Allied Oil Corp. v. Turney

170 F.2d 79, 1948 U.S. App. LEXIS 3360
CourtEmergency Court of Appeals
DecidedOctober 14, 1948
DocketNo. 471
StatusPublished

This text of 170 F.2d 79 (Allied Oil Corp. v. Turney) is published on Counsel Stack Legal Research, covering Emergency Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allied Oil Corp. v. Turney, 170 F.2d 79, 1948 U.S. App. LEXIS 3360 (eca 1948).

Opinion

LINDLEY, Judge.

Complainant operates an oil refinery at St. Elmo, Illinois, in- an area known as “Central Illinois.” In 1943, for the first time, it began to refine diesel engine fuel and market it on a guaranteed specification basis. On March 20, 1944, it applied to the Office of Price Administration for maximum sales prices for three such fuels having diesel index ratings respectively of 58 and above, 53 to 57 and 52 and below,' of, respectively, 5.750, 5.6250, 5.50 per gallon f. o. b. its refinery, for tank car shipment into Petroleum Administration for War, District One, consisting generally of the East Coast states. The request was made pursuant to Section 8.3 of MPR 88, issued February 14, 1944 (9 F.R. 3718), the applicability of which is not in dispute. It reads in part as follows:

“Sec. 8.3 For All Other Products Covered By This Regulation, (a) If under any preceding section of this regulation a seller is unable to determine the maximum price at a given shipping point for any product covered by this regulation then the seller may nevertheless make a sale of such product at the said point or may notify the Office of Price Administration in writing that he has set -a tentative maximum price for the ptoduct at the said shipping or delivery point. In giving notice of the setting of such tentative maximum price or within 15 days of the making of the said sale, the seller shall file with the Petroleum Branch of the Office of Price Administration, Washington, D. C., a written request for the approval of either the tentative or sale price * * *.
“(b) If a seller shall fail to report a sale as required by paragraph (a) above the Office of Price Administration may at any time upon written notice to the seller establish his maximum price for the particular product at the particular point effective retroactively to a date 15 days after the making of the said sale.”

By letter order dated April 12, 1944, the Office of Price Administration disapproved the prices proposed by complainant and established instead the following máximums:

58 Diesel Index and
above 5.000 per gallon
53-57 Diesel Index 4.8750 per gallon
52 Diesel Index and
below 4.750 per gallon

Subsequently, it having come to the at. tention of the Administrator that complainant had not applied for maximum prices within 15 days after its first sale of the product, he, in accord with section 8.3(b), by Order No. L-551, issued April 7, 1947, amended the order of April 12, 1944, so that the maximum prices established therein became effective 15 days after complainant’s first sale.

Complainant filed a protest of both orders and, following denial, its complaint in this court. Inasmuch as an action to recover damages for alleged over-ceiling sales prices during the period July 19, 1943 to May 24, 1944 is pending against complainant, we have jurisdiction. Standard Kosher Poultry, Inc. v. Clark, Em.App., 163 F.2d 430; Talbot v. Woods, Em.App., 164 F.2d 493.

Complainant contends that the maximum prices established by the Administrator for its diesel fuels were invalid because they (1) were not “in line” with the base period prices in the Central Illinois -area for similar fuels; (2) did not reflect then existing customary price differentials for different grades of petroleum products; (3) destroyed the competitive relationship of complainant with refiners in other areas; and (4) were discriminatory, in that Amendment 27 to MPR 88 provided a higher refinery realization or net back on delivered at destination sales in the Midwest Area than on f. o. b. sales to PAW District 1.

Complainant did not refine or sell diesel fuel during the base period, — the 60 days preceding October 15, 1941. Therefore, in determining its maximum prices on diesel fuel, the Administrator compared complainant’s suggested maximum prices with the following prices at which three other [81]*81Central Illinois refiners sold such fuel during the base period:

Dicscl Fuel
Pana Refining Co.
(Pana, 111.) 4.880
Shell Oil Co. 4.50
(Roxana, 111.) 4.70
Standard Oil Co. of Ind. 4.10
(Wood River, 111.) 4.60

Pana’s fuel was of diesel index rating comparable to complainant’s highest rating; yet Pana sold its fuel for less than the maximum price fixed for complainant. While Standard did not mention its index rating, it did specify a cetane rating higher than Pana’s. Therefore the Administrator felt it reasonable to assume that Standard’s index rating was at least as high as Pana’s if not higher.1 Yet Standard sold its equivalent or better fuel for less than the maximum prices fixed for complainant.

But complainant insists that these comparisons, while appropriate on their face, were misleading in that the products compared were not the same, inasmuch as complainant’s fuels were “guaranteed specification” fuels, while the other three refiners did not guarantee the specifications; that guaranteed specification fuels are commonly sold at a higher price than those not guaranteed; and, hence, that some differential in price should have been allowed it on that account.

It may well be true that, prior to the time price control was invoked, guaranteed specification fuels commanded higher prices than fuels on which there were no guarantees and equally true that the other three Central Illinois refiners did net, du: ing the base period, guarantee their diesel index rating. But since the fuel sold by the other refiners during the base period was of a specified quality, their prices for future sales of that grade were, by virtue of the regulation, frozen at the price established therefor during the base period.2 In other words, if Pana sold diesel fuel during the base period, with a diesel index rating of 58.6 at 4.880 per gallon, the regulation re-

Diesel Index Rat. Cetane Rat.
58.6 53
Minimum 45
55

quired it, in continuing to sell fuel of the same quality, to sell at the same price. Ebling Brewing Co. Inc. v. Porter, Em.App., 156 F.2d 1012, certiorari denied 329 U.S. 784, 67 S.Ct. 297, 91 L.Ed. 672. Under these circumstances, we can find no justification for a conclusion that the Administrator acted arbitrarily or capriciously in comparing complainant’s diesel fuel with that of other Central Illinois refiners in determining a proper “in line” maximum price.

Complainant contends that it is the established practice of the oil industry to establish prices of petroleum products according to their respective economic values, and that, in that practice, high grade diesel fuel ranks ahead of fuel oils. Thus, complainant shows that in certain areas a differential of 1/2

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Related

Saunders Petroleum Co. v. Bowles
152 F.2d 112 (Emergency Court of Appeals, 1945)
Ebling Brewing Co. v. Porter
156 F.2d 1012 (Emergency Court of Appeals, 1946)
Standard Kosher Poultry, Inc. v. Clark
163 F.2d 430 (Emergency Court of Appeals, 1947)
Talbot v. Woods
164 F.2d 493 (Emergency Court of Appeals, 1947)
Fleet-Wing Corp. v. Clark
166 F.2d 145 (Emergency Court of Appeals, 1948)
Ebling Brewing Co. v. Porter
329 U.S. 784 (Supreme Court, 1946)

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Bluebook (online)
170 F.2d 79, 1948 U.S. App. LEXIS 3360, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allied-oil-corp-v-turney-eca-1948.