Houston Oil & Refining, Inc. v. United States Federal Energy Regulatory Commission

95 F.3d 1126
CourtCourt of Appeals for the Federal Circuit
DecidedSeptember 10, 1996
DocketNo. 95-1354
StatusPublished
Cited by1 cases

This text of 95 F.3d 1126 (Houston Oil & Refining, Inc. v. United States Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Houston Oil & Refining, Inc. v. United States Federal Energy Regulatory Commission, 95 F.3d 1126 (Fed. Cir. 1996).

Opinion

SCHALL, Circuit Judge.

This appeal arises from a remedial order (“RO”) issued by the Federal Energy Regulatory Commission (“FERC”) and affirmed by the United States District Court for the Southern District of Texas. On April 29, 1988, the Department of Energy (“DOE”) issued a RO (i) finding that Houston Oil and Refining, Inc. (“Houston”) had violated 10 C.F.R. § 212.186 (1980) (the “layering regulation”), a crude oil resale regulation, and (ii) ordering restitution of overcharges. Houston Oil & Refining, Inc., 17 DOE (CCH) ¶ 83,011 (1988). The RO held Houston and Joseph A. Imparato (“Imparato”) jointly and severally liable for the restitution. Id. at 86,132-35. FERC affirmed the RO, Houston Oil & Refining, Inc., 65 FERC (CCH) ¶61,-022 (1993), and Houston and Imparato appealed to the district court. On March 15, 1995, the court granted DOE’s motion for [1130]*1130summary judgment, affirmed FERC’s RO, and entered judgment requiring Houston and Imparato to disgorge as restitution $57,989,-722.44, plus interest. Houston Oil & Refining, Inc. v. Department of Energy, No. H-93-3836 (S.D.Tex. Mar. 15, 1995). On May 15, 1995, Houston and Imparato appealed concurrently to the Courts of Appeals for the Federal Circuit and the Fifth Circuit. The Fifth Circuit granted DOE’s motion to dismiss the appeal for lack of jurisdiction. Houston Oil & Refining, Inc. v. FERC, No. 95-20394 (5th Cir. June 28, 1995). Houston and Imparato challenge both our jurisdiction and the decision of the district court on the merits. For the reasons set forth below, we (i) hold that we have jurisdiction and (ii) affirm the decision of the district court affirming FERC’s RO.

BACKGROUND

As we recounted in Phoenix Petroleum Co. v. FERC, 95 F.3d 1555 (Fed.Cir.1996), also decided today, in 1971 President Nixon imposed wage and price controls under the authority of the Economic Stabilization Act of 1970 (“ESA”), Pub.L. No. 91-379, 84 Stat. 799 (1970) (codified as amended at 12 U.S.C. §§ 1901-1910 note (1994)). 95 F.3d at 1559-60. In 1973, the Emergency Petroleum Allocation Act of 1973 (“EPAA”) was enacted. Pub.L. No. 93-159, 87 Stat. 627 (1973) (codified as amended, but omitted, at 15 U.S.C. §§ 751 et seq. (1994)). That statute, which incorporated by reference portions of the ESA, required the President to promulgate regulations providing for the mandatory allocation of crude oil, in amounts and at prices specified in the regulations. Phoenix, 95 F.3d at 1560; Bonray Oil Co. v. Department of Energy, 472 F.Supp. 899, 900-01 (W.D.Okla.1978), aff'd, 601 F.2d 1191 (Temp. Emer.Ct.App.1979). The President’s authority under the EPAA expired on September 30, 1981. Energy Policy and Conservation Act, Pub.L. No. 94-163, § 461, 89 Stat. 871, 955 (1975); Texas American Oil Corp. v. Department of Energy, 44 F.3d 1557, 1562 (Fed.Cir.1995) (in bane). However, a savings provision in the EPAA provided that expiration of the President’s authority did not affect pending enforcement proceedings or enforcement proceedings, such as the present one, based upon acts committed or liability incurred prior to the expiration date. EPAA § 18, 89 Stat. at 955; Texas American, 44 F.3d at 1562.

The regulations controlling the allocation and price of crude oil were enforced by DOE and its predecessors, the Cost of Living Council, the Federal Energy Office, and the Federal Energy Administration. Phoenix, 95 F.3d at 1559-61. FERC is charged with reviewing EPAA ROs issued by DOE. 42 U.S.C. § 7193. After such review, FERC issues an order affirming, modifying, or vacating the remedial order. For purposes of judicial review, the FERC order constitutes a final agency action. Id. The FERC decision initially is reviewed in a United States district court. See 42 U.S.C. § 7193(c); 42 U.S.C. § 7192(a); ESA § 211(a), 85 Stat. at 748-49. Prior to April 29, 1993, review of the district court decision was within the jurisdiction of the Temporary Emergency Court of Appeals (“TECA”). Phoenix, 95 F.3d at 1559-62. Effective that date, however, TECA was abolished, and all remaining actions within its jurisdiction were transferred to this court. Federal Courts Administration Act of 1992 (“FCAA”), Pub.L. No. 102-572, § 102, 106 Stat. 4506, 4506-07 (1992); Texas American, 44 F.3d at 1561. At the same time, the jurisdiction of the Federal Circuit was expanded to add appeals arising under the EPAA/ESA. FCAA § 102(c), 106 Stat. at 4507; see 28 U.S.C. § 1295(a)(11)-(12) (1994).

In MAPCO Int’l Inc. v. FERC, 993 F.2d 235 (Temp.Emer.Ct.App.1993), TECA recounted the circumstances which led to the layering regulation, which is at issue in this case.

In the latter half of the 1970s there was a large increase in the number of [crude oil] resellers and a change from the traditional reselling activities of gathering, storing and transporting crude oil, as they had historically done in the past, to an almost instantaneous transfer of title from a seller to a buyer. In response the DOE promulgated a new set of regulations in 1978, designated 10 C.F.R. Part 212, Subpart L, [1131]*1131that applied to resales of crude oil. In general, the regulations were established to limit the legitimate resellers (those gathering and moving the crude oil) to a “permissible average markup” (PAM) of their prices each month, and to deny price markups for resales in which no legitimate reselling service was performed. This latter activity, which inflated prices of crude oil when none of the services traditionally associated with resale of crude oil was performed, is called “layering.” The layering rule [prohibited layering], 42 Fed. Reg. 64856, 64865 (December 29, 1977), reprinted at 10 C.F.R. § 212.186.

993 F.2d at 238.

In this ease, DOE found that Houston was a Texas corporation organized in May 1979, and that it conducted its first crude oil transaction in June 1979. During the period June 1979 through August 1980, Houston engaged in the trade or business of purchasing crude oil and reselling it, without substantially changing its form, to purchasers other than consumers. Houston Oil, 17 DOE at 86,123-24. During that time, Imparato was Houston’s president and sole stockholder. Id. at 86,134. It was uncontested that Houston sold the ofl at prices in excess of those at which it was acquired.

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