Caribou Four Corners, Inc. v. American Oil Co.

628 F. Supp. 363, 1985 U.S. Dist. LEXIS 13827
CourtDistrict Court, D. Utah
DecidedNovember 18, 1985
DocketCiv. C84-2173G
StatusPublished
Cited by5 cases

This text of 628 F. Supp. 363 (Caribou Four Corners, Inc. v. American Oil Co.) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Caribou Four Corners, Inc. v. American Oil Co., 628 F. Supp. 363, 1985 U.S. Dist. LEXIS 13827 (D. Utah 1985).

Opinion

J. THOMAS GREENE, District Judge.

This matter came on regularly for hearing on September 25, 1985, on defendants' Motions to Dismiss. Mark L. Evans appeared on behalf of defendant Amoco Oil Company and several other defendants and Ronald C. Barker and Mitchell R. Barker appeared on behalf of plaintiff Caribou Four Corners, Inc. Because the issues presented in the Motions to Dismiss would be dispositive as to all defendants, if granted, most of the defendants adopted and incorporated into their Motions to Dismiss the extensive legal memoranda submitted by defendants Amoco Oil Company and others and Amerada Hess Corporation and others. The issues were thoroughly briefed by plaintiff and defendants and all parties had opportunity to present extensive oral argument, after which the Court took the matter under advisement. The Court grants defendants’ Motions to Dismiss and hereinafter sets forth its reasoning.

FACTUAL BACKGROUND

This case arises out of a Department of Energy (DOE) Entitlements Program which affected several hundred oil companies and refineries throughout the country. In this novel lawsuit, Caribou Four Corners, Inc., one of the companies involved in the Entitlements Program, sued 105 private firms for entitlements Caribou claims were wrongly denied to it under the Program. Plaintiff characterizes this suit simply as a situation where the defendants have money belonging to the plaintiff and the plaintiff wants it back. In that regard, the plaintiff’s suit is based on state common law theories of implied contract, unjust enrichment, quantum meruit, assumpsit and money had and received. The defendants, on the other hand, view this case as a premature challenge to Agency action involving the complex regulatory scheme promulgated pursuant to the Emergency Petroleum Allocation Act of 1973. Additionally, the defendants articulate several reasons why this Court lacks subject matter jurisdiction over this action. As will be discussed more fully hereafter, this Court disagrees with plaintiff’s simplistic characterization and agrees with the defendants that this Court lacks jurisdiction to hear this case and that the plaintiff’s action is a premature challenge to Agency action.

The Entitlements Program

In 1973, Congress enacted the Emergency Petroleum Allocation Act (EPAA), Pub.L. No. 93-159, 87 Stat. 627 (codified at 15 U.S.C. § 751 et seq.) for the purpose of continuing price controls which had been implemented under the Economic Stabilization Act of 1970 (ESA), Pub.L. No. 92-210, 85 Stat. 743 (codified as amended at 12 U.S.C. § 1904 note). Section 4(a) of the EPAA specifically directed the President to issue regulations governing the price and allocation of crude oil and refined petroleum products. 15 U.S.C. § 753. Under the system, the President created two regulatory price tiers of crude oil. Volumes of crude oil produced and sold that were equal to or less than the volumes produced and sold in the corresponding month of the base period from the same property were called “old oil” and could not be sold at a price higher than the maximum allowable price. Volumes produced and sold that were in excess of the volumes produced and sold from the same property during the base period were called “new oil” and could be sold at market prices. All imported oil and “stripper well” crude oil were also exempt from price controls. In addition, the DOE provided incentives to producers by permitting old oil to be released from price controls based on increased production of new oil.

*365 The artificial constraints on domestic crude oil, combined with significant increases in the price of foreign crude oil during the latter part of 1973 and most of 1974, caused a wide disparity between the average price of controlled domestic “old oil” and uncontrolled foreign and domestic oil. Although the “two tier” system effectively minimized the inflationary impact of rising world oil prices and provided incentives for increased domestic production, the end of the Arab oil embargo, the emergence of adequate crude oil supplies and the input cost of crude oil to refiners created a disparate impact on refiners without or with less access to price-controlled crude oil. Refiners who had greater access to volumes of price-controlled domestic oil had a significant advantage over their competitors who had relied upon oil acquired at world market prices. Contrary to some of the objectives of the EPAA, see § 4(b)(1)(AHI), [15 U.S.C. § 753 (b)(1)(A)(I) ], “economic distortions, interference with the competitive viability of the small and independent sectors of the petroleum industry, and inequitable prices to consumers developed in certain areas of the country under the two-tier system due to the varying reliance of the geographic region in which they made gasoline and petroleum product purchases on uncontrolled domestic and imported oil.” Cities Service Co. v. EFA, 529 F.2d 1016, 1020-21 (TECA 1975), cert. denied, 426 U.S. 947, 96 S.Ct. 3166, 49 L.Ed.2d 1184 (1976).

Pursuant to the EPAA, the Federal Energy Agency (FEA) adopted the Entitlements Program, 10 C.F.R. § 211.67, for the purpose of equitably allocating among domestic refiners the benefits associated with having access to price-controlled crude oil. 1 See Cities Service Co. v. FEA, 529 F.2d 1016 (TECA 1975) (giving a detailed description of the Entitlements Program), cert. denied, 426 U.S. 947, 96 S.Ct. 3166, 49 L.Ed.2d 1184 (1976); Pasco, Inc. v. FEA, 525 F.2d 1391 (TECA 1975) (explaining the imbalance caused by the “two-tier” pricing system and the FEA’s attempts equitably to allocate the benefits under the Entitlements Program).

The Program generally was to spread the benefits of access to “old oil” and the burden of dependence on “new oil” among all sections of the petroleum industry throughout the country and among all consumers of petroleum products, while keeping the anti-inflation measures and retaining the incentives to increase production provided by the two-tier system. Essentially, the Program required refiners to shift this overall reliance on controlled or uncontrolled oil to a balanced position among all the refiners. Cities Service Co. v. FEA, 529 F.2d at 1021. Specifically, the Entitlements Program attempted to allocate the benefits and burdens associated with price-controlled crude oil through a system of money payments among the oil companies participating in the program, rather than through the impracticable method of physically allocating the price-controlled crude oil. Refiners with lower than average access to the “old oil” received entitlements sales benefits. Those refiners with greater than average access to the “old oil” were obliged to purchase the entitlements. 2

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628 F. Supp. 363, 1985 U.S. Dist. LEXIS 13827, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caribou-four-corners-inc-v-american-oil-co-utd-1985.