Consumers Power Co. v. Department of Energy

742 F.2d 1468, 1984 U.S. App. LEXIS 20161

• Court: Temporary Emergency Court of Appeals
• Decided: July 26, 1984
• Docket: No. 6-32
• Status: Published

Opinions

MAXWELL, Judge.

Defendant-Appellant, the Department of Energy (“DOE”), appeals an order entered by the district court for the Eastern District of Michigan requiring it to include plaintiff-appellee Consumers Power Company (“Consumers”) in the Entitlements Program for the period from the program’s inception in November 1974 through January 1976.

The Entitlements Program was part of a comprehensive regulatory framework administered by DOE for the mandatory aliocation and pricing of crude oil and refined petroleum products. See Emergency Petroleum Allocation Act of 1973, Pub.L. No. 93-159, 87 Stat. 627 (1973) codified at 15 U.S.C. §§ 751, et seq., 753(b)(1)(F) (1976). The Entitlements Program was designed to alleviate inequities which arose by virtue of the two-tier pricing system which was in effect from mid-1973 through late January 1981. Essentially, refiners with greater access to cheaper, price-controlled crude oil would make payments in the form of entitlements to refiners with less access to the cheaper price-controlled oil. This “spread the benefit of access to old price-controlled oil ... among all sectors of the petroleum industry, all regions of the country, and among all consumers of petroleum products.. Cities Service Co. v. Federal Energy Administration, 529 F.2d 1016, 1021 (TECA 1975), cert. denied, 426 U.S. 947, 96 S.Ct. 3166, 49 L.Ed.2d 1184 (1976).

On January 28, 1981, President Reagan decontrolled the price of crude oil. Executive Order 12287, 46 Fed.Reg. 9909 (1981). In response, DOE promulgated a Clean-up Regulation” which provided for the issuance of a final Entitlements Notice (the ,... , T . , ... .. Entitlements Clean-up List ) which would ...... . ,... , ' , , . set forth final entitlement adjustments for ,, . . ... , f6092 (19^ c°dlfiedat 10 C-F-R- § 211.69 (1983). The final Clean-up List has not een pu is e .

From 1973 through December, 1979, Consumers operated a synthetic natural gas plant where it converted petroleum liquids, including lease condensate and Canadian plant condensate, into various products, The synthetic natural gas produced was sold to Consumers’ gas customers.

On February 24, 1976, Consumers applied to the Federal Energy Administration for inclusion in the entitlements program and the resulting benefits as a seller of entitlements. This application was rejected. Consumers renewed its application on June 17, 1976. The Department of Energy then determined that Consumers was a refiner and was eligible to participate in the entitlements program on and after June 17, 1976.

Thereafter Consumers petitioned the Department of Energy for entitlement rights for the period of February 1976, the time 0f Consumers’ first application, to June 16, 1976. The Agency through its Office of Hearings and Appeals denied such relief on April 14, 1981, finding that the record did not reveal that Consumers qualified as a refiner prior to June, 1976, and finding that retroactive relief should include an examination of Consumers’ position as a refiner ¡n the entitlement program prior to February 24, 1976, as well.

Consumers led to the district court) which essentially ruled that since the gram was mandatory; Consumers should be induded prior to June or Februaryj 1976> if the synthetic natural gas plant made Consumers a refiner under the law. The court remanded to the agenc

„ , „ , . On remand for a determination of eligímty> Consumers filed with DOE’s Office of Hearings and Appeals a Motion for Determination of Refiners Eligibility, seeking a ruijng that it was in fact eligible from November 1 1974.

n „ inoo ,, . , ,. , On March 2, 1983 the agency ruled that ^ Consumers was m fact a refiner, as de- .... , ,. „ ., . . . fined by the regulations, from the period of November 1, 1974, through June, 1976. The agency further found that Consumers had not complied with the reporting requirements for the entitlements program as required by the agency’s regulations and therefore was not eligible to receive the resulting benefits as a refiner. It was determined by the agency that the noncompliance with the reporting regulations amounted to an estoppel of Consumers from participating in the entitlements program as a seller of entitlements,

Upon returning to the district court, the agency’s action was reversed as to Consumers being denied the right to participate in the entitlements program. The Court again repeated that the entitlements program was mandatory and ordered the agency to calculate benefits due and owing to Consumers as a refiner, as was determined by the agency, from November 1, 1974. The district court’s order of September 23, 1983 is the subject of this appeal.

As part of the regulatory scheme for the operation of the entitlements program, pri- or to its end in 1981, 10 C.F.R. § 211.66(h) required that adjustments or amendments to reports refiners were required to submit monthly were to be filed with the refiner’s next monthly report. The “Clean-Up” regulation requires that all errors and adjustments to reports filed for the period October 30, 1980, to January 27, 1981, be filed with DOE by August 15, 1981. 10 C.F.R. § 211.69(c) and (d). From these regulations, DOE reasons that Consumers’ information concerning entitlements prior to June, 1976, should have been on file with the agency prior to March 5,. 1981 (flowing from 10 C.F.R. § 211.66(h)) or August 15, 1981, at the latest (flowing from 10 C.F.R. § 211.69(d)).

DOE then reasons that since Consumers had contacted it concerning the February through June, 1976, entitlements on January 13, 1981, the information for this period was received in a timely fashion. Since no information was received on the November, 1974, through February, 1976, period until after the first district court remanded order of September, 1982, it was untimely and could not be considered.

The Court is of the opinion that the August 15, 1981, deadline in the “Clean-Up” regulation, 10 C.F.R. § 211.69(c) and (d) is applicable only to the October, 1980, to January 27, 1981; reporting period; and that the March 5, 1981, deadline is intended to be applicable only to refiners submitting regular monthly reports under the entitlements program pursuant to 10 C.F.R. § 211.66(h). It would appear the August 15, 1981, deadline is inapplicable to this controversy and that the March 5, 1981, deadline is contrived, at best a strained interpretation.

Moreover, DOE’s position ignores other language in the Clean-Up regulation and agency statements issued with the final rule which indicate that entitlement claims and obligations resulting from administrative or judicial determinations are eligible for inclusion in the entitlements “CleanUp” list without regard to a reporting deadline. 10 C.F.R. § 211.69(d)(3). The agency has stated, “... This will include, for example, any administrative or judicial decisions which relate to months prior to the reporting period.” 46 Fed.Reg. 36092, 36096 (July 13, 1981). See 46 Fed.Reg. at 36093.

DOE’s position also appears to ignore the mandatory nature of the entitlements program as enunciated by the district court below, by this Court in Cities Service Co. v. Federal Energy Administration, supra, and by the agency itself in Glacier Park Company (Case No. FXA-1239) 6 F.E.A. 1180,522 (July 18, 1977). The Court is of the opinion that DOE cannot ignore the mandatory nature of the entitlements program here simply because Consumers would benefit from inclusion, as compared with Glacier Park Company where the agency insisted on inclusion and the refiner stood to lose.

For the reasons stated above the court believes the conclusions and decision of the district court of September 23, 1983, is the correct application of the law and regulations to the facts and circumstances presented in the record before the court and the district court’s order, the subject of this appeal, is affirmed.