properly placed before us for review.

Second, Inexco argues that, even if the district court's discovery and privilege decisions pose EPAA issues within TECA's competence, we nonetheless lack subject-matter jurisdiction under the Supreme Court's decision in Bray v. United States, 423 U.S. 73, 96 S.Ct. 307, 46 L.Ed.2d 215 (1975). In Bray, the Internal Revenue Service, which then had enforcement authority under the Economic Stabilization Act ("ESA"), subpoenaed certain documents from Bray to further an investigation into possible violations of the ESA. When Bray failed to comply, the district court granted the IRS's petition for an enforcement order, and when Bray disobeyed that order, the court convicted him of criminal contempt under 18 U.S.C. § 401. Bray appealed his conviction to the Court of Appeals for the Tenth Circuit. That court dismissed the appeal for lack of jurisdiction, concluding that the appeal represented a "case or controversy" arising under the ESA, and thus falling within TECA's exclusive purview. The Supreme Court reversed, holding that the matter for determination was the...