United States v. Tesoro Petroleum Corp.

• Decision Date: 23 October 1980
• Docket Number: Misc. No. 80-0217.
• Citation: 503 F. Supp. 868
• Parties: The UNITED STATES of America, Petitioner, v. TESORO PETROLEUM CORPORATION et al., Respondents.
• Court: U.S. District Court — District of Columbia

503 F. Supp. 868

The UNITED STATES of America, Petitioner, v. TESORO PETROLEUM CORPORATION et al., Respondents.

Misc. No. 80-0217.

United States District Court, District of Columbia.

October 23, 1980.

Alice Daniel, Asst. Atty. Gen., R. John Seibert, Peter William Waldmeir, Attys., Dept. of Justice, Washington, D. C., for petitioner; David L. Anderson, Mayer Magence, Carey R. De Moss, Mark Kreitman, Attys., Dept. of Justice, Washington, D. C., of counsel.

Fred W. Drogula, Gary J. Klein, Ira T. Kasdan, Washington, D. C., for respondents; Stephen Poppoon, Dallas, Tex., of counsel.

MEMORANDUM OPINION

JOYCE HENS GREEN, District Judge.

This action is brought by the United States on behalf of Charles W. Duncan, Jr., Secretary of the Department of Energy, wherein the Court is petitioned to issue an order requiring compliance with a subpoena duces tecum issued to Tesoro Petroleum Corporation (Tesoro) and Dean M. Bloyd, its Group Vice-President (hereafter included in references to Tesoro), on June 13, 1980 and modified on June 25, 1980. Arising out of the Department of Energy's (DOE's) enforcement of the Mandatory Petroleum Allocation and Price Regulations, 10 C.F.R. Parts 210-212 (the Regulations), and underlying statutes, the subpoena requires production of accounting records and other documents allegedly needed by DOE to determine whether Tesoro, as a major refining company, has complied with the Regulations. Within DOE, the entity concerned with the audit of Tesoro is the Office of the Special Counsel for Compliance (OSC).

The parties' filings reflect a long history of disputes and impasses ever since a resident team of DOE auditors began, at Tesoro's offices in San Antonio, Texas, to analyze whether Tesoro was in compliance with the Regulations. The review has already spanned six years, spawning detailed audit inquiries and requests for production of documents. Since Tesoro's production in May, 1979 of 23 file boxes of material, the parties have reached few compromises and Tesoro has provided no other significant amount of documentation.

Responding to an Order to Show Cause why the petition should not be granted, respondents have moved to dismiss the petition for lack of jurisdiction or, in the alternative, have sought a change of venue. Simultaneously, they have asked for a modification of the Order to allow limited discovery. Petitioner has opposed such motions and the matter was submitted following a hearing. For the reasons that follow, respondents' motions to dismiss the petition, to change venue, and to allow limited discovery will be denied. The petition will be granted and the subpoena duces tecum will be enforced according to the terms of this Memorandum Opinion.

Petitioner asserts that the authority of OSC to issue and to seek enforcement of the instant subpoena is conferred by section 645 of the Department of Energy Organization Act of 1977 (DOEOA), 42 U.S.C. § 7255, which provides in pertinent part:

For the purpose of carrying out the provisions of this Act, the Secretary or his duly authorized agent or agents, shall have the same powers and authorities as the Federal Trade Commission under section 9 of the Federal Trade Commission Act with respect to all functions vested in, or transferred or delegated to, the Secretary or such agents by this Act.

Thus, DOE is granted the authority to issue subpoenas "requiring the attendance of witnesses, and the production of such documentary evidence, ... from any place in the United States, at any designated place of hearing," Federal Trade Commission Act (FTCA) § 9, 15 U.S.C. § 49 (Section 9), and to invoke the aid of any court of the United States in requiring such compliance. To effectuate these transferred powers, Section 9 further provides that "any of the district courts of the United States within the jurisdiction of which such inquiry is carried on" may enforce the subpoena. Id.

Respondents challenge petitioner's reliance on Section 9. Although Tesoro concedes that DOE has broad subpoena power and recognizes the far-reaching authority granted to the Secretary of DOE under 42 U.S.C. § 7255 of the DOEOA, it contends that the power to issue subpoenas does not imply co-extensive extra-territorial jurisdiction to a district court petitioned to enforce a DOE subpoena. Only specific statutory language, Tesoro maintains, can be held to grant this court jurisdiction to enforce a subpoena issued for persons and materials located outside the District of Columbia. Neither of the cases cited by respondents,¹ however, appears to prohibit judicial recognition of congressional intent with respect to the jurisdiction of the district courts.²

The parties concur that this Circuit's decision in Federal Trade Commission v. Browning, 435 F.2d 96, 99 (D.C.Cir.1970), interpreted Section 9 as providing particular federal courts within the jurisdiction where an FTC inquiry is being conducted with "an implied grant of authority for extra-territorial service of process in order to effectuate the purpose of the regulatory scheme." It is unquestioned that under Section 9, in personam jurisdiction over the parties outside the jurisdiction of the enforcement proceedings can attach by this power of extra-territorial service of process implied from the broad investigatory powers given the FTC by Congress. Id. at 98-101.

Whether a district court has the power of extra-territorial service of process in DOE enforcement proceedings under 42 U.S.C. § 7255 apparently has not been addressed squarely by a court. Petitioners urge implication of that power from 42 U.S.C. § 7255 and from section 9 of the FTCA. Respondents counter with the general rule that the jurisdiction of a district court is territorially limited unless Congress specifically provides otherwise. Fed.R.Civ.P. 4(f). Because Tesoro was served at its Texas headquarters, it urges that the service was ineffective to give this Court in personam jurisdiction. Accordingly, respondents' primary argument is that unless Congress has passed a law that directly addresses the district courts' jurisdiction, no court can imply a deviation from that strictly territorial jurisdiction.

This argument is clearly flawed. The language of the DOEOA regarding subpoena enforcement powers incorporates the language of the FTCA; it does not merely model that act. It would be logical to imply, then, a congressional intent to give DOE the same powers as those given to the FTC.

Statutory expression almost identical to Section 9 was considered in Federal Election Commission v. Committee to Elect Lyndon La Rouche, 613 F.2d 849 (D.C.Cir. 1979), cert. denied 444 U.S. 1074, 100 S.Ct. 1019, 62 L.Ed.2d 756 (1980). The court in La Rouche held that the district court in a proceeding to enforce a Federal Election Commission (FEC) subpoena had in personam jurisdiction over the non-resident respondents under 2 U.S.C. § 437d(b).³ Adopting the reasoning of Federal Trade Commission v. Browning, 435 F.2d 96 (D.C. Cir.1970), the court noted that despite the absence of an affirmative grant of extra-territorial jurisdiction in the statute, such a grant was implied from the statutory language. La Rouche 613 F.2d at 860.

There are manifold justifications for holding that this court has extra-territorial jurisdiction in an enforcement proceeding of this type. Without extra-territorial service of process, an agency would have to sue in every district where witnesses or documents were located in order to enforce its subpoenas. Such fragmentation of an investigation would frustrate an agency's purpose of maintaining coherent, nationwide supervision over the subject matter of its regulatory efforts, see La Rouche, Browning, depriving a regulatory scheme of expected orderly process consistent with "uniformity in the application of the law and economy of judicial administration." Browning, 435 F.2d at 100. Extra-territorial service also avoids the situation where a district court would have exclusive jurisdiction over an enforcement proceeding and yet be deprived of the authority to compel the attendance of the respondent absent his voluntary entrance into the district. See id. at 99.

In sum, the power of DOE, equal to that of the FTC, to subpoena witnesses and documents related to its investigations is given its full effectiveness only by recognizing the validity of extra-territorial jurisdiction in DOE enforcement proceedings, thereby promoting judicial economy, facilitating an orderly regulatory scheme, and avoiding the classic anomaly of jurisdiction without corresponding power.

Statutes, public policy, case law and rational interpretation compel the conclusion that Congress intended to grant to the district court in which a DOE enforcement proceeding is brought the power of extra-territorial in personam jurisdiction. See La Rouche, Browning. Service of process, therefore, on respondents Tesoro and Bloyd, was valid, with in personam jurisdiction in this district court.⁴

Tesoro contends further that this court lacks subject matter jurisdiction under 42 U.S.C. § 7255 because the vast majority of the audit activities have occurred in San Antonio, Texas. In the alternative, it seeks transfer of the action to the Western District of Texas where, respondents apparently concede, subject matter jurisdiction lies. Petitioner argues that the District of Columbia, as the center of DOE's authority and decision-making, is the place from where the inquiry into Tesoro is being carried on.

Section 9 of the FTCA provides, as incorporated in the DOEOA, that the DOE will have the power to enforce its subpoenas in the district court in the jurisdiction in which "the inquiry is being carried on." The determination of the locale of the inquiry is governed by a standard of reasonableness. In Federal Trade Commission v. MacArthur, 532 F.2d 1135 (7th Cir. 1976), the court set forth the applicable test as "whether that place and the activities occurring there bear a reasonable relation...