Pasco, Inc. v. Federal Energy Administration

525 F.2d 1391, 1975 U.S. App. LEXIS 12400
CourtTemporary Emergency Court of Appeals
DecidedOctober 14, 1975
DocketNo. 10-7
StatusPublished
Cited by90 cases

This text of 525 F.2d 1391 (Pasco, Inc. v. Federal Energy Administration) 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
Pasco, Inc. v. Federal Energy Administration, 525 F.2d 1391, 1975 U.S. App. LEXIS 12400 (tecoa 1975).

Opinion

ESTES, Judge.

The plaintiff-appellee, Pasco, Inc., sought and obtained, in the district court, injunctive relief from enforcement of the defendants-appellants’, Federal Energy Administration, et al. (FEA), Old Oil Entitlements Program, 10 C.F.R. § 211.67 (Entitlements program), 39 F.R. 42,246 (December 4, 1974), and a declaratory judgment that the Entitlements program is invalid as applied to Pasco, on the grounds that: the Entitlements program fails to exempt from entitlement purchase obligations all small refiners as defined in section 3(4) of the Emergency Petroleum Allocation Act of 1973, Pub.L. No. 93-159, 87 Stat. 628, 15 U.S.C. § 751 et seq. (1975 Supp.) (Allocation Act),1 and similarly fails to exempt those small refiners established pursuant to federal antitrust decrees,2 such failures being contrary to Congressional intent in passing the Allocation Act; the Entitlements program is arbitrary and capricious and beyond the FEA’s authority, because no differentiation is made, among entitlement sellers, between those [1393]*1393refiners running a high proportion of new, released, or stripper well oil which they produced and refiners running a high proportion of such uncontrolled oil which they purchased in the open market; the administrative modification and review of Pasco’s exception application was arbitrary, capricious, and contrary to substantial evidence; and the administrative appeal process from FEA exception decisions violated the publication requirements of the Freedom of Information Act, 5 U.S.C. § 552(a)(1).

This expedited appeal is from the August 27, 1975 decision and final judgment of the United States District Court for the District of Wyoming, Cheyenne Division, which granted Pasco complete and permanent relief from its obligations, past and future, under the Entitlements program, and ordered such additional requested relief necessary for the FEA to administratively comply with the court order on an equitable basis vis a vis other participants in the program.3 The district court judgment also dismissed the counterclaim of the United States, which was seeking not only to enforce the Entitlements program as applied to Pasco, but also seeking damages for Pasco’s past violations of the FEA entitlement regulation.4

This court has jurisdiction of FEA’s appeal under section 211 of the Economic Stabilization Act of 1970, Pub.L.No. 91-379, 84 Stat. 799, as amended (Stabilization Act), 12 U.S.C. § 1904 note (1975 Supp.), as incorporated into the Allocation Act by section 5(a)(1) thereof, 15 U.S.C. § 754(a)(1) (1975 Supp.).5

[1394]*1394Pasco’s attack on the Entitlements regulation itself, 10 CFR § 211.67, is basically three-fold. It is contended that, contrary to Congressional intent, the FEA failed to specifically and totally exempt from all entitlement purchase obligations, first, all small refiners as defined under the Act and, second, all small refiners established pursuant to an antitrust decree. In addition, Pasco contends and the District Court held that the entire Entitlements program is arbitrary, capricious, and beyond the agency’s authority, for the reason that no differentiation is made between producer-refiners and purchaser-refiners; that is, the regulation does not distinguish, in providing for the issuance of entitlements, between those refiners running low proportions of old oil due to their own high production of new, released, and stripper well oil and those refiners running low proportions of old oil due to their purchases of such new, released, and stripper well oil on the open market.

The Allocation Act was enacted by Congress to authorize the President to deal with the present or threatened severe economic hardships caused by shortages of imported and domestically produced crude oil, all of which constituted a “national energy crisis” and a threat to the public health, safety, and welfare. It was the express intent of Congress that the President be granted “full flexibility in devising the most effective and efficient means of meeting the priority needs of the American people identified in section 4(b).” H.R.Conf.Rep.No.93628, U.S.Code Cong. & Ad.News, 93d Cong., 1st Sess., pp. 2688, 2689 (1973).

In reviewing the exercise of that authority, it must be remembered that the “[e]xercising of the administrative authority and the accomplishment of purposes enumerated by Congress under the recognized emergency conditions are exceedingly complicated undertakings.” Condor Operating Company v. Sawhill, 514 F.2d 351, 359 (Em.App.1975), cert. denied, 421 U.S. 976, 95 S.Ct. 1975, 44 L.Ed.2d 467 (1975). The broad mandate for the equitable allocation of crude oil at equitable prices combined with the rapid rise in world oil prices left the FEA with a “gargantuan task.”6 As stated in Condor Operating Company v. Sawhill, supra, at p. 359:

The urgency of the challenge confronting the agency upon the passage of the Emergency Petroleum Allocation Act already has been recognized. Reeves v. Simon, 507 F.2d 455 (Em. App.1974); People of State of California, State Lands Com’n v. Simon, 504 F.2d 430 (Em.App.1974); Mandel v. Simon, 493 F.2d 1239 (Em.App.1974).

To minimize the inflationary impact of world-wide oil prices and at the same time to provide an incentive for increased domestic production of crude oil, the “two-tier” pricing system for crude oil was promulgated.7 The “two-tier” pricing system basically imposes a ceiling price of approximately $5.25 per barrel on all “old” oil and allows new and released oil to be sold without respect to [1395]*1395the ceiling price, i. e., at approximately $11.28 per barrel.8 The FEA found, however, that while the “two-tier” system met certain necessary objectives, the great disparity between the price of controlled and uncontrolled crude oil was having an unequal impact on all refiners. During the base period of May, 1973, composite crude oil costs of all refiners were approximately equal; however, with the pricing system in effect, the major integrated oil companies, who as a class had far greater access to old oil, had significantly lower composite crude oil costs in refining their products than did the small and independent refiners.

To insure that all refiners and marketers shared equally in the benefits of price-controlled crude oil and the burdens of uncontrolled crude oil, the FEA adopted the Entitlements program. Under this program, a refiner must have one “entitlement” for each barrel of old oil it refines during a particular month. All refiners are initially issued for each month an amount of entitlements equal to their proportionate share of the old oil refined during the month on a nationwide basis.

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Bluebook (online)
525 F.2d 1391, 1975 U.S. App. LEXIS 12400, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pasco-inc-v-federal-energy-administration-tecoa-1975.