Petition — Marathon Oil Co. v. Federal Energy Administration

sccesiiemsibinimainatiiaiuiniioniiiipecalttl 1976

IN THE

ICHAEL RODAK, JR., CLEP

Supreme Court of the United States —— =n

OcroBeR TERM, 1975

MaraTHON Ori CoMPANY,

Petitioner

v.

FEepERAL EnerGy ADMINISTRATION ;

Franx G. Zars, Administrator,

Federal Energy Administration; and

ASHLAND Om, Inc.

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS .

OF THE UNITED STATES

GrorGcE BLow,

JOHN OBERDORFER,

JouN Epwarp WILLIAMS,

1200 17th Street, N.W.

Washington, D.C. 20036

Kent B, Hampton,

J. Furman Lewis,

Marathon Oil Company

539 South Main Street

Of Counsel, Findlay, Ohio 45840

Rap 8. SPRITZER, Attorneys for Petitioner,

3400 Chestnut Street Marathon Oil Company

Philadelphia, Pennsylvania 19174

Paess or Brnonw S, ADAMS Paintine, Inc., WASHINnoTON, D. OC,

INDICX

Page

I 6 oss a ea ce db eke be be inaeeeenens ]

IR: 8b. oo! oT see ce hehe teeees ceed 2

QUESTIONS PREGENTED 2. .ccccccccccccccccseccsccons 5)

CONSTITUTIONAL, Stratutrory AND Reauiatory PRovI-

rr Ce 8 ts due onde beeeeneeese « 4

SES ee Ee ee ee ge ee 4

REASONS FOR GRANTING THE WRIT .....cccccccscccces S

Rs Ni i eg i a ee eee tae 16

CITATIONS

CASES:

Algonquin, SNG, Ine. ve. PRA, AS Fed 1051 (D.C,

Cir.), cert, aranted, 44 U.S.L.W. 3236 (U.S. Nov. 3,

re ce Ce Ol Co bens ae been ns 14,15

Amalaamatcd Meat Cutters Union vy. Connallu, 337 F.

Supp. 767 (DDC, 1971)

Armstrong v. United States, 364 U.S, 40 (1960) ..... 12,14

Block vy. Hirsh, 256 U.S. 185 (1921) ....ccccccccvecs

Cities Service Co. v. FEA, No. DC-34 (THCA, Dee, ol,

1975), petition for cert, filed (No, 75-1230, Feb. 27,

DD. ‘i sesha ee deocids wa skeee eedceaecee 2, 10, 14

Condor Operating Co. vy. Sawhill, 514 F.2d 35

(TECA), cert. denied, 421 U.S. 976 (1975)

Consumers Union of the United States, Inc. v. Sawhill,

i @ @ Beis By, + @ . | ere 1D

Knox v. Lee, 79 U.S. (12 Wall.) 287 (1871) ......... 12

Kohl v. United States, 91 U.S. 367 (1876) ........... 12

Local 11, Elec. Workers vy. Boldt, 481 F.2d 1392

(TECA), cert. denied, 414 U.S, 1092 (1973) ..... 10

Monongah la Nai igation Co. v. United States, 148 U.S.

Se CE £u0 seu succuchsetsadbeueewocceereuness 12

Pasco, lune. vy. FEA, No, 10-7 (THCA Oct. 14, 1975) ...2, 14

Pennsylvania Coal Co. v. Mahon, 260 U.S. 3938 (1922). 14

il Index continued

Page

Regional Rail Reorganization Act Cases, 419 U.S. 102

PGE: Scanecceeeensbeateuae eee uhess xia 9,13

Richards vy. Washington Terminal Co., 233 U.S, 546

SEE e506 0 6-ab Dan ae ees hoes ena eae ee i)

Shell Oil Co. v. FEA, No, 5-13 (TECA, Noy. 11, 1975). 15

Thompson vy. Consolidated Gas Corp., 300 U.S, 55

CREED: phe adua sin Guts deusduuetssuns chs eubceres l4

United States v. Causby, 320 U.S, 256 (1946) ........ i)

United States v. Central Eureka Mining Co., 357 U.S.

I he Ce Ne eae ata eee 10, 1]

Western States Meat Packers Ass’n vy, Dunlop, 482

¢ 8 Fe 28) Gg Pre rere rrr tre 10, 11

CONSTITUTE IN, STATUTES!

U.S. Constitution, Amendment V, $4 ............ passim

leonomie Stabilization Act of 1970,

note to 12 U.S.C, § 1904

Sections 205-207, 209-211 2

Section 210(a)

I NS oe ig ee td

Sections 211(b)(2), (e)

Section 211(g)

S46¢660664 @Oeeeeeeeoeos8 6060086 06080 3

O'@e2.646060 68 60888 2886 @2:°¢

*- *« - - -*-

W SS bo to SS

866606808 666-6.6:6.68 828428 Be6e886 8

ltmergency Petroleum Allocation Act of 1973,

1d) U.S.C, o§ 751-56

Section 4(a), 15 U.S.C. § 753(a) ...... 2,3,4,5, 15

Section 4(b)(1), 15 U.S.C. § 758(b)(1) 2.0... 15

Section 4(b)(2)(A), 15 U.S.C,

NI ie oe ee 4,13

Section 5(a)(1), 15 U.S.C. § 754(a)(1) ...... 2,3

nergy Poliey and Conservation Act, 89 Stat. S71... 5

Section 403(a), 8B Stat, 948 .....cccccccccececen (

lederal Energy Administration Act, 15 U.S.C.

LT 6040s Sexensesendsaeeeaceecsss ecekuedl i)

BUG 6 TOD . ccccccrccccccccscseuseseeeeeesossss y

Index continued ili

Page

2

OB U.S.C. S$ 1881 ... ncccccevcccevevensccesessences

9

PS UG.C, S DOL .ncccccccvccsccccvesesesccessceres yA

REGULATIONS:

é | (

10 CUFLR. § 211.62 .... ccc ceceeccvvcvevevevecerens j

10 CUFLR. § 212.83 ..ccccvccccccecccccevevsvvcceees 7

MisCeELLANEOUS:

| ove ’ (\" 5

Kntitlements Program, 39 Fed, Reg. 42946 (1974) ... )

i xecutive Order 11790, 39 Fed. Reg, 23185 (1974) ... 5

MEA Directive of Jan, 10, 1975, 40 Fed, Reg. 2560

(IOTB) nc cccccccccvecscscvaccteucseseassegeveves i)

PEA Ruling 1974-27, 10 CLPLR. at 29L 6. eee eee ee eee 7

S, Rep. No, 94-016, 04th Cong. Ist Sess. (1975) ....-. 13

Sax. Takings, Private Properly and Public Rights, 31

bab Ne A ys ; ;

Valo Lid. 149 (1971) 2... ccc cere ee ne eee enn eeees 12

IN THE

Supreme Court of the United States

OcToBER TERM, 1975

No. 75——

MaraTHon O11 COMPANY,

Petitioner

v.

FEDERAL ENERGY ADMINISTRATION ;

FRANK G. Zars, Administrator,

Federal Energy Administration; and

ASHLAND O11, INC.

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

Marathon Oil Company (‘‘Marathon’’) petitions

that a writ of certiorari issue to review the judgment

of the Temporary Emergency Court of Appeals of the

United States entered in this case on February 17,

1976.

OPINIONS BELO'NV

The per curiam order of the Temporary Emergency

Court of Appeals of the United ‘States, entered on Feb-

ruary 17, 1976 (A. la),’ and the order of the United

***(A. )’’ refers to the separately bound Appendix.

2

States District Court for the Northern District of Ohio

granting final judgment, entered on August 29, 1975

(A. 3a), are not officially reported.

The Temporary Emergency Court of Appeals’ per

curiam order of February 17, 1976, states that two of

its other decisions, Pasco, Ine. v. FEA, No. 10-7

(TECA, Oct. 14, 1975), and Cities Service Co. v. FEA,

No. D.C,-34 (TECA, Dee. 31, 1975), petition for cert.

filed (No, 75-1230, Feb. 27, 1976), are ‘‘dispositive as

against all of the contentions’’ of Marathon. These de-

cisions (not yet reported) are reproduced in the

Appendix (A. 83a).

JURISDICTION

The judgment of the Temporary Emergency Court

of Appeals was-entered on February 17, 1976. The Dis-

trict Court had jurisdiction under section 5(a)(1) of

the Emergency Petroleum Allocation Act of 1973

(‘‘Alloeation Act’’), 15 U.S.C. §754(a)(1), which

makes sections 205-207 and 205-211 of the Economie

Stabilization Act 6f 1970 (‘Economic Stabilization

Act’’), note to 12 U.S.C. § 1904, applicable to a regula-

tion promulgated under section 4(a) of the Allocation

Act; sections 210(a) and 211(a) of the Economie Sta-

bilization Act; 28 U.S.C. §§ 1331, 2201; and 5 U.S.C.

§ 702.

* By order entered on January 31, 1975, the District Court denied

a motion by Marathon for a preliminary injunction and a motion

for certification of substantial constitutional questions (A. 27a).

This order is not reported. The Temporary Emergency Court of

Appeals dismisse¢ Marathon’s appeal of the January 31, 1975,

District Court order for lack of jurisdiction by order entered on

Apri! 21, 1975 (A. 6a). This order is reported at 516 F.2d 1397.

3

The Temporary Emergency Court of Appeals had

jurisdiction to review the judgment of the District

Court and to consider the constitutional issues raised

in this case under section 5(a)(1) of the Allocation

Act, which makes sections 205-207 and 209-211 of the

Economic Stabilization Act applicable to a regulation

promulgated under section 4(a) of the Allocation Act;

and sections 211(b) (2), (¢) of the Economie Stabiliza-

tion Act.

This Court has jurisdiction to review the judgment

of the Temporary Emergency Court of Appeals under

section 5(a)(*) of the Allocation Act, which makes

sections 205-207 and 209-211 of the Economic Stabiliza-

tion Act applicable to a regulation promulgated under

section 4(a) ; section 211(g) of the Economic Stabiliza-

tion Act; and 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether directives of the President that Mara-

thon make payments to other oil refiners of more than

$62 million over a period commencing in January 1975

and continuing as of this date, even if arguably author-

ized by an act of Congress, violate the fifth amendment

because they effect a taking for a private rather than

a public use, and because they constitute a taking with-

out just compensation.

2. Whether such directives, even if arguably with-

in the stated objectives of the Emergency Petroleum

Allocation Act of 1973, were authorized by that act.

4

CONSTITUTIONAL, STATUTORY AND REGULATORY

PROVISIONS INVOLVED

U.S. Const. Amend. V, $4:

‘* |. nor shall private property be taken for public

use, without just compensation.”

Section 4(a) of the Emergency Petroleum Allocation

Act of 1973, 15 U.S.C. § 753(a):

‘* .. the President shall promulgate a regulation

providing for the mandatory allocation of crude

oil, residual fuel oil, and each refined product, in

amounts specified in (or determined in a 1. nner

prescribed by) and at prices specified in (or deter-

mined in a manner prescribed by) such regula-

tion.”’

Section 4(b)(2)(A) of the Emergency Petroleum

Allocation Act of 1973, 15 U.S.C. § T53(b) (2) (CA):

**(2) In specifying prices (or prescribing the man-

ner for determining them), such regulation shall

provide for—

*(A) a dollar-for-dollar passthrough of net in-

ereases in the cost of crude oil, residual fuel oil,

and refined petroleum products to all marketers or

distributors at the retail level’’.

The relevant regulations of the Federal Energy Ad-

ministration are set forth in the Appendix (A. 46a).

STATEMENT

Marathon Oil Company (‘‘Marathon’’),’ under the

challenged directives of the Federal Energy Adminis-

° Marathon produces, transports, refines and sells erude oil in the

United States and abroad. As a result of substantial past and con-

tinuing capital expenditures in exploration and development, Mara-

5

tration (**FEA’’),' has paid other oil refiners more

than $62 million sinee January 1975. During 1975

Marathon posted checks ranging in amounts from a

low of $546 thousand in May to almost $11.6 million

in August. With the enactment of the Energy Policy

and Conservation Act® in December 1975, FEA has

continued to issue such directives. Accordingly, Mara-

thon expects that it will be required to make substan-

tial monthly payments to other refiners for several

more years.

On December 4, 1974, FEA promulgated in the form

of a regulation what is known as the entitlements pro-

gram. 39 Fed. Reg. 42246 (1974). The preamble to the

notice proposing establishment of the program cited

section 4(a) of the Allocation Act as statutory authori-

ty for the program. 39 Fed. Reg. 31650 (1974). On Jan-

uary 10, 1975, FEA issued its first directive that Mara-

thon and certain other refiners make payments to other

oil refiners by the end of that month. 40 Fed. Reg. 2560

(1975) (A. 57a).

Mechanically, the entitlements program imposes an

obligation upon a refiner that it have what FEA de-

fines as an ‘entitlement’? for each barrel of ‘old oil’

thon has valuable domestic erude oil resources. Marathon’s three

domestic refineries are located in Hlinois, Michigan and Texas. The

company markets gasoline and other petroleum products in the

midwestern and the southeastern sections of the United States. It

is not a market leader in any state.

*The President's authority under the Allocation Act was dele-

gated to the Federal Energy Offiee ('FEO’’), 38 Fed. Reg. 33575

(Dec. 6, 1973). FEA was established by Congress on June 27, 1974,

as an independent agency and assumed the authority and responsi-

bility of FEO, Federal Energy Administration Act, 15 U.S.C.

$$ 761-766; see Executive Order 11790, 39 Fed. Reg. 23185 (June

27, 1974).

° 89 Stat. 871.

6

which it refines in each month." Each month FEA es-

tablishes ‘tan adjusted national old oil supply ratio” ’

and ‘tissues’ each refiner a number of entitlements

equal to the number of barrels of erude oil it refined

two months previously, multiplied by the adjusted :a-

tional old oil supply ratio. If, on the basis of informa-

tion supplied to FEA by the refiner, FEA determines

that the refiner had insufficient entitlements, it directs

that refiner to ‘tpurchase’’ entitlements at a certain

1 ‘e per entitlement from oil companies which have a

surplus. Since an ‘‘entitlement”’ is simply a creature of

the program, the directive is nothing more than a

mandate that a refiner pay to another refiner a specified

sum of money. This Congress recognized in section

403(2) of the recent Energy Policy and Conservation

Act, wherein it is stated that the entitlements program

is nothing more than a ‘tcash transfer arrangement.”

89 Stat. 948, amending 15 U.S.C. § 7538.

Refiners which benefit from the program are those

whose refinery runs are made up of lower percentages

* Old cil is essentially an amount of domestic crude oil produced

from a property equal to or less than the amount produced during

a base period. This oil may not be lawfully sold at a price higher

than a prescribed ceiling price, which has been approximately $9.29

per barrel. Approximately sixty pe.cent of the oil produced ea the

United States 1s identified for price control purposes as old oil,

The numerator of the adjusted national old oil supply ratio is

the amount of old oil received by all companies in a particular

month. The denominator of this ratio is the total number of barrels

of crude oi! refined by all refiners for that month, and includes, in

addition to old oil, ‘*new oil’? (a property's production in excess

of the base level) and imported crude oil. 10 C.F.R, § 211.62. Prior

to the effective date of regulations issued pursnant to the Energy

Policy and Conservation Act, new oil was not subject to price con-

trols, It now sells at a preseribed price of approximately $11.28.

Sve 41 Fed. Reg. 4931 (Feb, 3, 1976). The federal government has

not established price ceilings for imported oil.

ne AEA

=

‘

of old oil than the adjusted national old oil supply ra-

tio. For instance, under the program Respondent Ash-

land Oil, Ine. has received more than $130 million.

Amerada [less Corporation has received close to $400

million from Marathon and other refiners.

Although the amount a refiner has been directed to

pay another refiner may lawfully be passed through to

customers, the program, as structured, provides no

reasonable assurance that a refiner required to make

payments will be able to recover these payments in the

marketplace,

On January 23, 1975, Marathon commenced this ae-

tion in the United States District Court for the North-

ern District of Ohio® to obtain preliminary and per-

manent injunctive relief from its January 1975 pay-

ment obligation and future payment obligations under

the entitlements program. It also sought a declaratory

judgment that FEA’s promulgation of the entitlements

program and its issuance of monthly payment diree-

tives were unlawful, and a certification to TECA that

there was a substantial question whether the directives

were consistent with the fifth amendment to the Con-

stitution. The Distriet Court denied Marathon’s mo-

tions for preliminary relief on January 31, 1975 (A.

27a). The Temporary Emergency Court of Appeals

(*TECA’’) dismissed Marathon’s appeal of the Dis-

*10 C.F.R, § 212.83. However, a portion of a refiner’s crude oil

costs, whieh include payments made under the entitlements pro-

gram, must be allocated to the refiner’s own plant fuel, and th s not

all ernde oil costs may be passed through to customers. FEA Rul-

ing 1974-27, printed at 10 C.F.R. at 291 (1975),

*On January 13, 1975, Marathon applied to FEA for adminis-

trative relief from its payment oblications, On May 15, 1975, FEA

issued a final denial of Marathon’s applications, stating that Mara-

thon had exhausted its administrative remedies.

trict Court’s order for lack of jurisdiction on April 21,

1975. (A. 6a). On August 27, 1975, Marathon filed a

second motion for a preliminary injunction, seeking

reliof from FEA’s August 1975 order that the company

pay $11.6 million by the close of that month, On August

29, 1975, the Distriet Court denied this motion and,

upon its own motion, entered final judgment against

Marathon (A, 38a). On the same date Marathon filed

its notice of appeal, Qn Kebruary 17, 1976, TECA af

firmed (A, la). This petition seeks review and re-

versal of that judgment,

REASONS FOR GRANTING THE WRIT

1. This petition presents the basie question of

whether government directives which require one

company to pay a substantial sum o* money to another

company, Which the government has determined to be

less able to compete, constitute a taking by the govern-

ment of private property subject to the limitations of

the fifth amendment. The national significance of this

issnie, as it arises here, is demonstrated by the financial

impact whieh the government's directives under the

entitlements program have had, and continue to have,

on those companies inthe United States engaged in the

production and refining of their domestic oil resources,

Since Jannary 1975 monthly directives issued by FEA

have taken more than $1.5 billion from a limited num-

her of refiners and have conferred these monies direct-

ly upon others in the petroleum industry. The program

has resulted in extensive federal court litigation in-

volving pavers and payees and the imposition of erim-

inal fines upon one refiner which failed te comply.”

Gulf Oil Corporation was eriminally indieted) in the United

States District Court for the Western District of Pennsylvania for

9

The program imposes the substantial financial bur-

den of subsidizing one group of oil refiners upon a di-

minishing number of other oil refiners, rather than

upon the government." This is in sharp contrast to

action recently taken by Congress to reorganize the

bankrupt railroads in the northeast and midwest see

tions of the country. Having determined that the con-

tinued operation of portions of these railroads was

in the national interest, Congress established a reor-

ganization plan which provided for large infusions of

federal money and invitations (not directives) to profit-

able railroad companies to purchase properties of the

bankrupt railroads. Had Congress determined that the

financial difficulties of these bankrupt railroads should

be redressed through payments to be made by profit-

able companies, such as the Chessie System, the Re-

gional Rail Reorganization Act of 1973 would have

had the same constitutional defects as the program

challenged here. See Re qrnal Pail Re organization Act

Cases, 419 U.S, 102 (1974).

In times of emergency the government has estab-

lished controls which limit the return which a pevson

may derive from his property, business or labor. See,

failure to comply with the initial FEA directive that it make pay

ments by January 31, 1975, On February 19, 1976, the company was

fined on a plea of guilty to four counts of the indictment. United

States v. Gulf Oil Corp., ct al., Crim. No, 75-231,

The number of companies directed to make payments to other

refiners has declined from 53 in Mareh 1975, 40 Fed. Ree. 12466

(1975), to only 19 ander FEA‘s most recent entitlements directive

41 Fed, Reg, 7461 (Ireeb. 18, 1976). The diminishing number of re

fiers required to make these payments is significant in that it gives

added emphasis to the point, highly relevant for fifth amendment

purposes, that the proyram 1 confined in Imipact to oa sinvled-out

category of COM Panes Nee lnitid Ntates \ Caushy, 320 U.S. 256

(1946); Richards v. Washington Terminal C'o., 233 U.S. 546 (1914).

10

c.g, Block v. Hirsh, 256 U.S. 135 (1921); Western

States Meat Packers Ass'n vy. Dunlop, 482 F.2d 1401

(TECA 1973); Local 11, Elec. Workers v. Boldt, 481

F.2d 1392 (TECA), cert. denied, 414 U.S. 1902 (1973) ;

Amalgamated Meat Cutters Union vy. Connally, 387 F.

Supp. 737 (D.D.C, 1971)."" Government measures also

have temporarily restricted the use of property. See,

e.g., United States v. Central Eureka Mining Co., 357

U.S. 155 (1958). Ilowever, this is the first instance in

which the government has required one person to grant

a cash subsidy directly to another, The implications of

such an assertion of governmental authority require

no elaboration,

2, The court below failed to provide an ade-

quate answer to Marathon’s claim that the entitlements

program works a confiscation of Marathon’s property,

Thus, the court’s primary reliance was on Bloch Vv.

Ilirsh, 256 U.S, 135 (1921). That case held constitu-

tional an emergeney rent control program in the Dis-

trict of Columbia during World War T which was

justified to the Court as ‘only a temporary measure.”

256 U.S, at 157. TECA quoted from the opinion of this

Court as follows (A. 103a) :

‘A limit in time, to tide over a passing trouble,

well may justify a law that could not be upheld as

a permanent change... .°’ Bloch vy. Hirsh, 256 U.S,

at 157,

TECA then stated in reference to the entitlements pro-

gram:

“Whether the challenged regulation and enforee-

ment order would pass muster as a long continu-

= The first and last of these cases were cited by TECA in Cities

Servier, (A. 1030) The second and third were relied upon by the

District Court in Marathon, (A, 45a).

ee

11

ing response to chronic energy problems need not

be determined.’ ’’'*

Contrary to TECA’s perception, the entitlements

program must be viewed as ‘a long cont. nuing response

to chronie energy problems’’. The Allocation Act, first

enacted in 1973 with an expiration date of February

28, 1975, has now been extended by Congress four

times. The most recent extension, for a period in ex-

cess of five years, came before the date of TECA’s opin-

ior. in Cities Service and the date of its order of affirm-

ance in Marathon, Under this extension it is reasonable

to expect that the entitlements program will continue

for several additional years. Accordingly, the consti-

tutionality of the entitlements program should be de-

finitively determined, even if the distinetion between

a short and a “long continuing response to chronic en-

ergy problems”’ is constitutionally significant."

TECA suggested additionally that the entitlements

program limits the use of property and is comparable

to rent and price regulations of the kind upheld in

Block v. Hirsh, 256 U.S. 135 (1921), and Western State

Meat Packers Ass'n v. Dunlop, 482 F.2d 1401 (TECA

1973). In those cases, no landlord or meat packer was

directed to make cash payments to another landlord

or meat packer, The directives here in question are of

" TECA quoted from its opinion in Condor Operating Co. v. Saw-

hill, 514 Fi2!8d $51, 362 (TECA ), cert, denis d, 421 US. O76 ( 1975).

" We, of course, do not concede that the program passes consti-

tutional muster, even if it is viewed as “temporary.” As argued

below, we submit that it falls in the category of a direct appropria-

tion of private property rather than a regulatory limitation on the

use of property. As Mr. Justice Harlan observed in United States ¥

Central Eureka Mining Co.. 8357 VS. 155, 184 (1958) (dissenting

opinion,, the fifth amendment requires that compensation be paid

for ‘‘a temporary confiscation... ."’

12

a quite different order, They require Marathon to make

cash payments to its competitors. As stated in Know vy,

Lee, 79 U.S. (12 Wall.) 287 (1871), there is a taking

when there is a ‘‘direct appropriation’? of property.

The appropriation of Marathon’s monies under the en-

titlements program is like a condemnation of real prop-

erty, Which is clearly a taking compensable under the

fifth amendment. See, e.g., Kohl vy. United States, 91

U.S. 367 (1876). Whether Marathon has demonstrated

a substantial diminution in the company’s value after

it has paid its competitors (a question to which the

court below adverted) is not, in this context, any more

relevant than it would be to ask whether the land lost

through condemnation was all or enly a part of that

previously owned. As the Court stated in Monongahela

Navigation Co, v. United States, 148 U.S. 312, 526

(1893), ‘just compensation... is for the property, and

not to the owner.”’

We do not deny that the lines between ‘‘regulation”’

and ‘‘taking’’, between ‘timpairment of use’? and ‘*di-

rect appropriation’, are often shadowy. As Mr, Justice

Black, writing for the Court, noted in Armstrong V.

United States, 364 U.s. 40, 48 (1960) :

“This case and many others reveal the difficulty

of trving to draw the line between what destruc-

tions of property by lawful government actions are

compensable ‘takings’ and what destructions are

‘consequential’ and therefore not compensable.”?™’

See also Sax, Takings, Private Property and Public Rights,

81 Vale LJ, 149 (1971). Professor Sax bewins his article with the

observation that:

‘Fow legal problems have proved as resistant to analytical

efforts as that posed by the Constitution’s requirement that

private property not be taken for public use without payment

of just compensation, Despite the intensive efforts of commen-

13

We submit that the instant program falls clearly on

the ‘direct appropriation’? side of the line. In all

events, however, the difficulties inherent in deciding

when there has been a taking emphasize the importance

of review by this Court when the issue arises, as it

does here, in the context of a program that is both novel

in its features and enormous in its consequences.

3. The ‘‘taking’’ issue cannot be avoided on the

ground that some of the costs incurred in the purchase

of entitlements may be passed through.” Just com-

pensation means something more—namely, a ‘‘reason-

able, certain and adequate provision for obtaining com-

pensation.”’ Regional Rail Reorganization Act Cases,

419 U.S. 102, 125 (1974). As Congress itself has

recognized, ‘‘the competitive pressures of the market-

place’’ have prevented some refiners from recouping

substantial amounts of their crude oil costs. Conf. Rep.

on‘ Energy Policy and Conservation Act’’, 8. Rep. No.

94-516, 94th Cong., Ist Sess. 195 (1975). Plainly, this is

true of the future as well as the past. There can be no

certainty that Marathon will be able to pass on to its

customers the amounts that it is required to pay to

its competitors.

4. As pointed out above, the entitlements program

requires some refiners to make payments to other re-

tators and judges, our ability to distinguish satisfactorily be-

tween ‘taking’ in the constitutional sense, for which compensa-

tion is compelled, and exercises of the police power, for which

compensation is not compelled, has advanced only slightly sinee

the Supreme Court began to struggle with the problem some

eighty years ago.’’ (Footnotes omitted. )

Section 4(b)(2)(A) of the Allocation Act, 15 U.S.C. § 753(b)

(2)(A), permits a ‘‘dollar-for-dollar pass-through of the net in-

creases of crude oil... to all marketers or distributors at the retail

level’’,

14

finers in order to improve the competitive position cf

the latter. This is not only a taking; it is, we submit,

a taking for non-public use. We assume that the gov-

ernment may elect to subsidize refiners heavily depend-

ent on foreign oil. The fifth amendment, however,

‘‘was designed to bar Government from forcing

some people alone to bear public burdens which, in

all fairness aud justice, should be borne by the pub-

lie as a whole.’’ Armstrong v. United States, 364

U.S. 40, 49 (1960).

‘*fA] strong public desire to improve the public con-

dition is not enough to warrant achieving the desire by

a shorter cut than the constitutional way of paying

for the change.’’ Pennsylvania Coal Co. v. Mahon, 260

U.S, 393, 416 (1922),

The instant case is closely analogous to Thompson v.

Consolidated Gas Co., 300 U.S. 55 (1937), in which

this Court was asked to uphold a proration order that

Consolidated Gas and other producers owning pipeline

facilities purchase designated quantities of gas from

unconnected producers, thus requiring them to fulfill

their contracts in part with the natural gas of the un-

connected producers, rather than with their own. Jus-

tice Brandeis, speaking for a unanimous Court, re-

jected that program:

‘‘Our law reports present no more glaring instance

of the taking of one man’s property and giving it

to another.’’ 300 U.S. at 79-80.

5. Review of this case is appropriate for the addi-

tional reason that TECA’s decisions in Cities Service

and Pasco are inconsistent with the approach adopted

by the United States Court of Appeals for the District

of Columbia Circuit in Algonquin, SNG, Inc. v. FEA,

15

518 F.2d 1051 (D.C. Cir.), cert. granted, 44 U.S.L.W.

3236 (U.S. Nov. 3, 1975) (No. 75-382). In that case,

now pending before this Court, the court of appeals

declared an oil import license fee program to be in

excess of statutory authority because there was no

‘‘elear statutory directive’’ that it be implemented.

The approach of the court of appeals in Algonquin

to the exercise of executive power is valid here, for

section 4(a) of the Allocation Act does not authorize

a program of this nature. In the instant case TECA

erred in failing to adequately distinguish between the

empowering section of the Allocation Act and the ob-

jectives which Congress set forth in section 4(b) (1)

(A. 89a-92a), and in so doing deviated from its ap-

proach in Consumers Union of the United States, Ine.

v. Sawhill, 512 F.2d 1112 (TECA 1975), and Shell Oil

Co. v. FEA, No. 5-13 (TECA, Nov. 11, 1975).

16

CONCLUSION

The existing case law—formed in other times to cope

with other problems—is inadequate guidance when,

under guise of *‘regulation’’, the government takes pri-

for private use without just ceompensa-

i

vate property

tion. This petition should accordingly be granted

Respectfully submitted,

GEORGE BLow,

JOHN OBERDORFER,

JOHN Epwarp WILLIAMS,

1200 17th Street, N.W.

Washington, D.C, 20036

Kent B. ILAMPTON,

J. FurMAN Lewis,

Marathon Oil Company

239 South Main Street

Findlay, Ohio 45840

Aitorne YS for Petition r,

Marathon :/ Company

Of Counsel,

RALPH S. SPRITZER,

3400 Chestnut Street

Philadelphia, Pennsylvania 19174

March 1976