United States v. Thriftyman, Inc.

• Decision Date: 11 March 1983
• Docket Number: No. 5-83.,5-83.
• Citation: 704 F.2d 1240
• Parties: UNITED STATES of America and Jane O'Neill, Petitioners-Appellees, v. THRIFTYMAN, INC., Thriftyman Enterprises, Inc., M & W Oil Company, Sunbelt Gasoline Company, and John B. Meaders, Respondents-Appellants.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

704 F.2d 1240

UNITED STATES of America and Jane O'Neill, Petitioners-Appellees, v. THRIFTYMAN, INC., Thriftyman Enterprises, Inc., M & W Oil Company, Sunbelt Gasoline Company, and John B. Meaders, Respondents-Appellants.

No. 5-83.

Temporary Emergency Court of Appeals.

Decided March 11, 1983.

Steven Schaars and Joan L. Goldfrank, Collier, Shannon, Rill & Scott, Washington, D.C., for respondents-appellants.

James A. Rolfe, U.S. Atty., and Paula Mastropieri-Billingsley, Asst. U.S. Atty., Dallas, Tex., for petitioners-appellees.

Before GRANT, BECKER and PECK, JJ.

Submitted on the briefs.

WILLIAM H. BECKER, Judge.

This is an appeal from the Order of the United States District Court for the Northern District of Texas which granted the petition of the United States, on behalf of the Department of Energy (DOE), to enforce, against appellants, several administrative subpoenas duces tecum for documents described in the subpoenas. For the reasons which follow, we affirm the Order of the District Court.

THE FACTS

In February 1980, DOE commenced an on the premises (on-site) audit of appellant Thriftyman, Inc. (Thriftyman) to determine whether appellants had complied with the applicable Mandatory Price and Allocation Regulations of the DOE during an eight month period from May 1979 through December 1979 Transcript of Hearing on Petition to Enforce Subpoena (Tr.) 4, 7, 12. During the audit, a DOE auditor reviewed records for about a month, departed, and returned with a second DOE auditor for an additional two weeks (Tr. 12-13). The two DOE auditors were not auditors of the Special Investigation Unit (SIU) of the DOE (Tr. 13-14). They were permitted to inspect all the documents that they requested during the on-site audit (Tr. 41-45), but only two or three "sample" copies of the inspected records were made (Tr. 6-7).

In May 1980, after an indication of a probable willful violation of the regulations, the scope of the on-site audit was expanded and referred (by a "nomination") to the SIU to determine if there had been a willful violation of the regulations (Tr. 7, 14, 23, 25, 29).

On July 29, 1980, the DOE issued a Notice of Probable Violation (NOPV) to Thriftyman. The NOPV stated, among other things, that the DOE had reason to believe that "applicable provisions of law" had been violated. A response to the NOPV was filed by Thriftyman on October 2, 1980.

On November 5, 1980, the DOE issued the subpoenas in question to appellants directing appellants to produce documents for examination and copying. The four subpoenas were authorized by appellee Jane O'Neill, a Team Leader of the SIU (Tr. 4, 5, 7, 8), and were signed by a Title Auditor of the SIU Record (R.) Exhibit 5. Each subpoena stated that it was issued "under the authority of § 206 of the Economic Stabilization Act of 1970, as amended, incorporated by § 5(a)(1) of the Emergency Petroleum Allocation Act of 1973, amended, § 13 of the Federal Energy Administration Act of 1974; §§ 645 and 705 of the Department of Energy Organization Act and 10 C.F.R. § 205.8 and § 205.201."

The appellants did not comply with the subpoenas (Tr. 6, 37). Therefore, on April 2, 1982, the United States, and Jane O'Neill on behalf of the DOE, filed a Petition to Enforce Subpoena in the District Court (R. Exhibit 2). On April 5, 1982, the District Court entered an order directing appellants to show cause, at a hearing before the District Court, why they should not comply with the subpoenas (R. Exhibit 3).

A Motion for Discovery was filed by appellants on June 2, 1982 (R. Exhibit 1). On June 3, the motion was referred by the District Court to a United States Magistrate for determination (R. Exhibit 1). After considering memoranda, in support of and in opposition to the motion, and the oral arguments of counsel, the Magistrate filed a report entitled "Order" on June 10, 1982, which denied appellants' Motion for Discovery (R. Exhibit 7). This report was later approved by the District Court (Thriftyman's Brief, 17).

On June 11, 1982, a hearing on the merits of the petition to enforce the subpoenas was held before the District Court (Tr., R. Exhibit 6). Thereafter, on June 21, 1982, the District Court entered an Order granting appellees' Petition to Enforce Subpoena (R. Exhibit 8). In that Order the District Court concluded, among other things, that "the subpoenas were issued pursuant to a lawfully authorized purpose"; that "the information sought is necessary and reasonably relevant to DOE's task of determining compliance with pricing and allocation regulations"; that "the DOE investigation does not have as its sole institutional objective the gathering of data for criminal prosecution"; that appellants' contention, that appellees must establish that the information sought in the administrative subpoenas is not already in the possession of the DOE, is not supported by prior opinions of this Court; and that appellants "failed to satisfy their burden of demonstrating that the investigation is for an improper purpose and thus in bad faith."

This is an appeal from the Order of the District Court granting the Petition to Enforce Subpoena.

THE CONTENTIONS ON APPEAL

Appellants contend that the District Court erred in the following respects:

(1) in granting Appellees' petition to enforce administrative subpoenas which was filed after the expiration of the Emergency Petroleum Allocation Act of 1973;

(2) in ruling that the administrative subpoenas were issued for a lawful purpose when they had been issued after the DOE already had reviewed the subpoenaed documents and had taken agency action based upon those documents; and

(3) in denying Appellants' motion for discovery.

These contentions of appellants are discussed below in order.

DISCUSSION

I.

Appellants first contend that the four¹ subpoenas are not judicially enforceable because the Emergency Petroleum Allocation Act (EPAA) expired on September 30, 1981, before the Petition to Enforce Subpoena was filed in the District Court on April 2, 1982. This legal contention of appellants is not supported by the language of the EPAA and is contrary to the prior decisions of this Court.

Although Section 18 of the EPAA, 15 U.S.C. § 760g, provides in part that the "authority to promulgate and amend any regulation or to issue any order under the EPAA shall expire at midnight September 30, 1981," that section also provides for continuing judicial jurisdiction in certain actions. Judge Estes of this Court discussed that continuing jurisdiction, and the statutory authority therefor, in footnote 5 of United States v. Empire Gas Corporation, 547 F.2d 1147 (Em.App.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1326, 51 L.Ed.2d 592 (1977) as follows:

The Energy Policy and Conservation Act (EPCA), P.L. 94-163, December 22, 1975, amends and extends the EPAA through September 30, 1981; thereafter, the district courts and this court will have continuing jurisdiction over actions within the meaning of the general saving statute, 1 U.S.C. § 109, and the new saving statute, EPAA § 18, as amended by the EPCA. The amended saving statute, EPAA § 18, added by EPCA § 461, explicitly provides:

Such expiration shall not affect any action or pending proceedings, administrative, civil, or criminal, not finally determined on such date September 30, 1981, 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.

Section 18 of the EPAA, quoted in part above, expressly sets forth two "exceptions" to the expiration of authority under the EPAA. First, the expiration of the EPAA on September 30, 1981, does not affect "any action or pending proceedings, administrative, civil, or criminal, not finally determined on such date." Second, the expiration provided for in Section 18 does not affect "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." Cf. United States v. California, 504 F.2d 750 at 754-757 (Em.App.1974), cert. denied, 421 U.S. 1015, 95 S.Ct. 2423, 44 L.Ed.2d 684 (1975), which discussed two similar "exceptions" to the expiration of the Economic Stabilization Act.

The first exception of Section 18 is not applicable on this appeal because the action in the District Court to enforce the subpoenas was not pending when the EPAA expired. We conclude, however, that the second exception of Section 18, quoted above, does apply in this case.

An action to enforce a DOE subpoena is a civil "action or proceeding" under the second exception of Section 18. Cf. United States v. Empire Gas Corporation, 547 F.2d 1147 at 1154-1155 (Em.App.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1326, 51 L.Ed.2d 592 (1977) in which it was concluded that a pending action to enforce a subpoena survived the termination of the Federal Energy Administration Act of 1974.

It was unnecessary to commence the action to enforce the subpoenas on or before the expiration date of the EPAA. The second exception of Section 18, 15 U.S.C. § 760g, is made expressly applicable by Section 18 "whether or not" the action was pending on September 30, 1981. (Emphasis added.)

The subpoenas in question were issued for documents to determine if appellants had violated DOE regulations during an eight month period from May 1979 through December 1979. And the action in the District Court was a proceeding to enforce these subpoenas. Thus, the action in the District Court was "based" upon the subpoenas which were "based" upon acts committed before the expiration of the EPAA. As such, the proceeding was within the continuing jurisdiction of the District Court expressly provided for by the second exception of Section 18 of the EPAA.

Further, this Court has held that nothing in Section 18 or Executive Order 12287 indicates "any intention to grant amnesty for any possible violations occurring prior to the...