# Appendix — Marathon Oil Co. v. Federal Energy Administration > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1813%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1976 - **Citation:** 426 U.S. 947 ## Text 13643-3.76 IN THE Supreme Court of the United States Octoper Term, 1975 No. 75— 1259 : Maratuon Or Company, Petitioner v. FeperaL Enercy ADMINISTRATION; F'RanK G. Zarns, Admin- istrator, Federal Energy Administration; and Asu- LAND Orn JInc., Respondents APPENDIX TO PETITION FOR A WRIT OF CERTIORARI TO THE TEMPORARY EMERGENCY COURT OF APPEALS OF THE UNITED STATES Grorce Biow, JOHN OBERDORFER, JoHN Epwarp WILLIAMS, 1200 17th Street, N.W. Washington, D.C. 20036 Kent B. Hampron J. Furman Lewis, MaratHon Or Company 539 South Main Street Of Counsel, Findlay, Ohio 45840 Rautpx S. Spritzer, Attorneys for Petitioner, 3400 Chestnut Street Marathon Ou Company Philadelphia, Pennsylvania 19174 — _ — —— ene, Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C. gee a en nti o “aa, jaw 2. OPE erg ral TABLE OF CONTENTS OF APPENDIX Page Per Curiam Order of the Temporary Emergency Court GE BOUORED CHG. Bin DOGG! ccccccccccccscescess la Order of TECA Staying Mandate (Feb. 27, 1976) .... 2a Opinion and Grover of the District Court (Aug. 29, 1975) Opinion of TECA Denying the Appeal from the Dis- trict Court’s Denial of the Motion for Prelimi- nary Injunction (Apr. 21, 1975) ................ ba Memorandum and Order of District Court Denying the Motion for Preliminary Injunction (Jan. 31, SPUD 660-660 6905 babaecndendescerecdcncececeste 27a a TIEROUE -6.6.i.0 cine cnecececacdesecedeesss 46a Se Ge EE ic ccdccedn cdntecnesseeuecva 46a SP Sey ID on 6-600:5.06.0660000600b0s'eee 48a 10 C.F.R. § 211.67 (Dec. 4, 1974) .........00.. 50a Directive of January 10, 1975 ............4.. d7a 10 C.F.R. § 211.67, as amended by 39 Fed. Reg. 44710, 40 Fed. Reg. 6768, 10445, 13303, 14738, DMT sac cdduns ghucedss veeesiesuneen 74a Opinion of TECA in Cities Service Co. v. FEA, No. DC-34 (TECA Dee. 31, 1975) .......ccscccvvees 83a Order of TECA Denying Petition for Rehearing in EL Bs EP onc becnne coneeedecsteseczsess 105a Order of TECA Denying Suggestion for Rehearing En Banc in TECA No. DC-34 .....ccecccevcvseces 106a Opinion of TECA in Pasco, Inc. v. FEA, No. 10-7 gp 8 Be Pree eer 107a TABLE OF CONTENTS OF APPENDIX Per Curiam Order of the Temporary Emergency Court of Appeals (Feb. 17, 1976) .......cccccsccseess la Order of TECA Staying Mandate (Feb. 27, 1976) .... 2a Opinion and Order of the District “ourt (Aug. 29, Opinion of TECA Denying the Appeal from the Dis trict Court’s Denial of the Motien for Prelimi- nary Injunction (Apr. 21, 1975) ............8.. ba Memorandum and Order of District Court Denying the Motion for Preliminary Injunction (Jan. 31, Ges as er ists oe el ee ae ea a 27a I * WatryskI, J.: This cause is before the Court on a motion for a pre- liminary injunction. Because of the nature of the statute and regulation involved herein and the relief sought, this Court has caused the matter to be expedited in every way. The Court held a hearing on the motion on January 29, 1975, and permitted the Ashland Oil Company to intervene, pursuant to Rule 24(a), Federal Rules of Civil Procedure, as a party defendant. The Court also permitted the Inde- pendent Refiner’s Association of America to appear as an amicus curiae. All have filed briefs on the matters raised by the motion. Fixpincs or Fact Plaintiff, Marathon Oil Company (hereinafter Mara- thon), is a corporation organized and existing under the laws of the State of Ohio, with its corporate offices and principal place of business in Findlay, Ohio. Marathon is an integrated medium-sized oil company which produces, transports, refines and sells erude oil in the United States and abroad. Its principal markets for petroleum products in the United States are in the Midwest and in the South- east. 28a Defendant, Federal Energy Administration (herein- after FEA), is an agency and instrumentality of the United States under the Federal Energy Administration Act of 1974, 15 U.S.C., § 761 ef seq.; and it was established by Executive Order No. 11,790 (June 27, 1974). The FEA :s responsible for the administration of the Emergency Pe- troleum Allocation Act of 1973, as amended (hereinafter the EPAA), 15 U.S.C., (751 et seq. This responsibility previously was exercised by the Federal Energy Office (hereinafter FEO) established by Executive Order No. 11,748, 3 C.F.R., 6376 (Supp. 1974). Defendant Frank G. Zarb is Administrator of FEA. The authority which the EPAA vests in the President was dele- gated to the Administrator by Executive Order No. 11,790 (June 27, 1974). Defendant-intervenor, Ashland Oil, Incorporated (here- inafter Ashland), is an ‘independent refiner’’ as that term is defined in 43 of the EPAA and the regulations issued thereunder. The EPAA became law on November 27, 1973. Section 4(a) thereof required the President to promulgate regula- tions for the mandatory allocation of erude oil, residual fuel oil and refined petroleum products in amounts, and at prices to be specified by the regulations. Those regulations were to implement, ‘‘to the maximum extent practicable’’, certain objectives as set forth in §4(b) of the Act. Among others these objectives included the: « * > - = . > * . * ** Adjusted crude oil receipts’? means the crude oil re- ceipts of a refiner in a particular month the composition of which has been adjusted to reflect any invoice which is received in that month for crude oil (including crude oil sold under § 211.65) delivered to that refiner in any pre- vious month (excluding, however, months prior to No- vember 1974), and which has the effeét of increasing or decreasing the volume of old oil received by that refiner in such previous month. , ** Adjusted national old oil supply ratio’? means, for a particular month, the volume of old oil included in the aggregate adjusted crude oil receipts for all refiners, ex- pressed as a percentage of the sum of (a) the total volume of the « ‘ude oil runs to stills for all refiners for that month and (b) thirty percent (80% ) of the total volume of eligible imports by eligible firms for that month. Such volume of old oil shall be decreased by a number of barrels of old oil equal to the number of entitlements issuable to small refiners under § 211.67(e). ‘Crude oil receipts’? means, as to a particular refiner, the volume of crude oil (a) booked into its refineries in accordance with accounting procedures generally accepted and consistently and historically applied by the refiner eon- cerned, for its own account or for the account of a firm other than a refiner or (b) if not previously so booked into its refineries, delivered by that refiner for its account to another refiner pursuant to a processing agreement with that other refiner. Crude oil receipts shall not include erude oil received by a refiner for the purpose of processing at its refineries for the account of another refiner. A par- ticular crude oil receipt shall be deemed to have occurred 47a when the related cost is booked into refinery inventory in accordance with accounting procedures generally accepted and consistently and historically applied by the refiner con- cerned, whether or not such erude oil has been actually received by that refiner, except that crude oil delivered by one refiner to another refiner pursuant to a processing agreement will be deemed to have been delivered by the delivering refiner to the other refiner when the risk of loss passes to the other refiner under the particular processing agreement or when the crude oil is received at the refinery of the other refiner, whichever occurs first. Crude oil which has been added by a refiner to its inventory and which is thereafter sold or otherwise disposed of without processing for the account of that refiner shall be deducted from its crude oil receipts at the time when the related cost is de- ducted from refinery inventory in accordance with account- ing procedures generally accepted and consistently and his- torically applied by the refiner concerned. The volume of old oil ineluded in a refiner’s crude oil receipts shall be evidenced by and consistent with invoices received with respect to such crude oil receipts. ‘‘Eligible firm’’ means, as to imports of eligible prod- ucts, a firm (including a refiner) that has received, as to the particular eligible product imported and as to the PAD District in which the import takes place, an import alioca- tion not subject to a license fee under section 12, 28 or 30 of Oil Import Regulation I (revision 5), as amended (32A CFR OT Reg. 1-12, 23 and 30), or a firm which would other- wise qualify for such an import allocation under section 12 or 30 of such Regulation if (a) that firm were in the business in PAD District I of selling the eligible product concerned, (b) that firm had received an allocation of im- ports of No. 2 heating oil or No, 2-D diesel fuel in the al- location period beginning prior to January 1, 1973, or (iii) that firm were not a refiner and/or a petrochemical pro- ducer. 4Sa ‘*Eligible products’’ means residual fuel oil, No. 2 heat- ing oil and No. 2-D diesel fuel imported into the United States, except that imports into United States customs ter- ritory from United States possessions, territories or for- eign trade zones shall not be considered eligible products. ‘*Entitleme:..’? means, for a particular month, the right of a refiner owning the entitlement to include one barrel of old oil in its adjusted crude oil receipts in such month. The issuance and transfer of entitlements shall be evi- denced on records maintained by the FEA. ‘‘New crude petroleum’? means new crude petroleum as defined in § 212.72 of this chapter. ‘*No. 2 heating oil’? means heating oil grade No. 2 as defined in American Society for Testing and Materials (ASTM) D396-71. ‘*No. 2-D diesel fuel’? means diesel fuel grade No. 2 as defined in American Society for Testing and Materials (ASTM) D975-71. “Old oil’? means old crude petroleum as defined in § 212.72 of this chapter. ‘Old oil supply ratio’? means, for a particular month, the number of barrels of old oil included in a refiner’s ad- justed crude oil receipts, expressed as a percentage of the volume of that refiner’s crude oil runs to stills for such month. * * * * . * * * * . ‘*Released crude petroleum’? means released crude pe- troleum as defined in § 212.72 of this chapter. 10 C.F.R. 5 211.66 Reporting requirements. . * . * * * * * * * 49a (h) Monthly report. On or prior to the twenty-eighth day of each month, commencing with the month of Decem- ber 1974, each refiner shall file with the FEA a report certifying the following: (1) The estimated volume (to the best of the knowledge of the certifying officer of old oil included in the erude oil receipts of that refiner for the immediately preceding month. (2) Any permitted or required adjustments to the esti- mated volume of old oi! included in the crude oil receipts of that refiner for the immediately preceding month. (3) The volume of crude oil runs to stills of that refiner for the immediately preceding month, taking into account, and specifying the amount of, the adjustments provided for in § 211.67(d). (4) Such other information as the FEA may request. (i) Monthly transaction report. On or prior to the tenth day of each month, commencing with the month of Feb- ruary 1975, each refiner and each eligible firm shall file with the FEA a report certifying its purchases and sales of entitlements for the third month prior to the month in which the report is filed, except that if an eligible firm was not issued any entitlements for a month, no filing of a trans- action report with respect to that month shall be made. (j) Monthly report by eligible firms. On or prior to the twenty-eighth day of each month, commencing with the month of December 1974, each eligible firm that has im- ported an eligible product in the immediately preceding month shall file with the FEA a report certifying the following: | (1) The identity, volume and ports of origin and entry of any eligible products imported by that eligible firm in the immediately preceding month. 50a (2) Such other information as the FEA may request. (k) Affidavit for eligible firms. Each firm that claims to be an eligible firm shall submit to the FEA within twenty-eight (28) days following the first month in which that firm has imported an eligible product as to which the issuance of entitlements is sought an affidavit setting forth the factual basis for its claim to be classified as an eligible firm. 10 C.F.R. § 211.67 (Dee. 4, 1974) provided as follows: Ailocation of old oil. (a) Issuance of entitlements. (1) For each month, com- mencing with the month of November 1974, each refiner shall be issued entitlements by the FEA to include in its adjusted crude oil receipts for that month a specific num- ber of barrels of old oil which will result in an old vil supply ratio for that refiner equal to the adjusted national old oil supply ratio for that month, subject to the entitlement adjustment for small refiners set forth in paragraph (e) of this section. (2) Refiners to which entitlements shall be issued under this section shall include all refiners classified as refiner- buyers or refiner-sellers as of December 1, 1974 for pur- poses of § 211.65. Any refiner that is not so classified, or the refinery capacity of which is not certified by the FEA for purposes of § 211.65, shall apply to the FEA for certifica- tion of its refinery capacity for purposes of qualifying to receive entitiements under this section. With respect to the granting of any such application for certification, the FEA shall consider the factors set forth in § 211.65(b) (v) and (vi). (5) For each month, commencing with the month of No- vember 1974, each eligible firm that has imported an eligible product in that month shall be issued a number of entitle- ments equivalent to thirty percent (30%) of the number of 5la entitlements that would be received by a refin (without giving effect to the provisions of § 211.67(e)) in that month with respect to inclusion of a number of barrels of crude oil in that refiner’s crude oil runs to stills equal to the number of barrels of that eligible product imported by that eligible firm. An eligible product is imported for purposes of this paragraph (a) (3) in the month in which the product physically enters the United States. (b) Required purchases of entitlements by refiners. For each month, commencing with the month of November 1974, each refiner that bas been issued fewer entitlements for that month than the number of barrels of old oil included in its adjusted crude oil receipts shall purchase a number of entitlements effective for that month equal to the differ- ence between the number of barrels of old oil included in that refiner’s adjusted erude oil receipts for that month and the number of entitlements issued to and retained by that refiner. Entitlement purchases required under this paragraph (b) with respect to a particular month shall be effected by the close of the second month following that month. (c) Refiners and other firms with excess entitlements. For each month, commencing with the month of November 1974, each refiner that has been issued a greater number of entitlements for that month than the number of barrels of old oil included in its adjusted erude oil receipts shall sell such excess entitlements and any eligible firm (other than a refiner) that has been issued entitlements shall sell such entitlements. (d) Adjustments to volume of crude oil runs to stills. (1) A refiner’s volume of crude oil runs to stills shall (i) inelude (A) the volume of crude oil processed by another refiner for that refiner pursuant to a processing agreement and (B) the volume of erude oil processed by that refiner for a person other than a refiner pursuant to a processing agreement, and (ii) exclude the volume of crude oil proc- 52a essed by that refiner for another refiner pursuant to a processing agreement. (2) The volume of a refiner’s erude oil runs to stills for purposes of calculating its old oil supply ratio and the adjusted national old oil supply ratio shall be reduced by that refiner’s volume of export sales in that month of re- fined petroleum products (except refined lubricating oils), including sales to a domestic purchaser which certifies the product is for export. (e) Entitlement adjustment for small refiners. In addi- tion to the number of entitlements issuable under para- graph (a) of this section, each small refiner with a daily average volume of crude oil runs to stills of less than 175,000 barrels for a particular month shall be issued addi- tional entitlements for each day of that month equal to the number of barrels obtained by applying the following applicable percentage to the daily average volume of that small refiner’s crude oil runs to stills for that month; (i) for daily average volumes of erude oil runs to stills of 100,000 to 175,000 barrels, the applicable percentage is ob- tained by multiplying the difference between the reported daily average volume of crude oil runs to stills (in thou- sands of barrels) and 175 by a factor of .0101; (ii) for daily average volumes of crude oil runs to stills of 30,000 to 100,000 barrels, the applicable percentage is obtained by multiplying the difference between the reported daily average volume of crude oil runs to stills (in thousands of barrels) and 100 by a factor of .0214, and by adding 76% to the resulting percentage; (iii) for daily average volumes of crude oil runs to stills of 10,000 to 30,000 bar- rels, the applicable percentage is obtained by multiplying the difference between the reported daily average volume of crude oil runs to stills (in thousands of barrels) and 30 by a factor of .506, and by adding 2.26 to the resulting per- centage; and (iv) for daily average volumes of crude oil 53a runs to stills of zero to 10,000 barrels, the applicable per- centage is 12.38%. (f) Transactions under § 211.65. (1) Each sale by a re- finer-seller under § 211.65 shall be decmed to include a vol- ume of old oil proportionate to the volume of old oil in- eluded in that refiner-seller’s crude oil receipts (in the PAD Districts or District the erude oil deliveries in which determine the price of the sale) in the month in which the sale is made. Any volumes of old oil so ineluded in any sale under § 211.65 shali be included in the crude oil receipts of the refiner-buyer concerned. As to each such sale, each refiner-seller shall eevtify to the refiner-buyer the vo.ume of old oil included in the volume of crude oil sold within twenty-five (25) days following the month in which the crude oil is delivered to or for the account of the refiner- buyer in accordance with the provisions of § 212.131 of part 212. (2) In determining the weighted aver* “e price of all erude oil delivered to a refiner-seller i month in the specified PAD District or Districts pursuant to § 212.94 of part 212, the cost of any required purchases or revenues from any sales of entitlements by that refiner-seller shall not be taken into account. (g) Exchange of crude oil. In any exchange of crude oil in which only quality and location differentials are given effect in the caleulation of the exchange ratio, or in any matching purchase and sale transaction which has the same effect as such an exchange, no volumes of old oil shall be deemed to have been transferred. Any volumes of old oil delivered pursuant to any such exchange or transaction shall be considered as having been retained by the refiner that has exchanged away or sold such volume, regardless of the volume of erude oil received or purchased by that refiner in such an exchange or transaction. 5ta (h) Averaging of crude oil receipts. Upon application by a refiner in accordance with the procedures established under Subpart G of Part 205 of this chapter within twenty (20) days following the close of 2 month, the FEA may adjust the crude oil receipts of that refiner for that month to permit the portion of such erude oil receipts specified by the FEA to be included in the erude oil receipts of that refiner for one or more subsequent months, if the volume of crude oil receipts in that month is significantly dispropor- tionate to the volume of that refiner’s erude oil runs to stills for that month due to shutdowns or other mechanical failures resulting in a fifty percent (50) or greater portion of that refiner’s refinery capacity not having been operable for the duration of that month. (i) Issuance and transfer of entitlements. (1) The first month with respect to which entitlements shall be issued js November 1974. The entitlements for the month of Novem- ber 1974 shall be issued by the FEA on January 10, 1975, pursuant to the notice specified in subparagraph (2) below. As to each month subsequent to November 1974, FEA shall issue entitlements pursuant to a notice published 40 days after the close of that month. (2) Each notice published by the FEA evidencing the issuance of entitlements under this section shall specify as to a particular month the adjusted national old oil supply ratio, the name of each refiner and other eligible firm to which entitlements have been issued, the number of entitlements issued to each such refiner or other firm, the number of barrels of old oil included in each refiner’s ad- justed crude oil receipts and the price at which or price range within which entitlements shall be sold. (3) No transfer of an entitlement shall be effective if made to (i) any person other than a refiner, or (ii) any Se Da refiner that is not purchasing such entitlement to fulfill such refiner’s obligations under paragraph (b) of this section. (4) The price at which entitlements shall be sold and purchased shall be fixed by the FEA for each month. Such price may be fixed in terms of a price range in which en- titlement transactions shall be effected or in terms of a single price at which all entitlement transactions shall take place. Such price or price range shall be fixed by the FEA with reference to the differential between the weighted average prices for old oil and the weighted average prices of new and released crude petroleum, imported crude oil and erude oil produced from stripper wells. (j) Failure to consummate transactions. The FEA may direct refiners that have not purchased the required num- ber of entitlements under paragraph (b) of this section for a particular month to purchase such required number of entitlements at a price specified by the FEA from any refiner or eligible firm that has entitlements for such month available for sale. The FEA may direct refiners or eligible firms that have entitlements available for sale to sell such entitlements at a price specified by the FEA to refiners that have not purchased their required number of entitle- ments under paragraph (b) of this section. (k) Certification of old oil by non-refiners. Within twenty (20) days following each month commencing with the month of November 1974, each person other than a refiner that has delivered crude oil to a refiner for process- ing for the account of such person pursuant to a processing agreement in that month shall certify to that refiner the volume of old oil contained in the crude oil so delivered to that refiner. (1) Adjustments to product costs —(1) Refiners. The cost of entitlements purchased in a particular month pur- suant to this section by refiners shall be added to the cost d6a of crude petroleum purchased or landed in that month (which is the period ‘‘t’’ (the month of measurement), for purposes of calculating the increased costs to be applied to product prices in the following month under the ‘‘A’”’ factor of the general formulae of § 212.83(c)(2) of this chapter). The sales revenues from entitlements sold in a particular month pursuant to this section by refiners shall be subtracted from the cost of evude petroleum or eligible product purchased or landed in that month (which is the period ‘‘t’’ (the month of measurement), for purposes of calculating the increased costs to be applied to product prices in the following month under § 211.83(c) of this chapter) as follows: (i) The sales revenues from entitlements which are is- sued for crude oil which are sold in a particular month shall be subtracted from the total cost of crude petroleum purchased or landed in that month (which is the period ‘*t’’ (the month of measurement), for purposes of caleu- lating the increased costs to be applied to all product prices in the following month under the ‘‘A,”’ factor of the gen- eral formulae of § 212.83(c)(2)). (ii) The sales revenues from entitlements which are issued for residual fuel oil which are sold in a particular month shall be subtracted from the total cost of residual fuel oil purchased or landed in that month (which is the period ‘‘t’? (the month of measurement), for purposes of calculating the increased costs to be applied to prices of covered products other than special products under the ‘*Bit’’ factor of the formula for covered products other than special products of § 212.83(¢) (2) (ii)). (iii) The sales revenues from entitlements which are issued for No. 2 heating oil or No. 2-D diesel fuel which are sold in a particular month shall be subtracted from the total cost of No. 2 heating oil or No. 2-D diesel fuel pur- chased or landed in that month (which is the period “t’’ (the month of measurement), for purposes of calculating 57a the increased costs to be applied to prices for special prod- ucts where (i=1) under the ‘‘Bit’’ factor of the general formula of § 212.83(c)(2)(i) for special products where (i=1)). F (2) Resellers and Retailers. The sales revenues from en- titlements sold pursuant to this section by resellers or re- tailers shall be subtracted from the cost of the product in inventory for which the entitlements were issued, so as to reduce the weighted average unit cost of that product in inventory computed pursuant to § 212.92 of this chapter. (3) Use of eligible products entitlements by refiners to which they are issued. A refiner that is issued entitlements with respect to eligible products shall account for the use of those entitlements to include old oil in its erude oil reeeipts as if it had purchased such entitlements so as to incur an increased cost of crude oil pursuant to subparagraph (1) above and as if it had sold such entitlements so as to reduce its cost of the eligible product for which the entitlements were issued, pursuant to subparagraphs (1)(ii) and (1) (iii) of this paragraph. (4) Timing. The date of purchase or sale of entitlements for purposes of determining the date on which a cost or a cost reduction is incurred under 4 212.83(c) or § 212.93 of this chapter shall be the date on which the transaction is re- ported to have taken place on the monthly transaction re- port filed with the FEA under paragraph (i) of § 211.66. Drective oF January 10, 1975 Allocation of Old Oil; Entitlement Notice Pursuant to the authority of the Emergency Petroleum Allocation Act of 1973, Pub. L. 93-159, the Federal Energy Administration has established the Old Oil Entitlements Program, and in accordance with the provisions of 10 CFR 211.67, the notice specified in § 211.67(i) is hereby pub- lished. 5Sa Based on reports submitted to FEA by refiners and eligi- ble firms as to crude oil receipts, crude oil runs to stills and eligible product imports for November 1974 and an applica- tion of the entitlement adjustment for small refiners pro- vided in 10 CFR 211.67(e), the adjusted national old oil supply ratio for November 1974 is caleulated to be .4105. The issuance of entitlements for the month of November 1974 to refiners and eligible firms is set forth as an Appen- dix to this notice. The Appendix lists the name of each re- finer and other eligible firm to which entitlements have been issued, the number of entitlements issued to each such re- finer or other firm, and the number of barrels of old oil in- cluded in each refiner’s adjusted crude oil receipts. Pursuant to 10 CFR 211.67(i)(4) and as fixed by FEA notice (39 FR 4310& December 10, 1974), the price at which entitlements issued for the month of November 1974 shall be sold and purchased will be $5. In accordance with 10 CFR 211.67(b), each refiner that has been issued fewer entitle- ments for the month of November 1974 than the number of barrels of old oil included in its adjusted crude oil receipts is required to purchase a number of entitlements for the month of November 1974 equal to the difference between the number of barrels of old oil included in that refiner’s ad- justed crude oil receipts for that month and the number of entitlements issued to and retained by that refiner. Refiners which have been issued a number of entitlements for the month of November 1974 in excess of the number of barrels of old oil included in the adjusted ernde oil receipts for No- vember 1974, and eligible firms which have been issued en- titlements for November 1974, shall seli such excess entitle- ments to refiners required to purchase entitlements. The listing of entitlement issuances contained in the Ap- pendix reflects the application of Special Rule No. 3 (39 FR 43814, December 19, 1974) which operates to relieve certain small refiners from the requirement to purchase entitle- ments for the first 30,000 barrels per day of their daily 59a average volume of crude oil runs to stills for the month of November 1974. Accordingly, for those small refiners whose purchase requirements were totally exempted pur- suant to Special Rule No. 3, the Appendix specifies issuance of an incremental number of entitlements equa! te the num- ber such refiners would have otherwise been required to purchase. The total number of entitlements so exempted from the purchase requirements of 10 CFR 211.67(b) is 4,187,997. A factor of .7675 has been applied to the number of entitlements available for sale by each refiner and eligi- ble firm, which has the effect of reducing the total number of entitlements available for sale by an amount equal to the total purchase requirements exempted pursuant to Spe- cial Rule No. 3. ; Refiners which have reported no volumes of old oil re- ceipts and erude oil runs to stills for November 1974, and eligible firms which have filed reports indicating no eligible product imports for this month have not been included in the listing contained in the Appendix. The total volume of entitzements required to be pur- chased and sold under this notice is 13,825,979. Entitlement purchases required under 10 CFR 211.67(b) for the month of November must be effected by January 31, 1975. On or prior to February 10, 1975, each refiner and eli- gible firm which has been issued entitlements for November shall file with FEA the monthly transaction report specified in 10 CFR 211.68(i) certifying its purchases and sales of entitlements for the month of November. FEA will mail monthly transaction report forms for November 1974 to re- porting firms in January 1975. Refiners and eligible firms which have been unable to locate firms for required entitle- ment transactions by January 25, 1975 may contact FEA at 902-634-7610 to obtain assistance in locating a firm with out- standing purchase or sale requirements. For refiners and eligible firms that have failed to consummate entitlement ~ sueduoy [IO 4eqPpeg 10 CFR 211.67(j). 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Sundue) (1% meat M 0 0 COT GLE CCT'6LE Sueduo,) Surmyory woysur yy LLUL’¢ 0 gsz tl Iic’¢ suvdmo,) Suu 1199S Ny PPS 84 0} = PaseypaNg aq 0} pouss] (S199) sidtosog suaty aqIsyy pur HIME HUg =—§ SHaMIYHU = SJUMATITUTY HO PMO SdoUgOY Jo MUR jo doquiny Jo doquiny Jo doquiny 0 0 Gtr 90¢ GH9OS | Sundae.) [IQ WSR,» ysoyy 19¢°% 0 1962 — “OU “HO way 0 0 aee'SL Z8E'ZL - Morywaodso, ) aeysy * 4et4ah gy 86£°01 0 86°01 — Auvdwo,y wiojotja| aie ox Is9Il 0 ISvL 0 Auvdwo,) Suwiyesy yeydsy ue. 7 ‘A Les‘L1 0 eR9 Ler SE8E1F WO LIOdIO,) UNAfOd jog Saoyo1 4 = ween 0 0zS"FL a PRRON RS ahaa nee. jong Woy ‘= —- ecr'stt 0 £90°691 rs Bumyoy lO S| £L0°20Z 0 z99'zte 6XC'OFE Auvdwo,) Furuyoy pou | 0 0 LIL‘9EI Liege WYO] SELOT WOH | 0 czL‘OCs'L 187°680'S Z10'0c6"9 bah WIUsOFY,) JO [MY MoI | Lee'coe 0 GEs"Cer ee, See ‘guy “pawuowy [Ryo 8Ee"CF 0 OL8'8Zt eS WorRdodao,) WNeodJo] O40, PIS 24%} = PosBYaN aq 0} ponssy (sI4q) sidtoaey SUL OYA pur SHHOULPHU™ = SMoWAHUG —s yuo] VU 0 PLO NAWUYOY Jo OUR jo soquiny jo soquing = yo aoquiny 74a 75a entitlements issued to and retained by that refiner. Entitlement purchases required under this paragraph (b) with respect to a particular month shall be effected 10 C.F.R. § 211.67, as amended by 39 Fed. Reg. 44710, 40 Fed. Reg. 6768, 10445, 13303, 14738, 28447, 40818, provides as follows: Allocation of Old Oj (a) Issuance of entitlements. (1) For each month, commencing with the month of November 1974, each refiner shall be issued entitle- ments by the FEA to include in its adjusted crude oil receipts for that month a specific number of barrels of old oil which will result in an old oil supply ratio for that refiner equal to the adjusted national old oil sup- ply ratio for that month, subject to the entitlement adjustment for small refiners set forth in paragraph (e) of this section. (2) Refiners to which entitlements shall be issued under this section shall include all refiners classified as refiner-buyers or refiner-sellers as of December 1, 1974 for purposes of § 211.65. Any refiner that is not so classified, or the refinery capacity of which is not certified by the FEA for purposes of § 211.65, shall apply to the FEA for certification of its refinery ca- pacity for purposes of qualifying to receive entitle- ments under this section. With respect to the granting of any such application for certification, the FEA shall consider the factors set forth in § 211.65(b)(v) and (vi). (b) Required purchases of entitlements by refiners. For each month, commenci:¢ with the month of No- vember 1974, each refiner that has been issued fewer entitlements for that month than the number of bar- rels of old oil included in its adjusted erude oil receipts shall purchase a number of entitlements effective for that month equal to the difference between the number of barrels of old oil ineluded in that refiner’s adjusted erude oi] receipts for that month and the number of by the close of the second month following that month. (c) Refiners and other firms with excess entitle- ments. For each month, commencing with the month of November 1974, each refiner that has been issued a greater number of entitlements for that month than the number of barrels of old oil included in its ad- justed crude oil receipts shall sell such excess entitle- ments and any eligible firm (other than a refiner) that has been issued entitlements shall sell such entitle- ments. (d) Adjustments to volume of crude oil runs to stills. (1) A refiner’s volume of crude oil runs to stills shall (i) inelude (A) the volume of crude oil processed by another refiner for that refiner pursuant to a proc- essing agreement and (B) the volume of crude oil processed by that refiner for a person other than a refiner pursuant to a processing agreement, and (ii) exclude the volume of crude oil processed by that re- finer for another refiner pursuant to a processing agreement. (2) The volume of a refiner’s crude oil runs to stills for purposes of calculating its old oil supply ratio and the adjusted national old oil supply ratio shall be re- duced by that refiner’s volume of export sales in that month of refined petroleum products (except refined lubricating oils), including sales to a domestic pur- chaser which certifies the product is for export. (3) The volume of a refiner’s crude oil runs to stills in a particular month for purposes of calculating its old oil supply ratio and the adjusted national old oil 76a supply ratio shall include the total number of barrels of plant condensate and the total number of barrels of synthetic crude oil made from tar sands which are imported from Canada and are utilized in that month as inputs to distillation units by a refiner, measured in accordance with the Bureau of Mines Form 6-1300-M. Neither plant condensate nor synthetic crude oil made from tar sands which are imported from Canada shall be eligible for inclusion in the volume of a refiner’s crude oil runs to stills under this subparagraph (3) unless payment has been made in accordance with Presidential Proclamation No. 3279 of any import li- cense fees applicable to crude oil as defined for pur- poses of this section, which is imported for refining. (e) Entitlement adjustment for small refiners. In addition to the number of entitlements issuable under paragraph (a) of this section, each small refiner with a daily average volume of crude oil runs to stills of less than 175,000 barrels for a particular month shall be issued the following number of additional entitle- ments for each day of that month: (1) for each small refiner with a daily average volume of crude oil runs to stills of 100,000 to 175,000 barrels, 1,258 entitlements less the number of entitlements obtained by multiply- ing the difference between that small refiner’s daily average volume of crude oil runs to stills (in thou- sands of barrels) and 100 by 16.7733; (2) for eaeh small refiner with a daily average volume of crude oil runs to stills of 30,000 to 100,000 barrels, 1,690 entitle- ments less the number of entitlements obtained by mul- tiplving the difference between that small refiner’s daily average volume of crude oil runs to stills (in thousands of barrels) and 30 by 6.1714; (3) for each small refiner with a daily average volume of crude oil runs to stills of 10,000 to 30,000 barrels, 1,238 entitle- ments plus the number of entitlements obtained by multiplying the difference between that small refiner’s ——— 77a daily average volume of crude oil runs to stills (in thousands of barrels) and 10 by 22.6; and (4) for each small refiner with a daily average volume of crude oil runs to stills of zero to 10,000 barrels, 123.8 entitle- ments for each 1,000 barrels of that small refiner’s daily average volume of crude oil runs to stills. (f) Transactions under § 211.65. (1) Each sale by a refiner-seller under § 211.65 shall be deemed to include a volume of old oil proportionate to the volume of old oil included in the deliveries of crude oil to that refiner- seller that determine the price at which the sale is made under 4 212.94 of part 212. Any volumes of old oil so included in any sale under § 211.65 shall be re- flected in the crude oil receipts of the refiner-buyer concerned. As to each such sale, each refiner-seller shall certify to the refiner-buyer the volume of old oil in- cluded in the volume of crude oil sold within twenty- five (25) days following the month in which the crude oil is delivered to or for the account of the refiner- buyer in accordance with the provisions of § 212.131 of part 212. (2) In determining the weighted average price of all crude oil delivered to a refiner-seller in a month in the specified PAD District or Districts pursuant to § 212.94 of part 212, the cost of any required purchases or revenues from any sales of entitlements by that re- finer-seller shall not be taken into account. (¢) Exchanges of crude oil. In any exchange of crude oil in which only quality and location differen- tials are given effect in the calculation of the exchange ratio, or in any matching purchase and sale transac- tion which has the same effect as such an exchange, no volumes of old oil shall be deemed to have been trans- ferred. Any volumes of old oil delivered pursuant to any such exchange or transaction shall be considered as having been retained by the refiner that has ex- 78a changed away or sold such volume, regardless of the volume of crude oil received or purchased by that re- finer in such an exchange or transaction. (h) Averaging of crude oil receipts. Upon applica- tion by a refiner in accordance with the procedures established under Subpart G of Part 205 of this chap- ter within twenty (20) days following the close of a month, the FEA may adjust the crude oil receipts of that refiner for that month to permit the portion of such crude oil receipts specified by the FEA to be in- cluded in the crude oil receipts of that refiner for one or more subsequent months, if the volume of crude oil receipts in that month is significantly disproportionate to the volume of that refiner’s crude oil runs to stills for that month due to shutdowns or other mechanical failures resulting in a fifty percent (50%) or greater portion of that refiner’s refinery capacity not having been operable for the duration of that month. (i) Issuance and transfer of entitlements. (1) The first month with respect to which entitlements shall be issued is November 1974. The entitlements for the month of November 1974 shall he issued by the FEA on January 10, 1975, pursuant to the notice specified in subparagraph (2) below. As to each month subse- quent to November 1974, FILA shall issue entitlements pursuant to a notice published 40 davs after the close of that month. (2) Each notice published by the FEA evidencing the issuance of entitlements under this section shall specify as to a particular month the adjusted national old oil supply ratio, the name of each refiner and other eligible firm to which entitlements have been issued, the number of entitleinents issued to each such refiner or other firm, the number of barrels of old oil ineluded in each refiner’s adjusted crude oil receipts and the 79a price at which or price range within which entitlements shall be sold. (3) No transfer of an entitlement shall be effective if made to (i) any person other than a refiner, or (ii) any refiner that is not purchasing such entitlement to fulfill such refiner’s obligations under paragraph (b) of this section. (4) The price at which entitlements shall be sold and purchased shall be fixed by the FEA for each month. Such price may be fixed in terms of a price range in which entitlement transactions shall be ef- fected or in terms of a single price at which all entitle- ment transactions shall take place. Such price or price range shall be fixed by the FEA with reference to the differential between the weighted average costs to re- finers of old oil and of new and released crude petro- leum, imported crude oil and crude oil produced from stripper well leases. (5) Refiners and eligible firms shall correet any er- rors contained in reports filed pursuant to paragraphs (h) and (j) of § 211.66 by filing an amended report for the particular month, Based on any reporting errors so corrected, FEA in its discretion may adjust entitle- ment issuances to the refiner or eligible firm in a month or months subsequent to the month in which the amended report is filed with the FILA, by issuing fewer entitlements than the number otherwise issuable or by requiring the refiner or eligible firm to purchase en- titlements in order to correct for excess entitlements issued in a prior month or by issuing entitlements over and above the number otherwise issuable to compen- sate for too few entitlements having been issued in such prior month. Amended reports setting forth cor- rections which would result in adjustments favorable to a refiner or eligible firm shall be filed no later than the 28th day of the second month following the month 80a in which the report being corrected is required to be filed. Refiners and eligible firms which seek corrections in their favor subsequent to the two month period al- lowed for filing amended reports may apply to FEA for an exception from the provisions of this subpara- graph in accordance with the procedures established in subpart D of part 205 of this chapter. All entitlement issuances or purchase requirements shall give effect to any differential between the entitlement price for the month in which any correction is reflected as compared with the entitlement price for the month as to which the reporting error was made and such other factors as the FEA deems appropriate. (6) Notwithstanding the provisions of paragraph (i) of { l li ive } — C hmeyve ; | \ | ig 1 with the ri ! Section 7602 of the In (‘oc }o° rizes the Internal IRS) te rye to further its tax | } rp | r consis it} rity » ¢ bre | tig OT 1) Lon res under S n (O01, In orde purpose oO ho ! wuries [’; ted )/ YTS. B , (1975) 1) ito st ment of the Committee of \lloecation Aet, Confer Report 95 628, 2 U S. Code Cor or, & Ad. News, 05 ¢ ‘one... Ist Sess. ZOSS, 2689. the ( tee stated: “The President is intended to have full fl e and efh people re Lin Section ’ Thus, the alloeation and iin li} iT \ _ TloO}r ) V1 hout vitality un , } ‘ } } oO } ‘ ; ‘ ve ‘ laet to th, ob ives of: ss 1) 1) ) Ni || | n nui rl] f mice red bv Con- vres s | dl I he } ng author 7 \ “( | ? | ( } ; \ { «>? erenes }? | prt 7 ~ The on ttee | led to coun price ( | llocati hority so to oc ’ iking authorit nd respon 7 v to? rat yiiy he al ort ituation C‘ongress intends to force the Adininistration to ration and ha (oT) hie ) mol ¢ ile it ’ F fy | th the objective of the Economie Stabilization Aet.’’ Con rence | port Jo-bUs pra, 2 | S. Code Cong. & Ad. Vev Od Ce Ist Sess, JOSS, 2702. Therefore, plaintiff's ister 1] the bifurcation of the authority conferred Ov thy eke \ rricle r Section L(y) tro 1} thre ohiectives of ih), 1 thei r to assert the lack of specific authority ni! \lloe, on cet for the | tle; ents Program, 1s unwarrante — ‘ } and unreasonable. The Kntitiems nts Program 92a is clearly within the authority conferred on the FEA under the Allocation Act.” Cities Service further contends on this appeal that the Mntitlements Program, 10 CFR § 211.67, as promulgated by the FEA, violates Section 4(b)(2)(A) of the Allocation Act by failing to provide Cities Service with an effective means of passing through its costs resulting from the kin- itlements Program on a dollar-for-dollar basis. The Allo- eation Act. under Section 4(b)(2)(A) mandates that the FEA, in promulgating its regulations, provide a dollar-for- dollar pass-through of net increases in the cost of erude oil. The FEA has responded to this mandate through 10 CFR 219 83(¢)(2). Under this regulation the eost of entitle- © While it is not necessary to go further in finding authority for the Entitlements program, we note that in Pasco, Inc. v. FEA, supra, 3 CCH Energy Management at p. 26,258, n, 21, this court stated that: ‘‘[t]he Committee Reports of the Senate and Ilouse are quite enlightening on the FEA’s authority to promulgate the Entitlements program.’’ During its consideration of the first exten- sion of the Allocation Act, a Senate Committee stated that the Allo- eation Act provides ample authority for the F.E.A. to institute a system of price equalization to provide that all segments of the indus try benefit from lower-priced domestic oil. The Committee was urged to amend the Act to achieve this objective but has been assured that F.E.A. intends to institute a price equalization program under existing authority in the immediate future. S. Rep. No. 93-1052, Comm, on Interior and Insular Affairs, 93d Cong., 2d Sess. at 2 (Aug. 9, 1974 Further. a House Committee Report, issued two months later, clearly indicates the FEA’s authority to institute a system of price equalization applicable to crude oil. residual fuel oil and refined products to eliminate the re- gional and competitive inequities which result from a depend- ence upon high-cost imported oils and petroleum products. The F.E.A.’s stated commitment to Subcommittee Chairman Mac- donald during the hearings on this bill to move promptly on a price equalization program has convinced the Committee 93a ment purchases and the revenues from entitlement sales must be added to or deducted from the cost of crude oil purchased or landed in that month, for the purposes of eal- culating the increased cost to be applie d to product prices for the following month under the ‘‘ A+” factor of Section 212.835(¢)(2), which is the general product pricing formula. Cities Service argues that because it has certain banked ! ; i costs which it was unable to pass through in earlier months prior to the promulgation of the Entitlements Program, it cannot now pass through its entitlements costs due to the current passing through by Cities Service of these former hanked costs. The FEA pass-through 1 vulation provides that specific amendments to the Aet te may prove to be unnecessary. compel such action H. Rep. No. 93-1443, 93d Cong., 2d Sess. at 3 (Oct. 8, 1974 Cities Service contends that such legislative reports are ‘‘sub sequent legislative history’’ such as are proscribed by the Supreme Court in Regional Rail Reorganization Act Cases, 419 U.S. 102, 132 1974). The Court there stated, ‘“post-passage remarks of legis lators, however explicit, cannot serve to change the legislative intent of Congress expressed before the Act’s passage.’’ However, in this case the Allocation Act was directly before Congress by reason of the expiration of the Act and the necessity of ext: nding its provi sions as Congress saw fit. Therefore, the above reports are con temporaneous with the Act’s extension and, further, the remarks are not being used to indicate any different legislative intent, but rather that intent expre ssly found by a contemporaneous construc tion of the Act by the agency charged with administering it Courts give great deference to the construction of an Act bv the agency charged with administering it, and hence where Congres sional intent congruous therewith is found to have been expressed not subsequent to the Act’s passage but contemporaneously with the Aect’s renewal, its pertinence to the court’s task in adjudging the agency Ss exercise of auth rity under the Act is clear See. gen erally, Udall v. Tallman, 380 U.S. 1 (1965); Pacific Coast Meat Job. Ass’n, Inc. v. Cost of Living Coun., 481 F.2d 1388 (T.E.C.A. 1973 University of Southern California v. Cost of Living Coun., 472 F.2d 1065 (T.E.C.A. 1972) 94a for the pass-through of costs other than those derived from the Entitlements Program." However, Cities Service has, during the first four months of 1975, passed through under this regulation costs totaling more than their $23.9 million of entitlement purchases ineurred over the same period of time’? Whether or not the inereased costs which Cities Service passed through were banked costs or entitlement costs, the FEA pass-through regulation is clearly effective for the purpose for which it was promulgated.’* Whether or not Cities Service passes through its entitlement costs in the month following their purchase, or in a much later month, depends on business judgements which Cities Serv ice must make. The Allocation Act does not guarantee that all increased costs will be absorbed by the market place without any change in the market shares of the respective companies when they pass through such costs under section 4(b)(2)(A); rather, the Act merely mandates that an op- portunity for the pass-through of such costs be provided. This the FEA has done, and this court holds that the En titlements Program does not violate section 4(b)(2)(A) of the Allocation Act. * Under 10 CFR § 212.83, a refiner’s increased product and non- product COSTS may be ineluded to the extent provided in 212.83, f base prices and allowable in the computation under § 212.82 « prices in ePXACOSS of the hbase prices for eovere (| produets, ‘= See lk’ inding of bac t Numbe r 25. Citi s Se rvice ws FE A ar KF Supp. —— (D.D.C. CA No. 75-653, July 10, 1975), 2 CCH Energy Management {26,024 at p. 26,221. ‘The district court did not, as appellant erroneously contends, premise its finding that Cities Service had failed to show that it eould not recover its entitlement purchase costs from the market place on the conelusion that every dollar Cities Service recovered during the first four months of 1975 constituted a recovery of en- titlement purchase costs. The district court found that during the first four months of 1975 Cities Service was passing its increased costs through under 10 CFR § 212.83 and thus a mechanism was clearly available by which Cities Service could have passed through its entitlement purchase costs if it had chosen to do so, 95a Cities Service further contends that the Entitlements Program is arbitrary and capricious and consti‘ ites an abuse of administrative discretion on the part of the FEA, for the reasons that: the entitlements regulation fails to provide for a separation of those companies within the pe- troleum industry which are integrated companies from those which are not; the Entitlements Program impacted on the market in such a way as to require certain further market distortions by the FIA through its ex “stion proe- ess; and the small refiner bias included within the Entitle- ments regulation, 10 CEFR § 211.67(e), is arbitrary and capricious. As stated in Pasco, Jue. v. F.E.A., supra, 3 CCH Energy Management {| 26,031, at p. 26,256. [ijn reviewing the discharge of an ageney’s function in interpreting the . . . HloNORABI RoBERT Pasco, INc.. Plaintiff Appellee, MAN CHRISTENSEN, HONORABLI Jn.. AND HonoraBLe JOHN FepERAL ENercy ApMINISTRATION, an agency of the United States, ORABLE Frank M. JoHNsON, s HIASTINGS, JUDGES DC 234 and rank G. Zars, Administrator, Federal Energy Citres SERVICE COMPANY and Adh linistration, Di I ¢ ndants Annellan Citres Service Om Company, Plaintiffs-Appellants, (Fitep Octroper 14, 1975) v. Marvin Coan, with whom Rex KE. Lee, Assistant Attorney _ General, and Stanley D. Rose, Attorney, Department ApMINISTRATION and Frank G. Zarp, > Justi ' - of Justice, Washington, D.C., were on the brief for I'rpERAL ENERGY lefendants vwellees / 1 Ap} ; the Aupellenta, W. Drogula and Peter Upon consideration of ll. Rodgers, Ginsburg, Feldman and Bress. and Ario kv. were on the brief for he aring I. hi Bane . W. Mayne, Ashland, Kentuck the Amicus Curiae, Ashland Oil, Ine. David Ginsburg, with whom Fred Appellants’ Suggestion of Re- Lid Suggestion is denied. COURT ’ oo —— Jerry L. Shulman and Joseph Califano, Jr., Williams, Connally & Califano, Washington, D.C., Jack Speight, ‘or THI =/ Reta H. Jacopson Carmichael, Gage & Speight, Cheyenne, Wy- Ruth H. Jacobson Haines, Clerk oming, on the brief for the Appellee. \ppeal from the United States District Court for the District of W voming (C75-91) January 28, 1976 Before Carter, CHRISTENSEN, and Estes, Judqes > res Judae. The plaintiff-appellee, Pasco, Inc., sought and obtained, court, injunctive relief from enforce- in the district 108a ment of the defendants-appellants’, Federal [nergy Ad- ministration, et al. (FEA), Old Oil Entitlements Program, 10 C.F.LR. § 211.67 (Entitlements program), 39 FUR. 42,246 (December 4, 1974), and a declaratory judgment that the Isntitlements progrant is invalid as applied to Pasco, on the grounds that: the [entitlements program fails to ex- empt from entitlement purchase obligations all small re- finers as defined in section 3(4) of the Emergency Petro- leum Allocation Act of 1973, Pub.L. No. 93-159, S87 Stat. 628, 15 U.S.C. 6751 (1975 Supp.) (Allocation Act), and similarly fails to exempt those small refiners established pursuant to federal antitrust decrees,’ such failures heing contrary to Congressional intent in passing the Allocation and bevond the FEA’s authority, because no differentiation is made, among entitlement sellers, between those refiners Act: the Entitlements program is arbitrary and eapricious 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 applicetion was arbitrary, capricious, and contrary to substantial evidence; and the administrative appeal process from FEA exception deci- sions violated the publication requirements of the Free- dom of Information Act, 5 U.S.C. § 552(a)(1). This expedited appeal is from the August 27, 1975 deci- sion 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 Icntitlements 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 partici- pants in the program.’ The district court judgment also dismissed the counterclaim of the United States, which was secking not only to enforce the Entitlements program —_— 109a as applied to Pasco, but also seeking damages for Pasco’s past violations of the FIA entitlement regulation.’ This court has jurisdiction of FEA’s appeal under see- tion 211 of the Economie Stabilization Aet of 1970, Pub.L. No. 91-579, 54 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. 794(a)(1) (1975 Supp.).° Pasco’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 specifi- cally and totally exempt from all entitlement purchase obli- gations, first, all small refiners as defined under the Act and, second, all smatl refiners established pursuant to an antitrust deeree., In addition, Pasco contends and the Dis trict 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 pro ducer-refiners and purchaser-refiners: that is, the regula- tion does not distinguish, in providing for the issuance of entitlements, between those refiners running low propor tions of old oil due to their own high production of new, released, and stripper wel! 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 economle hardships caused by shortages of imported and domestically produced crude oil, all of which constituted a ‘‘national energy crisis’’ and a threat to the publie 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 of the American people identified in section 110a 4(b).”’ TLR. Conf. Rep. No. 93-628, U.S. Code Cong. & Ad. News, 93 Cong., Ist Sess. 2688, 2689 (1973). In reviewing the exercise of that authority, it must be remembered that the ‘*fe]xercising of the administrative authority and the accomplishment of purposes enumerated by Congr ss under the recognized emergency conditions are exceedingly complicated undertakings.’’ Condor Op- erating Company vy. Sawhill, 514 F.2d 351, 359 (TECA 1975), cert. deni d, U.S. “» 43 USLW 3614 (May 19, 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.’’® As stated in Condor Operating Company v. Saw- hill, supra, at p. 309: The urgency of the challenge confronting the agency upon the passage of the Emergency Petroleum Allo- eation Act already has been recognized. Reeves v. Simon, 507 F.2d 455 (TECA 1974) ; People of State of California, Stale Lands Com’n Ve Simon, nO+ vd $30 (TECA 1974): Mandel v. Simon, 495 h.2d 1259 (THCA 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 erude oil was promulgated.’ 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 the ceil- ing price, ie. at approximately $11.28 per barrel.* The FEA found, however, that while the **two-tier’’ system met certain necessary objectives, the great disparity be- tween the price of controlled and uncontrolled crude oil was having an unequal impact on all refiners. During the base period of May, 1975, composite erude ol costs of all refiners were approximately equal; however, with the - — lila pricing system in effect, the major integrated oil com- panies, who as a ciass 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 bur- dens of uncontrolled crude oil, the FEA adopted the Kntitlements program. Under this program, a refiner must have one ‘‘entitlement’’ for each barrel of old oil it re- fines 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 nation-wide basis. Thus, a refiner running more old oil as a percentage of its total refinery runs than the national average would have to buy additional entitlements froi a refiner which ran a smaller percentage of old oil during the month than the national average. The national ratio of old oil runs to total refinery runs is lowered somev >t by the issuance of additional entitle- ments to small ve.iners under the ‘‘small refiner bias’’ built into the regulation’ and to certain eligible firms which import residual fuel oil and home heating oil. By requiring refiners and importers who sell entitlements to reduce their crude oil or product costs by the amount of the entitlement sales proceeds, and allowing a purchaser of entitlements to include the cost of entitlements in its crude oil costs. the FEA basically equalized the average weighted erude oil costs of all refiners, thereby eliminating the inequities caused by the ‘‘two-tier’’ pricing system.” The small refiners, as a class, were by no means over- looked in the promulgation of the Entitlements program. The notice of proposed rulemaking published by the FEA, seeting forth the tentative form of the Entitlements regu- lation, contained a small refiner bias which was subse- quently increased and adopted as a part of the final rule.” In addition to the number of entitlements a small refiner lia would otherwise receive for a particular month under the program, the small refiner bias provides additional entitle ments to sinall refiners for each day of that month in an amount equal to a designated percentage of its average daily volume of erude oil runs to stills, with the percent- ave basis becoming greater as crude oil runs to stills hecome sinaller. Further, an emergency amendment to the entitlements regulation, Special Rule No. 3, was issued ly the FEA to provide smnall refiners with special relief in the form of a eraduated phase-in of the program.” The FEA recognized that immediate imposition of the full entitlement purchase requirements of the program could have a severe short-term economie lnpaet on rtain small refiners with a high proportion of old oil in their erude oil runs to stills as compared with the national old oil ratio, and that a special rule which would allow these refiners time to arrange any necessary financing or restructuring of their marketing operations Was necessary. or the same reasons, the first phase of Special Rule No. 3 was subsequently extended to runs in December, 1974, and, in addition, any refiner filing an exception applica- tion on or prior to February 21, 1975 received an auto- matic extension of the first phase exemption until the application was passed on by the Fina. Pasco, a small, partially integrated refiner, contends, however, that such provisions failed to effectuate the intent of Congress. Relving on section 4(b)(1)(D) and 4(¢)(3) of the Allocation Act as expressions of specific Congressional intent, the distriet court held the FRA erred in promulgating the Entitlements program without a complete exemption for all small refiners, Section 4(¢) (5) requires such adjustments on the part of the Exeeutive in the nllocations of erude oil as are necessary to Tmplement the ay yercel Cs ot vestor owned utilities or by any State o1 local gov rnment or authority, and including transportation Taciities and services « .? ich serv , ic at large) ; which serve the public at large) ; a — (C) maintenance of agricultural operations, including farm pene — 129a ing, ranching, dairy, and fishing activities, and services di- rectly related thereto; * >. * (E) the allocation of suitable types, grades, and quality of crude oil to refineries in the United States to permit such refineries to operate at full capacity ; * * * (G) allocation of residual fuel oil and refined petroleum products in such amounts and in such manner as may be nee- essary for the maintenance of exploration for, and production or extraction of, fuels, and for required transportation related thereto; (H) economic efficiency ; and (1) minimization of economic distortion, inflexibility, and unnecessary interference with market mechanisms. 15. The Conference Committee stated in its report: The listing of objectives in successive paragraphs (A) through (I) in section 4(b)(1) is not intended to establish any order of priority. There [sic] are collective goals, and the conferees have not attempted to discern an order of precedence or value one against another. It is fully recognized that, in some instances, it may be impossible to satisfy one objective without sacrificing the accomplishment of another. Conf. Rep. No. 93-628, U.S. Cong. & Ad, News, 93d Cong., Sess. 2688 (1973). As the district court stated in Union Oil Company of Calif. v. F.E.A., F.Supp. (C.V. 74-1943- MML, Ca., July 25, 1974), 3 CCH Energy Management * 26,007, at p. 98, the ‘‘goals [of the Allocation Act] are in- herently inconsistent and no regulation could promote all of them at the same time. .. . balancing of goals is required, and Congress has left the details of this balancing to the Federal Energy Admin- istration.’’ 16. Paseo received a 52% exception for the first quarter of , Pasco, Inc., Case No. FEE 1299 (filed 12-6-74, decided 1-20-75), H Energy Management § 83,021; a 100% exception for the second quarter of 1975, Pasco, Inc., Case No. FEE-1676 (filed 5-15-75, decided 6-3-75), 3 CCH Energy Management { 83,168; and an 84.7% exception for the third quarter of 1975, Pasco, Inc., Case No. FEE-1853 (filed 7-31-75, decided 9-17-75), Appendix A to appellants’ reply brief filed with this court on October 3, 1975. 17. In Paseo’s January 20, 1975 exception decision (3 CCH Energy Management §[ 83,021), the FEA reviewed its decision on 130a an earlier exception application filed by the only other small refiner existing pursuant to an antitrust divestiture decree. The FEA stated in Paseco’s decision that in Navajo Refining Co., Case No. FP EE-1300 (filed 12-16-74, decided 1-2-75), 3 CCH Energy Manage- ment © 83.003, which was an aplication for an exeeption from 10 CFR § 212.83, the agency had placed great weight on the fact that the firm had purchased the refinery as a part of a U. S. District Court divestiture decree... and that Navajo’s acquisition was approved only after the firm stipulated to the Court that it would make every effort to expand the cap icity of the refinery jand that | [t}he principles established in Navajo and related deeisions are clearly relevant to the issues presented by this [Paseo’s] case. The Arco divestiture decree and Paseo’s concomitant purchase of the Sinelair properties were part of a larger effort by the Department of Justice to reinvigorate and encourage competl- tion in the national petroleum industry and . . . Paseo has developed into the kind of active small competitor the Federal government has sought to foster. 3 CCI Energy Management § 83,021, at p. 83,057, Navajo Refining Co. received exception relief from 10 CFR § 212.83 under its de- cision and was allowed to calculate the base price of middle distil- lates it refined by an alternative method, 3 CCH Energy Manage- ment © 83,003 at p. 83,006. Navajo subsequently filed an application for a complete excep- tion from 10 CFR § 211.67, the Entitlements program, which was denied on the basis that Navajo failed to show that its entitlement purchases would significantly impair the firm’s financial or opera- tional posture, Navajo Refining Company, Case No, FEE-1417 (filed 1-23-75, decided 3-12-75), 3 CCH Energy Management © 83.069. Navajo’s application for a stay pending appeal was also denied. Navajo Refining Company, Case No. FES-0387 (filed 3-26- 75. decicled 4-11-75). 3 CCH Energy Management § 85,022. Finding that ‘‘cireumstanees surrounding both the Entitlements Program and Navajo’s financial posture have changed substantially since Navajo originally applied for’’ exception relief, the FEA granted Navajo limited relief from the program for the second quarter of 1975 by reducing the old oil receipts as reported by Navajo, on which its purchase obligations were based, by 5.333 per cent. Navajo Ri fining Company, Case No, FEA-0387 (filed 3-26-79, decided 5275). 3 CCH Energy Management © 80581, at p. 80,771. This relief was projected to result in a reduction of the firms’ average monthly purchases of entitlements, not including any benefit con- ferred by any special rules, by 42.4877 per cent. $ - : l3la 18. The producing and refining capacities of the property Paseo purchased were not sufficient to meet the prodnet requirements of the marketing system which it inherited from Arco. Therefore. Pasco received certain long-term supply contracts from Arco for erude petroleum, motor gasoline, and middle distillates. These tv pes of contracts, to which Congress particularly directed iiself in the Conference Report quoted above, were intended. as recoenized by the FEA, *‘to afford Pasco a reasonable opportunity te expand its erude oil production and refining operations to the point where it could through its own productive resources fully satisfy the require- ments of the marketing system which it had acquired.’’ 3 CCH Energy Management § 83,021, at p. 83.054. The Entitlements pro- gram of course does not abrogate Pasco’s supply agreements in any way. What the program does is spread the dramatie increase in world oil prices over all refiners, big and small, which would have oceurred in the absence of such regulation but for the fact that the FEA was maintaining a ceiling price on the sale of approximetely 40 per cent of the nation’s domestic production. It was the greater access to this price-controlled oil on the part of the major companies as a class that prompted the crude oil equalization or entitlements program. 19. Paseo has a substantial capital improvements program aimed at becoming independently able to fulfill its marketing system's needs before its long-term supply agreement with Arco expires in 1977, threugh expansion and modernization of its refineries and pipelines and the development of secondary recovery programs for its oil fields. 20. The distriet court in Marathon Oil Co. v. FEA, 3 CCH En- ergy Management § 26,015, upheld the Entitlements program against Marathon’s contentions that it was arbitrary, capricious and unsupported by substantial evidence. This court dismissed Mara- thon’s appeal for lack of jurisdiction, 516 F.2d 1397 (TECA 1975). 21. The Committee Reports of the Senate and House are quite enlightening on the FEA’s authority to promulgate the Entitle- ments program. At the time of the consideration of the extension of the Allocation Act, the Senate Committee stated that the Act provides ample authority for the FEA to institute a system of price equalization to provide that all segments of the industry benefit from lower-priced domestic oil. The Committee was urged to amend the Act to achieve this objective but has been assured that FEA intends to institute a price equalization program under existing authority in the immediate future. 132a S. Rep. No. 93-1082, Comm. on Interior and Insular Affairs, 93d Cong., 2d Sess. at 2 (Aug. 9, 1974). Similarly, the House report indicates the same presence of author- ity for the FEA to institute a system of price equalization applicable to ernde oil, residual fuel oil and refined products to eliminate the regional and competitive inequities which result from a depend- ence upon high-cost imported oils and petroleum products, The FEA’s stated commitment to Subcommittee Chairman Mace- donald during the hearings on this bill to move promptly on a price equalization program has eonvineed the Committee that specific amendments to the Act to compel such action may prove to be unnecessary. H. Rep. No. 93-1443, 93d Cong., 2d Sess. at 3 (Oct. 8, 1974). Paseo has not challenged, and we do not decide, the validity of any entitlement purchases required by the FEA beyond the second quarter of 1975 (i.e., beyond purchase obligations arising in Au- gust, 1975 for crude oil runs to stills through June, 1975). There- fore, only for the purpose of examining Congressional intent with regard to the Entitlements program, it should be noted that in passing the Emergency Petroleum Alloeation Act of 1975, which provided that the Allocation Act be effective through November 15, 1975, Congress clearly expressed its intent that all regulations promulgated under the Emergency Petroleum Alloeation Act of 1973 (which necessarily includes the Entitlements program as adopted by the FEA and challenged by Pasco in this case, 10 CFR § 211.67) should be considered in force and effect for the period between August 31, 1975 and the date of enactment of the Emer- gency Petroleum Allocation Act of 1975. 94th Cong., Ist Sess., 121 Cong. Record H. 9193 (Sept. 26, 1975). 22 The relief was granted in optional form, in that for refinery runs for December, 1974 and the first quarter of 1975, Paseo could reduce its entitlement purchase obligations by 52°, computed under 10 CFR § 211.67 without regard to any Special Rules under § 211.67, or compute its obligations for entitlement purchases under § 211.67 and include any benefits conferred by any Special Rules. 3 CCH Energy Management 83,021, at p. $3,005. Special Rule No. 3, the first phase of which was extended through December, 40 F.R. 6197 (Feb, 10, 1975), gave Pasco greater relief for runs during the month of December than it would have received under its January 20, 1975 exception decision. Had the first phase of Special Rule No. 3 not been extended, Pasco would have received 133a greater benefit from its exception decision than was available under the operation of the second phase of Special Rule No. 3. For all of the runs during the first quarter of 1975, Pasco received greater relief under its exception decision than it received under Special Rule No, 3. In determining appropriate exception relief in each refiners case, the PEA uses information, submitted with the refiner’s exception application, which is basically intended to show the firm’s past present, and projected operations and its financial ability to meet its entitlement purchase obligations. The FEA caleulates the finan- ciai impact of the Entitlements program and any necessary relief onan annualized basis, while gencrally granting relief from obliga- tions under the program only on a quarterly basis. The FEA fe quires the resubmission of exception applications for each quarter before granting any exception relief for further quarters. Of course certain of the financia! figures and ratios computed therefrom are approximations or projections and in some cases have to be measu- ured over relatively short periods of time. Pasco entered the petro- leum industry only two years ago; thus any projection based on historical averages is subject to considerable variation. This is witnessed by the fact that Pasco asserted in its second quarter exception application that its actual results for the first quarter were much worse than Pasco had projected in its own first quarter exception application. 3 CCH Energy Management at p. 83,533. Further, in the FEA decision and order of September 17, 1975, Pasco, Inc., Case No. FEE-1853 (filed 7-31-75, decided 9-17-75), Appendix A to appellants’ reply brief, it is noted by the FEA at p. 5, n. 4, that Paseo’s , actual consolidated financial results for the first six months of Pasco's current fiscal year which the firm provided in connee- tion with its current submission indicate that Paseo achieved a level of profitability during that period which substantially exceeded the projections previously submitted by the firm andl which formed the basis of the Paseo IT { Paseo’s second quarter exception application] Decision. Clearly it is a reasonable and rational choice on the part of the FEA to grant exception relief from the Entitlements program on a quarterly basis using certain annualized projections and the refin- er’s quarterly submissions which include the refiner’s actual finan- cial results up to the filing date and the refiner’s projections for upeoming quarters. 25. In this supplemental order. the method of ealeulating the relief granted to Paseo was changed to incorporate the method of 134a eranting relief subsequently adopted by the FEA in issuing other exception decisions following Pasco’s January 20, 1975 decision. The new method utilized in the supplemental order provided that Pasco could compute its entitlement purchase obligations for April and May, 1975, without regard to the benefit conferred by any Special Rules, by reducing its reported old oil receipts for runs during February and March, 1975, by 19.08%, or by caleulating its obligations under 10 CFR § 211.67, including any benefit con- tained in any Special Rules. This relief was caleulated by the FEA to give Pasco relief from 60° of its entitlement obligations on a monthly basis, 3 CCH Energy Management § 83,021 at p. 83,059-4. 24. The fact that Pasco received a 100°% exception for the second quarter of 1975 does not, by -itself, as intimated by the district court, indieate that Pasco deserved a 100°. exception for the first quarter of 1975. It does indicates that the FEA was not inflexible in its exception decisions and, heine sensitive to: the decline in the national old oil ratio and the rise in Pasco’s old oil ratio; the ‘nerease in the cost of entitlements; the merits of Pasco’s exception application for the first quarter, the relief granted therein, includ- ine the burden of Pasco’s entitlements obligations as yet not pur- chased for crude oil runs during any month of the first quarter of 1975: and the financial and operational picture of the firm as re- flected by its May 15, 19% exception application, the FEA deter- mined that Pasco was entitled to further and in fact complete relief for the second quarter of 1975. 25. A party appealing an FEA exception decision may, pursuant to 10 CFR § 205.105(d), request that a conference or hearing re- earding the appeal be held. Also, the FEA on its own initiative may convene a conference or hearing on the appeal under 10 CFR ¢9)5.106. If. under the guidelines established in 6 CFR § 205, Subpart M, it is determined that a hearing will be held, the FEA then designates one agency official to conduct the hearing pursuant to 10 CFR § 205.172. % As this court stated in Carpenters 46 County Conference Board. ct al. v. The Construction Industry Stabilization Committee, ct al.. —— F.2d — (TECA slip opinion No. 9-26, July 31, 1975) at note 5, section 207 of the Stabilization Act, 12 Pos.c. § 1904 note (1975 Supp.), incorporated into the Allocation Act by section 5(a)(1) thereof, 15 U.S.C. § To4(a (1). “‘exempts agency ection under the Act from most of the provisions of the Administrative Procedure Act, title 5, United States Code, inghuding § 556 on the conduct and right of participants in dministrative hearings. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1813%3A2. Public record. Not legal advice.