International Drilling & Energy Corp. v. Watkins

920 F.2d 14, 1990 U.S. App. LEXIS 16334, 1990 WL 131349
CourtTemporary Emergency Court of Appeals
DecidedSeptember 12, 1990
DocketNo. 3-57
StatusPublished
Cited by21 cases

This text of 920 F.2d 14 (International Drilling & Energy Corp. v. Watkins) is published on Counsel Stack Legal Research, covering Temporary 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
International Drilling & Energy Corp. v. Watkins, 920 F.2d 14, 1990 U.S. App. LEXIS 16334, 1990 WL 131349 (tecoa 1990).

Opinion

PER CURIAM.

Plaintiff-Appellant International Drilling and Energy Corporation [IDEC] filed a complaint against the Department of Energy [DOE] in the United States District Court for the District of Delaware, seeking judicial review of a final order by the DOE’s Office of Hearings and Appeals [OHA] denying IDEC’s refund application. The district court granted the summary judgment motion of the defendant DOE on October 25, 1989. For the reasons explained below, we affirm the decision of the district court.

Background

On January 10, 1983, the DOE entered into a Consent Order with Petrolane-Lomi-ta Gasoline Company and its parent, Petro-lane Incorporated [Petrolane], settling all claims of Petrolane’s alleged violation of the federal petroleum allocation and pricing regulations. Under the terms of that Order, Petrolane transferred over $3 million into an escrow fund to compensate its injured customers. In order to disburse those funds to the victims of the violations, the Office of Hearings and Appeals implemented Subpart V procedures pursuant to 10 C.F.R. Part 205 for the submission and review of claims.1 IDEC, a propane resell[16]*16er that purchased propane from Petrolane and resold it to residential customers, filed a formal refund application on January 16, 1987, claiming that it was injured by Petro-lane’s failure to supply it with 14 million gallons of propane and seeking over $1.4 million in restitution.

In its Order of October 20, 1988, the OHA rejected IDEC’s application because IDEC had failed to meet the DOE’s Si-prong test of proving both a supplier/purchaser relationship with Petrolane and injury caused by the alleged violations. Petrolane-Lomita Gasoline Company/International Drilling and Energy Corp., 18 DOE ¶ 85,091 (1988).

Initially, an allocation claimant must demonstrate the existence of a supplier/purchaser relationship with the consent order firm during the consent order period. See 10 C.F.R. § 211.9. We also have stated that “[i]t is advisable to presume that any party claiming injury due to alleged allocation violations who had not previously notified the Department of Energy or otherwise sought redress was not injured by the allocation violation.” OKC Corp., 9 DOE ¶ 82,531 at 85,268.

18 DOE at 88,152. Specifically, the agency found that there was no basis in the record for claiming a supplier/purchaser relationship prior to August 4, 1975. Even though IDEC had entered into a contract in 1972 with another reseller, H.W. Lemens, to purchase certain assets, the OHA noted that the contract did not include the acquisition of Lemens’ propane allocation from Petro-lane. It was not until the Region VI Office of the Federal Energy Administration [FEA] issued an order on August 4, 1975, releasing Petrolane from its obligation to supply Lemens and directing it to supply IDEC instead that Petrolane had a direct obligation to supply propane to IDEC. Therefore, with the FEA order of August 4, 1975, the required supplier/purchaser relationship was established and the first prong of the test was met. Id. at 88,153.

Turning then to the period following that date, the OHA considered whether the applicant had demonstrated that Petrolane’s alleged failure to supply IDEC with propane caused IDEC any injury. It found no evidence in the record that IDEC had filed a contemporaneous complaint against Pe-trolane alleging an allocation violation, and thereupon concluded that IDEC did not rebut the presumption that a party failing to make a contemporaneous complaint of injury was not in fact injured by the alleged violation. Id. Without evidence of a complaint or a credible showing of injury, the OHA concluded that the record did not establish injury to IDEC as a result of Petrolane’s alleged allocation violation, and denied IDEC’s application in its entirety. Id. at 88,153-54.

Following this decision, IDEC sought reconsideration by presenting documentation of an April 1977 complaint it had filed with the DOE against Petrolane. With this new submission before it, the OHA again reviewed all the evidence presented by IDEC. 19 DOE ¶ 85,004 (1989).

As we pointed out in IDEC, an allocation claimant must demonstrate (i) the existence of a supplier/purchaser relationship, (ii) a colorable claim that an allocation violation occurred and (iii) injury as a result of the failure to receive its allocated volume of regulated products. See id., 18 DOE at 88,152.

19 DOE at 88,007. However, on June 1, 1989, the OHA denied IDEC’s motion for reconsideration. 19 DOE at 88,013. It rejected IDEC’s renewed claim of a supplier/purchaser relationship with Petrolane prior to August 4, 1975, finding once more that the Federal Energy Administration’s formal transfer of the propane allocation to IDEC on August 4, 1975 had created the beginning of Petrolane’s obligation to IDEC. 19 DOE at 88,009.

[17]*17As to the post-1975 period, however, IDEC’s documentation of the April 1977 complaint filed against Petrolane, together with the DOE’s response, was considered sufficient proof of a contemporaneous complaint. This evidence was a proper rebuttal of the presumption incorporated in the OHA analysis of applications that a claimant with no previous complaint was not injured. Nevertheless, according to the OHA, IDEC was still unable to present a colorable claim of actual violation.

[T]he mere fact that such a complaint was filed does not establish the validity of the claim for purposes of a special refund proceeding or necessarily entitle the applicant to a refund. As we have repeatedly pointed out, the applicant must show not only that it filed a complaint, but also the claim itself must be “colorable” and not “spurious.” UTP, 14 DOE at 88,306; Tenneco Oil Co./Kern Oil & Refining Co., 10 DOE ¶ 85,003 (1982).

19 DOE at 88,010. The evidence proffered by IDEC included a letter from DOE administrator Wayne Gifford responding to the complaint by analyzing IDEC’s claim. The correspondence described the DOE investigation, the IDEC and Petrolane records Gifford reviewed, and his reasons for concluding that Petrolane did not deliver product to IDEC for a limited period because IDEC had an outstanding balance owed. Id. at 88,010. The OHA pointed out that such a justification for refusing product was proper under the DOE regulations found at 10 C.F.R. § 210.62(d).2

When the agency reviewed the records of IDEC purchases reflecting other time periods, it found that IDEC never formally demanded product from Petrolane, and did obtain propane from other suppliers. It also discovered that, in some years, IDEC was not purchasing the full volume of propane to which it was entitled. With this information, the OHA concluded that IDEC made internal business decisions not to purchase propane, and could not now claim that Petrolane failed to supply product to IDEC. Without a showing in the record of IDEC’s demand for propane or Petrolane’s improper refusal to sell it, the OHA found that IDEC failed to show a colorable claim of actual allocation violation in connection with the contemporaneous complaint.

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920 F.2d 14, 1990 U.S. App. LEXIS 16334, 1990 WL 131349, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-drilling-energy-corp-v-watkins-tecoa-1990.