United States v. Stoltz, Misc. No. 81-0198.

• Decision Date: 27 October 1981
• Docket Number: Misc. No. 81-0198.
• Citation: 525 F. Supp. 617
• Parties: The UNITED STATES of America, Petitioner, v. Deane H. STOLTZ, Respondent.
• Court: U.S. District Court — District of Columbia

525 F. Supp. 617

The UNITED STATES of America, Petitioner, v. Deane H. STOLTZ, Respondent.

Misc. No. 81-0198.

United States District Court, District of Columbia.

October 27, 1981.

Dayton Lehman, Sp. Asst. U. S. Atty., Washington, D. C., for petitioner.

Michael J. Madigan, Robert F. Klein, Akin, Gump, Strauss, Hauer & Feld, Washington, D. C., for respondent.

MEMORANDUM OPINION AND ORDER

JOYCE HENS GREEN, District Judge.

This is a petition to enforce a Department of Energy (DOE) subpoena directed to Deane H. Stoltz, the President, during the relevant period, of the Tipperary Corporation, a Texas corporation engaged in the purchase and sale of crude oil. Respondent was ordered to testify in San Antonio, Texas, June 19, 1981, but by agreement of the parties the time was postponed until July 9, 1981, and the place changed to Washington, D. C. The subpoena related that the purpose of respondent's appearance was to testify in the DOE investigation "to determine the compliance" of three companies, including Tipperary "with the Mandatory Petroleum Price and Allocation Regulations, 10 C.F.R. Parts 205, 210, 211 and 212. This investigation concerns purchases, sales, exchanges and processing of its refined products during the period September 1976 through September 1977." Respondent appeared at the appointed time and place, but refused to answer any questions, giving no legal basis for such refusal. Respondent avers that he only agreed to appear in Washington, D. C. on that particular date because he had business here, but that he and his company are located in Texas. He also claims that his counsel, prior to the scheduled testimony, repeatedly attempted to obtain additional information on the scope of the inquiry, but none was forthcoming. On advice of counsel, respondent declined to answer questions until he was given enough information to determine whether the subpoena was issued for a lawful purpose and to determine whether fifth amendment rights appropriately could be claimed.

Respondent does not dispute the authority of DOE to issue such subpoenas, or to seek their enforcement in a court of competent jurisdiction. He does oppose the petition for enforcement on three grounds. The first is that the court lacks subject matter jurisdiction. The grant of DOE subpoena power, which is defined by section 9 of the Federal Trade Commission Act (FTCA), gives jurisdiction for subpoena enforcement to the district courts "within the jurisdiction of which the Commission's inquiry is carried on." Respondent claims that this is not the jurisdiction where the inquiry is being carried on, since Mr. Stoltz resides in Texas, the subpoena was returnable in San Antonio, the Tipperary Corporation is incorporated and has its principal place of business in Texas, and the other companies mentioned in the subpoena have had business contacts with Tipperary only in Texas. While the subpoena does not refer to any documents, documents with which Mr. Stoltz might wish to refresh his recollection would be located in Texas. Respondent cites cases holding that the activity under investigation must bear a reasonable relationship to the forum, Federal Trade Com. v. MacArthur, 532 F.2d 1135, 1140 (7th Cir. 1976); and that jurisdiction does not lie where its only purported justification is that the subpoenas were issued from an office in the forum, and made returnable there, while none of the activity being investigated had any nexus with the judicial district, Federal Trade Com. v. Western General Dairies Inc., 432 F.Supp. 31 (N.D. Cal.1977). However, this Court in United States v. Tesoro Petroleum Corporation, 503 F.Supp. 868 (D.D.C.1980), held that the District of Columbia was an appropriate forum, although perhaps not the only appropriate forum, for a subpoena enforcement proceeding under circumstances very similar to those in the instant case. In Tesoro, there was a lengthy history of investigation leading to the subpoena in issue, most of it in San Antonio, Texas. Petitioner was located in Texas. Jurisdiction was predicated upon findings that much audit activity also took place in Washington, D. C., that the central headquarters of DOE and the officials ultimately responsible for the enforcement of the regulations in question were located in Washington, and that all authority to conduct audits of that type emanated from the Washington, D. C. headquarters of DOE. Although investigation had proceeded from the DOE office in Texas, from time to time, DOE headquarters in the District of Columbia would issue instructions to the Texas office regarding the audit. The decision to issue the subpoena and to petition for its enforcement were made in Washington, D. C. Therefore, it was concluded that the inquiry was being carried on in the District of Columbia. Likewise, in this case, the central headquarters for DOE are in this district, and the officials ultimately responsible for enforcing the regulations are here. The control and direction of the investigation has always been retained in the District of Columbia, and the decisions to issue the subpoena and to seek its enforcement were made here.

Respondent has attempted to discredit the affidavit of Jeffrey R. Whieldon of DOE which recites these jurisdictional facts. In his Supplemental Memorandum, respondent argues that the Office of Special Counsel (OSC) of DOE, where Mr. Whieldon is employed, has no authority to investigate him or Tipperary Corporation. OSC, respondent contends, only has authority to investigate the 34 major refiners. Therefore, OSC's location and activities are irrelevant to the proceeding. Respondent also argues that absent evidence that Mr. Whieldon has personal knowledge of the operating procedures, chain of command, and activities of the Office of Special Investigation, (OSI), the office which issued the subpoena, he is incompetent to testify about the investigation involved here.

Petitioner has replied that OSC has been delegated jurisdiction over issues and actions directly affecting major refiners. DOE Delegation Order No. 0204-12 from the Administrator of the Economic Regulatory Administration. The instant investigation is a joint inquiry by OSC and the Office of Enforcement, the body with enforcement authority over all refiners except the 34 major refiners. This subpoena derives from the joint investigation. OSC's interest in Mr. Stoltz's testimony is based upon an ongoing inquiry regarding the compliance of Tesoro Petroleum, a major refiner, with the DOE pricing and allocation regulations in transactions with the companies named in the Stoltz subpoena. Mr. Whieldon, petitioner continues, as Deputy Solicitor for Special Investigations of OSC, is one of the DOE officials directly responsible for coordination and oversight of the joint inquiry, and has personal knowledge concerning the matters in his affidavit.

Petitioner's response disposes of respondent's objections to the Whieldon affidavit. The facts there stated will be accepted by the Court.

Although respondent contended at oral argument that the instant case more closely resembles FTC v. Western General Dairies, Inc., supra, than it does Tesoro, and should be governed by the former case, the Court cannot agree. The Court in Western General Dairies refers to none of the factors found to support jurisdiction in Tesoro and in this case. The only support for jurisdiction put forth in Western General Dairies was that the FTC had chosen to issue the subpoenas from its San Francisco regional office, returnable in San Francisco. Whether the factors present here would have swayed the district court in California cannot be known. Lacking persuasive arguments to the contrary, this Court will follow its own precedent in Tesoro, and finds that jurisdiction is proper in the District of Columbia. Although petitioner could have chosen to proceed in Texas, it has the legal right to proceed in this Court.

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