Petition — Adams v. United States

Supreme Cour, US \|

FILED

MAY 29 1979

In THE 4

; ICHAEL RODAK, JR., CLER

Supreme Court of the United ous es

October Term, 1978

,

Docket No.

@8-17 74

J. R. Apams, First Crry NationaL Bank, anp OKC Corp.,

Petitioners,

— against —

Unirep Srates oF AMERICA AND REGIONAL COUNSEL,

Region Six, Department Of Energy,

Respondents.

On Petition For a Writ oF CERTIORARI

TO THE TEMPORARY EMERGENCY Court or APPEALS

oF THe Unitep States

PETITION FOR A WRIT OF CERTIORARI

Of Counsel:

Rosert A. MitLer

G. Scorr DamutH

Office of General Counsel

OKC Corp.

P. O. Box 34190

Dallas, Texas 75234

Ricuarp B. Marrin

Forp Marrin Esposiro

& WITMEYER

120 Wall Street

New York, New York

10005

KAMMERMAN, YEAKEL

& OVERSTREET

1420 American Bank

Tower

Austin, Texas 78701

Rocrrs, HucHes

& Herman

1200 Southwest Tower

Building

Austin, Texas 78701

May ,1979

ArTHUR MITCHELL

P. O. Box 34190

Dallas, Texas 75234

Joun J. Wirmeyer III

120 Wall Street

New York, New York

10005

Kart L. Yeaket III

1420 American Bank

Tower

Austin, Texas 78701

Timotrny J. Herman

1200 Southwest Tower

Bldg.

Austin, Texas 78701

Counsel for Petitioners

Bowne of Dalias

Printed in U.S.A.

INDEX

PAGE

ee a A) EE EU 6 ccc cae ccusdscedvecens ii

ES ee |

GROUNDS FOR JURISDICTION ................. 2

QUESTION PRESENTED FOR REVIEW ........ 2

CONSTITUTIONAL PROVISIONS AND

Se UO WNN EE gc vs cece eusecssdevevse’ 2

Re Ee GP EES SAIS oo rcscccccccccccccces 3

REASONS FOR GRANTING THE WRIT ......... 6

1. The Court Below Has Decided a Federal

Question in a Way in Confliet with

EE EE 6

2. The Decision Below Subverts the Protection

Aéecorded by the Fifth Amendment ............ 7

3. The Problems of Parallel Civil-Criminal

Investigations Are Important and Recurring .... 12

ne a Se bank bk 6 bas 4:4 8:00 9 0 3.0.68 13

IS SE RO a Re, A-1, B-1

cute k eT he hs v0.0 608 es aside eects A-1

Orders Sought to be Reviewed ...,............ A-2, 3

gE Oe B-1

Other Orders, Judgments and Opinions

er ek aa be B-2, 3, 4, 5, 6,

7, 18, 24, 25, 26

CERTIFICATE OF SERVICE .................... 15

ii iil

TABLE OF AUTHORITIES Page

me bi Const SS) & Regulati

onstitution, Statutes ious

Bull, Nuremburg Trial, 7 F.R.D. 175 (1945) ......... 9

Clay v. United States, 397 F.2d 901 (5th Cir. 1968) .. 9 4 S. ice amend. ft vs : eS Ne - ‘ . eee ee ees 2,7

unergy Organization Act, P.L. 95-91, ee ae 3

’ eas ey Oye ; ee

DORON 0. TONNE Romer Say Senet Name e Kconomie Stabilization Act of 1970, § 211(@) ........ 2

FTC v. American Tobacco Co., 264 U.S. 298 (1924) ... 10 ERASE AS) py ie eerie Wenn alas 2

Hale v. Henkel, 201 U.S. 48 (1906) ........... 00-008. 8 WO Cacia a one ives Gees ae 2, 4n

Harriman v. ICC, 211 U.S. 407 (1908) .............. 10 Oe Ne ee iis SaaS V ae aeL Rhos «eae Mabe: 3, 4n

te oe Oe ce Tae ee ee EARS Se Ne ca Tis 9, 10

ims Oe eee CE nh iy cawicneenss 10 ’

ee: ee eee Pak DM a cc ee ce: 9

In re Charge to Grand Jury, 30 F. Cas. 992 eye >

(C.C.D. Cal 1872) (No. 18,255) .......ccceeeceeeee s ney : ga i gs Wack SURANN cs WiC es Saree cae

Se SCS OR AWS Si aaa bb ec eeae ssi eeN ook

Jones ¥. GEG, BS UB: 1 CIPS) oni veces sess cect 10

Marshall v. Barlow’s, Inc., 486 U.S. 307 (1978) ...... 10 Other Authorities

Michigan v. Tyler, 436 U.S. 499 (1978) «2.6... 6... eee 10 4 W. Biackxstone, ComMENTAaRIES 349 ................ 8

Reisman v. Caplin, 375 U.S. 440 (1964) 0.6.6.6 e eee 6 R. Younger, THe Prorur’s Panen (1968) ............ 8n

ni ; v. F.2nd 167 (5th Cir. 1965) .. 8 Discovery & Inspection in Federal Criminal

siaccie bites lalate ca stesaatiys > Procedure, 59 W. Va. L. Rev. 221 (1957) .....0.... 9

United States v. Feinberg, 502 F.2d 1180 (7th Cir. 8. R. Cures, Moonr’s Feperan Practice 7 16.02[1

1974) cert. denied, 420 U.S, 926 (1975) ............ ° (1978) ieranbenieecumlascuaiicl bean : : We 9

United States v. Henry, 491 F.2d 702 (6th Cir. 1974)... 11 Friendly, The Fifth Amendment Tomorrow, 37

, SEM, Ba Ne OE COMED Wks kv ine ccdcs ke aks ck i)

United States v. LaSalle National Bank, — U.S. —, ( )

7 EnTG. Be BEE AUG vic nace adi crete ess 4, 5, 6, 7, 10 |

United States v. O’Connor, 118 F.Supp 248

CE: Bie TIGR) nc 's.vie veniseenc pesado ends Paueanees 11

United States v. Ross, 511 F.2d 757 (5th Cir. 1975) .. 9)

Wardius v. Oregon, 412 U.S. 470 (1973) ..........66.. i)

In THE

Supreme Court of the United States

October Term, 1978

Doeket No.

J: Ro. Apams, First Crry Narionat Bank, anp OKC Corp.,

Petitioners,

— against —

Uniren Srates or America AND ReGionaAL CouNsEL,

Region Six, Department Of Energy,

Respondents.

On Peririon For a Wrir or Cerriorari

ro THE ‘Tes porvry MuMercency Court or APPEALS

or Tue Unirrep Srates

PETITION FOR A WRIT OF CERTIORARI

To the Honorable, the Chief Justice of the

United States and the Associate Justices

of the Supreme Court of the United States:

Petitioners, in support of their Petition for a Writ of

Certiorari to the Temporary Emergeney Court of Appeals

of the United States, respectfully show, as follows:

OPINIONS BELOW

The orders sought to be reviewed were entered in the

Temporary Kmergeney Court of Appeals of the United

States (““TECA”) on May 18, 1979, and are appended hereto

as Appendix A. All other orders, judgments, and opinions

entered in this action, both in the Temporary Emergency

Court of Appeals and the United States District Court for

the Western District of Texas, are appended collectively

as Exhibit B. None is yet reported.

y]

—

GROUNDS FOR JURISDICTION

This Court has jurisdiction under Section 211(G) of

the Keonomiec Stabilization Aet of 1970, as amended, and

15 U.S.C. § 754. The orders sought to be reviewed were

entered on May 18, 1979. This Petition is filed within thirty

days of the entry of the orders sought to be reviewed. A

timely filed petition for rehearing on the underlying judg-

.

ment was denied on April 27, 1979.

QUESTION PRESENTED FOR REVIEW

Whether an unexecuted civil administrative subpoena

“an be enforced after a criminal reference by the issuing

agency.

CONSTITUTIONAL PROVISIONS

AND STATUTES INVOLVED

The Fifth Amendment to the United States Constitution

provides, in pertinent part:

No person shall be held to answer for a eapital, or

otherwise infamous crime, unless on presentment or

indictment of a Grand Jury, ... nor be deprived of

life, liberty or property, without due process of

ie

15 U.S.C. § 772(e) provides:

(e)(1) The Administrator, or any of his duly autho-

rized agents, shall have the power to require by sub-

pena the attendance and testimony of witnesses, and

the production of all information, documents, reports,

answers, records, accounts, papers, and other data

and documentary evidence which the Administrator is

authorized to obtain pursuant to this section.

(2) Any appropriate United States district court may,

in case of contumacy or refusal to obey a subpena

3

issued pursuant to this section, issue an order requiring

the party to whom such subpena is direeted to appear

before the Administration and to give testimony touch-

ing on the matter in question, or to produce any matter

deseribed in paragraph (1) of this subseetion, and any

failure to obey such order of the court may be pun-

ished by such court as a contempt thereof. .

Section 645 of the Knergy Organization Act, P.L. 95-91,

August 4, 1977, provides:

Mor the purposes of carrying out the provisions of this

Act, the Seeretary, or his duly authorized «vent or

agents, shall have the same powers and authorities as

the F’'TC under §9 of the Federal Trade Commission

Act [15 U.S.C. 49] with respect to all funetions vested

in, or transferred or delegated to, the Seeretary or

such agents by this Aet.

10 C.F.R. § 205.8 provides, in part:

(a) The Administrator of the FEA [*], his duly autho-

rized agent, the FEA General Counsel, or the ageney

official designated to conduct a hearing or public hear-

ing convened in accordance with Subpart M of this

part may sign and issue subpoenas either on his initia-

tive or, upon an adequate showing that the information

sought will materially advance the proceding, upon

the request of any person participating in that pro-

ceeding,

STATEMENT OF THE CASE

This case presents yet another facet of the complex

problem created when a federal agency seeks simultaneous-

ly to conduct civil and criminal investigative proceedings.

Here, according to an affidavit on file in the TECA, the

Department of Justice received a eriminal referral frone

the Department of Energy (“DOE”) in a matter styled

°The Secretary of Energy under the Energy Organization Act,

P.L. 95-91, assumed the powers previously delegated to the Ad-

ministrator of the Federal Energy Administration (“FEA”).

4

J. R. Adams, et al. which involved OKC Corp. That re-

ferral, according to the Justice Department, occurred on

Kebruary 6, 1979.

At that time, two appeals were sub judice before TECA,

which had as of then rendered no decision or judgment.

Both appeals concerned orders issued by the United States

District Court for the Western District of Texas, which

enforced two civi’ administrative subpoenae issued by the

Acting Regional Counsel of Region Six of the DOE to the

First City National Bank of El Paso, Texas (erroneously

identified by the DOE as “Southwest National Bank”).*

The civil subpoenae pertained: to the DOEK’s J. R. Adams,

et al. investigation.

Upon learning of the eriminal reference, the TECA

appellants (J. R. Adams, OKC Corp. and the bank) jointly

moved before TECA to vacate the judgments and orders in

the case upon the ground that the DOE’s criminal reference

precluded enforcement of the DOE’s civil subpoenae. In

support of their motion, the petitioners pointed to this

Court’s recent decision in United States v. LaSalle National

Bank, —-U.S.—, 57 L. Ed. 2d 221 (1978), in whieh this

Court explicitly held that a civil administrative subpoena

could not be enforced if it was employed after a criminal

reference.

The philosophy for that rule was summed up in LaSalle,

as follows:

A referral to the Justice Department permits criminal

litigation to proceed. The IRS cannot try its ovn

prosecutions. Such authority is reserved to the Depart-

ment of Justice and, more particularly, to the United

States attorneys. 28 USC § 547(1) [28 USCS § 547(1)].

°The lawsuit commenced when the Department of Justice, on

behalf of the United States and the DOE’s Acting Regional Coun-

sel, brought a subpoena enforcement action against the bank

under 15 U.S.C. § 772 and 10 C.F.R. § 205.8(b)(i).

5

Nothing in § 7602 or its legislative history suggests

that Congress intended the summons authority to

broaden the Justice Department’s right of eriminal

litigation discovery or to infringe on the role of the

grand jury as a principal tool of criminal accusation.

Accord, United States v. Morgan Guaranty Trust Co.,

— F.2d — (CA2 1978); United States v. Weingarden,

473 F.2d 454, 458-459 (CAG 1973); United States v.

O'Connor, 118 F.Supp 248, 250-251 (Mass. 1953); see

Donaldson v. United States, 400 U.S., at 536, 27 L.d.

2d 580, 91 S.Ct. 584; ef. Abel v. United States, 362 U.S.

217, 226, 4 L.Ed. 2d 668, 80 S.Ct. 683 (1960), 57 L.Kd.

2d at 233.

Obviously, the proseriptions against [RS subpoena enforce-

ment are equally applicable to other Executive agencies,

including the DOF.

As to interagency cooperation, such as that between DOE

and the Justice Department’s Criminal Division, LaSalle

had further observed:

But such cooperation, when combined with the inher-

ently interwined nature of the criminal and civil ele-

ments of the ease, suggests that it is unrealistie to

attempt to build a partial information barrier between

the two branches of the executive. Effective use of

information to determine civil liability would inevitably

result in criminal discovery. The prophylactic restraint

on the use of the summons effectively safeguards the

two policy interests while encouraging maximum inter-

agency cooperation. Jd.

Logically, under these standards, there is no difference

hetween enforcement of a civil subpoena issued after a

criminal reference, and post-reference enforeement of an

earlier-issued civil subpoena.

The United States and the DOE took a different view.

They argued that the LaSalle rule was purely technical

and that the date of the subpoena’s issuance controlled the

6

outcome in a mechanical fashion. The TECA concurred in

a summary decision. (Appendix A) Thus, that issue is

presented to this Court.

REASONS FOR GRANTING THE WRIT

1. The Court Below Has Decided a Federal Question In

A Way In Conflict With Decisions of This Court

The rule that a civil administrative subpoena cannot be

employed so as to further a criminal investigation is well

established. LaSalle, supra, has recently reconfirmed that

fact. Where the Grand Jury starts, the civil processes of

government stop.

This is not a new concept. In 1964, a unanimous Supreme

Court stated in Reisman v. Caplin, 375 U.S. 440, 449 (1964) :

Furthermore, we hold that in any of these procedures

before either the district judge or United States Com-

missioner, the witness may challenge the summons on

any appropriate ground. This would include, as the

circuits have held, the defenses that the material is

sought for the improper purpose of obtaining evidence

for use in a criminal prosecution, Boren v. Tucker, 9

tir. 239 F.2d 767, 772-773, as well as that it is protected

by the attorney-client privilege, Sale v. UNited States,

8 Cir. 228 F.2d 682.

The statement in Reisman was again reviewed by the

Supreme Court in Donaldson v. United States, 400 U.S. 517,

532 (1971), and was again reaffirmed.

In Donaldson, the TRS claimed that Reisman placed the

government in the dilemna of having to choose between (a)

subpoenaeing civilly a potential defendant’s records and

thereby surrendering any further criminal action or (b)

commencing a criminal action immediately, even though a

criminal case may ultimately be found not to lie. The

7

Supreme Court resolved the IRS’s dilemna by holding that

as long as the subpoenae were employed (i) in good faith,

(ii) pursuant to congressionally authorized process, and,

(ili) prior to any recommendation to the Department of

Justice for prosecution, they were enforceable. 400 U.S.

at 536. |

Yet, the court below has deviated from this accepted law

by a mechanistie construction of the language of the cases.

Even though enforcement of the subpoenae would occur

after the criminal reference, and even though such enforee-

ment would effect the evils sought to be avoided by LaSalle

and Donaldson, TECA would permit enforcement if the

subpoenae were signed in advance of the reference. Such a

decision conflicts with the principles enunciated by this

Court.

2. The Decision Below Subverts the Protection Ac-

corded By the Fifth Amendment

Under any system of government, there is always the

difficult ta.« of properly protecting the citizens from over-

reaching by the bureaucracy, while at the same time afford-

ing a mechanism for regulation and criminal prosecution.

The primary institution selected to serve that purpose in

the American federal system, from its inception, has been

the Grand Jury. U.S. Consr., amend V.

One could, of course, trace the common law origins of

that institution, starting from the Twelfth Century, or

perhaps before, through its inclusion in the Magna Carta,

James Madison’s proposal of June 8, 1779 to require a

grand jury indictment for all serious crimes, and an inser-

tion to that effect in the Bill of Rights. Like most ancient

institutions, it would over time have displayed a genesis

based at least in part on political maneuvering, occasional

stellar barriers to governmental impropriety, and regret-

8

table instances of prosecutorial subversion and cireum-

vention.*

Be all that as it may, under our federal system it is the

grand jury which “stands between the prosecutor and the

accused”, Hale v. Henkel, 201 U.S. 48, 59 (1906). “[T]he

grand jury earned its place in the Bill of Rights by its

shield, not its sword”, United States v. Cox, 342 F.2d 167,

186 (5th Cir. 1965) (Wisdom, J., coneurring); it is this

institution “by which the subject was rendered secure

against aggression from unfounded prosecutions of the

Crown”. In re Charge to Grand Jury, 30 F. Cas. 992, 993

(C.C.D. Cal. 1872) (No. 18,255). Without it, the exeeutive

branch of government might effectively “exile any man that

was obnoxious to the government, by an instant declara-

tion, that such is their will and pleasure”. 4 W. Brack-

STONE, CoMMENTARIES 349.

When approaching the question of parallel civil and erim-

inal investigations in our federal system, the principle

that the Grand Jury is specifically intended to serve both

a protective and prosecutorial function must be kept in

mind. It is a unique body. While various administrative

entities (such as the DOE) may have some similar func-,

tions, they, ultimately, are not twins of the Grand Jury —

they are prosecutors only, not protectors of the accused.

A decision to allow a simultaneous criminal and civil

investigation of an accused is inherently likely to cireum-

vent the Grand Jury’s protective function. Beyond that,

one might ask whether such circumvention would tend to

have other socially unacceptable consequences.

Here, again, the answer is yes. First of all, there are

fundamental differences between the federal concepts of

civil investigation and criminal procedure. Indeed, Ameri-

°See generally, e.g., R. YouNcER, THE PEopte’s Pane (1963).

9

can criminal procedure has long been so restrictive as to the

information supplied an accused that even the Soviets and

the French objected to the use 91 American-like criminal

methods at the Nuremberg trials. See Remarks of Justice

R. H. Jackson, quoted at Bull, Nuremberg Trial, 7 F.R.D.

175, 178 (1945); accord, Orfield, Discovery & Inspection

in Federal Criminal Procedure, 59 W. Va. L. Rev. 221,

232-33 (1957).

Even with the advent of the Federal Rules of Criminal

Procedure, and the amendments to them, discovery in civil

matters is significantly broader than in criminal cases.

Accord, e.g., United States v. Ross. 511 F.2d 757, 762 (5th

Cir. 1975); Clay v. United States, 397 F.2d 901, 915 (5th

Cir. 1968); see United States v. Feinberg, 502 F.2d 1180

(7th Cir. 1974), cert. denied, 420 U.S. 926 (1975). See gen-

erally, 8 R. Ciprs, Moore’s Feperat Practice §16.02[1]

(1978)* While displaying a tendeney toward liberalization.

our system has attempted on the whole to compensate for

the denial to an accused of comprehensive criminal dis-

covery by imposing elaborate, like restraints on the prose-

eution. Accord, Wardius v. Oregon, 412 U.S. 470 (1973):

compare, e.g., Fen. R. Cry. P. 26 & 34 with Fen. R. Crim. P.

16 & 15. Yet, in the final analysis, it is the government

which has the overall advantage. See, e.g., Friendly, The

Fifth Amendment Tomorrow, 37 U. Crxn. L. Rev. 671, 694

(1968).

Why, however, are these factors important? Beeause in

an administrative inquiry whieh will with high probability

result at most in civil litigation, there is some room to

tolerate ill-defined, sweeping inquiries. Once the civil litiga-

*As to the underlying reason why governmental agencies truly re-

sist criminal discovery, Moore’s FeperaL Practice states: “Dis-

closure is not so much a matter of life and death, as it is a matter

"i — sure of officials to criticism”. 8 Id. §16.02[1], at 16-43

10

tion commences, the data gathered in the ex parte, admini-

st.ative dragnet can be extracted by the defendant under

Fep. R. Civ. P. 26, after which he can prepare a defense

to it.

The same is not true in a criminal case. Thus, deprived

by administrative subpoena of even a Grand Jury to safe-

guard his interests, and faced with the attendant cireum-

vention of the criminal discovery rules, a defendant could

find himself confronted at trial by the selected fruits of

an undisclosed and overbroad foray into his activities.

Second, there is the need for any system of justice to

not only be fair, but also to be perceived as fair. No matter

how serupulous a government’s representatives hold them-

selves out as being, the fact remains that actions which on

their face appear unfair or one-sided necessarily erode

the system of justice itself.

The important need to correctly balance these competing

interests is highlighted by the history of administrative

subpoenae themselves. When generalized agency subpoenae

first appeared, they were kept within careful bounds by

scrupulous judicial oversight. ICC v. Brimson, 154 U.S.

447, 478 (1894); Harriman v. ICC, 211 U.S. 407, 419

(1908); FTC v. American Tobacco Co., 264 U.S. 298, 305-07

(1924); Jones v. SEC, 298 U.S. 1, 26 (1936). The sub-

sequent judicial relaxation of that oversight resulted, for

a time, in an all-encompassing regulatory environment

laden with surprise inspections; the reaction to this devel-

opment has been a re-assertion of judicial review. See, e.g.,

Marshall v. Barlow’s, Inc., 4836 U.S. 307 (1978); Michigan

v. Tyler, 436 U.S. 499 (1978). And, in the parallel civil-

criminal context, the established rule that civil process

could not be used to further criminal enforcement objec-

tives was likewise reaffirmed. United States v. LaSalle

National Bank, 57 L. Ed. 2d 221 (1978).

11

Clearly, over the years, courts have had to shape re-

straints upon the regulators so as to aecord some protec-

tion to the citizenry. Indeed, in an even more attenuated

situation involving multi-agency, civil-criminal investiga-

tions, one court, upon learning that one ageney’s adminis-

trative subpoena could, in part, aid the criminal enforce-

ment activities of another, wrote in United States v.

O’Connor, 118 F. Supp. 248, 250-51 (D. Mass. 1953) :

The Constitution of the United States, the statutes,

the traditions of our law, the deep rooted preferences

of our people speak clearly. They recognize the pri-

mary and nearly exclusive role of the Grand Jury as

the agency of compulsory disclosure. That is the in-

quisitional body provided by our fundamental law to

subpoena documents required in advance of a criminal

trial, and in the preparation of an indictment or its

particularization. See Hale v. Henkel. 201 U.S. 43, 26

S.Ct. 370, 50 L.Ed. 652.

To eneourage the use of administrative subpoenas as

a device for compulsory disclosure of testimony to be

used in presentments of criminal eases would dimin-

ish one of the fundamental guarantees of liberty.

Moreover, it would sanction perversion of a statutory

power.

Consistent with this approach, the Court in United States

v. Henry, 491 F.2d 702, 705 (6th Cir. 1974), held that

“. . . where, as here, the information sought by the [IRS’s]

civil summons has an obvious and strong potential for

supplying information needed in a pending federal erim-

inal [nareoties conspiracy] ease, we believe the use of the

civil summons is as much an abuse of process as if a

criminal tax case had been recommended or had actually

been begun”. Applying the rule of Donaldson v. United

States, 400 U.S. 517, 586 (1971), the Henry court refused to

enforce the civil summons.

12

The principles applied by these cases were reaffirmed

last year by the Supreme Court in LaSalle:

The likelihood that discovery would be broadened or

the role of the grand jury infringed is substantial if

post-referral use of the summons authority were per-

mitted... ss Interagency cooperation on the caleula-

tion of the civil liability is then to be expected and

probably encourages efficient settlement of the dispute.

But such cooperation, when combined with the inher-

ently intertwined nature of the criminal and civil ele-

ments of the case, suggests that it is unrealistic to

attempt to build a partial information barrier between

the two branches of the executive. Effective use of

information to determine civil liability would inevi-

tably result in criminal discovery. The prophylactic

restraint on the use of the summons effectively safe-

guards the two policy interests while encouraging

maximum interagency cooperation. 57 L. Ed. 2d at 233

(footnote omitted).

These principles, as a whole, clearly preclude enforcing a

DOF subpoena covering the very OKC transactions now

being reviewed by a grand jury, at the DOE’s behest.

3. The Problems of Parallel Civil-Criminal Investiga-

tions Are Important and Recurring

Beyond the error of the court below, there are important

reasons for reviewing its decision. In today’s economic en-

vironment, with its attendant complex regulatory schemes,

and the political pressures to investigate and, whenever

possible, prosecute highly profitable business concerns,

parallel civil-criminal investigations abound. As long as our

economy continues as it has, this will remain true.

In such an environment, the judiciary must continually

fashion and tighten the ground rules. LaSaile specifically

confirmed one set —7.e., at least if the issuance of a civil

subpoena post-dates a reference, it cannot be enforced.

13

The government here, however, seeks to erode that doc-

trine with a ritualistic exception. Let the subpoena issue

first, and refer the matter later but before enforcement,

and an agency will reap the benefits of a two-pronged

attack. Perhaps that was not the advance design here,

hut it most assuredly will be the effect of what was

decided.

Accordingly, this Court should delineate the boundary

clearly. Is the rule to be what common sense dictates — no

data can be gathered by civil process after a reference —

or is it to be something else?

CONCLUSION

or all the foregoing reasons, a writ of certiorari should

issue to the Temporary Emergency Court of Appeals of

the United States as prayed.

May 25, 1979

Respectfully submitted,

ArtHur MiIrcHELL

P. O. Box 34190

Dallas, Texas 75234

Of Counsel:

Rosert A. MILLER

G. Scorr DamMutTH

Office of General Counsel

OKC Corp.

P. O. Box 34190

Dallas, Texas 75234

Ricuarp B. Marrin

Forp Marrin Esposito

& WITMEYER

120 Wall Street

New York, New York

10005

KAMMERMAN, YEAKEL

& OVERSTREET

1420 American Bank

Tower

Austin, Texas 78701

Rogers, HucHes & HERMAN

1200 Southwest Tower Bldg.

Austin, Texas 78701

Joun J. Witmeyer III

120 Wall Street

New York, New York

10005

Karu L. YeAKEL III

1420 American Bank

Tower

Austin, Texas 78701

Timoruy J. HerMANn

1200 Southwest Tower

Bldg.

Austin, Texas 78701

Counsel for Petitioners

A-1

APPENDIX “A”

ORDERS SOUGHT TO BE REVIEWED

A-2

In THE

Cemparary Emergency Court of Appeals

of the United States

No. 5-33

Unirep States or America and Haroip CLemMeEnts, II,

Acting Regional Counsel, Department of Energy

Petitioners-Appellees,

Vv.

First Ciry Nationa Bank or Et Paso, Texas,

Defendant-A ppellant,

J. R. ApamMs

Intervenor-A ppellant.

Before Honorable Joe Ewing Estes, Honorable Frank M.

Johnson, Jr., and Honorable Walter P. Gewin, Judges

ORDER

Having duly considered Appellants’ Motion to Vacate

Judgment entered by this Court on March 5, 1979, and the

Appellees’ opposition thereto, the Court concludes that such

motion is completely without merit and should be denied.

Accordingly, such motion is denied and stricken for at-

tempted delay of subpoena enforcement.

Ir Is So OrDERED.

For THE Court:

Ruta H. Jacosson

Clerk

May 18, 1979

A-3

In THE

Cemporary Emergency Court of Appeals

nf the United States

No. 5-35

Unirep Srares oF America and Harotp CLemMeEnts, II

Acting Regional Counsel, Department of Energy

Petitioners-Appellees,

Vv.

SoutHwest NATIONAL Bank,

Defendant-A ppellant,

J. R. Apams

Intervenor-Appellant,

OKC, Corp.

Applicant for Intervention-A ppellant.

Befcre Honorable Joe Ewing Estes, Honorable Frank M.

Johnson, Jr., and Honorable Walter P. Gewin, Judges

ORDER

Having duly considered Appellants’ Motion to Vacate

Judgment entered by this Court on March 29, 1979, and the

Appellees’ opposition thereto, the Court concludes that such

motion is completely without merit and should be denied.

Accordingly, such motion is denied and stricken for at-

tempted delay of subpoena enforcement.

Ir Is So Orperep.

For THe Court:

Ruru H. Jacosson

Clerk

May 18, 1979

B-1

APPENDIX “B”

OTHER ORDERS, JUDGMENTS

AND OPINIONS IN THE CASE

B-2

In THE

United States District Court

For the Western District of Texas

E] Paso Division

No. EP-78-CA-129

Unirep Sratres or AMERICA, AND Harotp CLEMENTs, I],

Acting Regional Counsel Department of Energy,

Petitioners,

Vv.

First Crry Nationa Bank,

Defendant,

J. R. ApaMs,

Intervenor.

ORDER

On the second day of November, 1978, the above-styled

and numbered cause came on for consideration. After con-

sidering the record, evidence and testimony in this case,

the Court is of the opinion that the Petition for Enforce-

ment of the Federal Energy Administration subpoena

should be partially granted, and accordingly,

Iv ls Heresy Orpverep that the Respondent, FIRST CITY

NATIONAL BANK, shall comply fully with Paragraphs

1, 2, 4 and 5 of the subpoena, attached as Exhibit B to the

Enforcement Petition on or before December 8, 1978.

Ir Is FurrHer Orperen that at the Respondent’s election,

the United States Federal Energy Administration shall

provide the necessary personnel to photocopy any and all

documents to be provided pursuant to the above-deseribed

subpoena, and said photocopying shall be made at the ex-

pense of Petitioners.

November 17, 1978 WiLLiamM 8S. Sessions

United States District Judge

B-3

In THE

United States District Court |

For the Western District of Texas

E! Paso Division

No. EP-78-CA-129

Unirep States or AMERICA, AND Haroip CLEMENTS, II,

Acting Regional Counsel Department of Energy,

Petitioners,

Vv.

First Crry Natronau Bank,

Defendant,

J. R. Apams,

Intervenor. —

ORDER

On this date came on to be considered the Application of

J. R. Adams to Intervene in the above-styled and num-

bered cause, and it appearing to the Court that said Appli-

cation should be granted,

Ir Is Heresy Orpverep that leave is granted to J. R.

Adams to intervene herein pro hac vice.

WI.LuiaAM S. Sessions

United States District Judge

November 17, 1978

| —

. B-4

In THE

United States District Court

For the Western District of Texas

El Paso Division

No. EP-78-CA-129 ‘

UNITED StTaTEs OF AMERICA and Harotp CLEMENTs II,

Acting Regional Counsel, Department of Energy,

Petitioners,

v.

SovutHwest Nationa Bank,

Defendant,

J. R. Apams,

Intervenor,

OKC Corp.,

Applicant for Intervention.

ORDER

On this date came on to be considered the Motion of

First Crry Nationa, Bank or Ex Paso (erroneously sued

as Souruwesr Nationa Bank) for rehearing on United

States Department of Energy’s Motion to Compel Subpoena

of Southwest National Bank. On December 8, 1978, De-

fendant, First Ciry Narionat Bank, filed its Notice of

Appeal of this Court’s Order of November 17, 1978 to the

Temporary Emergency Court of Appeals, and accordingly,

this Court is without jurisdiction since the cause is on

appeal, and

Ir Is THEREFORE OrpereD that Defendant, First Crry

NationaL Banx’s, Motion for Rehearing be, and it is in

all things, DeN1ED.

Deeember 15, 1978 Witiiam 8S. Sessions

United States District Judge

B-5

In THE

United States District Court

For the Western District of Texas

El Paso Division

No. EP-78-CA-129

Unirep States or America and Haroip CLements II,

Acting Regional Counsel, Department of Energy,

Petitioners,

v.

Soutuwest NaTIOoNAL Bank,

Defendant,

J. R. Apams,

Intervenor,

OKC Corp.,

Applicant for Intervention.

ORDER

On this date came on to be considered OKC Corp.’s

Motion to Intervene as Defendant in the above-styled and

numbered cause. On December 7, 1978, Sournawest NATIONAL

Bank (actually Firsr Crry Narionat Bank) filed its Notice

of Appeal of this Court’s Order of November 17, 1978 to

the Temporary Emergency Court of Appeals. Accordingly,

this Court is without jurisdiction at this time, since the

cause is pending before the Temporary Emergency Court

of Appeals, and

Ir Is THeREFORE OrpveRED that OKC Corp.’s Motion to

Intervene as Defendant herein be, and it is in all things,

DENIED.

December 15, 1978 Wituiam S. Sessions

United States District Judge

B-6

In THE

United States District Court

For the Western District of Texas

El Paso Division

No. EP-78-CA-129

Unrrep States or America and Harotp CLements II,

Acting Regional Counsel, Department of Energy,

Petitioners,

pS

SoutHuwest NATIONAL Bank,

Defendant,

J. R. Apams,

Intervenor,

OKC Corp.,

Applicant for Intervention.

ORDER

On this date came on to be considered the Motion of

Intervenor, J. R. Apams, for Rehearing of the United States

Department of Energy’s Motion to Compel a Subpoena of

certain records of First City National Bank (erroneously

sued as Southwest National Bank). It appearing to the

Court that the above-styled and numbered cause is pres-

ently on appeal before the Temporary Emergency Court of

Appeals, and that therefore, this Court is without juris-

diction to consider said Motion for Rehearing,

Tr Is Heresy Orverep that Intervenor’s Motion for

Rehearing be DENIED.

December 21, 1978 WiLuiaM S. Sessions

United States District Judge

B-7

Cemporary Emergency Court of Appeals

of the United States

No. 5-33

T a . iA oc a

Unirep Sratres or America and Harotp CLEMENT Ts, II,

Acting Regional Counsel Department of Energy,

Petitioners-A ppellees

Vv.

s vv

First Crry Nationa, Bank or Ex Paso, Texas,

Defendant-Appellant

J. R. Apams,

Intervenor-Appellant

Appeal from the United States District Court

for the Western District of Texas, El Paso Division

(Civil No. EP-78-CA-129)

(Submitted: February 12, 1979 Deeided: March 5, 1979)

Timortuy J. Herman, Rogers, Hughes & Herman, Austin,

Texas, was on the brief for the Defendant-Appellant.

Exotse E. Davies, Department of Justice, Washington, D. C.,

with whom Barbara Allen Babeock, Assistant Attorney

General, and Jamie C. Boyd, U. S. Attorney, were on the

brief for the Petitioners-Appellees.

Before Estes, Jounson, and Grwry, Judges.

Per Curiam:

On the basis of a complaint filed by the Salt River Proj-

ect,' the Federal Energy Administration (FEA), on March

31, 1975, began a civil investigation of J. R. Adams to de-

‘Appellant's Brief (Apt.’s Br.) 7.

B-8

termine whether amounts Adams received for the sales of

certain covered petroleum products were in compliance

with applicable pricing regulations.? The investigation was

assigned Category A status, indicating a high investigative

priority and allowing the agency to combine three separate

cases into one The FEA began negotiating with Kevin

Hayes, an attorney representing J. R. Adams, for informa-

tion concerning the investigation; and on November 15,

1977, Hayes tendered to the agency certain checks written

by Adams.‘ From these checks, which had been deposited in

the Southwest National Bank of El Paso (now First City

National Bank of El Paso), the FEA obtained the names

and aecount numbers of James Cardwell and Gilbert R.

Russell.®

The Department of Energy (DOE) took the statement of

J. R. Adams, the subject of the investigation in January,

1978.6 On January 9, 1978, Cardwell and Russell testified

before the DOE that they had received from Adams the

checks which Hayes had tendered to the FEA in November,

1977,’ and that these checks represented finder’s fees “de-

veloped out of a profit margin that Mr. Adams charged.”*

A subpoena duces tecum “[iJn a matter before the Depart-

ment of Energy conerning J. R. Adams et al,” was subse-

Transcript (T.) 9, 10, 14. Unless otherwise noted, all references

to the transcript are to testimony before the District Court of

Harold R. Clements, II, deputy regional counsel for the Department

of Energy (DOE), Region 6, Dallas, Texas.

3T. 9-10. Also under investigation were Consolidated Materials,

Robert Vale, CLB, Stonewalker Corp., and OKC. T. 21-22.

‘T. 10-11.

ST. 11.

°T. 41.

77. 11.

8T. 44,

B-9

quently issued to the Southwest National Bank at El Paso,

Texas, on March 8, 1978, requiring testimony and produe-

tion of documents before the DOE on March 23, 1978, at

Dallas, Texas. The Schedule of Documents Requested con-

tained five paragraphs requesting records of various trans-

actions of Cardwell and Russell:

1. Documents in your possession that contain records of

transactions in the following numbered accounts —

58-03-144

13-11-336

during the period December 1973 through December

1974.

2. Cashiers checks or Bank Money Orders purchased by

either —

James Cardwell or

Gilbert R. Russell

during the period December 1973 through December

1974.

3. Signature cards for all accounts maintained in your

bank by James Cardwell or Gilbert R. Russell, indi-

vidually or jointly, during the period December 1978

through December 1977.

4. Any Safe Deposit Box contract entered into with either

James Cardwell or Gilbert R. Russell, or both of them,

and in foree during the period December 1973 through

December 1977, or any portion of that time period.

qr

. Entry records for the Safe Deposit Boxes deseribed

in item 4 above and for the time periods in item 4.

On March 15, 1978, the Bank tendered, through its senior

vice-president/cashier, Jim M. MeVay, the ledger sheets for

the accounts in question for the period December 1973-De-

cember 1974, as well as the requested signature cards.® How-

°T. 16, 23, 52. Apt.’s Br. 2. T. 52 contains testimony of Jim M.

McVay, senior vice-president/ cashier of the Bank.

b-10

ever, the Bank did not provide any of the remaining docu-

ments requested in the subpoena duces tecum.’? DOK

subsequently requested certain checks from the two ac-

counts." The Bank refused to comply with DOK’s request

in the absence of a separate subpoena for the checks.”

On July 12, 1978, the United States of America and Har-

old R. Clements, IT filed a petition in the United States Dis-

trict Court for the Western District of Texas, El Paso

Division, seeking to enforce the subpoena of March 8, 1978.

An amended subpoena was issued to the Bank on October

6, 1978, returnable October 25, 1978. The amended subpoena

sought the same documents and contained only very minor

differences: the heading read, “In a matter before the De-

partment of Energy concerning the DOE investigation of

transactions in covered petroleum products by J. R. Adams

and others, and the distribution of proceeds of the transac-

tions,” and the subpoenaed party was “First City National

Bank, successor to Southwest National Bank.” The Sched-

ule of Documents Requested was identical to that attached

to the original subpoena.

The District Court held an evidentiary hearing on

November 2, 1978, in which counsel for J. R. Adams was

allowed to participate as a defendant-intervenor. On

November 17, 1978, the District Court entered an order

enforcing all paragraphs of the subpoena except that re-

quiring production of the signature cards."* The Appel-

lant-Bank filed its notice of appeal to this court on Decem-

ber 8, 1978.

WT, 23.

11.T, 49, testimony of Mr. McVay.

12Tbid.

18The signature cards were furnished at the same time as the

ledger sheets. See n.9, supra.

B-11

The appellant, First City National Bank of El Paso

(Bank), presents the following issues for review by this

Court:

1. is the subpoena issued by DOE requiring appel-

lant First City National Bank to produce certain docu-

ments relating to James A. Cardwell and Gilbert R.

Russell violative of the Bank’s Fourth Amendment

guarantees against unlawful search and seizure and

did the District Court err in ordering compliance with

Paragraphs 1, 2, 4 and 5 of said subpoena, particular-

ly in the absence of an order of investigation or reso-

lution setting forth the nature, purposes and scope

of the agency’s inquiry?

2. Assuming, arguendo, that the purpose and scope

of the investigation deals with unlawful profit margins

on sales of product by J. R. Adams, are the documents

sought irrelevant and incompetent to any such inquiry?

3. Did the Appellant Bank, by virtue of its March

15, 1978 tender of documents, comply with Paragraph

1 of the “Schedule of Documents Requested” attached

to the involved subpoena?

4. Did the issuance by DOF of an amended sub-

poena, seeking the same documents, supersede and

render unenforceable the involved subpoena?"

The DOE, however, states the issue as follows:

Whether the district court correctly ordered the

First City National Bank to comply with the De-

partment of Energy’s subpoena.™

The Bank argues that the absence in the subpoena of

an order of investigation or other standard by which

relevance can be determined constitutes a violation of

MApt.’s Br., 1-2.

Appellee’s Brief (Apl.’s Br.) 1.

B-12

the Fourth Amendment guarantee of freedom against un-

reasonable search and seizure; that documents from the

accounts of Cardwell and Russell are incompetent and

irrelevant with respect to amounts received by J. R.

Adams from the sale of petroleum products; that its

tender of all ledger sheets for the two accounts in ques-

tion for the period December 1973-December 1974 satis-

fies paragraph 1 of the subpoena; and that the October

6, 1978 subpoena superseded the subpoena of March 8,

1978. The Bank requests that this court reverse the Dis-

trict Court’s order enforeing the subpoena and render

judgment in its favor, or alternatively, reform the Dis-

trict Court’s order to delete enforcement of paragraph

1 of the subpoena.

The administrative subpoena involved in this case recites

that it was issued by the DOE “under the authority of

§ 206 of the Economie Stabilization Act of 1970, as amended,

incorporated by § 5(a)(1) of the Emergency Petroleum

Allocation Act of 1973, as amended; § 13 of the Federal

Energy Administration Act of 1974; §§ 645 and 705 of the

Department of Energy Organization Act and 10 CFR

§ 205.8 and § 205.201.”

The DOE’s subpoena authority under the Emergency

Petroleum Allocation Act of 1973, as amended, 15 U.S.C.

§ 751 et seq. (KFPAA), and the Federal Energy Admin-

istration Act of 1974, 15 U.S.C. § 761 et seq. (FEA

Act), is diseussed in detail in this Court’s decision in

United States v. Empire Gas Corp., 547 F.2d 1147 (TECA

1976), and United States v. Bell Oil Co., 564 F.2d 953

(TECA 1977).1® Congress broadened this authority in § 645

16 § 5(a)(1) of the EPAA, which incorporates § 206 of the

Economic Stabilization Act of 1970, as amended. 12 U.S.C. § 1904

[Continued |

B-13

of the Department of Energy Organization Act, 42 U.S.C.

§ 7101 et seq. (DOE Act), by providing that:

For the purpose of carrying out the provisions of this

Act, the Secretary, or his duly authorized agent or

agents, shall have the same powers and authorities

as the Federal Trade Commission under § 9 of the

Federal Trade Commission Act with respect to all

functions vested in, or transferred or delegated to,

the Secretary or such agents by this Act... .

Section 9 of the Federal Trade Commission Act (FTC

Act), 15 U.S.C. § 49, authorizes the FTC “to require by

16 [Continued |

note, authorizes [t]he head of an agency exercising authority under

this title, or his duly authorized agent . . . for any purpose related to

this title, to sign and issue subpoenas for the attendance and testi-

mony of witnesses and the production of. relevant books, papers,

and other documents, and to administer oaths.

Section 13(b) of the FEA Act of 1974 requires

[a]ll persons owning or operating facilities or business premises

who are engaged in any phase of energy supply or major energy

consumption [to] make available to the Administrator such in-

formation and periodic reports, records, documents, and other

data, relating to the purposes of this chaper.

Section 93(e)( 1) of the same Act empowers

[t]he Administrator, or any of his duly authorized agents . . . to

require by subpoena the attendance and testimony of witnesses

and the production of all information, documents, reports, an-

swers, records, accounts, papers, and other data and documentary

evidence which the Administrator is authorized to obtain pur-

suant to this section.

The regulations promulgated pursuant to these statutes authorize

the FEA (now DOE) to “initiate investigations relating to com-

pliance by any person with any rule, regulation, or order promul-

gated by the FEA .. .,” 10 CFR § 205.201 (a) and to “sign and issue

subpoenas . . . upon an adequate showing that the information

sought will materially advance the proceedings . . .” 10 CFR

§ 205.8(a).

b-14

subpoena the attendance and testimony of witnesses and

the production of all such documentary evidence relating

to any matter under investigation.”

The Bank cites the fact that J. R. Adams, rather than

Cardwell or Russell, is the target of DOE’s investigation.

However, decisions under § 9 of the FTC Act, which

§ 645 of DOE Act parallels, make it clear that “this sec-

tion authorizes the Commissioner to subpoena documen-

tary evidence from parties not the subject of an investi-

gation or proceeding.” F’.7.C. v. Cockrell, 431 F. Supp. 561,

563 (D.D.C. 1977) (Emphasis in original) ; F.7.C. v. Tuttle,

244 F.2d 605 (2d Cir. 1957), cert. denied 354 U.S. 925,

F.T.C. v. Rockefeller, 441 F.Supp. 234 (S.D.N.Y. 1977).

Clearly then, the DOE was within its authority in issuing

a subpoena to the Bank in order to obtain records from

the accounts of Cardwell and Russell for use in the investi-

gation of J. R. Adams.

This Court’s decision in United States v. Empire Gas,

supra, recognized as the legal standard applicable in sub-

poena enforcement proceedings the holding of Oklahoma

Press Publishing Co. v. Walling, 327 U.S. 186, 209 (1945),

that “[i]t is enough that the investigation be for a law-

fully authorized purpose within the power of Congress to

command.” The DOE’s investigation of Adams’ profit mar-

gin from the sale of certain covered products has a law-

fully authorized purpose under the EPAA, FEA Act, DOE

Act, and applicable regulations.’7 The subpoena in question

was issued under the same rules and regulations as the

suhpoenas enforeed by this Court in United States v. Em-

pire Gas, supra, and United States v. Bell Oil Co., supra,

See, e.g., § 5(b), EPAA; §5, FEA Act; §§ 301(a), 641, 645, 705,

DOE Act; and 10 CFR Part 205.

B-15

and shows on its face that it concerned a specific investi-

gation by the DOE.

Referring to the permissible scope of ageney inquiry,

the Supreme Court in Oklahoma Press Publishing Co.,

supra at 208, stated that “[t]he gist of the protection is

in the requirement ... that the disclosure sought shall

not be unreasonable.” Thus an otherwise lawful subpoena

will be enforeed if the requested information is reasonably

relevant to the investigation. United States v. Morton Salt

Co., 388 U.S. 632, 652 (1949). This standard of reasonable

relevance does not, however, require a showing of specific

need for the information. F'.7.C. v. Texaco, Inc., 555 F.2d

862 (D.C. Cir. 1977), cert. denied, 97 S.Ct. 2939, 2940,

From cancelled checks written by J. R. Adams, the tar-

get of the investigation, to Cardwell and Russell, the

DOE learned of finder’s fees paid by Adams on the

basis of his profit margin. The DOE subsequently sub-

poenaed the Bank to produce records from the accounts

of Cardwell and Russell “in a matter coneerning J. R.

Adams et al.” The subpoena was issued for the lawfully

authorized purpose of investigating profit margins from

sales of covered products. The information requested re-

lated to the matter under investigation and was, there-

fore, relevant under Oklahoma Press Publishing Co.

supra; f’.7.C. v. Rockefeller, supra. The statutes and pene.

lations under which this subpoena was issued require no

order of investigation or statement of purpose from which

the relevance of the requested information can be deter-

mined. It is sufficient that relevance can be determined from

the face of the subpoena. United States v. Bell, supra. The

subpoena is not violative of any Fourth Amendment guar-

antees and is in all respects lawfully authorized and issued.

This Court’s statement in United States vy. Pel! Oil Co.

supra, at 961, that

——

B-16

[i]t is not for Bell to cheose the records the FEA ex-

amines or to second-guess the FEA’s decision with re-

spect to whether it has obtained all information needed

to meet its statutory mandate to determine compliance,

answers the Bank’s contention that it complied with para-

eraph 1 of.the subpoena by tendering all ledger sheets for

the two accounts in question. At the evidentiary hearing,

DOE Acting Regional Counsel, Harold Clements, LH, testi-

fied that the ledger sheets reflected only deposits and with-

drawals for the particular aeccounts.’* Consequently, the

only way for the DOE to learn more about certain trans-

actions would be to receive copies of the checks. The Dis-

trict Court found such a request to be within the scope of

paragraph 1 of the subpoena,” and such finding is not clear-

ly erroneous. See F.7.C. v. Texaco, supra at 876 n. 29 (D.C.

Cir. 1977).

The Bank’s argument that the second subpoena, which

merely made a correction to reflect the Bank’s change of

name, superseded the original subpoena has been properly

characterized as hypertechniecal.”” In United States v. Bell

Oil Co., supra at 958, this Court stated that so long as the

proper party is identifiable, a mistake in name is not fatal

and that to hold otherwise would be to elevate “form over

substance,” citing Conley v. Gibson, 355 U.S. 41, 48 (1957).

The Bank suffered no prejudice as a result of the mistake

in name, and all other respects the second subpoena was

identical to the first.

The Court’s role in a subpoena enforcement proceeding is

necessarily a limited one. Challenges other than those based

on agency authority and relevance of requested information

1ST. 17-18.

1"T, 72, finding of the District Court.

20AplL.’s Br. 20.

B-17

generally are not defenses in such a proceeding. he Su-

preme Court in Hndicott-Johnson v. Perkins, 317 U.S. 501,

909 (1943) (footnote omitted), observed that the petitioner

advanced many matters that are entitled to hearing and

considered in its defense against the administrative eom-

plaint. but they are not of a kind that ean be aecepted as

a defense againsi the subpoena.

See /-.7.C. v. Texaco, supra at 879.

At the hearing in the Distriet Court, a question arose

as to the DOE’s use in the Adams investigation of an al-

legedly illegally obtained “Report to Special Committee to

OKC Corp. by Special Counsel.” Appellant’s contention in

this regard affords no ground to deny enforcement of the

subpcena issued to the Bank.

The Department of Energy subpoena, as amended, was

issued for a lawfully authorized purpose, for determining

compliance with DOK pricing reeulations, seeks informa-

tion relevant to that inquiry, and should be promptly en-

forced. The November 17, 1978 order of the District Court

is AFFIRMED.

B-18

Cemporary Emergency Court of Appeals

of the United States

No. 5-35

Untrep Srares or America and Haroip Clements, II,

Acting Regional Counsel, Department of Energy,

Petitioners-A ppellees,

Vv.

’ T ’ on @

Souruwest Natrionau Bank,

Defendant-A ppellant,

J. R. Apams,

Intervenor-Appellant,

OKC Corp.

Applicant for Intervention-Appellant.

Appeal from the United States District Court

for the Western District of Texas, El Paso Division

(Civil No. E-78-CA-129)

(Submitted: Mareh 15, 1979 Decided: Mareh 29, 1979)

Timoruy J. Herman, Rogers, Hughes & Herman, Austin,

Texas, Earl L. Yeakel, II], Kammerman, Yeakel & Over-

street, Austin, Texas, Arthur Mitchell, and G. Seott Da-

muth, OKC Corporations, Dallas, Texas, were on the brief

for the Defendants-Appellants.

Enos B. Davies, Department of Justice, Washington, D.C.,

with whom Barbara Alien Babeoek, Assistant Attorney

General, and Jamie C. Boyd, U.S. Attorney, were on the

brief for the Petitioners-A ppellees.

°The First City National Bank was erroneously sued as the

Southwest National Bank.

B-19

Before Esrrs, Jounson, and Gewin, Judges.

Per curiam.

On January 4, 1979, a joint notice of appeal was filed

by the First City National Bank of El Paso (Bank),

J. R. Adams, and OKC Corp. (OKC). The Bank appeals

from an order entered by the Distriet Court on Decem-

ber 15, 1978, denying its motion for rehearing under

I.R.Civ.P. CR.) 60(b); Adams appeals from an order

entered by the District Court on December 21, 1978,

denying its motion for rehearing under R. 60(b); and

OKC appeals from an order entered by the Distriet Court

on December 15, 1978, denying its post-judgment motion

to intervene under R. 24.1

Appellants state the issue in this appeal as

whether the trial court erred in holding that it was

without jurisdiction to consider motions, made pur-

suant to Rule 60(b) of the Federal Rules of Civil

Procedure, for relief from a final order?

Appellants contend that new testimony, not available at

the time of the November 2, 1978 subpoena enforcement

proceeding in the District Court, contradicts statements

by the government concerning the receipt and use of an

allegedly privileged document, the “Report to Special

Committee to OKC Corp. by Special Counsel” (OKC Re-

port), and thus requires a new hearing under R. 60(b).

This new evidence, according to Appellants, “surfaced”?

in the December 11, 1978 deposition of David G. Ownby,

'The joint notice of appeal states that OKC appeals from the de-

nial of a motion under R. 24 and R. 60; however, the record con-

tains no motion by OKC under R. 60, and the District Court’s order

of December 15, 1978, refers only to OKC’s motion under R. 24.

*Appellants’ Statement Pursuant to Rule 15(c) of the General

Rules of the Temporary Emergency Court of Appeals of the United

States, 1.

’Appellants’ Brief ( Apts.’ Br. ), 7.

1-20

a former employee of OKC, taken in an Oklahoma state

court action brought by OKC against Ownby. Appellants

claim that “Clements’ [the government witness] version

and Ownby’s version of what occurred were . . . markedly

different.”*

On January 12, 1979, the government (Appellee) moved

for dismissal of this appeal on the grounds that the Dis-

trict Court’s denial of the Bank’s and Adams’ motions

for rehearing was not an abuse of discretion; that the

District Court’s denial of OKC’s post-judgment motion to

intervene was not an abuse of discretion; and that Ap-

pellants’ allegations of a “tainted” DOE civil investiga-

tion cannot transform a subpoena enforcement proceed-

ing into a-trial.

In their reply of January 24, 1979 to the Appellee’s

Motion to Dismiss, the Appellants urge that the District

Court should hear “all relevant evidence as to the taking

of the report by the DOK .. .,”° that the District Court

did in fact have jurisdiction to rule on the R. 60(b)

motions, and that OKC is entitled to intervene under

R. 24(a) or R. 24(b).

Appellants claim that the District Court “specifically

left open Appellants’ right to reapply for a rehearing

based upon further evidence of governmental miscon-

duct.”" According to Appellants, this newly discovered

evidence relates to

fo]ne of the primary defenses asserted by the parties

opposing the enforcement of the subpoena .. . that

‘Affidavit of Arthur Mitchell, General Counsel for OKC Corp., 4.

5Appellants’ Memorandum in Response to Appellee’s Motion to

Dismiss Appeal, 8.

®Apts.” Memorandum in Support of Motion for Summary Remand,

2. The statement in the Record, p. 78, on which Appellants rely in

their brief, 3, does not, however, bear out this contention.

Bok

the investigation by the DOT was based on a Speeial

Report preparcd by a Speeial Committee of the Board

of Directors of OKC Corp. CR. 8, 9). [footnotes omit

ted]. This report was authored by a Dallas law firm

and subjeet to the legal protection given to confidential

communientions between an attorney and his elient.

Subsequently, the Report was stolen from OKC and

viven to two federal ageneies, one of whieh was the

Dood?

Appellants, however, take an unjustifiably broad view

of a subpoena enforcement proceeding. The eourt'’s role in

such a proceeding is limited to determining whether the

subpoena was issued fora lawfully authorized purpose and

Whether it seeks information relevant to the aweney'’s in

quiry. Tf these questions are resolved in the aflirmative, the

subpoena is valid and must be enforeed. United States v.

KMmpire Gas Corp, 547 Wold 1147, TESE-52 (TCA 1976),

Kndicott Johnson Corp. vo Perkins, 317 US. SOL (1948),

Oklahoma Press Publishing v. Walling, 827 US. 186 (1946),

Other matters whieh a defendant may be entitled to present

in defense against an administrative eomplaint or in col

lateral actions are not proper defenses in a subpoena en

Foreement proceeding, Hudicott Johnson, supra at 509, and,

if allowed, would unnecessarily frustrate the ageney'’s in

vestigative and, ultimately, conplianee enforcement efforts.

In Hannah v. Larche, 363 U.S. 420, 443-444 (1960), the Su

preme Court observed that

the investigative process could be completely disrupted

if investigative hearings were transformed inte trial

like proceedings. ... Faet- finding ageneies . 2. would

be diverted from their legitimate duties and would be

plagued by the injeetion of collateral issues that would

make the investigation interminable. ... This type of

proceeding would make a shambles of the investigation

and stifle the agzeney in its gathering of faets.

TApts.” Br., 3.

B22

Appellants’ argument that the DOK investigation is “tart

od” by the use of the OKC Report, an allegedly privileged

document, eannot be entertained as a defense against en

forcement of the subpoena issued to the Bank, Issuanee of

A subpoena comes at an early stage of administrative aetion,

as this Court recognized in United States vo. Empire Gas,

supra abt Po2, nt:

This is only the commencement of administrative pro

cedures whieh must be exhausted prior to ageney de-

termination of violations of the Mandatory Allocation

and Priee Regulations. See City of New York v. New

York Telephone Co,, 468 2d 1401, 1402 CPECA 1972).

Section 2EL of the Heonomie Stabilization Aet, as amend

ed, 12 U.S.C. § 1904 note (ISSA), now incorporated in § 5

(a) (1) of the Kmergeney Petroleum Allocation Act of 1078,

as amended, 19 ULS.C. §751 et seq. (IAPAA), “was desipned

to provide speedy resolution of eases brought under. the

[ESAD.” Braye. United States, 423 US, 73, 74 (1975). Phe

rehearing sought by Appellants would in no way be eon

sistent with this purpose, but would tnistead eause undue

delay in the enforeement of the subpoena already found

valid in United States, etal. vc. Kirst City National Bank of

Kl Paso, Teaas, etal, TWOAN No. 5-383, Wd , de

vided Mareh 5, 1979.

Murthermore, R. G60, under which Appellants seek rehear

ing, is a rule of equity which “attempts to strike a proper

balanee between the conflieting prineiples that) Ttigation

must be brought to an end and that justice should be done.”

Appellants seek to use R. GO(b) asa vehicle for the pre

sentation of evidence irrelevant to the sole issue before

the Distriet Court, that of the subpoena’s validity. Ap:

‘LL Wright & Miller, Federal Practice and Procedure, ) 2851,

B-28

pellants characterize certain statements made by David

Ownby in connection with an Oklahoma state court action

brought by OKC against Ownby as “new evidence.” How-

ever, even if construed in the light most favorable to Ap-

pellants, this “new evidence” would not require the

District Court to quash the subpoena. The Distriet Court

correetly found the issue of the use of the OKC Report, on

which Appellants’ R. GO0(b) motions are based, to be remote

to the question of the enforcement of the subpoena issued

to the Bank for the records of two private depositors.®

Clearly, then, Appellants have suffered no harm or preju-

dice as a result of the Distriet Court’s denial of these

motions. No valid reason exists for remanding this proeeed-

ing to the Distriet Court for presentation of this kind of

“new evidence.” “|T]he underlying public interest in sueh

a vital source of energy for our day as oil.” Railroad Com.

v. Rowan & Nichols Oil Co., 310 U.S. 578, 580, ealls for

prompt enforcement of the subpoena in question. AlL relief

sought by Appellants is denied.

IT IS SO ORDERED.

*R. 78,

B24

Cempurary Emergency Court of Appeals

uf the United States

No. 5-35

Unrrep Srares or America and

Haroup CLEMENT’, LI,

Acting Regional Counsel, Department of Mnergy,

Petitioners-Appellees,

Vv.

Sournwest NationaL Bank,"

Defendant-Appellant,

J. R. Abas, }

Intervenor-Appellant,

OKC Corp.,

Applicant for Intervention-Appellant.

BEFORE HONORABLE JOE EWING ESTES, HONOR-

ABLE FRANK M. JOILNSON, JR. and HONORABLE

WALTER P. GEWIN, JUDGES.

Upon consideration of OKC Corporation’s Petition for

Rehearing and Suggestion for Rehearing Mn Bane, it is

ORDERED that said Petition and Suggestion are hereby

DENIED.

FOR THE COURT: :

Ruth H. Jacobson

Clerk

April 27, 1979

°The First City National Bank was erroneously sued as the

Southwest National Bank.

B-25

Cemporary Emergency Court of Appeals

of the United States

No. 5-33

Unirep Stares or AMERICA

AND Hanroup CLEeMEN's, LI,

Acting Regional Counsel, Department of Energy,

Petitioners-A ppellees,

V.

Finsr Crry Nationa Bank

or Ki Paso, Texas,

Defendant-A ppellant,

J. R. Apams,

Intervenor-A ppellant.

BEFORE HONORABLE JOK EWING ESTES, HONOR-

ABLE FRANK M. JOHNSON, JR., and HONORABLE

WALTER P. GEWIN, JUDGES.

This cause was submitted on the record on appeal from

the United States District Court for the Western District

of Texas, Kl Paso Division. In consideration whereof,

IT IS ORDERED that the November 17, 1978 order of

the District Court is AFFIRMED.

FOR THE COURT:

Ruth H. Jacobson

Clerk

by:

Donna M. Bold

Chief Deputy Clerk

March 5, 1979

(District Court No. EP-78-CA-129)

13-26

Temporary Emergency Court of Appeals

nf the United States

No. 5-35

Unrrep States oF AMERICA

anv Haroup CLements, II,

Acting Regional Counsel, Department of Mnergy,

Petitioners-Appellees,

Vv. |

Soutuwest Nationa Bank,*

Defendant-A ppellant,

J . R. A DAMS,

Intervenor-A ppellant.

OKC Corp.,

Applicant for Intervention- Appellant.

BEFORE HONORABLE JOE EWING ESTES, HONOR-

ABLE FRANK M. JOHNSON, JR., and HONORABLE

WALTER VP. GEWIN, JUDGES.

This cause was submitted on the record on appeal from

the United States District Court for the Western District

of Texas, El Paso Division. In consideration whereof,

I'l’ IS ORDERED that all relief sought by Appellants

is DENIED.

FOR THE COURT:

Ruth H. Jacobson

Clerk

by:

Donna M. Bold

Chief Deputy Clerk

Mareh 29, 1979

°The First City National Bank was erroneously sued as the South-

west National Bank.

15

CERTIFICATE OF SERVICE

The undersigned, a member of the Bar of the Supreme

Court of the United States, does hereby certify that three

copies of the foregoing Petition were this day served upon

the respondents by depositing the same, enclosed in a first

class air mail postage prepaid wrapper, addressed to the

Solicitor General, Department of Justice, Washington, D.C.

20530, in a United States Post Office mail box. I further

certify that all parties required to be served have been

served.

May 25, 1979