Department of Energy v. Hunt

798 F.2d 1421, 1986 U.S. App. LEXIS 27488

• Court: Temporary Emergency Court of Appeals
• Decided: July 16, 1986
• Docket: Nos. 5-101, 5-102
• Status: Published

Opinions

THORNBERRY, Judge:

This appeal presents a narrow issue: whether the district court abused its discretion in holding that the Department of Energy (DOE) failed to demonstrate a change in core circumstances requiring remand of a lawful remedial order to the agency for reconsideration. We are not asked to determine the district court’s power or duty to fashion a restitutionary remedy. Compare United States v. Exxon Corp., 773 F.2d 1240, 1280-87 (Temp.Emer.Ct.App. 1985); Citronelle-Mobile Gathering, Inc. v. Edwards, 669 F.2d 717, 723 (Temp.Emer. Ct.App.), cert. denied, 459 U.S. 877, 103 S.Ct. 172, 74 L.Ed.2d 141 (1982). Because we find that the district court did not abuse its discretion in denying DOE’s motion to remand, we affirm its order.

I. INTRODUCTION

DOE issued the remedial order with which we are concerned in November 1977. The order required the Estate of H.L. Hunt (Hunt) to refund crude oil overcharges of $316,960.91 plus interest to Cities Service Co. (Cities Service), the first purchaser from Hunt. After exhausting its administrative remedies, Hunt filed suit in federal district court for the Northern District of Texas, seeking judicial review of the stripper well regulation on which the remedial order was based, DOE’s interpretation of the regulation in Rulings 1974-29 and 1975-12, and the remedial order itself. In 1979 the district court issued a preliminary injunction restraining DOE from enforcing the stripper well regulation against Hunt. At the same time, the court ordered Hunt to pay an amount equal to the alleged overcharges into an interest-bearing escrow account.

This Court upheld the stripper well regulation in 1982. In re Department of Energy Stripper Well Exemption Litigation, 690 F.2d 1375 (Temp.Emer.Ct.App.1982), cert. denied, 459 U.S. 1127, 103 S.Ct. 763, 74 L.Ed.2d 978 (1983).' Soon afterward DOE filed a motion for summary judgment and for remand of the part of the remedial order that required Hunt to refund the overcharges to Cities Service. DOE sought the remand on grounds that the decontrol of oil prices in 1981 constituted a change in circumstances that undermined the agency’s purpose in ordering the refund. The district court granted DOE’s summary judgment motion, Prosper Energy Corp. v. Department of Energy, 549 F.Supp. 300 (N.D.Tex.1982), but subsequently denied its motion for partial remand. DOE and the intervenor States¹ appeal the district court’s order denying partial remand.²

This Court’s review of the district court’s order is limited. The decision whether to grant an agency’s motion to remand for changed circumstances is committed to the sound discretion of the court hearing the motion. Cf. Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 171-72, 83 S.Ct. 239, 247-48, 9 L.Ed.2d 207 (1962) (finding that district court, “in the exercise of its sound discretion,” should have remanded order to agency in light of charged circumstances). Thus, this Court may reverse a district court’s order denying a motion to remand only if we find that the district court has abused its discretion.

II. CHANGE IN CIRCUMSTANCES

DOE relies on a line of cases that favor remand “where there has been a change in circumstances, subsequent to administrative decision and prior to court decision, that is not merely ‘material’ but rises to the level of a change in ‘core’ circumstances, the kind of change that goes to the very heart of the case.” Greater Boston Television Corp. v. Federal Communications Commission, 463 F.2d 268, 283 (D.C.Cir. 1971), cert. denied, 406 U.S. 950, 92 S.Ct. 2042, 32 L.Ed.2d 338 (1972). DOE argues that decontrol of the oil industry in 1981 changed the “core circumstances” in this case. Before decontrol, a first purchaser-refiner such as Cities Service, upon receiving a refund from its crude oil supplier, would have been required either to reduce its maximum lawful selling price or to draw upon its “bank” of unrecouped costs.³ In either case, the refiner might have been forced to lower the price it charged its customers for refined products. Ultimately, DOE contends, this price reduction would have been passed through the marketing chain to the consumer. In this manner the refund would have found its way to those who bore the brunt of the overcharge. After decontrol, by contrast, the first purchaser-refiner can simply pocket any refund it receives for overcharges; no pass-through is required.⁴

Cities Service offers two principal counterarguments. First, it notes that by early 1979 DOE had exempted from price controls between fifty and sixty percent of all refined products by volume. Refiners were not required to pass through cost reductions properly allocated to these products. Second, the price regulations established a maximum lawful selling price. According to Cities Service, market conditions held the actual selling prices below the maximum price throughout the period between issuance of the remedial order and decontrol. Consequently, had Cities Service received the refund before decontrol, its maximum lawful selling price would have decreased slightly, but its actual selling price would not have changed. At most, Cities Service argues, its bank of unrecouped costs would have shrunk somewhat, a matter of little significance given the small amount of the refund. Thus, Cities Service’s use of the refund before decontrol would have been no more limited as a practical matter than its use after decontrol; in neither case would the refund have been passed through for the consumer’s benefit.

DOE has not attempted to disprove Cities Service’s contentions, either before this Court or before the district court. Instead, it argues that the accuracy of those contentions should be determined in the first instance by DOE on remand.⁵ In effect, therefore, the agency asserts not that a change in core circumstances justifies remand in this case, but that remand is necessary to determine whether core circumstances have changed. This view reflects a fundamental misunderstanding. As proponent of the remand motion, DOE bears the burden of demonstrating a change in core circumstances. The agency cannot sustain its motion merely by asserting that changed circumstances might appear upon further inquiry after remand.

Considerations of administrative and judicial finality justify placing the burden of proof on the party seeking remand.⁶ The proceedings in this case demonstrate the strength of this interest. DOE issued its remedial order to Hunt in 1977. Hunt sought judicial review in 1978. The order was upheld in 1982. Eight years have passed since DOE issued the order. DOE asks us to remand to the agency for another round of adjudication, to be followed inevitably by further review in the district court, in this Court, and possibly in the Supreme Court. Surely it is appropriate to require the party seeking to invoke administrative and judicial process for further consideration of a concededly lawful order to show good reason for doing so. See Solar v. Pension Benefit Guaranty Corp., 504 F.Supp. 1116, 1123-24 (S.D.N.Y.) (denying “in the interests of finality” an agency’s motion seeking remand), aff'd per curiam, 666 F.2d 28 (2d Cir.1981); see also United States v. Texas Energy Petroleum Corp., 719 F.2d 394, 398 (Temp.Emer.Ct. App.1983) (stressing importance of swift resolution of cases brought under Emergency Petroleum Allocation Act, since the Act is no longer in effect); Rossi v. Mobil Oil Corp., 710 F.2d 821, 827 (Temp.Emer. Ct.App.1983) (“The [price and allocation] program no longer exists. Surely it is in the interest of both parties that this litigation be not prolonged unnecessarily.”).

In light of these concerns, we hold that the district court did not abuse its discretion in finding that DOE failed to sustain its burden of showing a change in core circumstances.⁷ This does not mean, of course, that we would necessarily have decided the issue the same way if the motion for remand had been presented to this Court, the relevant inquiry is not how this Court would have ruled in the first instance, but whether the district court’s decision fell within the limits of its discretion. See Washington v. Sherwin Real Estate, Inc., 694 F.2d 1081, 1087 (7th Cir.1982). Nor are we suggesting that those district courts which have remanded pre-decontrol remedial orders to the DOE⁸ have erred in doing so. The range of a court’s sound discretion may encompass more than one “right” approach.

III. CONCLUSION

Our role in this case is simply to decide whether the district court abused its discretion in concluding that DOE did not show a change in core circumstances that would warrant remand of the agency’s lawful remedial order. We hold that the court did not abuse its discretion. Consequently, we affirm its order denying DOE’s motion to remand.

1 . DOE and the intervenor States make similar arguments on appeal, and we refer to them collectively as “DOE.” Similarly, we refer to appellees Cities Service and Hunt as “Cities Service.”

2 . The intervenor States also appeal the district court’s order denying the States’ motion for reconsideration of the order denying remand. The States argue that the district court should have granted their motion for reconsideration because the court's order denying remand was inconsistent with its decision in Christmann & Welborn v. DOE, 4 Energy Mgmt. (CCH) ¶ 26,-467 (N.D.Tex. Dec. 20, 1982), in which it remanded a remedial order to DOE "for consideration of the appropriate remedy in light of decontrol.” But as the district court pointed out in the unpublished opinion accompanying its order denying the motion for reconsideration, factual differences between Christmann and this case explain the apparently inconsistent results. In Christmann, the amount of the refund was uncertain and could best be calculated on remand, while in this case the amount of the refund owed by Hunt is established. Moreover, the escrow agreement in Christmann provided that DOE would control the disbursement of escrowed funds, while in this case the DOE has no part in the disbursement of funds. In light of these differences, we find no inconsistency in the district court’s decision in Christmann and its decision in this case.

3 . A refiner’s maximum lawful selling price under price controls was computed by adding its May 15, 1973 price to certain increased costs since that time. 10 C.F.R. § 212.83 (1981). When market conditions prevented the refiner from charging the maximum lawful price, the refiner was permitted to "bank" the unrecouped costs. These banked costs could be used under certain circumstances to increase the refiner’s maximum lawful price when market conditions later improved. Id. Because the refund from Hunt would have represented a decrease in Cities Service’s costs, it would have forced Cities Service either to lower its maximum selling price or to draw upon its bank of unrecouped increased costs from previous months.

4 . DOE also argues that before decontrol Cities Service would have spread both the burden of Hunt’s overcharges and the benefits of any refund to other refiners and ultimately to the consumer through the Entitlements Program, 10 C.F.R. § 211.67. But DOE took precisely the opposite position before the district court, stating: • "Almost all of Hunt’s disputed overcharges occurred [sic ] prior to the implementation of the Entitlements Program. Therefore, the first purchaser(s) of Hunt’s crude oil bore the initial overcharge, rather than all refiners." Memorandum in Support of Defendants' Request for Remedial Action, at 7. In light of this assertion by DOE, the district court certainly did not abuse its discretion in discounting the impact of the Entitlements Program on this case.

5 . DOE seems to take the position that this Court should invoke the primary jurisdiction doctrine. Under this doctrine, courts asked in the first instance to decide matters peculiarly within the competence of an administrative agency may seek the agency’s views. See Oasis Petroleum Corp. v. DOE, 718 F.2d 1558 (Temp.Emer.Ct. App.1983). Here, however, DOE has already considered the matter and reached its conclusion. The district court was not asked to decide in the first instance whether Hunt should pay the refund to Cities Service, but whether circumstances have changed sufficiently to justify reconsideration by DOE of its earlier decision.

6 . DOE correctly notes that the district court did not mention finality in the unpublished opinion accompanying its order denying remand. As the prevailing party in the district court, however, Cities Service may assert any ground in support of the district court’s order. See Colautti v. Franklin, 439 U.S. 379, 397 n. 16, 99 S.Ct. 675, 686 n. 16, 58 L.Ed.2d 596 (1979).

7 . We have no doubt that the district court exercised its discretion in finding that DOE failed to show a change in core circumstances. In the unpublished opinion accompanying its order denying remand, the court noted that it was required to enforce the remedial order “so long as the premise for said order is still viable." The court then discussed the "changed circumstances" issue at some length and concluded:

It appears that (1) there has been no significant change in the core circumstances surrounding the issuance of the 1977 remedial order ...; and (2) the justifications set forth by DOE for its reconsideration of its 1977 remedial order are not persuasive in this context. Accordingly, the court will not order remand of the 1977 remedial order to DOE.

This passage clearly demonstrates that the district court considered DOE's arguments in favor of remand and, in an exercise of its discretion, rejected them.

8 . See Grigsby v. DOE, 561 F.Supp. 50 (W.D.La. 1982), aff’d on other grounds, 701 F.2d 147 (Temp.Emer.Ct.App.), cert. denied, 460 U.S. 1086, 103 S.Ct. 1780, 76 L.Ed.2d 350 (1983); Christmann & Welborn v. DOE, 4 Energy Mgmt. (CCH) ¶ 26, 467 (N.D.Tex. Dec. 20, 1982); Olympia Exploration Co. v. DOE, 4 Energy Mgmt. (CCH) ¶ 26, 368 (W.D.Okla. Dec. 10, 1981); Sun-dance Oil Co. v. DOE, 4 Energy Mgmt. (CCH) ¶ 26,345 (D.Colo. Oct. 23, 1981).