Petition — Exxon Corp. v. United States
Supreme Court brief1980
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Supreme Court, U. &
FILE Dv
MAR 10 1980
€9-1394
o.
“MICHAEL RODAK, JR., CLERK
IN THE
Supreme Court of the United States
OCTOBER TERM, 1979
SHELL OIL COMPANY,
Petitioner,
We
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT
J. WALLACE ADAIR
ROBERT W. STEELE
ROBERT E. HEBDA
HowrReEY & SIMON
1730 Pennsylvania Ave., N.W.
Washington, D.C. 20006
(202) 783-0800
Attorneys for Petitioner
Shell Oil Company
Of Counsel:
A. M. MINOTTI
SHELL OIL COMPANY
One Shell Plaza
P.O. Box 2463
Houston, Texas 77001
(713) 241-6161
March 10, 1980
WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001
iliac
TABLE OF CONTENTS
Page
TABLE OF PU TEI cy riciscnccnesessscessonspacneossessentioes iv
Fee aces tsinsssaneakisnadyesieccnccsaces 1
ES EIN 2
oe 8 gs | 2
STATUTES AND REGULATIONS INVOLVED........ 4
ENTERS 4
REASONS FOR GRANTING THE WRIT .........0........ 9
I. The Judgment Below Conflicts with Principles
of Statutory Construction Enunciated by this
acu anseanencencoce 10
II. The Judgment Below Conflicts with the Funda-
mental Principle that an Agency Is Bound by Its
I cnn ces eenenerececnes 13
III. The Judgment Below Conflicts with the Funda-
mental Principle that an Agency Must Rule
Upon Challenges to Its Subpoenas _......... 16
IV. The Judgment Below Wrongly Sanctioned an
Agency’s Use of a Subpoena for an Improper
ES SED IE ES a 20
V. The Judgment Below Imposed a Penalty on the
merce Gf @ Legal Right -.:................................ 21
st a a 22
TEE Gea la
A. United States v. Exxon Corp., No. 80-1002,
Slip Opinion (D.C. Cir. February 25, 1980) ...... la
B. United States v. Exxon Corp., No. 79-0149,
Judgment (D.C. Cir. February 26, 1980) ........ 23a
ii
TABLE OF CONTENTS—Continued
. United States v. Exxon Corp., No. 79-0149,
Stay Order (D.C. Cir. February 29, 1980)...
. United States v. Shell Oil Co., No. 79-0150, Or-
der (D.D.C. Desember 17, 1979) ........................
. United Siates v. Exxon Corp., No. 79-0149,
Memorandum (D.D.C. January 14, 1980)........
. United States v. Exxon Corp., No. 79-0149,
Memorandum Order (D.D.C. January 14,
BE ake eae Pe SER Ie NAN te Os ERS
. Letter, Frank Lipson to A.M. Minotti, Febru-
I I lr led oak cr cee
. Subpoena, J.F. Bookout, Shell Oil Co., Janu-
Ss TI ici ati lededeetncrnctaceabetnatenca nv cccheads clack
. Senate Debate on Title III of the Petroleum
Marketing Practices Act, 124 Cong. Rec.
S 7,149-7,158 (Daily ed., May 9, 1978) ............
. House Debate on Title III of the Petroleum
Marketing Practices Act, 124 Cong. Rec.
H 4,996-5,003 (Daily ed., June 6, 1978) ............
. Statutes and Regulations Involved ....................
1. Petroleum Marketing Practices Act, Sec-
em O01, 16 USA. S OGG) q.......2..................
2. Petroleum Marketing Practices Act, Sec-
| ie tee} || eee
38. Department of Energy Organization Act,
Section 645, 42 U.S.C. § 7255 00
i TO erp eect pasteh an bisicpstsciceansccsseinee
5. Administrative Procedure Act, Section 552,
FS I ca ee
6. Administrative Procedure Act, Section 555,
OR | FEA Ce ny a rn
Page
25a
27a
29a
37a
4la
42a
47a
ili
TABLE OF CONTENTS—Continued
Page
Bs Me NN ne 104a
1. Department of Energy Delegation Order
No. 0204-8 to the Administrator of the
Energy Information Administration ............ 104a
2. Energy Information Administration Dele-
gation Order No. 5 to the Director of the
Office of Competition, Office of Policy and
MII Stocco, citceek aiasiebins eee 105a
iv
TABLE OF AUTHORITIES
Cases:
Page
Atlantic Richfield Co. vy. FTC, 398 F. Supp. 1
(S.D. Tex. 1975), aff'd, 546 F.2d 646 (5th Cir.
STE) <ccnnncssnsnstisnonteniecinistivah aadammaeianiaeaanne 15
Burlington Truck Lines, Inc. v. United States, 371
US. 306 (3008) 06 12
Chrysler Corp. v. Brown, 441 U.S. 281 (1979)...... 12, 14
Citizens to Preserve Overton Park, Inc. v. Volpe,
Ga US. GR CRBTED ccintciica 12
Cudahy Packing Co. v. Holland, 315 U.S. 357
0 | MOE oe, 16, 17, 18, 19
Deering Milliken, Inc. v. Johnston, 295 F.2d 856
(4m Cie. BORE) ee eee 18
Donaldson v. United States, 400 U.S. 517 (1971).. 3
Elmo Division of Drive-X Co. v. Dixon, 121 U.S.
App. D.C. 113, 348 F.2d 342 (D.C. Cir. 1965) .... 15
FEA V. Algonguin SNG, Inc., 426 U.S. 548 (1976) .. 11
FTC v. Atlantic Richfield Co., 185 U.S. App. D.C.
229, 567 F.2d 96 (D.C. Cir. 1977) ........................ 15
FTC v. Gibson Products, Inc., 569 F.2d 900 (5th
Civ. SBFG) nccnsts eee 15
FTC v. Turner, 609 F.2d 743 (5th Cir. 1980) ........ 21
GTE Sylvania, Inc. v. Consumers Union of the
United States, Inc., 400 F. Supp. 848 (D.D.C.
1975), rev’d, 182 U.S. App. D.C. 351, 561 F.2d
349, rehearing denied, 184 U.S. App. D.C. 146,
565 F.2d 721 (D.C. Cir. 1977) (per curiam),
vacated, 434 U.S. 1030 (1978), on remand, 192
U.S. App. D.C. 98, 590 F.2d 1209 (D.C. Cir.
1978), cert. granted, 441 U.S. 942 (1979) 13
Hannah v. Larche, 363 U.S. 420 (1960) _.............. 3
Marshall v. Barlow’s Inc., 486 U.S. 307 (1978)...... 18
McKart v. United States, 395 U.S. 185 (1969)...... 17
Mobil Oil Corp. v. DOE, 4 CCH Energy Manage-
ment Rptr. { 26,147 (D.D.C. 1979) _........00.. 15
Myers v. Bethlehem Shipbuilding Corp., 303 U.S.
Gl (EGGS) . jie 17
Pacific Molasses t ». v. FTC, 356 F.2d 386 (5th
Clr, BOGB) ceehesicccssccckcce ee 15
7
TABLE OF AUTHORITIES—Continued
Page
Preiser V. Rodriguez, 411 U.S. 475 (1978) ............ 12
Reisman V. Caplin, 375 U.S. 440 (1964) W000... 3
Sampson V. Murray, 415 U.S. 61 (1974) .............. 17
SEC v. Wall Street Transcript Corp., 422 F.2d
1871 (2d Cir. 1970), cert. denied, 398 U.S. 958
yet RASS Sete TREC Posy Ik ALC We Ne 14
Service v. Dulles, 354 U.S. 363 (1957) _................. 15
Simpson V. United States, 485 U.S. 6 (1978) ........ 12
Train Vv. Colorado Public Interest Research Group,
Inc., 426 U.S. 1 (1976), rev’g 507 F.2d 743
IO oe 2,11
United States v, Bisceglia, 420 U.S. 141 (1975) ..3, 21, 22
United States v. LaSalle National Bank, 437 U.S.
aE eB Ug ae SRS ena Ree OP aR 3
United States v. Nixon, 418 U.S. 683 (1974) ......... 3, 14
United States v. Powell, 379 U.S. 48 (1964) .....14, 21, 22
United States ex rel. Accardi v. Shaughnessy, 347
On 14, 15
Vitarelli v. Seaton, 359 U.S. 5385 (1959) 3, 14, 15
Wearly v. FTC, 1980-1 Trade Cas. § 63,175 (3d
Cir. 1980), vacating 462 F. Supp. 589 (D.N.J.
PUI sierra chtantga bahaes iBcabo its chennstess icetateasicn cee le hendatawitcniess 13
Yellin v. United States, 374 U.S. 109 (1968) ......... 14
Statutes:
Administrative Procedure Act
| _SaSeERaeaee ve M 3,19
RN EMER ae ee a eee 3,18
Federal Trade Commission Act
a a souucndinwcnuns 10
Federal Energy Administration Act
I te i ssseeme 2
Petroleum Marketing Practices Act
zee a8, 16 U0. § Sense). .......................... 11
TORE Bg RO Bs, BO oecsicsnscncecccccesscereanc 4, 8,10
vi
TABLE OF AUTHORITIES—Continued
Page
Judiciary and Judicial Procedure
DE NR & § ) Senne ene ee eee aes 2
I EE soe stnictessa nie ecemeiniinesiiigniitia 2
Department of Energy Organization Act
Section 645, 42 U.S.C. § 7255 .._.........02.... 2,8
Rules, Regulations and Other Authority:
Department of Energy
Pg ME II ktceninseceeneectncnccscavnerainenend 6, 18, 14, 19
Federal Trade Commission
16 C.F.R. §§ 1.13 (d) (6), 2.7, 3.84 2. 3
Federal Communications Commission
sc cstteaee
Federal Rule of Appellate Procedure 41(b) ........
Federal Rule of Civil Procedure 12(b) ..................
44 Fed. Reg. 3,548 (January 17, 1979) ................
124 Cong. Rec. S 7,149-7,158 (Daily ed., May 9,
ARERR ERAN IRE fell 08,5 2. VOOR Sea cA oT woe 4, 20
124 Cong. Rec. H 4,996-5,003 (Daily ed., June 6,
ERR AUE b PSRICI NEE Sey OE 5
IN THE
Supreme Cont of the Auited States
OCTOBER TERM, 1979
No.
SHELL OIL COMPANY,
Petitioner,
Vv.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT
Petitioner Shell Oil Company (“Shell”) respectfully
prays that a writ of certiorari issue to review the judg-
ment of the United States Court of Appeals for the Dis-
trict of Columbia Circuit entered on February 26, 1980.
OPINIONS BELOW
The per curiam opinion of the Court of Appeals (the
Honorabie J. Skelly Wright and David L. Bazelon; the
Honorable Malcolm Richard Wilkey dissenting) (1la-22a)
1This judgment was rendered in connection with one of three
separate subpoena enforcement proceedings which were consoli-
dated on appeal. Shell Oil Company, Exxon Corporation and
Marathon Oil Company were appellants below.
2
has not yet been reported; neither has the opinion of the
District Court. (29a-36a.) These opinions are set forth
in the Appendix hereto.
JURISDICTION
The judgment of the Court of Appeals (23a-24a) was
entered on February 26, 1980; no rehearing or rehearing
en bane was sought. This petition for certiorari is being
filed on an expedited basis in accordance with the stay
to and including March 10, 1979 granted by the Court of
Appeals pursuant to Rule 41(b) of the Federal Rules of
Appellate Procedure. (25a-26a.)?
The jurisdiction of this Court is invoked under 28
U.S.C. § 1254(1). Jurisdiction in the District Court was
purportedly based on 28 U.S.C. § 1845, 42 U.S.C. § 7255
and 15 U.S.C. § 772(e).
QUESTIONS PRESENTED
(1) Whether a single employee of a federal agency
which has been directed by statute to conduct a study
based on voluntary submissions of evidence, may instead
subpoena information in flagrant disregard of the plain
language and legislative history of the statute. This
Court in Train v. Colorado Public Interest Research
Group, Inc., 426 U.S. 1 (1976), held that the legislative
history of a statute cannot be ignored.
(2) Whether a single employee of a federal agency
which has explicitly made its own regulations applicable
to a particular subpoena may deny that these regulations
are applicable once the subpoena is challenged. This
Court has ruled in numerous cases that an agency is
bound by its own rules and regulations so long as they are
extant and may not change them on an ad hoc basis to
* Because of the ambiguity in this stay order, Shell applied on
March 6, 1980, to Chief Justice Burger, as Circuit Justice, for an
emergency stay pending Supreme Court review. Shell Oil Co. v.
United States, No. A-756.
3
suit its convenience in a particular case. United States
v. Nixon, 418 U.S. 683 (1974); Vitarelli v. Seaton, 359
U.S. 535 (1959).
(3) Whether a federal agency can fail or refuse to
enact procedures to govern the issuance of and challenges
to its subpoenas. The Administrative Procedure Act, 5
U.S.C. §§ 552 and 555, (102a-103a) as interpreted and
applied by this Court, requires that an agency promulgate
rules of procedure and methods for obtaining decisions;
this requirement has been respected by the host of agen-
cies which have promulgated and published rules for is-
suing and challenging subpoenas as set forth by this
Court in Hannah v. Larche, 363 U.S. 420 (1960). See,
é.g., 16 C.F.R. §§ 1.13(d) (6), 2.7, 3.84 (Federal Trade
Commission) ; 47 C.F.R. § 1.3834 (Federal Communications
Commission).
(4) Whether an agency subpoena, which it now ap-
pears seeks data for use by other agencies in matters not
related to its stated purpose, has thus been illegally issued
for an improper purpose. United States v. LaSalle Na-
tional Bank, 437 U.S. 298, 318-317 (1978); Donaldson
v. United States, 400 U.S. 517, 533 (1971); Reisman v.
Caplin, 375 U.S. 440, 449 (1964).
(5) Whether a federal agency may penalize the ex-
ercise of a legal right to contest a subpoena by refusing to
grant a contesting party the same protection for con-
fidential information as the agency has granted to par-
ties who surrendered their right to contest the subpoena.
The agency here has used its subpoena power as a lever to
obtain information to which it may not be entitled, which
information may then be used by other agencies in mat-
ters completely irrelevant to the stated purpose of the
subpoena. Numerous decisions of this Court hold that
the exercise of a legal right cannot be penalized, and
tnat a subpoena cannot be used for harassment or in bad
faith. United States vy. Bisceglia, 420 U.S. 141 (1975).
4
STATUTES AND REGULATIONS INVOLVED
The following statutes and regulations are set forth
in pertinent part in the Appendix hereto: Petroleum Mar-
keting Practices Act (95a-97a); Department of Energy
Organization Act (97a-98a); Administrative Procedure
Act (102a-103a); and Code of Federal Regulations
(98a-101a).
STATEMENT
As enacted on June 19, 1978, Title III of the Petroleum
Marketing Practices Act (“PMPA”) required the Depart-
ment of Energy (“DOE”) to study subsidization* by
“afford[ing] interested persons an opportunity to present
written and oral data” and to submit, within 18 months,
a report which could form the basis for possible legis-
lative or executive action. 15 U.S.C. § 2841. (95a-96a.)
The legislative history of Title III confirms Congress’
explicit intention that DOE not obtain information by
compulsory process, but instead rely on the voluntary
cooperation of interested parties.* 124 Cong. Rec. S 7,153
col. 2 (Daily ed., May 9, 1978). (65a.) Senator Bumpers,
the sponsor of Title III, repeatedly made the uncontra-
dicted statement in the course of debate that DOE would
not have subpoena power to conduct the Title III Study.
124 Cong. Rec. S 7,155 col. 2-3 (Daily ed., May 9, 1978).
(75a-76a.) Indeed, the Senate recognized that if DOE be-
came embroiled in subpoena enforcement controversy, it
could not meet the 18-month deadline for completing the
Title III Study. 124 Cong. Rec. S 7,153 col. 2-3 (65a-
66a), S 7,154 col. 3 (Daily ed., May 9, 1978). (72a.)
3 “Subsidization” is the alleged practice by which vertically
integrated oil companies “subsidize” their retail operations with
profits from other parts of their business.
4 For the convenience of the Court, the Senate and House debates
on Title III are set forth in the Appendix hereto. (47a-94a.)
5
At the time Title III was enacted, this view was shared
by DOE, the Department of Justice and the Energy In-
formation Administration. 124 Cong. Rec. S 7,154 col. 2
(Daily ed., May 9, 1978) (70a-7la); 124 Cong. Ree.
H 5002 col. 2-3 (Daily ed., June 6, 1978). (92a.)
Despite the 18-month statutory deadline, DOE pro-
ceeded at a leisurely pace.* Four months passed before
DOE staffed an office to conduct the Study. Three more
months passed before DOE published a “Study Plan,”
which contemplated, contrary to express Congressional
directive, serving subpoenas on nine oil companies. 44
Fed. Reg. 3,548, 3,552 col. 1 (January 17, 1979).
On January 28, 1979, Shell received a subpoena (the
“Title III Subpoena”) signed by William C. Lane (Di-
rector of the Office of Competition of the Office of Policy
and Evaluation of DOE). (42a-46a.) Mr. Lane pur-
ported to act on the basis of two unpublished delegations
of authority (104a-105a, 106a-107a) which required him
to ‘be governed by the rules and regulations of the De-
partment of Energy and the policies and procedures
prese~ibed by the Secretary * * *.” (104a, 106a.)
The Title III Subpoena, returnable on March 2, 1979,
stated on its face that its purpose was solely “to provide
information for use in the preparation of a study required
by Title III of the Petroleum Marketing Practices Act.”
(42a.) Nonetheless, it was egregiously overbroad and
sought information far beyond that necessary for a study
of “subsidization.” In only twelve specifications, Mr. Lane
would require Shell to spend over 3,700 man hours to
search for documents, not including the clerical time in-
volved in copying, collating and shipping the documents.
5 As the Court of Appeals acknowledged, Shell has not been re-
sponsible for any delay in this matter, and in fact Shell has been
very cooperative in expediting the proceeding. Without any con-
gressional approval, Mr. Lane has twice granted himself extensions
of time in which to submit the Title ITI Study.
6
Mr. Lane would require Shell to review over 1.3 million
document pages, and to disrupt its orderly processing of
ducuments for production in the course of pending litiga-
tion between Shell and the Federal Trade Commission.
The materials requested by the Title III Subpoena in-
cluded highly confidential current planning and market-
ing documents and other proprietary information which,
if disclosed, would severely and irreparably injure Shell’s
competitive position.
Shell immediately contacted DOE to determine the au-
thority on which Mr. Lane purported to base the Title III
Subpoena and the procedures by which Shell could re-
spond to it. On February 2, 1979, Shell was advised of
his position that the only regulations which DOE had
adopted for the issuance, interpretation and enforcement
of subpoenas, 10 C.F.R. § 205.8 (98a-101la), did not
apply to the Title III Subpoena, and that no DOE regu-
lations allowed Shell to file a motion to quash or applied
to the Title III Subpoena in any way whatsoever. (41a.)
Beginning on May 14, 1979, Shell voluntarily furnished
DOE a large quantity of materials for DOE’s use in the
Title III Study and emphasized that Shell was gathering
and would furnish additional materials as they became
available.® Concurrently, Shell filed—in accordance with
10 C.F.R. § 205.8—an Application to Quash the Title III
Subpoena, which challenged DOE’s failure to safeguard
Shell’s confidential data, the extremely broad scope of the
subpoena, the deprivation of Shell’s legally recognized at-
torney-client and other privileges, the impropriety of the
return procedures, and many other matters.
6 Despite the pendency of this litigation, Shell has continued to
provide data on Shell’s operations for DOE’s use in the Title III
Study. For example, Shell has submitted DOE Form EIA-148 (“Re-
tail Motor Gasoline Cost and Revenue”) and DOE Form EIA-151
(“Refiners and Wholesalers Gasoline Prices and Sales’’).
isd
7
Without responding to Shell’s numerous offers of vol-
untary cooperation, and without ruling on Shell’s appli-
cation to quash, DOE filed a petition on June 29, 1979
to enforce the Title III Subpoena.’ In the course of this
proceeding, DOE has repeatedly argued that Shell has no
right to raise in district court the issues set forth in Shell’s
application to quash the Title III Subpoena, even though
no one at the agency has ever ruied on Shell’s application
and no one at the agency but Mr. Lane has ever reviewed
the subpoena.
In the meantime, and despite the vigorous protestations
of the Department of Justice and Federal Trade Com-
mission, DOE entered into agreements with the six com-
panies which chose to supply documents voluntarily
rather than to comply with the Title III Subpoena. These
agreements limited substantially the scope of the Title
III Subpoena and imposed very strict assurances of the
confidentiality and proper use of the materials which the
companies provided. In general, the documents could be
used only for purposes of the Title III Study; extremely
confidential documents could be inspected by DOE but
not copied; and DOE would have no discretion to disclose
confidential company documents in response to a Free-
dom of Information Act Request or otherwise.
Once DOE was involved in litigation, it refused to offer
Shell these limitations on the scope of the subpoena and
likewise refused to provide Shell the same assurances of
confidentiality. Instead, DOE has insisted that all Shell
documents be available for any purpose whatsoever to
the Department of Justice, Federal Trade Commission,
and to other as yet unspecified government agencies.
7 DOE concurrently filed an enforcement petition against Exxon
Corporation; over three months later, on October 10, 1979, DOE
filed an enforcement petition against Marathon Oil Company.
8
The district court issued an order on December 17,
1979, without opinion, directing Shell to comply with the
subpoena and to produce to DOE the most confidential
information on Shell’s business practices, without the bene-
fit of any protective order to prevent its disclosure.
(27a-28a.) The court did not expressly rule either on
Shell’s motion to dismiss or on Shell’s request for the
taking of evidence. Nor did the court provide Shell with
the opportunity to file an answer and/or counterclaim to
DOH’s petition as required by Rule 12(b) of the Federal
Rules of Civil Procedure.
On January 14, 1980, after Shell had noticed its ap-
peal and some five months after the case was fully sub-
mitted, the district court issued a 614 page memorandum
in which it held that DOE was statutorily authorized to
issue the Title III Subpoena pursuant to the Department
of Energy Organization Act and that Shell must comply.®
(29a-36a. )
The Court of Appeals, in affirming the district court
enforcement of the Title III Subpoena, held that DOE
could circumvent the clear Congressional intent on how to
conduct the Title III Study by relying on its general sub-
poena power under Section 645 of the Department of
Energy Organization Act, 42 U.S.C. § 7255. (97a-98a.)
Moreover, the Court of Appeals approved a protective
order (16a-20a) which admittedly differed in material
respects from that which DOE had voluntarily entered
with six other companies, in that the scope of the Title
III Subpoena was not limited to the subject of “subsidiza-
tion” and all the materials which Shell furnished would
be available to as yet unidentified agencies for purposes
totally unrelated to Title III of PMPA. (15a n.8.)
8 Shell’s motions for a stay pending further review were granted
by the district court (January 14, 1980) (37a-40a) and the Court
of Appeals (February 29, 1980). (25a-26a.) DOE’s motion to
vacate the district court stay was not granted.
9
The Honorable Malcolm Richard Wilkey dissented trom
the Wright-Bazelon per curiam opinion on the grounds
that: (a) DOE’s subpoena power under Title III can
derive only from Title III itself, the language of which
is silent on subpoena power, and the legislative history
of which demonstrates congressional intent that DOE
have no subpoena power for the Title III Study; (b) the
general grant of subpoena power to DOE in the DOEOA
cannot provide subpoena power for an agency function
which, like the Title III Study, stands outside and was
mandated subsequent to the general act; and (c) the
Title III Subpoena was too broad and burdensome to
meet the demands of legitimate purpose and relevancy.
(22a.)
REASONS FOR GRANTING THE WRIT
The decision of the Court of Appeals (1a-22a) presents
critical and important questions far beyond the particu-
lar parties, statutes and regulations involved. This is
especially true since the Court of Appeals decision sharply
conflicts with decisions of this Court, as well as with
decisions of other courts of appeals.
Since this decision involves the subpoena power, a
power frequently recognized by this Court as “capable
of oppressive use”, it is of wide-spread importance. Agen-
cies and the courts alike are faced with challenges to
agency subpoenas on a regular basis. The instant prece-
dent, if it is allowed to stand, will have a sweeping effect
on federal agencies by allowing them to infer and imply
their own subpoena powers even when Congress has
specifically stated that such a power is not to be utilized;
by allowing them to ignore their own published rules
pertaining to challenges to subpoenas; and by allowing
them to proceed without any rules whatsoever in regard
to subpoenas. According to the Court of Appeals, it is
not even necessary for an agency to rule on a citizen’s
10
motion to quash a subpoena; the agency and its employ-
ees may simply ignore the motien. This deleterious
precedent, when coupled with the court’s further holding
that the agency may seek overly broad materials (per-
taining to other agencies’ enforcement duties) to coerce
a citizen into surrendering his subpoena challenge rights
cannot help but erode the due process protection accorded
the citizen under existing federal agency practices. For
all of these reasons it is criticai that this Court resolve
these questions at this time.
I. THE JUDGMENT BELOW CONFLICTS WITH
PRINCIPLES OF STATUTORY CONSTRUCTION
ENUNCIATED BY THIS COURT
The rule of statutory construction adopted by the Court
of Appeals—that the express words of a statute and the
record statements of its sponsor and other legislators
may be ignored in favor of what hypothetically ‘Con-
gress may reasonably have understood,” Slip Op. at 9
(9a)—will allow agencies to subvert clear congressional
intent at the slightest whim of a single agency employee.
The Wright-Bazelon opinion ignores the express lan-
guage of Title III which mandated that DOE use volun-
tary submissions to conduct the Title III Study. The
Petroleum Marketing Practices Act states:
In conducting the study required by this section, the
Secretary shall give appropriate notice and afford in-
terested persons an opportunity to present written
and oral data, views and agreements concerning such
study. 15 U.S.C. § 2841(c). (95a.)
The Congressional intent that DOE secure information
for the Title III Study by voluntary means is further
manifested by comparing Title II of PMPA with Title
III. Despite the fact that the Federal Trade Commission
(“FTC”) has subpoena power under the Federal Trade
Commission Act, 15 U.S.C. $49, which is at least as
11
broad as that of DOE, Congress explicitly granted the
FTC subpoena power to carry out the program of gaso-
line octane posting established under Title II of PMPA.
15 U.S.C. § 2823(a). (96a-97a.)
Thus, Congress, when enacting the Petroleum Market-
ing Practices Act, could not have been clearer as to what
agencies should have subpoena power under what circum-
stances. It is incredible for Judges Wright and Bazelon to
suggest that the statute is “silent” on this subject. (22a.)
Likewise, the Wright-Bazelon opinion suggests “con-
fusion” in the legislative history and ignores the clear
view of the sponsor of Title III.° As Circuit Judge Wilkey
accurately observed:
There is admittedly not one word in the legislative
history implying that there is such a power, and
there are words from two of the legislators most
active on this statute saying flatly that no subpoena
power exists for the Title III Study, a repeated as-
sertion which was repeatedly uncontradicted. (22a.)
Since the Court of Appeals ignored the legislative his-
tory of PMPA, it disobeyed this Court’s admonition in
Train v. Colorado Public Interest Research Group, Inc.,
426 U.S. 1, 9-10 (1976), rev’g 507 F.2d 743 (10th Cir.
1974), that “to the extent that the Court of Appeals ex-
cluded reference to the legislative history * * * in discern-
ing its meaning, the court was in error.” And the refusal
of the Court of Appeals to. give any weight to the state-
ments of the sponsor of PMPA is directly contrary to
FEA v. Algonquin SNG, Inc., 426 U.S. 548 (1976),
®The Wright-Bazelon discussion of the legislative history is a
classic exercise in speculation. There is not a single citation to any
statement of any sponsor of Title III to support this conjecture
about what Congress might have intended.
12
where this Court held that the views of a sponsor are
entitled to great weight.’°
The Wright-Bazelon opinion also wrongly character-
izes PMPA as a “repeal * * * by implication” of the
DOEOA, when in fact PMPA in no way repeals DOEOA
or any other law by implication or otherwise. (10a.)
Rather, PMPA stands separate and apart from DOEOA
and other laws, as a subsequent expression of Congres-
sional intent directed specifically at one area, a par-
ticular study of “subsidization” mandated by Congress.
Thus, to the extent that the Court of Appeals ignored the
specific provisions of PMPA and turned instead to the
DOEOA to sustain the Title III Subpoena, it ignored
the rule of statutory construction articulated by this
Court, in Simpson v. United States, 485 U.S. 6, 15
(1978): “where a general statute and a specific statute
speak to the same concern,” the specific takes prece-
dence.’ See Prieser v. Rodriguez, 411 U.S. 475 (1973).
10 The Court of Appeals’ reliance on Chrysler Corp. v. Brown,
441 U.S. 281, 311 (1979), is misplaced. (8a.) In Chrysler, this
Court held that the views of a sponsor had to be considered in the
context of the legislative debates in their entirety, and would not
be conclusive if contradicted by the statements of other legislators.
In the present case, the sponsor of Title III and all legislators who
spoke on the subject noted that DOE was not to have subpoena
power to conduct the Title III Study.
1 To the extent that the courts below accepted the belated state-
ments of the United States Attorney that DOE meant to issue the
Title III Subpoena in order to fulfill its responsibilities under the
DOEOA, they disregarded the teachings of this Court to the effect
that such statements are “merely ‘post hoc’ rationalizations, which
have traditionally been found to be an inadequate basis for review.”
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 419
(1971) (citation omitted); Burlington Truck Lines, Inc. v. United
States, 371 U.S. 156, 168-169 (1962). In the instant case, the sub-
poena itself states that it was issued solely for purposes of Title
III. (42a.) Under such circumstances, the Court of Appeals could
hardly find that the agency was acting spontaneously to perform
a project under DOEOA.
Se en ne, Tee
13
II. THE JUDGMENT BELOW CONFLICTS WITH THE
FUNDAMENTAL PRINCIPLE THAT AN AGENCY
IS BOUND BY ITS PUBLISHED REGULATIONS
The Court of Appeals decision will govern the issu-
ance and enforcement of subpoenas issued by all federal
agencies, since so many agency subpoenas are the subject
of enforcement in the District of Columbia Circuit. The
Wright-Bazelon opinion below that an agency can ig-
nore its existing rules, and indeed need not enact any
rules by which a citizen can challenge an agency sub-
poena, will thus have virtually a nationwide effect, even
though it is not followed by other circuits.’”
The DOE rule in effect at the time the Title III Sub-
poena was issued provided that “[a]ny person to whom
a subpoena is directed may * * * apply to quash or
modify such subpoenas * * *.” 10 C.F.R. § 205.8(h) (1).
(100a.) The regulation goes on to set forth a procedure
wherein agency personnel at three levels will review a
challenged DOE subpoena.
The judgment below condones DOE’s deliberate failure
to follow its own published rules governing motions to
12 A good example of agency preference for the District of Colum-
bia Circuit is GTE Sylvania, Inc. v. Consumers Union of the United
States, Inc., 400 F. Supp. 848 (D.D.C. 1975), rev’d, 182 U.S. App.
D.C. 351, 561 F.2d 349, rehearing denied, 184 U.S. App. D.C. 146,
565 F.2d 721 (D.C. Cir. 1977) (per curiam), vacated, 434 U.S. 1030
(1978), on remand, 192 U.S. App. D.C. 938, 590 F.2d 1209 (D.C.
Cir. 1978), cert. granted, 441 U.S. 942 (1979).
Likewise in Wearly v. FTC, 1980-1 Trade Cas. | 63,175 (3d Cir.
1980), vacating 462 F. Supp. 589 (D.N.J. 1978), the recipient of an
FTC subpoena sought declaratory relief in New Jersey, where it
conducted business and where the subpoenaed documents were
located. The FTC countered by filing an enforcement action in the
District of Columb.u, which was eventually vacated but only after
the FTC’s enforcement petition had been granted and the FTC had
moved for contempt. The Third Circuit held, however, that the
New Jersey District Court had no pre-enforcement jurisdiction and,
thus, that the agency was entitled to its choice of forum, i.e., the
District of Columbia. »
14
quash subpoenas, 10 C.F.R. § 205.8 (98a-101a), which is
in direct conflict with the numerous decisions of this
Court holding that an agency is bound by the rules which
it promulgates. United States v. Nixon, 418 U.S. 683
(1974) ; Vitarelli v. Seaton, 359 U.S. 585 (1959) ; United
States ex rel. Accardi v. Shaughnessy, 347 U.S. 260
(1954). As this Court stated in Nixon:
So long as this regulation is extant it has the
force of law. In [Accardi], 347 U.S. 260 (1954),
regulations of the Attorney Generai delegated certain
of his discretionary powers to the Board of Immi-
gration Appeals and required that Board to exercise
its own discretion on appeals in deportation cases.
The Court he!ld that so long as the Attorney Gen-
eral’s regulations remained operative, he denied him-
self the authority to exercise the discretion delegated
to the Board even though the original authority was
his and he could reassert it by amending the regu-
lations. Service v. Dulles, 354 U.S. 363, 388 (1957),
and Vitarelli v. Seaton, 359 U.S. 535 (1959), reaf-
firmed the basic holding of Accardi. 418 U.S. at
695-696.
In fact, as this Court recently held in Chrysler Corp.
v. Brown, 441 U.S. 281, 295 (1979), “agency regula-
tions have the ‘force and effect of law.’” (Citations
omitted. )
Accordingly, this Court and other circuits have held
that an agency must establish that the required adminis-
trative steps have been followed before a court orders
enforcement of an agency subpoena. SEC v. Wall Street
Transcript Corp., 422 F.2d 1871, 1875 (2d Cir. 1970),
cert. denied, 398 U.S. 958 (1970). See United States v.
Powell, 379 U.S. 48, 57-58 (1964). Once an agency has
promulgated rules, the agency cannot fail to comply with
them; such a violation results in a deprivation of due
process of law. See Yellin v. United States, 374 U.S. 109
~~ Le
by ah ie PR tir el
mvs eM ee ees Ok tne
15
(1963) (a subpoena not issued in compliance with appli-
cable procedural rules is invalid); Vitarelli v. Seaton,
359 U.S. 535 (1959); Service v. Dulles, 354 U.S. 363
(1957) ; United States ex rel. Accardi v. Shaughnessy,
347 U.S. 260 (1954) ; FTC v. Gibson Products, Inc., 569
F.2d 900, 904 (5th Cir. 1978) (“This Court, of course,
will not aid in enforcing a subpoena if the Commission
did not adhere to its rules governing the use of such
discovery tools.”) ; Pacific Molasses Co. v. FTC, 356 F.2d
386, 389-390 (5th Cir. 1966) ; Elmo Division of Drive-X
Co. v. Dixon, 121 U.S. App. D.C. 118, 117 n.5, 348 F.2d
342, 346 n.5 (D.C. Cir. 1965) ; Atlantic Richfield Co. v.
FTC, 398 F. Supp. 1, 12 (S.D. Tex. 1975), aff'd, 546
F.2d 646 (5th Cir. 1977); Mobil Oil Corp. v. DOE, 4
CCH Energy Management Rptr. { 26,147 (D.D.C. 1979).
Since DOE has ignored or violated its own rules, any
action taken as a result, including the enforcement pro-
ceeding in the court below, should not be allowed to stand.
Pacific Molasses Co. v. FTC, 856 F.2d 386, 390 (5th Cir.
1966). Indeed, the Wright-Bazelon opinion erroneously
assumes that the agency rules have been construed by the
agency not to apply to the Title III Subpoena, stating
that “an agency is entitled to very broad deference when
it construes its own regulations.” Slip Op. at 12. (12a.)
The error in this statement is particularly egregious,
since the agency never construed its own regulations.
Indeed, this whole issue hinges upon the fact that the
agency refused to construe this regulation by ruling on
Shell’s application to quash."
13 The only agency action in this litigation is the delegation of
authority to Mr. Lane, which delegation expressly adopted DOE’s
rules and regulations. (104a-105a, 106a-107a.)
‘4 This failure to act is directly contrary to the decision in FTC v.
Atlantic Richfield Co., 185 U.S. App. D.C. 229, 567 F.2d 96 (D.C.
Cir. 1977), which requires an agency to construe its own rules.
16
The Wright-Bazelon opinion (la-22a) would thus allow
an agency simply to ignore its own rules in subpoena
enforcement proceedings whenever it suits the agency’s
convenience. Federal agencies with subpoena power, such
as the Federal Trade Commission and Federal Communi-
cations Commission, which now have rules for the resolu-
tion of subpoena challenges, can be expected to abandon
them. At issue is not only the sanctity heretofore ac-
corded agency rules, but also the scrupulous agency ad-
herence to procedural safeguards which this Court has
repeatedly emphasized are necessary in the exercise of
the subpoena power, a power “capable of oppressive use.”
Cudahy Packing Co. v. Holland, 315 U.S. 357, 363 (1942).
Iii. THE JUDGMENT BELOW CONFLICTS WITH THE
FUNDAMENTAL PRINCIPLE THAT AN AGENCY
MUST RULE UPON CHALLENGES TO ITS SUB-
POENAS
The judgment below approves DOE’s abdication of its
responsibility to determine subpoena enforcement mat-
ters, and has the far-reaching effect of allowing an agency
to delegate to a single employee the authority to issue a
subpoena which cannot be challenged on any grounds
whatsoever at the agency level.®
The Court of Appeals held that neither the Adminis-
trative Procedure Act nor general principles of due
process require an agency to adopt regulations governing
challenges to a subpoena, nor require an agency to con-
duct an inquiry, apart from its rules, into the bona fides of
a citizen’s objections to a subpoena.’* Slip Op. at 12-13.
15 DOE further argued below that Mr. Lane’s subpoenas should
be “self-enforcing,” presumably so that the citizen will not even
be entitled to a cursory review by the judicial system when he is
summoned—by mail—to appear and produce hundreds of thousands
of documents, thousands of miles from his office.
16 Instead, the Court of Appeals disingenuously suggested that
“the District Court [rather than the agency] can inquire into all
relevant matters,” Slip Op. at 18. (18a.) This is contrary to the
17
(12a-13a.) .This precedent is thus in direct conflict with
a long line of decisions of this Court holding that an
agency may not delegate its entire discretionary authority
in subpoena matters to an employee.
In Cudahy Packing Co. v. Holland, 315 U.S. 357
(1942), this Court held that the Administrator of the
Department of Labor could not delegate his power to sign
and issue subpoenas to a Regional Director and empha-
sized the stringent safeguards which should be placed
upon the exercise of the subpoena power:
Unlimited authority of an administrative officer
to delegate the exercise of the subpoena power is not
lightly to be inferred. It is a power capable of op-
pressive use, especially when it may be indiscrimi-
nately delegated and the subpoena is not returnable
before a judicial officer. Under the present Act, the
subpoena may, as in this case, be used to compel pro-
duction at a distant place of practically all of the
books and records of a manufacturing business, cov-
ering considerable periods of time. True, there can
be no penalty incurred for contempt before there
is a judicial order of enforcement. But the sub-
poena is in form an official command, and even
though improvidently issued it has some coercive
tendency, either because of ignorance of their rights
on the part of those whom it purports to command
or their natural respect for what appears to be an
official command, or because of their reluctance to
test the subpoena’s validity by litigation. All these
are cogent reasons for inferring an intention of Con-
gress not to give unrestricted authority to delegate
the subpoena power which it has in terms granted
only to the responsible head of the agency. 315 U.S.
at 363-364.
requirement that a litigant must exhaust administrative remedies
before seeking judicial review, and that only final agency action can
be judicially enforced. Sampson v. Murray, 415 U.S. 61, 74 (1974) ;
McKart v. United States, 395 U.S. 185 (1969); Myers v. Bethlehem
Shipbuilding Ccrp., 303 U.S. 41 (1938).
18
More recently, in Marshall v. Barlow’s, Inc., 486 U.S.
307, 323 (1978), this Court reemphasized that “unbridled
discretion [exercised by] administrative officers, particu-
larly those in the field, as to when to search and whom to
search” deprives the target of the search of its constitu-
tional right to have “assurances from a neutral officer
that the inspection is reasonable.” (Emphasis supplied.)
The approval by a neutral officer, according to the Court
in Barlow’s is an “important functio[n]” under the
Fourth Amendment. 4386 U.S. at 323-324. This princi-
ple is thrown to the winds by the Wright-Bazelon opin-
ion that neither DOE nor any administrative agency
need review a subpoena issued and enforced at the whim
of a single subordinate employee.
Similarly, Section 555 of the Administrative Procedure
Act provides that any interested citizen must have the
opportunity to:
appear before an agency * * * for the presentation,
adjustment, or determination of an issue, request, or
controversy in a proceeding, whether interlocutory,
summary or otherwise, or in connection with an
agency function. 5 U.S.C. § 555(b). (1038a.)
Clearly, the Wright-Bazelon opinion conflicts with that
of the Fourth Circuit in Deering Milliken, Inc. v. John-
ston, 295 F.2d 856 (4th Cir. 1961), where an agency
was held to be under an obligation to act pursuant to this
provision.
The Court of Appeals suggests no reason for allowing
DOE to abdicate its responsibility of ruling on the ob-
jections to the subpoena except to note that a district
court “can inquire into all relevant matters, unlimited
by the scope of the agency’s own inquiry, if any.” Slip.
Op. at 13. (13a.) Of course, this is the argument re-
jected by this Court in Cudahy Packing Co. v. Holland,
315 U.S. 357 (1942).
19
Nonetheless, the Wright-Bazelon opinion seems to treat
the resolution of subpoena challenges as a trivial agency
function which does not even require the adoption of for-
mal rules. In fact, subpoena proceedings are a vital part
of an agency’s duties, and they should be closely moni-
tored and regulated as this Court made clear in Cudahy
Packing Co. v. Holland, 315 U.S. 357 (1942). Indeed,
Section 552 of the Administrative Procedure Act, 5 U.S.C.
§ 552 (102a-103a), requires an agency to promulgate
rules governing all of its functions.
More importantly, it is axiomatic that the agency is
in a better position to exercise such discretion and to
determine its own historical practice and procedure as
well. The citizen has little opportunity to determine these
facts in the district court, particularly under the rule
adopted by the Court of Appeals that no discovery is
available to determine previous agency positions in a dis-
trict court enforcement proceeding.'? (13a n.7.)
If the Court of Appeals decision is allowed to stand, a
single agency employee—without any review at the
-agency level—can mail a subpoena anywhere in the coun-
try and require a citizen to produce al! documents he has
demanded or to defend a summary enforcement action
in the District of Columbia, where under the decision
below no discovery is allowed and the subpoena is as-
sumed to be valid unless the citizen proves otherwise.
The Court of Appeals has expressly approved this
course of agency conduct and, as a result, the recipients
of agency subpoenas in the future can expect their ob-
jections based on breadth, ambiguity, burden, privilege,
and confidentiality to be ignored by the agency and sum-
marily rejected by the court, however valid.
17 Based on all published information, it appears that DOE has
applied 10 C.F.R. § 205.8 to all previous subpoenas issued by the
agency. However, Shell was denied the discovery it sought in the
district court to determine what the agency practice was.
20
IV. THE JUDGMENT BELOW WRONGLY SANCTION-
ED AN AGENCY’S USE OF A SUBPOENA FOR AN
IMPROPER PURPOSE
DOE has adamantly refused to limit the scope of the
Title III Subpoena as it applies to Shell, and DOE has
likewise refused to grant Shell the same confidentiality
protection provided to the six companies which surrend-
ered their right to contest the legality of the Title III
Subpoena.
As the Court of Appeals itself noted, DOE cannot pos-
sibly show that such discriminatory treatment was man-
dated by Title III of PMPA or that it is in the public
interest. (15a n.8.)
Instead, DOE is attempting to enforce a subpoena
which in large part seeks documents which are irrelevant
to the subject matter of the Title III Subpoena, as Cir-
cuit Judge Wilkey noted. (22a.) Indeed, DOE is threaten-
ing Shell with the release of its confidential documents
to unspecified federal agencies for purposes other than
Title III of PMPA. (95a-96a.) Title III authorizes DOE
to conduct a study of subsidization for Congress; it does
not authorize DOE to obtain documents for other agencies
to use in the course of their day-to-day duties.'* Under
such circumstances, it is impossible to contend that this
proceeding was meant to enforce a subpoena issued for a
proper purpose. Rather, DOE attempted to use an over-
broad subpoena to coerce Shell into supplying without ob-
jection thé documents actually necessary for the Title III
18 This sharing of Title III material among government agencies
is also directly contrary to the legislative history of PMPA. Sena-
tor Kennedy’s proposed amendment, which would have allowed such
sharing of Title III material, was rejected by the Senate because
otherwise “hell will freeze over before [the oil companies] will
voluntarily give one ounce of information, because they know it is
going to be disseminated to everybody under the shining Sun.” 124
Cong. Rec. S 7,153 col. 2 (Daily ed., May 9, 1978). (65a.)
21
Study. DOE cannot credibly contend that the Title III
Study would be impaired in the least if Shell were to
provide materials on the same terms and conditions as
the other six companies have done.
Thus, to the extent which the Wright-Bazelon per
curiam opinion approves an agency’s use of or allows
an agency to engage in such discriminatory conduct, it
is contrary to the decisions of this Court which hold
that subpoenas and other compulsory process cannot be
used for improper purposes. United States v. Bisceglia,
420 U.S. 141 (1975) ; United States v. Powell, 379 U.S. 48°
(1964). See also FTC v. Turner, 609 F.2d 743 (5th Cir.
1980).
Vv. THE JUDGMENT BELOW IMPOSED A PENALTY
ON THE EXERCISE OF A LEGAL RIGHT
The Court of Appeals has approved an agency’s threats
to disclose confideniial information to induce subpoena
recipients to provide documents voluntarily rather than
to challenge the validity of the subpoena.
The protective order adopted by the Court of Appeals
(16a-21a), by the Court’s own admission, differs in ma-
terial respects from that to which DOE agreed in the
case of the six other companies which surrendered their
right to contest the subpoena. (15a n.8.) Namely, the
scope of the request was restricted substantially—pre-
sumably to conform to the scope of the Title III Study—
and extremely confidential materials could not be pos-
sessed by DOE or used by other agencies except for the
Title III Study.
DOE has therefore, with the approval of the Court of
Appeals, penalized Shell for exercising its legal right to
resist enforcement of an illegal subpoena. This is directly
contrary to the teaching of this Court that a subpoena
22
cannot be used for such an improper purpose. United
States v. Bisceglia, 420 U.S. 141 (1975) ; United States v.
Powell, 379 U.S. 48 (1964).
CONCLUSION
»
For the foregoing reasons, the petition for writ of cer-
tiorari should be granted.
\
Respectfully submitted,
J. WALLACE ADAIR
ROBERT W. STEELE
ROBERT E.. HEBDA
HoOwREY & SIMON
1730 Pennsylvania Ave., N.W.
Washington, D.C. 20006
(202) 783-0800
Attorneys for Petitioner
Shell Oil Company
Of Counsel:
A. M. MINOTTI
SHELL OIL COMPANY
One Shell Plaza
P.O. Box 2463
Houston, Texas 77001
(713) 241-6161
March 10, 1980
Appendices
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 80-1002
UNITED STATES OF AMERICA
V.
EXXON CORPORATION, a Corporation, APPELLANT
No. 80-1003
UNITED STATES OF AMERICA
V.
SHELL OIL COMPANY, a Corporation, APPELLANT
No. 80-1018
UNITED STATES OF AMERICA
Vv.
MARATHON OIL COMPANY, a Corporation, APPELLANT
2a
Appeals from the United States District Court
for the District of Columbia
(D.C. Miscellaneous Nos. 79-0149, 79-0150, & 79-0217)
Argued February 13, 1980
Decided February 25, 1980
Donald B. Craven, with whom Mark L. Evans was on
the brief, for appellant Exxon Corporation. A. M. Min-
ott? entered an appearance for appellant Exxon Corpora-
tion. [Sic.]
Robert W. Steele, with whom J. Wallace Adair and
Robert E. Hebda were on the brief, for appellant Shell
Oil Company.
Daniel Joseph, with whom Warren E. Connelly and
William M. Berenson were on the brief, for appellant
Marathon Oil Company.
Thomas R. Kline and Ann F. Cohen, Attorneys, De-
partment of Justice, with whom Alice Daniel, Assistant
Attorney General. Charles F. C. Ruff, United States At-
torney, and William G. Kanter, Attorney, Department of
Justice, were on the brief, for appellee. H. Robert Field,
Attorney, Office of Competition, Department of Energy,
also entered an appearance for appellee.
Before WRIGHT, Chief Judge, BAZELON, Senior Circuit
Judge, and WILKEY, Circuit Judge.
Opinion for the court per curiam.
Dissenting opinion filed by Circuit Judge WILKEY.
PER CURIAM: These are appeals from a District Court
order of December 19, 1979 enforcing identical adminis-
| ia aia
3a
trative subpoenas duces tecum against three oil com-
panies: Exxon Corporation, Shell Oil Company, and
Marathon Oil Company. We affirm the District Court’s
enforcement of the subpoenas, subject to a protective
order as discussed below.
On May 9, 1978 Congress passed the Petroleum Mar-
keting Practices Act (PMPA), 15 U.S.C. § 2801 et seg.
(Supp. 1979), Title III of which directs the Secretary
of Energy, in consultation with the Federal Trade Com-
mission (FTC), the Justice Department, and other ap-
propriate agencies, to conduct a study of subsidization of
wholesale and retail motor fuel sales by vertically inte-
grated oil companies. Id. § 2841.1 The Secretary dele-
gated to the Director of the Office of Competition of the
Department of Energy (DOE) his purported power to
issue subpoenas to obtain information for the Title III
study, and on January 22, 1979 the Director served on
these appellants subpoenas for a broad range of docu-
ments related to subsidization.?
‘The Title III study, which was to be completed within
18 months of enactment, is to cover the following subjects:
(1) the role of vertically integrated operations in
facilitating subsidization of sales of motor fuel at whole-
sale or retail;
(2) the extent to which such subsidization is preda-
tory and presents a threat to competition;
(3) the profitability of various segments of the petro-
leum industry;
(4) the impact of prohibiting such subsidization on
the competitive viability of various segments of the
petroleum industry, on prices of motor fuel to consumers
and on the health and structure of the petroleum indus-
try as a whole; and
(5) such other matters as the Secretary considers
appropriate.
15 U.S.C.A. § 2841(b) (Supp. 1979).
* The subpoenas are set out in the Joint Appendix at 24-38.
4a
Appellants have challenged the subpoenas on several
grounds, most notably: (1) DOE’s subpoena power under
Title III can derive only from Title III itself, the lan-
guage of which is silent on subpoena power, and the legis-
lative history of which demonstrates congressional intent
that DOE have no subpoena power for the Title III
study. (2) The general grants of subpoena power to
DOE in the Department of Energy Organization Act
(DOEOA), 42 U.S.C. § 7101 et seg. (Supp. I 1977), and
the Federal Energy Administration Act (FEAA), 15
U.S.C. § 761 et seg. (Supp. I 1977), cannot provide sub-
poena power for an agency function which, like the
subsidization study, stands outside and was mandated
subsequent to these general acts. (3) Even if the general
grant of subpoena power under the DOEOA, 42 U.S.C.
§ 7255 (Supp. I 1977), could apply to a later-mandated
agency function, that section, which incorporates the
subpoena power granted the FTC under 15 U.S.C. § 49
(1976), applies only to narrowly focused agency in-
vestigations of specific legal violations, not open-ended
studies. (4) In denying administrative review of the
subpoenas, DOE violated its own regulations, the Ad-
ministrative Procedure Act, and the due process clause.
(5) The subpoenas are too broad and burdensome to
meet the demands of legitimate purpose and relevancy.
Judge Penn rejected the oil companies’ claims, hold-
ing that DOE had subpoena power for the Title III study
under DOEOA. We agree. Title III of PMPA rather
obviously makes no provision for subpoena power for the
subsidization study.* Our analysis of DOEOA, however,
reveals that DOE did not need a special grant of sub-
poena power for this specific study. Rather, Title III
3 On the other hand, Title II of PMPA, which sets standards
for accurate disclosure of motor fuel octane ratings, does
expressly grant subpoena power to the FTC. 15 U-.S.C.A.
§ 2823(a) (Supp. 1979).
5a
specifically instructs DOE to conduct a study which the
agency would in any event be permitted to conduct un-
der its broad general DOEOA mandate. Thus, DOE
can rely on the subpoena power in Section 7255.4 We
address this issue first, because it lays the premise for our
analysis of the oil companies’ legislative history argu-
ment.
DOEOA provides in 42 U.S.C. § 7255:
For the purpose of carrying out the provisions
of this chapter, the Secretary, or his duly authorized
agent or agents, shall have the same powers and
authorities as the Federal Trade Commission under
Section 49 of Title 15 [the FTC’s subpoena power]
with respect to all functions vested in, or trans-
ferred or delegated to, the Secretary or such agents
by this chapter.
In creating DOE, Congress expressly sought to achieve
effective management of energy resources, promote con-
sumer interests by ensuring an ample and reasonably
priced supply of energy, and foster the economic health
of small businesses engaged in energy production.
Id. § 7112. The statute mandates appointment of eight
Assistant Secretaries with such responsibilities as pro-
moting competition and setting regulations for consumer
protection. Jd. § 7133(a) (7). The Secretary must create
an Energy Information Administration (EIA) for
carrying out a central, comprehensive, and unified
data and information program which will collect,
evaluate, assemble, analyze, and disseminate data
and information which is relevant to energy re--
*So holding, we agree with the District Court that there
is thus no need to answer the somewhat more involved ques-
tion whether FEAA provides yet another source of this
subpoena power.
6a
source reserves, energy production, demaad, and tech-
nology, and related economic and statistical informa-
tion, or which is relevant to the adequacy of energy
resources to meet demands in the near and longer
term future for the Nation’s economic and social
needs.
Id. § 7135(a) (2). The statute also vests the EIA Ad-
ministrator with the very broad duties the FEAA had
assigned to the Administrator of the Office of Energy
Information Administration under 15 U.S.C. § 790 et seq.
(Supp. I 1977), including the task of maintaining infor-
mation on the economic structure of energy supply sys-
tems. Id. § 790a(b). Finally, the DOEOA requires the »
Secretary to make an annual report on the effectiveness
of competitive and regulatory practices of government
and private entities. 42 U.S.C. § 7267(5) (Supp. I 1977).
The specific study required by Title III falls well
within the range of administrative inquiry which these
provisions of DOEOA place within DOE’s power. We
find no reason why the phrase “by this chapter” in Sec-
tion 7255 cannot include an agency function lying with-
in the powers granted by that chapter, but reinforced by
a specific subsequent legislative mandate. Thus, DOE’s
performance of the Title III study is a legitimate means
of “carrying out the provisions of this chapter” within
the meaning of Section 7255.
Since DOE thus already possessed subpoena power for
a general study of subsidization when Congress passed
Title III, that statute’s silence on subpoena power would
seem to be of no consequence; Congress would have had to
build into Title III a clear withdrawal of subpoena power
if it did not want DOE to issue subpoenas for the
Title III study. The oil companies point to the legisla-
tive history of Title III and to grants of subpoena power
in related legislation to argue that Congress intended to
do just that. We disagree.
7a
The heart of the legislative history argument is a pair
of remarks by Senator Bumpers, the sponsor of Title
III. The remarks arose during debate on a proposed
amendment to Title III offered by Senator Kennedy.
That amendment, incorporating the confidentiality section
of the Energy Supply and Coordination Act, 15 U.S.C.
§ 796(d) (Supp. I 1977), would have barred disclosure
of certain information DOE obtained from the oil com-
panies as confidential, except for requiring disclosure
upon request to the Justice Department, the FTC, and
other listed agencies. Senator Bumpers objected vigor-
onsly to the Kennedy amendment, apparently construing
it as giving these other agencies access which they would
otherwise lack to DOE-obtained information. Senator
Bumpers believed that the oil companies’ fear of adverse
use of such information by the other agencies would
chill their willingness to voluntarily comply with DOE
requests for Title III information. Apparently, he felt
that such voluntary compliance was crucial because he
assumed that DOE would have no subpoena power under
Title III. See 124 Cone. Rec. S7155 (daily ed. May 9,
1978) .5
® Senator Bumpers’ key remarks were as follows:
* * * The Justice Department has subpena powers.
If they are sure that something is going on that is wrong
among major oil companies, they can subpena the infor-
mation. They do not have to request it. They do not have
to ask for their cooperation. Here we do. * * *
* * * *
* * * [Kennedy’s] amendment has nothing to do with
what kind of energy information [the other agencies |
will get. They will get no more information under his
amendment than under mine. They will not have the right
to get the information under subpena powers either
way. * * *
124 Conc. REC. S7155, cols. 1, 2 (daily ed. May 9, 1978).
8a
The debate on the Kennedy amendment is clouded by
confusion on both sides as to what changes the amend-
ment would make in the status quo. Despite this con-
fusion, it does appear clear that Senator Bumpers
thought there would be no subpoena power under Title
III. Nevertheless, we do not see how Senator Bumpers’
express or implied view can alter our own view of
DOE’s general subpoena power here. First, “[t]he re-
marks of a single legislator, even the sponsor, are not
controlling in analyzing legislative history.” Chrysler
Corp. v. Brown, 441 U.S. 281, 311 (1979). Second, even
if Senator Bumpers did believe that DOE would have no
subpoena power under Title III, that belief was really
unnecessary to his argument against the Kennedy amend-
ment. Senator Bumpers wanted to encourage voluntary
compliance with Title III. Under the severe time con-
straints Title III was to impose on DOE, voluntary com-
pliance would be extremely desirable, even if DOE re-
tained a fall-back subpoena power. Therefore, the con-
text of Senator Bumpers’ remarks weakens their sig-
nificance as evidence of intent on the subpoena issue.
Moreover, the fact that his assumption that DOE would
have no subpoena power was unnecessary to his position
on the Kennedy amendment may explain why no Senators
rose to challenge that assumption; it was simply not cen-
trally relevant to the debate. In fact, so far from be-
lieving the goal of voluntary compliance and the presence
of a residual subpoena power inconsistent, Congress may
well have thought the two complementary. Since the fo-
cus of the Title III study is the possibility of preda-
tory subsidization of motor fuel sales by the oil com-
panies, Congress may have assumed the residual sub-
poena power to be necessary to encourage agreements
effecting voluntary compliance. Without the brooding
threat of such subpoena power, Congress might reasonably
have feared that the oil companies’ willingness to par-
ticipate in the study would be less than overwhelming.
9a
The oil companies nevertheless invoke the hoary prin-
ciple of expressio unius est exclusio alterius to buttress
their view of congressional intent. First, whereas Title
III of PMPA never mentions subpoena power, Title II,
which requires accurate disclosures of motor fuel octane
ratings, expressly grants subpoena power to the FTC.
15 U.S.C.A. § 2823(a) (Supp. 1979). Second, Congress
expressly gave subpoena power to the DOE itself in such
other specific statutes as the Powerplant and Industrial
Fuel Use Act, 42 U.S.C.A. § 301 et seg. (Supp. 1979),
and the Emergency Energy Conservation Act of 1979,
Pub. L. No. 96-102.
These congressional actions might, among many other
factors, provide somé evidence on the issue of con-
gressional intent, but they are hardly decisive. The struc-
ture of Title II differs markedly from that of Title III.
Title II is primarily a directive to private parties to
fulfill general reporting requirements imposed by the
Act. Title II, however, secondarily establishes the FTC
as the enforcing agency, and Congress may have felt a
need to spell out the FTC’s enforcement powers in some
detail. Title III, in contrast, is primarily a directive
to a government agency, the Department of Energy, and
Congress may reasonably have understood Title III to
incorporate DOE’s general enforcement powers from the
DOEOA.
As for the Powerplant and Energy Conservation Acts,
the grants of subpoena power there may well have been
the product of “uncertainty, understandable caution, and
a desire to avoid litigation.” Nat’l Petroleum Refiners
Ass'n v. FTC, 482 F.2d 672, 696 (D.C. Cir. 1973). The
oil companies’ expressio unius argument remains highly
speculative. Moreover, since Section 7255 had already
given DOE subpoena power for a study like that di-
rected in Title III, for us to accept the oil companies’
argument we would have to read the combination of their
10a
legislative history and expressio unius theories as proof
of repeal or amendment by implication. The Supreme
Court has cast grave doubt on such inferences, T7VA v.
Hill, 4837 U.S. 158, 189-190 (1978), and its suspicions
would be especially justified here where the inference
would be based not on any language in Title III itself,
but on a stray remark in the legislative history and
questionable reference to other statutes.
The oil companies nevertheless argue that 15 U.S.C.
§ 49 (1976), the FTC Act provision on which the Section
7255 subpoena power is based, allows the agency to issue
subpoenas only as part of narrowly focused investiga-
tions of specific parties suspected of specific legal viola-
tions, and not as part of broad inquiries into the possi-
bility of legal violations throughout an industry or into
industry conduct not currently illegal which might war-
rant fresh administrative or legislative action. We find
nothing in the FTC Act or in the judicial history of Sec-
tion 49 or Section 7255 to support this distinction.
The key provision in the FTC Act states:
For the purposes of this subchapter the Commis-
sion, or its duly authorized agent or agents, shall at
all reasonable times have access to, for the purpose
of examination, and the right to copy any docu-
mentary evidence of any person, partnership, or cor-
poration being investigated or proceeded against; and
the Commission shall have power to require by sub-
poena the attendance and testimony of witnesses
and the production of all such documentary evidence
relating to any matter under investigation. * * *
15 U.S.C. § 49 (1976). Although the section might put
some limit on FTC orders of access, the rather laconic
phrase “relating to any matter under investigation” de-
scribing the scope of the subpoena power hardly suggests
the study-investigation distinction argued by the oil com-
panies. Moreover, the language of other related sections
lla
of the FTC Act argues directly against this distinction.
Section 46, in granting substantive powers to the FTC,
clearly uses the verb “investigate” to describe broad ad-
ministrative functions involving studies or inquiries
which logic would force the oil companies to place on the
“study” rather than on the “investigation” side of their
distinction. See id. § 46(a), (h).
Moreover, of the numerous cases cited by the oil com-
panies to support their distinction, none is on point. Some
involve judicial construction of the very particular terms
of a wholly different statute, like the Internal Revenue
Code. United States v. Bisceglia, 420 U.S. 141 (1975) ;
United States v. Humble Oil & Refining Co., 488 F.2d
953 (5th Cir. 1974), vacated, 421 U.S. 948 (1975), re-
instated on remand, 518 F.2d 747 (5th Cir. 1975). Other
cited cases simply uphold subpoenas issued pursuant to
law enforcement investigations without judging the valid-
ity of subpoenas issued for other purposes. United States
v. Bell, 564 F.2d 9538 (TECA 1977); United States v.
Empire Gas Corp., 547 F.2d 1147 (TECA 1976), cert.
denied, 480 U.S. 915 (1977). And FTC v. Baltimore
Grain Co., 284 F. 886 (D. Md. 1922), aff'd per curiam,
267 U.S. 586 (1925), involved not a subpoena, but an
order of access.
To the extent that these cases might accumulate into
some amorphous general congressional belief in the study-
investigation distinction, they are easily offset by num-
erous cases cited by DOE which suggest, at least gen-
erally, the absence of such a distinction. With no con-
trolling precedent, we revert to the language and scheme
of the FTC Act, and find no grounds for the oil com-
panies’ theory.®
6 Appellants also rely on our recent decision in United
States v. Iannone, 610 F.2d 943 (D.C. Cir. 1979), as support
for limiting DOE’s general subpoena powers. We find the
case easily distinguishable. In Jannone, Congress had given
|
|
12a |
The oil companies’ procedural objections to the subpoena
merit little attention. Appellants claim that under the
DOE regulations for review of agency subpoenas, 10
C.F.R. § 205.8 (1979), DOE was required to entertain
their motion to quash. DOE points in response to Section
205.1 of the regulations, which purportedly limits the
subpoena review regulations to subpoenas issued as part
of the specific agency functions described in 10 C.F.R.
§§ 209-214 (1979), into none of which categories falls
the subsidization study. Whether the reference to Sec-
tions 209-214 in Section 205.1 is inclusive or exclusive
may not be obvious, but an agency is entitled to very
broad deference when it construes its own regulations,
Udall v. Tallman, 380 U.S. 1, 16 (1965), and we see no
reason to disagree with DOE here.
As for other procedural arguments, the oil companies
offer no sound authority for their view that either the
Administrative Procedure Act or due process requires the
agency to promulgate review regulations for all agency
subpoenas. See United States v. Firestone Tire & Rubber
the Inspector General of DOE express power to subpoena
documents but was silent on his power to subpoena live testi-
mony. We held that grant of power to subpoena documents
to be exclusive. There, however, we had a clear and focused
expression of congressional intent with respect to the sub-
poena powers of a particular official. Moreover, our concern
lay not with the general scope of DOE’s subpoena power, but
with problems of delegation of that power to that particular
official. First, the Inspector General is supposed to be an
independent officer within DOE, not an “agent” of the Secre-
tary within the meaning of 42 U.S.C. § 7255. 610 F.2d at 946.
Second, Congress has sought to create a comprehensive sys-
tem of Inspectors General throughout the government, all
with identical powers. Varying grants of subpoena authority
to Inspectors General from agency heads would disrupt such a
system. Plainly, none of the considerations in Jannone bear
on this case.
13a
Co., 455 F.Supp. 1072, 1080 (D. D.C. 1978). Northern
California Power Agency v. Morton, 396 F.Supp. 1187
(D. D.C. 1975), on which the oil companies rely, did not
involve subpoenas, but complex ratemaking matters which,
in the court’s view, required regulations to help the parties
obtain review of massive technical data. Moreover, in
that case court review would be limited to the agency
record, which the court thought would be enhanced by
new regulations. In a subpoena enforcement, by con-
trast, the District Court can inquire into all relevant
matters, unlimited by the scope of the agency’s own in-
quiry, if any. In any event, we find no evidence that the
oil company did not have a reasonable hearing on its
challenges to the subpoenas in the District Court, and
so we find no reason to impose new procedural rules
on the agency.’
Finally, we find that the subpoenas were reasonably
relevant to the agency’s legitimate statutory purpose and
imposed no undue burden on the oil companies. Oklahoma
Press Publishing Co. v. Walling, 327 U.S. 186, 209
(1946). Marathon makes the rather novel argument
that the Secretary should first collect documents on sub-
sidization and only if he finds evidence of this practice
proceed to seek information on the possibly predatory
motive behind it. But nothing in the statute or its legis-
lative history suggests in any way that Congress intended
7 We find no merit and little coherence in Shell’s claim that
the District Court erred in denying it discovery in the en-
forcement proceeding, and in reaching the merits of the
subpoena question in denying Shell’s motion to dismiss, be-
fore Shell filed an answer. Except in extraordinary circum-
stances of the sort that are not apparent here, discovery
is improper in a summary subpoena enforcement proceeding,
United States v. Firestone Tire & Rubber Co., 455 F.Supp.
1072, 1078 (D. D.C. 1978), and Shell appears to have had
ample opportunity to present the District Court with all its
objections to the subpoenas.
l4a
this study to be conducted in stages; its tight deadline
suggests quite the contrary.
We thus conclude that as a matter of law the DOE
acted within its statutory power in issuing the Title III
subpoenas. Nevertheless, we uphold their enforcement
subject to the precise terms of a protective order. Since
the enforcement of a subpoena is an independent judicial
action, and not merely an action ancillary to an earlier
agency action, ICC v. Brimson, 154 U.S. 447 (1894), a
court is free to change the terms of an agency subpoena
as it sees fit. Flotill Products, Inc. v. FTC, 278 F.2d 850,
852 (9th Cir. 1960).
DOE originally issued subpoenas to nine oil companies,
including, in addition to the appellants, Ashland Oil Com-
pany, Atlantic Richfield Oil Company, Clark Oil & Re-
fining Company, Gulf Oil Corporation, Standard Oil Com-
pany of Indiana, and Texaco, Inc. These latter six com-
panies, however, avoided enforcement of the subpoenas by
coming to agreements with DOE providing for volun-
tary submission of documents relevant to the Title III
study with special protection for certain documents desig-
nated by the companies as “confidential” or “extremely
confidential.’”’ Under these agreements, “confidential” docu-
ments in DOE hands would remain in special locked files,
while “extremely confidential” documents would generally
remain in the companies’ possession and thus never be-
come agency records subject to public disclosure under the
Freedom of Information Act. The gist of these protec-
tions is set out in the attached Protective Order. In set-
tling with the six other companies, DOE apparently be-
lieved that these protections put no serious constraints on
the Title III study. DOE has not shown any reason why
the appellants do not need similar protection, and in fact,
in an effort at settling after oral argument in this case,
expressly offered equivalent confidentiality terms to ap-
pellants. We therefore find it appropriate to modify the
15a
subpoenas to incorporate the essential confidentiality pro-
visions of these earlier agreements.®
Subject to the attached Protective Order, the judgment
of the District Court is
Affirmed.
8 The attached Protective Order is essentially the one sub-
mitted by DOE as part of its effort to settle the case after
oral argument in this court. The government’s settlement
proposal appears to differ from the agreements reached with
the nonlitigating oil companies in only two material ways,
and we must presume it was these differences which deterred
the appellants from settling.
First, the government did not offer the appellants, as it did
the nonlitigating companies, assurance that it would not
exercise any discretion it possessed under Chrysler Corp. v.
Brown, 441 U.S. 281 (1979), to release to the public any
information otherwise exempt under the Freedom of Infor-
mation Act. We think the public interest is not disserved by
providing appellants this protection, so we include it in the
Protective Order.
Second, the earlier agreements had provided that if DOE
shares any of its Title III information with the Justice De-
partment or the FTC, those agencies are bound not to use such
information—unless it is elsewhere available—for any pur-
pose other than that of Title III itself. The nonlitigating oil
companies thus obtained assurance that the other agencies
could not use any such information as the basis for any inde-
pendent legal actions against them. After those agreements
were drawn, DOE received complaints from the Justice De-
partment and the FTC that such provisions, forcing them to
read Title III documents with one eye closed, so to speak,
unduly inhibit them in their statutory law enforcement duties
and were not in any event required by law. We agree. Appel-
lants have not alerted us to any authority, either in general
or in the text or legislative history of PMPA, for requiring
such extraordinary protection. Thus, we are loath to make
such protection part of our Protective Order, especially since
Title III expressly provides for consultation between DOE
and other agencies.
16a
PROTECTIVE ORDER
I. Production of Documents.
By March 8, 1980 Exxon Corporation, Shell Oil Com-
pany, and Marathon Oil Company (hereinafter referred
to as company) shall produce all documents specified in
the subpoenas issued on January 22, 1979 by William C.
Lane, Jr. of the Department of Energy (DOE), subject to
the provisions for confidential treatment set forth below.
II. Confidentiality
(A) Each company shall designate in good faith at the
time of production of documents or information pursuant
to this Protective Order those items that it claims to be
“Confidential” in that they contain proprietary, trade
secret, or other confidential information. Each company
may also designate a reasonable number of documents and
information each company deems to be “Extremely Confi-
dential” in that they contain proprietary, trade secret, or
other confidential information of such a significant and
confidential nature that their release may have an ex-
tremely adverse effect on the company’s competitive busi-
ness position. A designation by each company as “Confi-
dential” or “Extremely Confidential” is not a declaration
of the agency of such designation. Documents designated
by being “Extremely Confidential” shall be made available
for examination by personnel assigned to the Title III
study from the Office of Competition (O/C), the Depart-
ment of Justice (DOJ), the Federal Trade Commission
(FTC), and any other agency as designated by the Secre-
tary for participation in the Title III study at the offices
designated by each company in Washington, D.C. In the
event any of the above-listed agencies reasonably de-
termines that physical possession of a copy of a docu-
ment labeled “Extremely Confidential” is necessary, those
agencies may make a request for such a copy, which re-
quest the company shall not unreasonably refuse.
17a
(B) In the event that copies are made of, or notes are
taken concerning, such “Extremely Confidential’ docu-
ments by any person examining the documents, such
copies and notes shall be treated as “Extremely Confi-
dential” documents within the meaning of that term as
it is used in this Protective Order.
(C) In the event that O/C, DOJ, FTC, or any other
agency designated by the Secretary for participation in
the Title III study determines that physical possession of
the notes from, or a copy of, a company document labeled
“Extremely Confidential” is necessary for the completion
of the Title III study, pursuant to Subparts (A) and (B)
of this Part, or if, upon examination of such documents
for Title III purposes, another law enforcement purpose
is evident, such document may be requested for such use.
If so requested, such agency shall provide the following
continuing protections for the co~fidentiality of such notes
or documents, as well as for docu.nents labeled “Confiden-
tial” or notes taken from such “Confidential”? documents:
(1) All such documents and notes, as well as drafts
and manuscripts of the Title III study, shall be
secured in a locked file cabinet when not in use
and in a room which is locked when not in use or
such other facilities as will provide comparable
security.
(2) A log, available to the company upon request,
shall be maintained by all individuals that have
access to “Confidential” documents of that com-
pany.
(3) A separate log, available to the company upon
request, shall be maintained for “Extremely
Confidential” documents which shall show on a
document-by-document basis who has possession
of such document.
(4) Individuals granted access to “Confidential” or
“Extremely Confidential’ documents of a com-
pany shall be informed of the status of these
18a
documents and the limitations on their use and
such individuals, other than attorneys employed
by O/C, DOJ, FTC, and other agencies desig-
nated by the Secretary for participation in the
Title III study, shall sign an acknowledgment of
their understanding of these limitations in the
form attached as Exhibit A. A copy of the
executed undertaking shall be made available to
the company.
(5) All “Confidential” and “Extremely Confidential”
material shall be returned to said locked file
cabinets at the end of each working day.
(D) In the event O/C, FTC, or any other agency
designated by the Secretary for participation in the Title
III study determines that any of a company’s documents
labeled “Extremely Confidential” are not necessary to the
Title III study, that agency shall immediately return such
documents to the company. Provided, however, that if
upon examination of such document for Title III pur-
poses another law enforcement purpose is evident, such
document may be kept for such use.
(E) Any government agency having possession of docu-
ments produced under this Protective Order may share
those documents with any other government agency that
agrees to abide by the terms of this Protective Order.
(F) Nothing in the Protective Order shall be con-
strued as precluding or limiting disclosure:
(1) pursuant to a valid subpoena or court order;
(2) pursuant to a request formally authorized by a
committee or subcommittee of Congress with
jurisdiction over the subject matter of the docu-
ments or information requested ;
(3) at the direction of the Office of Management and
Budget under 44 U.S.C. § 3502 et seq.
19a
(G) Any agency having possession of any documents
obtained under this Protective Order shall promptly
notify a company of all requests for disclosure under the
Freedom of Information Act of any document or infor-
mation produced by a company under this Protective
Order, including requests for disclosure that would be
permitted hereunder, and the basis therefor, and shall also
give the company the maximum actual notice reasonably
possible, and not less than ten days’ notice (unless com-
pelled by court order or lawful subpoena to disclose the
document in less than ten days), of any intended dis-
closure. The notice period shall run from the date on
which the company actually receives such written notice.
No agency shall exercise any discretion it may have
under the Freedom of Information Act to release other-
wise exempt material provided by any company.
(H) Portions of the draft report on the Title III study
which contain or summarize information from “Confi-
dential” or “Extremely Confidential’ documents shall be
treated in the same manner as other “Confidential” or
“Extremely Confidential” documents under this Protective
Order. In addition, O/C will send to a company those
portions of the final draft of such report which cite or
summarize “Confidential” or “Extremely Confidential’
documents at least ten days prior to public release of the
report and provide the company with an opportunity to
comment on O/C’s intended use prior to release of such
report.
(I) At the conclusion of O/C’s Title III study, any
agency in possession of any documents obtained under this
Protective Order shall immediately return to a company
all documents or information produced by that company
pursuant to this Protective Order (and all copies of such
documents or information) which are not referenced in
or relied upon to prepare the Title III study or which
are not, having been examined for the Title III study,
necessary for a law enforcement purpose. In any event,
20a
all documents will be returned to a company within four
(4) years from the completion of the Title III study un-
less being kept for a law enforcement purpose.
(1) All documents and information not immediately
(2)
returned or released to a company pursuant to
Subpart (I) of this Part shall continue to be
maintained by the agency in possession in the
same manner as provided in Subpart (C) of this
Part until returned.
All notes taken from a company document
labeled “Extremely Confidential” shall be de-
stroyed by the agency in possession when the
report of the Title III study is submitted to Con-
gress, unless being kept for a law enforcement
purpose.
(J) O/C, DOJ, FTC, or any other government agency
designated by the Secretary may request and a company
shall not unreasonably refuse the reclassification of any
material designated either “Confidential” or “Extremely
Confidential” which the agency believes may have been
wrongly classified or which the passage of time may have
made less sensitive. Such request of an agency shall spe-
cifically state the reasons for the request, including the
intended use thereof.
(K) A company shall inform O/C of the person auth-
orized to receive notification under this Protective Order.
2la
EXHIBIT A
STATEMENT :
hereby states:
(Name)
I reside at
(Street Adress)
in the City of ’
(Name of City)
County of
(Name of County)
in the
(Capacity) (Department or Agency)
I understand that I will have access to and be ex-
amining corporate documents of
(Company)
which are of a highly proprietary and confidential nature,
and pledge that I, under no circumstances, shall remove
any such confidential document from the control of
. Furthermore, I have
(Government Agency)
read the Protective Order covering these documents and
understand the limitations contained therein on the use
of information contained in those documents. I further
understand that violation of the terms of the Protective
Order may subject me to severe penalties under 18 U.S.C.
§ 1905, including fines and imprisonment.
Dated:
22a
WILKEY, Circuit Judge, dissenting: This case deserves,
and has received, all possible expedition, so I record my
disagreement with my colleagues’ conclusion with unac-
customed brevity. I think the appellants are correct in
their challenge to the subpoenas on points (1), (2), and
(5) as stated in the third paragraph of the Per Curiam.
On the face of the statute there is no subpoena power
under Title III, there is admittedly not one word in the
legislative history implying there is such a power, and
there are words from two of the legislators most active
on this statute saying flatly that no subpoena power exists
for the Title III study, a repeated assertion which was
repeatedly uncontradicted.
I agree, of course, with the imposition of the protective
order.
23a
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
September Term, 1979
Miscellaneous No. 79-0149
No. 80-1002
UNITED STATES OF AMERICA
Vv.
EXXON CORPORATION, a Corporation, APPELLANT
No. 80-1003
UNITED STATES OF AMERICA
Vv.
SHELL OIL COMPANY, a Corporation, APPELLANT
No. 80-1018
UNITED STATES OF AMERICA
Vv.
MARATHON OIL COMPANY, a Corporation, APPELLANT
Appeals from the United States District Court
for the District of Columbia
Before: WRIGHT, Chief Judge, BAZELON, Senior Cir-
cuit Judge, and WILKEY, Circuit Judge
24a
JUDGMENT
These causes came on to be heard on the record on
appeal from the United States District Court for the
District of Columbia, and were argued by counsel. On
consideration thereof, it is
ORDERED AND ADJUDGED, by this Court, that the
judgment of the District Court appealed from in these
causes is hereby affirmed, for the reasons set forth in the
Opinion for the Court filed in these cases on February
25, 1980, as amended, subject to the protective order at-
tached hereto as Schedule I and which is fully incor-
porated herein.
Per Curiam
For the Court
/s/ George A. Fisher
GEORGE A. FISHER
Clerk
Filed: February 26, 1980
Opinion for the Court per curiam.
Dissenting opinion filed by Circuit Judge Wilkey in which
he notes his disagreement with the disposition of this
case on the merits but agrees with the imposition of
the protective order.
[Protective Order omitted. It is set forth as part of
Appendix A, supra, pp. 16a-21a.]
25a
APPENDIX C
UNITED STATES COURT 0F APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
September Term, 1979
Mise. No. 79-0149
No. 80-1002
UNITED STATES OF AMERICA
V.
EXXON CORPORATION, a Corporation, APPELLANT
And Consolidated Case Nos. 80-1003 and 80-1018
Filed Feb. 29, 1980
Before: WRIGHT, Chief Judge; BAZELON, Senior Cir-
cuit Judge; and WILKEY, Circuit Judge
ORDER
Upon consideration of appellants’ motions for stay of
mandate, of the motions for expedited consideration of
same, and of appellee’s opposition to the requested stays
of mandate, it is
ORDERED, by the Court, that the motions for ex-
pedited consideration of the requests for stay of mandate
are granted, and it is
26a
FURTHER ORDERED, by the Court, that appellants’
motions for stay of mandate are granted to and includ-
ing March 10, 1980, on which date the Clerk is directed
to issue the mandate in these cases.
Per Curiam
FOR THE COURT:
/s/ George A. Fisher
GEORGE A. FISHER
Clerk
27a
APPENDIX D
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Mise. No. 79-0150
Filed Dec. 19, 1979
UNITED STATES OF AMERICA,
c/o U.S. Attorney,
Courthouse Building,
Washington, D.C. 20001, PETITIONER
V.
SHELL OIL COMPANY, a Corporation,
c/o C. T. Corporation System,
918 - 16th St., N.W.,
Washington, D.C. 20006, RESPONDENT
ORDER
Petitioner, the United States of America, having in-
voked the aid of the Court, pursuant to Section 645 of
the Department of Energy Organization Act, 42 U.S.C.A.
Section 7255 and Section 13(e) of the Federal Energy
Administration Act, 15 U.S.C. Section 772(e) (1976), in
requiring the above-captioned respondent to comply with
the administrative subpoena duces tecum issued on Jan-
uary 22, 1979, to obtain information for a study being
conducted pursuant to Title III of the Petroleum Market-
ing Practices Act, Public Law 95-297, 15 U.S.C.A. §§ 2801
et seq. and the Court having considered the Petition and
other papers of record, and the Court being of the opinion
that the subpoena was lawfully issued for an inquiry
within the authority of the agency; the demand is not too
indefinite, and the information sought is reasonably rele-
28a
vant, and therefore the subpoena should be enforced, it
is hereby
ORDERED that respondent Shell appear before Wil-
liam C. Lane, Jr., the Director of the Office of Competi-
tion of the Office of Policy and Evaluation of the Depart-
ment of Energy or his representative at a time and place
in Washington, D.C., to be designated by the petitioner
upon not less than ten (10) days’ notice, and produce
documents as required by the subpoena duces tecwm issued
by William C. Lane, Jr., on January 22, 1979, a copy of
which subpoena is attached to the Petition.
/s/ John Garrett Penn
JOHN GARRETT PENN
United States District Judge
December 17, 1979
29a
APPENDIX E
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Misc. 79-149
UNITED STATES OF AMERICA
V.
EXXON CORPORATION
~ Se ,™
Misc. 79-150
UNITED STATES OF AMERICA
Vv.
SHELL OIL Co.
Misc. 79-217
UNITED STATES OF AMERICA
Vv.
MARATHON OIL Co.
Filed Jan. 15, 1980
30a
MEMORANDUM
These three cases came before the Court on petitions
by the United States to enforce subpoenas duces tecum
dated January 22, 1979, and served on the three respond-
ents, Exxon Corporation (Exxon), Marathan [sic] Oil Co.
(Marathon), and Shell Oil Co. (Shell). Petitioner filed
these actions when the respondents failed to honor the
subpoenas.''? The Court heard arguments in support of
and in opposition to the respective petitions and on De-
cember 17, 1979, entered Orders directing the respondents
to comply with the subpoenas. The purpose of this Memo-
randum is to briefly set forth the basis of the Court’s
ruling.
Petitioner brings these actions pursuant to the author-
ity granted by the Department of Energy Organization
Act (DOEOA), 42 U.S.C. § 7101 et. seq., and the Federal
Energy Administration Act (FEAA), 15 U.S.C. § 761
et. seq. The subpoenas were issued by the Director of the
Office of Policy and Evaluation, acting under a delega-
tion of authority from the Secretary of the Department
of Energy, to require the, respondents to provide infor-
mation necessary for the preparation of a study required
by Title III of the Petroleum Marketing Practices Act
(PMPA), 15 U.S.C. § 2841. Section 2841(a) provides:
(a) The Secretary of Energy, in consultation with
the Chairman of the Federal Trade Commission and
the Attorney General and other agencies as the Sec-
retary deems appropriate, shall conduct a study of
1 The actions against Exxon and Shell were filed on June
29, 1979, and the action against Marthon [sic] was filed on
October 10, 1979.
2 Similar subpoenas have been served on several other oil
companies which voluntarily complied after negotiations with
the Department of Energy.
3la
the extent to which producers, refiners, and other
suppliers of motor fuel subsidize the sale of such
motor fuel at retail or wholesale with profits ob-
tained from other operations.
Section 2841(b) provides that the study shall examine
the role of vertically integrated operations in facilitating
subsidization of sales of motor fuel at wholesale or retail,
the extent to which such subsidization is predatory and
presents a threat to competition, the profitability of vari-
ous segments of the petroleum industry, the impact of
prohibiting such subsidization on the competitive viability
of segments of the industry, the prices of motor fuel to
consumers and the health and structure of the industry
as a whole and such other matters as the Secretary deems
appropriate. The Secretary plans to submit his report
on March 31, 1980.*
I
Respondents object to the subpoenas on several grounds,
namely, (1) that the PMPA does not confer subpoena
power, (2) Congress did not intend to confer subpoena
power upon the Department of Energy (DOE) for com-
pletion of the study required by PMPA, (3) the DOE
cannot look to other statutes for subpoena power, includ-
ing the DOEOA and the FEAA and (4) DOE may not
use its investigatory powers under FEAA and DOEOA
to fulfill its responsibilities under Title II of the PMPA.
Respondents also attack the subpoenas on a number of
procedural grounds. After giving careful consideration
to the arguments of respondents, this Court concludes
that they are without merit and that the subpoenas
should be enforced.
3’ The report was originally due on December 19, 1979, but
was extended due to various delays in obtaining information.
32a
The petitioner concedes that the PMPA, standing alone,
does not grant DOE the power to subpoena the informa-
tion sought by that agency. However, petitioner argues
and the Court agrees, that such authority is granted by
the DOEOA and, at least arguably, by the FEAA. There
is nothing in the PMPA or its legislative history which
suggests that by enacting the PMPA, Congress acted to
limit or prohibit the use of subpoenas. Such an argument
would necessarily be based on a contention that the
PMPA, having made no mention of subpoenas, necessar-
ily amended the DOEOA and the FEAA by implication.
As noted above, the Court finds nothing to support that
contention and, in any event, amendments by implication
are not favored. See United States v. Weldon, 377 U.S.
95, 103, n. 12 (1964). Moreover, to accept respondents’
argument in this regard, would be to hold that every
time Congress ordered DOE to perform a study pursuant
to its authority under DOEOA, a special direction affirm-
ing the subpoena power would be necessary. The re-
spondents have offered no argument or rationale which
would support such a contention.
The power to issue the subpoenas is found in the
DOEOA. In its declaration of purposes in creating the
DOE, Congress noted that it sought to, among other
things, achieve an effective management of energy func-
tions, promote the interests of consumers through the
provision of an adequate and reliable supply of energy at
the lowest reasonable cost, and foster, insofar as possible,
the good health of the nation’s small business firms, pri-
vate cooperatives and others involved in energy produc-
tion. See 42 U.S.C. § 7112. In order to achieve those
objectives, the statute provided for the appointment of
eight Assistant Secretaries and included in their assigned
responsibilities the task of reviewing competition and con-
sumer affairs including the promotion of competition in
the energy industry, protection of the consuming public
i atl Met im ws
33a
in the energy policy making processes, and formulation
and analysis of policies, rules, and regulation relating to
competition and consumer affairs. See 42 U.S.C. § 7133
(a) (7). The statute also provides for the establishment
of an agency information administration and provides
that the Secretary of DOE shall delegate to the adminis-
trator the responsibility for the gathering, analysis and
dissemination of energy information. See 42 U.S.C. § 7135
(b). Finally, the DOEOA provides that the Secretary
shall make an annual report to include a review and
appraisal of the adequacy and appropriateness of the tech-
niques, procedures and practices, including competitive
and regulatory practices, employed by federal, state and
local governments and non-governmental entities to achieve
the purposes of the DOEOA. See 42 U.S.C. § 7267(5).
Taking all of the above objectives into consideration, it
is easily discerned that the study required to be per-
formed by DOE by the PMPA, see 15 U.S.C. § 2841, is
well within the authority and powers granted to DOE
by the DOEOA. Thus, in performing the study required
by the PMPA, the Secretary is merely performing a func-
tion required of him under the DOEOA. Thus the sub-
poenas which make reference to the study required under
PMPA set forth a valid purpose.
II
The authority to issue the subpoenas now challenged by
the respondents is found in 42 U.S.C. § 7255 which
provides:
For the purpose of carrying out the provisions of
this chapter, the Secretary, or his duly authorized
agent or agents, shall have the same powers and
authorities as the Federal Trade Commission under
Section 49 of Title 15 with respect to all functions
34a
vested in, or transferred or delegated to, the Secre-
tary or such agents by this chapter.
The Court concludes that the subpoena power is broad
and would encompass the study required by the PMPA.
Respondents argue that the authority under Section
7255 is restricted to investigations and not studies since
a similar restriction limits the Federal Trade Commis-
sion. See 15 U.S.C. § 49. In this Court’s view, the au-
thority granted under Section 7255 is the same as that
granted by 15 U.S.C. $49 without any limitation as to
investigation. Section 7255 clearly provides that the sub-
poena power is provided to the Secretary, “[f]or the pur-
pose of carrying out the provisions [of the DOEOA]”.
See also, S. Rep. No. 95-164, 95th Cong. 1st Sess., 7e-
printed in [1977] U.S. Code Cong. & Ad. News 854,
904.
While concluding that the authority to issue the sub-
poenas is clearly set forth in the DOEOA, the Court
notes that the authority contained in the FEAA, see 15
U.S.C. § 772(b), appears to be limited to those situations
where organizations are required to make reports. Hav-
ing found that the authority is contained in the DOEOA,
the Court need not discuss the authority or limitations
contained in the FEAA as they relate to these subpoenas.
III
Respondents also challenge the subpoenas as being in-
valid because DOE allegedly failed to follow its own
regulations for resolving disputes over subpoenas and that
it failed to comply with the Administrative Procedure
Act (APA).
Respondents contend that 10 CFR § 205.8 applies to
the issuance of the subject subpoenas and that since DOE
did not follow the requirements of that regulation the
subpoenas are unenforceable. That regulation sets forth
35a
an administrative procedure for rulings on objections on
motions to quash subpoenas. The argument is without
merit since 10 CFR § 205.0 provides that the provisions
set forth in the above regulation applies to those proce-
dures set forth in 10 CFR Parts 209 through 214. Those
sections relate to International Voluntary Agreements
(Part 209), General Allocation and Price Rules (Part
210), Mandatory Petroleum Allocation Regulations (Part
211), Mandatory Petroleum Price Regulations (Part
212), Oil Import Regulations (Part 213), and Mandatory
Canadian Crude Oil Allocation Regulations (Part 214).
Furthermore, the Court finds no merit in the respondents
due process arguments since the subpoenas issued only
affect the respondents when the Court orders enforcement.
The respondents arguments made pursuant to the APA,
specifically 5 U.S.C. §§ 552 and 555 are likewise found
to be without merit.
IV
This Court is satisfied that the subpoenas were properly
issued pursuant to the DOEOA for a lawful purpose, that
the study for the purposes of PMPA is one which falls
within the authority granted under the DOEOA, that the
subpoenas are not burdensome or unreasonable in view
of the information sought and the requirements of the
PMPA* and that the understandable concern of the re-
spondents respecting confidentiality of their records is met
by the order which provides for at least 10 days notice
before any documents must be produced.
Having carefully considered the arguments of the re-
spondents, and having found those arguments without
* Respondents have failed to show that the subpoenas are
burdensome or unreasonable. See FTC v. Texaco, Inc., 180
U.S. App. D.C. 390, 555 F.2d 862, cert. den. 431 U.S. 974
(1977).
36a
merit, the Court entered the Orders in each of the cases,
directing enforcement of the subpoenas.°
Dated: January 14, 1980
/s/ John Garrett Penn
JOHN GARRETT PENN
United States District Judge
5In view of the Court’s ruling on the merits, the various
requests of the respondents for discovery and to dismiss the
petitions are moot.
37a
APPENDIX F
UNITED STATES DISTRICT COURT |
FOR THE DISTRICT OF COLUMBIA ,
Misc. 79-149
UNITED STATES OF AMERICA
V.
EXXON CORPORATION
Misc. 79-150
UNITED STATES OF AMERICA
V.
SHELL OIL Co.
Mise. 79-217 ;
UNITED STATES OF AMERICA |
V.
MARATHON OIL Co.
Filed Jan. 15, 1980
MEMORANDUM ORDER ‘
This comes before the Court on respondents’ motions |
for a stay of the Court’s Order of December 17, 1979,
pending appeal. In that Order, the Court granted the
at
38a
petition to enforce subpoenas duces tecum issued to the
respondents.
The guidelines for consideration the the [sic] respon-
dents’ request are found in Virginia Petroleum Jobbers
Association v. FPC, 104 U.S. App. D.C. 106, 259 F.2d
921 (1958), and Washington Metropolitan Area Transit
Commission v. Holiday Tours, Inc., 182 U.S. App. D.C.
220, 559 F.2d 841 (1977). These are whether the re-
spondents have made a strong showing that they are
likely to prevail on the merits, that they would suffer
irreparable harm if the stey is not granted, that the
issuance of a stay would not substantially harm any of
the other parties, and finally, where lies the public in-
terest. 104 U.S. App. D.C. at 110, 259 F.2d at 925.
Viewing each guideline separately, the Court concludes
that respondents have not made a strong showing that
they will prevail on the merits. The Court has carefully
considered the extensive briefs submitted in this case
together with the arguments of counsel. Two separate
hearings were held in these cases. The Court concluded
that the subpoenas should be enforced and that the De-
partment of Energy (DOE) has the authority to issue
the subpoenas pursuant to 42 U.S.C. § 7255. Respond-
ents have raised nothing in their motion for a stay pend-
ing appeal which would change the Court’s conclusion.
With respect to the irreparable harm that the re-
spondents might suffer, it falls within two categories.
First is that, if the subpoenas are enforced, the respond-
ents would be required to turn over information that they
contend is confidential and which might affect their
competitive position in the market if exposed to the pub-
lic. The Court’s order providing for ten days notice
should make such a breach of confidentiality unlikely.
Second, if they are required to comply with the sub-
poenas prior to the appeal, such action would effectively
moot the appeal.
39a
As to the possibility of svbstantial harm to the other
parties and where lies the public interest, any harm to
the petitioner would be that it may not be able to obtain
the necessary information for the completion of the study
under the Petroleum Marketing Practices Act (PMPA)
and the completion of that study is presumably in the
public interest.
“The Court is not required to find that ultimate suc-
cess by the movant is a mathimatical [sic] probability,
and indeed, as in this case, may grant a stay even though
its own approach may be contrary to moveants’ view of
the merits”. 182 U.S. App. D.C. at 222, 559 F.2d at 843.
Here, the Court views the respondents’ likelihood of suc-
cess as far below 50%. Nevertheless, it has balanced the
other factors in these cases and concludes that a stay,
conditioned upon certain actions by the respondents,
should be granted. Those other factors are that this is a
case of first impression, that the parties can seek an
expedited appeal, that respondents have agreed that they
will cooperate with the petitioner in seeking an expedited
appeal and that such should be done, that an expedited
appeal would not unduely burden either side to this
controversy since the cases have been fully briefed and
argued, that the respondents, notwithstanding the pen-
dency of the appeal, can forthwith begin to collect the
requested information so as to be in a position to im-
mediately turn that information over to the petitioner
by a date certain or final resolution of the appeal in
favor of petitioner, if that is the case, and that while
the petitioner may require the information in order to
complete the study under the PMPA, DOE has already
received similar information from other oil companies
as a result of their voluntary compliance, those companies
including Atlantic-Richfield Co., Standard Oil of Indiana,
the Gulf Oil Companies, Texaco, Inc., Clark Oil and Re-
fining Corp., and Ashland Oil Co.
40a
In view of the above, it is hereby
ORDERED that the Court shall grant the respondents’
motion for a stay pending appeal on the following
conditions:
1. Respondents shall cooperate with petitioner in seek-
ing to have the appeal heard on an expedited basis.
2. Respondents shall immediately begin to collect the
necessary information and be prepared to turn that in-
formation over to the petitioner on or before February
15, 1980, or on the date of the decision of the Court of
Appeals, if that court affirms the order of this court,
whichever is later.* Respondents shall advise this Court
and the Court of Appeals that they are in compliance
with this condition.
Dated: January 14, 1980
/s/ John Garrett Penn
JOHN GARRETT PENN
United States District Judge
* This requirement is similar to and in lieu of the posting of
a bond pending appeal. Respondents have represented to the
Court that they would begin the process of collecting the in-
formation although there is a dispute as to when such infor-
mation can actually be furnished. This Court concludes that
ay information should be available no later than February
15, 1980.
~ a
4la
APPENDIX G
[SEAL]
Department of Energy
Washington, D.C. 20545
February 2, 1979
A. M. Minotti, Esq..
Shell Oil Company
One Shell Plaza
Houston, Texas
RE: Subpoena of January 22, 1979 to Mr. J. F.
Bookout, President, Shell Oil Company
Dear Mr. Minotti:
This letter will confirm our telephone conversation of
this afternoon. This Office has been advised that 10
CFR Section 205.8 does not apply to the above-referenced
subpoena. We, therefore, agree that Shell has waived no
rights if it “does not comply with the 10-day filing re-
quirement contained in 10 CFR Section 205.8 (h) (1).
Sincerely yours,
/s/ Frank Lipson
FRANK LIPSON
Policy Analyst
Office of Competition
= : 42a
APPENDIX H
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
WASHINGTON, D.C.
SUBPOENA
TO: Mr. J. F. Bookout, President, Shell Oil Company,
One Shell Plaza, Box 2463, Houston, Texas 77001.
YOU ARE HEREBY REQUIRED TO APPEAR before
William C. Lane, Jr., an officer of the Department of
Energy, or his designated representative, at Room 7A-
142, 1000 Independence Avenue, S.W., Washington, D.C.
on the 2nd day of March, 1979 at 9:00 A.M. to pro-
vide information for use in the preparation of a study
required by Title III of the Petroleum Marketing Prac-
tices Act (PL 95-297).
YOU ARE FURTHER REQUIRED TO bring with you
and produce for examination at the time designated above
the documents and material specified in Attachment “A”.
FAILURE TO OBEY THIS SUBPOENA MAY RE-
SULT IN REFERRAL TO A UNITED STATES DIS-
TRICT COURT FOR ENFORCEMENT.
Issued this 22d day of January, 1979 under the authority
of Section 13(e) of the Federal Energy Administration
Act of 1974 and Section 645 of the Department of Energy
Organization Act.
Signature William C. Lane, Jr.
Director
Office of Competition
Policy and Evaluation
Department of Energy
43a
ATTACHMENT A
INSTRUCTIONS
1. Definitions
(a) The term domestic means within the United
States.
(b) The term document means writings of any kind,
however produced or reproduced.
(c) The word or is inclusive, referring to any one
or more of the disjoined words or phrases.
(d) The term “your company” means the company
named on the face of the subpoena, and all firms
in which it owns an equity interest greater than
50 percent that are engaged in whole or in part
in the production, refining, or transportation of
crude oil, or the transportation, marketing, or
distribution of motor gasoline, within the United
States or any part thereof.
2. Complete Documents
Where a document includes any material called for by
the subpoena, the subpoena requires the production of the
entire document, including all attachments, cover memo-
randa, appendices, etc., even if only part of the document
is responsive to any specification.
8. Claims of Privilege
Any document responsive to any of the specifications
which is not produced by reason of any claim of privilege,
statute, or regulatior. shall be identified by a short de-
scription of each such item, including the title, the type
of document, the subject matter, the name, address and
title of its author(s), the names and addresses of persons
to whom copies were furnished, the date of preparation,
44a
and a short statement of the reasons which in your opin-
ion justify withholding it.
4. Specification Identification
Each document shall be identified as to the specification
or specifications to which it is responsive.
5. Limitations of Document Search
Provide all documents described in the Specifications
below which were prepared by, or received by, any of
the following individuals or groups within your company
during the period January 1, 1970 to the date of this
subpoena:
(a) The Board of Directors or any committee there-
of ;
(b) the president or chief executive officer ;
(ec) the senior management committee ;
(d) any committee or individual with the authority
to approve capital expenditures of $3 million or
more;
(e) the vice president in charge of domestic refining
(or, if there is no such vice president, the high-
est level employee in the company whose primary
responsibility is domestic refining) ;
(f) the vice president in charge of corporate plan-
ning (or, if there is no such vice president, the
highest level employee whose primary responsi-
bility is corporate planning).
(g) the vice president in charge of domestic market-
ing (or, if there is no such vice president, the
highest level employee whose primary responsi-
bility is domestic motor gasoline marketing).
a -shls OS ee
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
45a
SPECIFICATIONS
All documents that evaluate, analyze, or report on
the feasibility or desirability of evaluating sepa-
rately the financial performance of different func-
tional levels within your company’s petroleum oper-
ations.
All documents that evaluate, analyze, or report on
the financial performance or projected financial per-
formance of any functional level or comparison of
functional levels within your company’s petroleum
operations.
All documents that evaluate, analyze, or report on
plans for the domestic test marketing of motor gaso-
line.
All documents that evaluate, analyze, or report on
the domestic marketing of motor gasoline under
secondary brand name(s).
All documents that evaluate, analyze, or report on
the expansion or contraction of the geographic area
(within the United States) in which motor gasoline
is marketed under brand name(s) owned by your
company.
All documents that evaluate, analyze, or report on
motor gasoline market shares of your company or
any other company in any State or metropolitan
area.
All documents that evaluate, analyze, or report on
the effects of the Department of Energy price or
allocation regulations (10 CFR Parts 210, 211, and
212) on the domestic marketing of motor gasoline.
All documents that evaluate, analyze, or report on
the financial aspects of proposals or plans to build,
(9)
(10)
(11)
(12)
46a
expand, close, purchase, or sell any domestic or
Caribbean refinery.
All documents that evaluate, analyze, or report on
the financial aspects of proposals or plans to build,
or to expand the capacity of, any domestic crude
or product pipeline, or purchase or sell any interest
in any domestic crude or product pipeline.
All documents that evaluate, analyze, or report on
the efficiency of, profitability of, or competitive ad-
vantages or disadvantages of, the domestic refining
or motor gasoline marketing operations of any firm
other than your company.
All documents that evaluate, analyze, or report on
your company’s plans for domestic marketing of
motor gasoline through company-operated stations.
All annual or periodic domestic motor gasoline
marketing plans and all documents that evaluate,
analyze, or report on such plans.
te
ee eee eae vd
47a
APPENDIX I
SENATE DEBATE ON TITLE III OF THE
PETROLEUM MARKETING PRACTICES ACT
[124 Cong. Rec. S 7149 - 7158 (Daily ed., May 9, 1978).]
[S 7149]
PETROLEUM MARKETING PRACTICES ACT
The Senate continued with the consideration of the
bill.
Mr. DURKIN. Mr. President, I ask unanimous con-
sent that Mike Harvey of the Committee on Energy and
Natural Resources, Henry Banta, Tom Susman, of Sen-
ator KENNEDY’S staff, and Richard Arnold of Senator
BUMPERS’ staff be granted the privilege of the floor dur-
ing debate on the pending bill. I make the same request
for Linda Gold as well.
The PRESIDING OFFICER. Without objection, it is
so ordered.
The Senator from Arkansas is recognized.
UP AMENDMENT NO. 1307
Mr. BUMPERS. Mr. President, the pending amend-
ment is amendment No. 1809 introduced by Mr. Mark O.
HATFIELD and me. I send to the desk a modified version
of that amendment.
THE PRESIDING OFFICER. The amendment will
be stated.
The legislative clerk read as follows:
The Senator from Arkansas (Mr. BUMPERS) proposes
unprinted amendment numbered 1307 as a modification
to amendment No. 1809.
48a
Mr. BUMPERS. I ask unanimous consent that fur-
ther reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is
so ordered.
[Text of Title III as enacted is omitted. ]
[S 7150]
The PRESIDING OFFICER. The amendment will
be so modified.
Mr. BUMPERS. I ask unanimous consent that the
Senator from Washington (Mr. JACKSON), the Senator
from New Mexico (Mr. DOMENICI), the Senator from
Kentucky (Mr. Forp), the Senator from Louisiana (Mr.
JOHNSTON), and the Senator from Alaska (Mr. GRAVEL)
be added as cosponsors to the amendment.
The PRESIDING OFFICER. Without objection, it is
so ordered.
Mr. BUMPERS. Mr. President, this amendment re-
flects a compromise on the issue of title III, which is pend-
ing before the Senate. It is a compromise which deals
with the most controversial part of the bill. I believe that
the managers will be willing to accept it. .
The compromise, very briefly, will require the Secre-
tary of Energy to study the subsidization issue fully.
Full provision is made for public involvement in the
study. The Secretary must send his study, together with
appropriate legislative recommendations, to the Congress
within 18 months after enactment.
In addition, this amendment establishes a procedure
where the President may develop interim measures to
protect the competitive viability of the marketing sector
of the petroleum industry if he considers them neces-
sary and appropriate. Congress would have 90 days to
act. affirmatively on his proposal.
Any interim proposals which might be accepted by the
Congress would not extend beyond 18 months from the
date of their affirmation by Congress.
ne ent BT ie IAD em es
- eile a ee
49a
Mr. President, if no interim measure is submitted to
Congress, then, of course, at the end of 18 months from
the date of enactment of this bill the Secretary shall sub-
mit legislative recommendations to Congress, if he finds
them to be necessary to protect the people we are trying
to protect under the present legislation. If the President
determines that interim measures are necessary, Congress
will have 90 days in which to affirm the recommendations
of the President under the procedures set forth in section
523 (a) of the Energy Policy and Conservation Act.
I think it is an excellent compromise, and I hope all
my colleagues will see fit to support it.
Mr. President, I believe that adoption of this amend-
ment will help clear the way for enactment of H.R. 130,
which will provide important protection to wholesalers
and retailers of gasoline from arbitrary termination of
supply.
Mr. President, I ask unanimous consent that the name
of the distinguished Senator from Tennessee (Mr. BAKER)
be added as a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is
so ordered.
Mr. FORD. Mr. President, I ask unanimous consent
that Jim Fleming, of my staff, have the privilege of the
floor during the debate and vote on H.R. 130.
The PRESIDING OFFICER. Without objection, it is
so ordered.
Who yields time?
Mr. DOMENICI. Mr. President, will the Senator yield
5 minutes to the Senator from New Mexico?
Mr. BUMPERS. I am happy to yield 5 minutes.
Mr. DOMENICI. I thank my good friend.
Mr. President, I would like to take several moments to
specifically address the issue of title III, and also to make
several comments on what I am told will be forthcoming
amendments to title ITI.
Congress has moved on several occasions to protect
independent segments of the petroleum industry. During
50a
the oil embargo, Congress and the executive branch pro-
tected independent refiners through the entitlement pro-
gram. Now the dealers are receiving protection under
title I of the dealer day in court. Title III provides com-
parable protection for the independent marketers—job-
bers. Jobber concerns stem from a changing oil market.
Their principal concern is that integrated oil companies,
both major and independent refiners, are subsidizing their
marketing operations with revenues earned upstream.
On a national basis, this concern is borne out by the
decline in total retail outlets over the past several years,
which have been accompanied in turn by an increase
in salary operated stations by refiners. Major refiners
have increased their sales from salary operated stations
by 55 percent while independent and small refiners have
increased their salary operated sales by 50 percent. Over-
all, refiner owned and operated stations have increased
their marketshare by one-third.
Refiner comments on title III admit that a margin
of 3 to 5 cents a gallon is appropriate between a jobber
purchasing gas at the refinery—at the rack—and the
sale price at the dealer outlet. The following table gives.
examples of what can only be subsidized pricing by re-
finer operated outlets. I ask unanimous consent to have
the table printed in the RECORD.
There being no objection, the table was ordered to be
printed in the REcorD as follows:
Priceto Refiner
Jobber dealer direct
Refiner: Location price (DTW) price
Marathon: Meridian, Mich. 55.02 58.19 56.19
Powerline: Redwood City,
Calif. 52.45 — 52.9
Ashland: Charlotte, N.C. 51.703 — 51.9
Champlin: Oklahoma City 53.56 51.91
Clark: Alliaoca, Ohio 52.7 — 51.91
To a
Sti heats tlle elias thai AEE MS Bet. the. Cl Lt. awk.
5la
Mr. DOMENICI. Mr. President, the most recent evi-
dence available is some January 1978 figures from Kan-
sas where Champlin Petroleum is selling on the street at
0.519 and selling to its jobbers for 0.5175. This is a
0.0015 difference, a situation that begs explanation.
Title III is predicated on a question: Why would in-
tegrated oil companies sell below cost? Title III answers
that as a general rule below cost sales are predatory per
se unless: They result, in fact, from proven cost savings;
they are designed to meet competition; or they are pro-
vided to enter a new market.
The basic elements of title III are as follows:
First. Section 302 prohibits subsidization.
Second. Section 303 makes price data available to in-
dependent marketers.
Third. Section 304 provides for defenses based on
cost, meeting competition, or penetrating a new market.
Fourth. Section 305 switches the burden of proof once
the jobber has proved below cost sales.
Fifth. Section 306, the enforcement section, provides
for civil fines, and a private right of action for treble
damages.
Sixth. Section 307 is the definitions section.
I should like to stress that in fashioning title III,
largely at my urging, I and other committee members
made a variety of changes designed to meet what we
saw as legitimate criticisms.
Nevertheless, several policy arguments have been raised
against the bill. These include:
First. The oil industry does not know its costs: Ba-
loney. How then does the industry know if it is making
a profit? How does it know whether to make more or less
of a given product? To open or close stations? The fol-
lowing quote from Champlin to one of its Kansas lessees
should help lay the matter to rest as to whether the in-
dustry knows its costs:
52a
Champlin Petroleum Company regrets to inform you
that it has determined that it is no longer economic for
it to operate the Champlin Service Station located at U.S.
Highway No. 56 and I-35 West, McPherson, Kansas,
under the present lease agreement with you.
This issue of costs raises a more fundamental ques-
tion. My opposition to divestiture is based on the belief
that integrated oil operations generate efficiencies and
economies of scale. In simple terms: they lower costs.
Now the industry tells us they cannot document this.
The industry cannot have it both ways. Either the cost
savings of integrated oil operations can be documented
or they cannot. And if they cannot, either they should
be, or the industry should be broken up.
Second. The Domenici title III will comulicate [sic]
antitrust litigation: This is the last straw. Antitrust
litigation has been ponderous and incomprehensible for
decades. The present FTC case against the industry is
an example. The FTC filed its complaint in 1973. In
1975, its first subpena was squashed. In November of
1976, it issued a “minisubpena.” This modest subpena
ran to 1,300 pages for each of the 8 major companies.
The industry responded with somewhere between 500,000
and 1 million pages. And what type of information did
this “minisubpena” call for. Just basics. Organization
charts, holdings, and so forth. A new subpena has now
gone out asking for more information. Five years after
its start, the FTC case is in the early, I repeat, early
stages of discovery. Urgings by oil industry lawyers
that independent marketers not confuse the crystalline
verities of antitrust litigation remind one of the nursery
rhyme poem:
[S 7151]
Will you walk into my parlour,
said the spider to the fly
Tis the prettiest little parlour
“that ever you did spy.
53a
Gh, no, no, said the little fly,
to ask is in vain.
For who goes up your winding stair,
can ne’er come down again.
In short, independent marketers believe they serve an
important competitive function. If they are to be driven
from the marketplace, it should be because of increased
efficiency, not because of the market power of the big
fish who live upstream. All they ask is a chance to com-
pete fairly. This hardly seems too much to ask.
Mr. President, at this point I would like to spend sev-
eral minutes discussing the compromise that has been
worked out at the 11th hour on title III. As my remarks
indicate, I am satisfied with the present title III. It is a
finely tuned solution to the problem at hand. It does not
establish another wave of regulations. It simply gives the
little guy his day in court.
It is apparent, however, to the proponents of title III
that there is not support for the present title III. This
lack of support arises in some cases from a legitimate
concern over the lack of data at hand. Although I find
this argument unpersuasive, I admit its strength.
Now, Mr. President, I am not one to attack bigness for
bigness’ sake. I am also not one that believes that the
oil industry is evil incarnate. I do, however, believe that
this biggest of American industries does the Nation a
disservice when they refuse to allow the little guy a
chance to make his case in court.
I feel a study is like prescribing aspirin for a severed
jugular. Personally, I believe we should attend to the
business at hand: Protecting the independent marketers.
I do not believe their livelihood should be sacrificed while
we await the results of a study. I believe the need for
action is now.
rom a tye I join this compromise not out of con-
viction, but rather because I see it as the only way that
the independent marketers can keep their case before the
|
54a
Congress. To be frank, a setback here might doom their
cause forever. I see this amendment as a way for the
independent marketers to establish a more complete fac-
tual case. In short, I see it, in military terms, as a way
for them to keep an army in the field so that they can
return to fight another day. :
Mr. President, the dealer’s day in court bill would
have come to the Senate with two titles that basically
directed their attention to trying to protect the inde-
pendent filling station operator as we move through this
energy crisis and these difficult, changing times. I cer-
tainly support that; that is needed.
As that evolved during the last year or year-and-a-
half, it became quite obvious that there was another
group of independent businessmen related to the delivery
of petroleum and petroleum products—sometimes called
the independent jobbers, sometimes called the independent
marketers, sometimes called independent wholesalers—
who indeed were becoming the victims of both major re-
fineries and refineries that own substantial numbers of
filling stations, by virtue of the fact that it appeared,
and the facts seemed to indicate, that the refiner would
take upstream profits and put thera into downstream cut-
rate prices at the filling station level, while at the same
time, in many instances, selling to their own jobber in
between for a higher price. If this were happening with-
in an integrated company, then most certainly it also was
happening in the field at large, where a major refinery
or a large refinery was selling at subsidized prices down-
stream, having earned the profits upstream in the re-
finery, and a jobber or independent distributor was
caught in the middle, paying a higher price for the same
product. |
It was my opinion that that kind of marketer, who,
by definition, is independent, was necessary in the Amer-
ican marketplace system, that we usually ask them to
take care of the distribution system where it was most
—
55a
expensive, in the rural parts, where they had to drive
large distances to serve the filling stations to which they
sold. It appeared from the facts that they were going
to be gobbled up and put out of business by this process.
So it was my amendment in committee that gave a
private cause of action to this kind of independent jobber
or distributor to sue the refinery, if he could prove that
there was such a subsidization downstream by virtue of
the profits upstream in the integrated system.
Since our antitrust laws do not help this kind of per-
son, we can imagine an independent jobber using the
existing antitrust laws of our Nation to try to take on
this kind of situation, with all the truth that is required
and the resources that are required.
So my amendment would say that if you can prove
the differential in price, let the burden shift, and see if
the big one can disprove that it is trying to control the
market.
I acknowledge that my amendment to title 3, which
was adopted by a slim margin in committee—8 to 7—
would have been defeated here today. It is'a new and
different approach to create a cause of action of this type
based only upon the evidence that I required in my
amendment. So I have most willingly joined the distin-
guished Senators who bring this substitute. It will not
do the job as well, but it will begin an investigation of
the facts, to see if what we are saying is happening
and to make recommendations, if they are happening, as
to how to cure it.
This amendment will provide a remedy, by virtue of
Congress being able to adopt the recommendations in an
expeditious manner, if recommendations are forthcom-
ing. During this study, and as a result of it, this would
protect this middle-man independent in the scheme of in-
tegration that is going on in this country, where they
are finding less and less of an opportunity to survive.
—
ee me ee we er WES) Oe 1 t- eee
eee eee
56a
The PRESIDING OFFICER. The time of the Sena- —
tor has expired.
Mr. DOMENICI. Mr. President, will the Senator
yield me 1 additional minute?
Mr. BUMPERS. I yield 2 minutes to the Senator.
Mr. DOMENICI. Mr. President, I generally have not
been one who wants to put restrictions on the private
sector. I have not been one who takes on bigness simply
because it is big. I take them kind of one at a time and
look at them. But I am firmly convinced, and the evi-
dence in my statement convinced me, that if we do not
do something, there would be no more independent mar-
keters or jobbers in the delivery system of petroleum
products in this country.
I hope those in the industry will understand that the
Bumpers-Hatfield-Domenici substitute amendment today
is a serious one; that in a year or so we will find the
evidence reversing itself, and perhaps we will never have
to do anything else; but, if not, that we find a way to
cure this approach which, in my opinion, is definitely
committed in the direction of monopoly; in the direction
of putting the little independent out of business.
Mr. President, I ask unanimous consent that a state-
ment by Senator MARK O. HATFIELD be printed in the
RECORD.
There being no objection, the statement was ordered
to be printed in the RECORD, as follows:
STATEMENT BY SENATOR MARK O. HATFIELD
I am pleased to join with my colleagues in support of «
the modified version of amendment 1809.
This compromise proposal will require the Secretary
of Energy to study the subsidization issue fully. Full pro-
vision is made for public involvement in the study. The
Secretary must send his study, together with appropriate
legislative recommendations, to the Congress within 18
months after enactment.
57a
In addition, this amendment establishes a procedure
where the President may develop interim measures to
protect the competitive viability of the marketing sector
of the petroleum industry if he considers them necessary
and appropriate. Congress would have 90 days to act
affirmatively on his proposal.
I believe that adoption of this amendment will help
clear the way for enactment of H.R. 130, which will pro-
vide important protection to wholesalers and retailers of
gasoline from arbitrary termination of supply.
I urge my colleagues to support this amendment and
to adopt this legislation.
Mr. BUMPERS. Mr. President, I yield 2 minutes to
the Senator from Wyoming.
Mr. HANSEN. I thank my distinguished colleague
from Arkansas for his courtesy.
Mr. President, we have searched long, with our col-
leagues, the ramifications of title III in this bill. We
have written to the Department of Justice as well as to
the Federal Trade Commission. We have letters from
them which have not been included in the hearing record
before our committee.
In essence, both the Department of Justice and the
Federal Trade Commission have opposed title III as
written. It is their considered opinion that, in a word,
this title III is anticompetitive, that it will not achieve
the goals that I know its sponsors hope very much might
be achieved.
[S 7152]
Mr. President, the amendment is acceptable to our side.
This is a reasonable compromise, and we will anxiously
await the results of the study, so that we can deal in a
rational way with the subsidization issue if it becomes
necessary.
I am prepared to yield back the remainder of my time,
if the distinguished floor manager of the bill is willing to
58a
do so. But I withhold that, awaiting whatever signal the
Senator from New Hampshire may want to give.
Mr. DURKIN. I thank the Senator from Wyoming.
Mr. President, we have a serious problem. I am not
sure the original language in title III solved that prob-
lem. Someone is going to have to face up to it. We hope
that the study language will enable us to come to better
terms with what I consider to be a growing problem,
which many of us consider to be a growing problem.
I am willing to accept the amendment of the Senator
from Arkansas, as modified.
Mr. HANSEN. I am willing, then, to yield back the
remainder of my time.
The PRESIDING OFFICER. The question is on
agreeing to the amendment.
Mr. KENNEDY. Mr. President, I send an amend-
ment to the desk.
Mr. HANSEN. I withhold that.
The PRESIDING OFFICER. Until the time on this
amendment has expired, an amendment to it is not in
order.
Mr. KENNEDY. I understood that. I thought the
time had been yielded back.
The PRESIDING OFFICER. The time had not been
yielded back.
Mr. BUMPERS. Mr. President, what is the remain-
ing time on the amendment?
The PRESIDING OFFICER. The Senator from New
Hampshire has 28 minutes remaining and the Senator
from Arkansas has 17 minutes remaining.
Mr. BUMPERS. Mr. President, a parliamentary in-
quiry.
The PRESIDING OFFICER. The Senator will state
it
Mr. BUMPERS. If the amendment of the Senator
from Massachusetts is an amendment to a modified
59a
amendment, the Senator from Arkansas submitted, which
is now the pending business, is it not an amendment in
the third degree and, therefore, out of order after all the
time is yielded back?
The PRESIDING OFFICER. The committee amend-
ment is considered original text for the purpose of amend-
ment. The amendment of the Senator from Arkansas,
therefore, is in the first degree and the proposed amend-
ment of the Senator from Massachusetts would be in the
second degree.
Mr. KENNEDY. Mr. President, I am sure that is
what the Senator from Arkansas intended.
[ Laughter. ]
Mr. BUMPERS. I certainly do not want to cut off
the time the Senator from Massachusetts might have.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from
Massachusetts.
Mr. KENNEDY. Mr. President, a parliamentary in-
quiry.
The PRESIDING OFFICER. The Senator will state
it.
Mr. KENNEDY. Mr. President, how much time is
there on the amendment to the amendment?
The PRESIDING OFFICER. There will be one-half
hour on an amendment to amendment, equally divided.
But the second amendment has not been proposed yet.
Mr. BUMPERS. Mr. President, just so the record is
straight, I am prepared to yield back the remainder of
my time if the floor manager is in agreement in order
that Senator KENNEDY may go ahead and offer his
amendment and let the time start running on his amend-
ment.
Is the floor manager prepared to yield back the time?
Mr. DURKIN. I am prepared to yield back the time.
Pr cae I ere
60a
The PRESIDING OFFICER. The Senator from New
Hampshire yields back time.
Mr. DURKIN. He may call up his amendment at this
time.
Mr. President, a parliamentary inquiry.
The PRESIDING OFFICER. The Senator will state
it.
Mr. DURKIN. How much time will be allotted? Is it
a half-hour on this amendment to be equally divided?
The PRESIDING OFFICER. Fifteen minutes to the
Senator from Massachusetts and 15 minutes to the Sena-
tor from New Hampshire.
Mr. KENNEDY. I hope since it is a worthy amend-
ment that it will be accepted.
Mr. BUMPERS. Mr. President, in the unlikely event
it is not a worthy amendment and universally acceptable,
I ask unanimous consent that the 30-minute time limit
be divided equally between the proponent, Mr. KENNEDY,
and myself.
The PRESIDING OFFICER. Is there objection?
Mr. KENNEDY. If the manager of the bill has no
objection, I have no objection.
Mr. BUMPERS. We are getting into a fox watching
the henhouse type of situation here, Mr. President, be-
cause I think the Senator from New Hampshire favors
this amendment.
Mr. KENNEDY. Whose time is this charged to, Mr.
President?
The PRESIDING OFFICER. Who yielded time?
Mr. KENNEDY. Mr. President, I do.
Mr. BUMPERS. I made a unanimous-consent request.
Mr. DURKIN. Mr. President, reserving the right to
object, I think we should proceed with the normal course,
that the Senator from Massachusetts will offer his amend-
ment, and I will be glad to yield to my good friend from
Arkansas time to rebut in'the event he does not care to
accept this amendment.
6la
Mr. BUMPERS. That is fine with me, Mr. President.
The PRESIDING OFFICER (Mrs. HUMPHREY). Does
the Senator withdraw his request?
Mr. KENNEDY. Madam President, as I understand,
I have 15 minutes, and I wish to yield what time I might
need.
The PRESIDING OFFICER. The Senator from Ar-
kansas has made a unanimous-consent request. Does he
withdraw it?
Mr. BUMPERS. Madam President, I withdraw the
request.
The PRESIDING OFFICER. The Senator from
Massachusetts.
UP AMENDMENT NO. 1308
Mr. KENNEDY. Madam President, I send an amend-
ment to the desk and ask for its immediate consideration.
The PRESIDING OFFICER. The amendment will be
stated.
The assistant legislative clerk read as follows:
The Senator from Massachusetts (Mr. KENNEDY) pro-
poses an unprinted amendment numbered 1308.
On page 3, at the end, insert the following new sec-
tion:
“Src. 802. Any energy information acquired, collected,
or held by the Department of Energy shall be subjected
to the requirements of Section 11(d) of the Energy Sup-
ply and Environmental Coordination Act of 1974, Public
Law 93-319.”
Mr. KENNEDY. Madam President, this amendment
is very simple: It basically tracks the actions which have
been taken by the Senate on previous occasions. It makes
energy information available to certain other agencies of
the Federal Government.
Under the amendment which is before us, Madam
President, a study will be done by the Department of
62a
Energy. The whole issue to be studied is one which is
fundamental to this particular legislation; it is the com-
petitive position of the independent retailers and mar-
keters and the extraordinary economic power which has
been used to squeeze them out of this industry.
So it is basically an issue of competition, and the agen-
cies of our Government which are concerned about the
competition happen to be the Federal Trade Commission
and the Department of Justice, and not necessarily the
Department of Energy.
Under the amendment which I have offered to the
amendment of the Senator from Arkansas, no new au-
thority is given to any of the agencies. The Department
of Justice on its own can get the same information that
is collected by the Department of Energy. The Federal
Trade Commission can also get the same information.
All we are saying is if we are so concerned about com-
petition, so concerned about the little guy, so concerned
about the corner gas station, then let us say if the De-
partment of Energy is going to get that information, they
will share it with those agencies of Government that have
the primary responsibility for protecting the little guy,
the corner gas station, and the independent segment of
our society.
It is not very complicated. It is not very complex. The
Senate has already gone on record in support of this
amendment last year in the coal conversion bill. It was
dropped in conference. This body already voted for this
amendment last year and suddenly when we have a bill
down here that really is talking about dealing with com-
petition, then there is a reluctance to set information and
share it with the cther departments of Government.
In this partieuiar amendment, Madam President, we
have the confidentiality provisions that are spelled out
under
a ae
63a
[S 7153]
section 11(d) to insure that this information will not be
leaked and we have the other provisions for the protec-
tions of confidentiality.
Madam President, I just wonder why it is that last
year the Senate was prepared to accept the sharing of
information between governmental agencies, and now we
in the Chamber are refusing to say, if the Department
of Energy gets data, it must share it with the Depart-
ment of Justice or the Federal Trade Commission.
That is, Madam President, just a position which I find
difficult to justify, particularly when we are talking about
a fundamental theme of this legislation which is supposed
to be competition and the protecting of small independent
marketers.
So, Madam President, a final point that I make is that
the Department of Justice and the Federal Trade Com-
mission have repeatedly stated their need for the energy
data. President Carter said that energy data analysis is
the keystone of the administration’s approach to the
» formulation of competition policys in the energy industry.
I certainly hope that the amendment wil! be accepted.
I reserve the remainder of my time.
The PRESIDING OFFICER. The galleries will be in
order.
Who yields time?
Mr. BUMPERS. Madam President, will the Senator
from New Hampshire yield?
Mr. DURKIN. I am glad to yield 10 minutes to the
Senator from Arkansas.
Mr. BUMPERS. Madam President, the amendment
the Senator from Massachusetts is proposing has the ef-
fect of making certain that this study will not be com-
pleted in 18 months. It will not be completed in 18 years.
The purpose of the study in the modified amendment I
offered is to determine if major oil companies are using
64a
upstream profits at the refinery level or at the marketing
level to subsidize their company-owned stations to the
detriment of independently owned stations.
To give you some idea of how bad title III was before
we offered this modified amendment, both the Justice De-
partment, the Antitrust Division, and the Federal Trade
Commission were unalterably opposed to title III. Now,
the fact that they were opposed to it is not totally com-
pelling to me, but it does throw up a red flag to me and
say, “Wait just a minute. If they are opposed to it on
the grounds they set out, let us try to help the small in-
dependent retail service stations in the country, but let
us do it in an orderly, workmanlike manner, and let us
not try to prove who hates major oil the most.”
Now, the Senator from Massachusetts knows I have
never been guilty of being considered a close associate of
major oil companies in this country. I am vitally con-
cerned about small business of all kinds. I am especially
concerned about small independent service station oper-
ators, who may indeed be facing unfair competition from
major oil companies or any oi! company, that maybe
using upstream profits to unfairly compete and drive in-
dependents out of business.
So what are we doing here? We are saying, “Let us
allow the Secretary of Energy to make a determination
as to whether or not this is a problem.” Why on earth
would we stand here and try to pass a law when there
is no manifestation that the law is needed? That is what
has got people in this country upset now.
What would the Senator from Massachusetts’ amend-
ment do? Why, he says, “Let us permit the Department
of Energy to do this study subject to a little old provision
here called section 11(d) of the Energy Supply and Envi-
ronmental Coordination Act of 1974.”
What does that do? It says the Secretary of Energy
may not share this information. He must keep it confi-
PER EL eb se St anne ee ee ee Ee
eee ee
65a
dential except, and then everybody on God’s green Earth
is named in section 11(d).
He has to keep it confidential except that he will give
it to any delegate of the Federal Energy Administration
for the purposes of carrying out this act; he will give it
to the Attorney General; he will give it to the Secretary
of Interior; he will give it to the Federal Trade Commis-
sion; he will give it to the General Accounting Office, and
those are the only ones named he has to share this infor-
mation with. That is what I call confidentiality. [Laugh-
ter. |
Madam President, I have the same feelings the Senator
has about getting this kind of information into the hands
of the Antitrust Division of the Justice Department. But
do you know something? They can get the information
today. They do not have to have this act. They can get
it today.
I want the Federal Trade Commission to have it, be-
cause the Federal Trade Commission is charged with the
responsibility of promoting competition in this country
to preserve the free enterprise system. But the Federal
Trade Commission can go and get it today, they do not
need this bill. So what are we doing? We are cluttering
up the books.
Mr. DURKIN. Mr. President, will the Senator yield?
Mr. BUMPERS. In just one moment.
If you want to make sure that the Secretary of Energy
gets no cooperation in carrying out the terms of this
amendment, just adopt the amendment of the Senator
from Massachusetts, and I promise you that hell will
freeze over before they will voluntarily give one ounce
of information, because they know it is going to be dis-
seminated to everybody under the shining Sun.
Mr. DURKIN. Mr. President, will the Senator yield
for a question?
Mr. ° eshieee I will be happy to yield.
66a
Mr. DURKIN. Is the thrust of the Senator’s opposi-
tion that he does not think the Department of Energy
should give that information to the Attorney General, to
the Federal Trade Commission, to the General Accounting
Office? They are not hostile entities, are they? They are
part of our Government charged with the responsibility
to enforce the law. Why the fear of giving them the
information?
Mr. BUMPERS. I have absolutely no objection to the
Attorney General or the Federal Trade Commission or
the General Accounting Office or anybody else getting the
information, but we are trying to help the small dealer.
If you adopt the amendment of the Senator from Massa-
chusetts, you are assuring yourself that the Secretary of
Energy will not get cooperation. The oil companies will
know it is going to be shared with all these people, possi-
bly used to prosecute them. They have been through this
before, they know how the Federal Government works,
and they know if this information is disseminated and
anybody can possibly distort it to file some kind of prose-
cution against them, they will do it.
What I am saying is we are setting an 18-month time
limit here, and I promise you the Secretary of Energy
will not get into the front door in 18 months if this
amendment is adopted.
Mr. DURKIN. But does not the Senator’s opposition
go to the principle that you can collect the information
but you cannot use it?
Mr. BUMPERS. Absolutely not. If the Federal Trade
Commission has any information to indicate that unfair
competition is being perpetrated by the majors in viola-
tion of the criminal laws of this country, they ought to
go after the information and prosecute them. |
Mr. DURKIN. One further question: What is the
position of the Secretary of Energy on this matter?
67a
Mr. BUMPERS. I do not know the position of the
Secretary of Energy on this amendment by Senator KEN-
NEDY.
Mr. HANSEN. Mr. President, if the Senator will
yield, I will be happy to tell him. The Secretary of En-
ergy opposes this amendment.
Mr. DURKIN. That is the best argument I have heard
for it yet. [Laughter. ]
Mr. KENNEDY. Madam President, how much time
do I have?
The PRESIDING OFFICER. The Senator from
Massachusetts has 10 minutes.
Mr. KENNEDY. [I yield myself 5 minutes.
I have heard convincing arguments from my good
friend from Arkansas before, and I am usually very
much carried away with the nationality of his dialog and
debate.
But this particular argument he makes in opposition
to this amendment fails to meet his usual standard of
persuasiveness.
If you are talking about make-work for lawyers, you
are talking about the Bumpers position. All those small
independent outlets have to respond, under the Bumpers
amendment, not only to the Department of Energy but
to the Department of Justice and to the Federal Trade
Commission. |
We are saying if you collect it once, Mr. Local Gas
Dealer, why are you going to have to answer all those
paper forms again, because they have got the power to
get it today?
Under the Bumpers amendment, they are going to have
to go out there, each of those particular departinents, and
get that information. It is make-work for the lawyers.
We are hearing those words rattled around: “harass-
ment of American business.” Here we are threatening
the har-
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assment of the smallest segment of American business.
The Senator from Arkansas points out or asks who is
going to get all this information? The Department of |
Justice, the Department of Energy, the Federal Trade
Commission, the GAO. Interesting. Add those together
and what do you get? The Congress of the United States
and the antitrust divisions of this Nation that are com-
mitted toward competition. Not a bad group-—the Ameri-
can people, their elected representatives, and those who |
are charged with maintaining competition. Those are the |
people that are getting the information. Under the
Bumpers amendment, if the Department of Energy gets
the information, it does not even share it with the Con- |
gress of the United States. Yet under his particular ;
amendment it gives the President the power to make xe
recommendations for interim relief. |
Do we get the information then? No. Does the Fed- :
eral Trade Commission get the information? No. Does
the Justice Department get it? No.
It just does not make any sense, Madam President,
particularly when this body has gone on record, as we
know, that it has been the failure of Congress to get |
intelligent, accurate information that has been at the
heart of the inability to fashion and develop an adequate
energy policy for this Nation to meet the needs of both
producers and consumers alike.
We have not been able to get that information, and
here we are in 1978 still saying, ‘““Well, we have to oppose
this amendment, because if we get a little information
we want to keep it all nice and together.” We want to
do that so that the other agencies of Government cannot
get it.
It does not make any sense in logic or rationality. Be-
yond that it does not make any sense in terms of energy
69a
policy; and third, it does not make any sense in terms of
trying to protect the legitimate interests of the people
we are attempting to protect, and that is the small and
independent firms in the oil and gas industry.
I withhold the remainder of my time.
Mr. DURKIN. Mr. President, will the Senator yield
for a question? Was not this very same amendment part
of the Coal Conversion Act?
Mr. KENNEDY. The Senator is absolutely correct. It
was passed and accepted without dispute. That is why
I felt some degree of hope.
Mr. DURKIN. What concerns me is the statement of
the Senator from Arkansas that it could take 18 years
to get the information.
If my memory serves me correctly, during the con-
ference on the coal conversion bill, this is one of the things
that JOHN DINGELL recommended. So if we have a con-
ference, JOHN DINGELL will be chairman of the House
conferees, and I think he will be as amenable to the pros-
pect in this conference as in the conference on the coal
conversion bill, and it will not slow down the bill and in
fact will hasten the bill on its way to enactment and to
the President’s desk.
I urge that we accept the amendment.
Mr. KENNEDY. I thank the Senator.
Madam President, I would like to point out that both
Mr. Shenefield, the Assistant Attorney General of Anti-
trust, and Mr. Doherty, the FTC’s Director of the Bureau
of Competition, have testified before the Antitrust Sub-
committee that they cannot get data from the Depar-
ment of Energy, and they have told us that this is true
even today.
Mr. HANSEN. Madam President, will the Senator
from Arkansas yield me one-half minute?
Mr. BUMPERS. The time is not mine. It belongs to
the floor manager.
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Mr. DURKIN. Madam President, I yielded the Sena-
tor from Arkansas 10 minutes. I do not believe he used
all that time.
Mr. BUMPERS. How much of the 10 minutes did I
use?
The PRESIDING OFFICER. The Senator from Ar-
kansas used 5 minutes.
Mr. BUMPERS. In that case, I yield the Senator
from Wyoming 1 minute.
Mr. HANSEN. Madam President, I would point out
to my colleagues that the Energy and Natural Resources
Committee is considering the energy information issue as
a part of the Department of Energy authorization bill.
We agreed to do this during the conference on the coal
conversion bill. Last week, I asked the committee staff
to prepare recommendations so that we can act upon it.
I would suggest that the amendment of the Senator
from Massachusetts is irrelevant to the issue before us.
I would also state that the administration is opposed
to this amendment. They believe that the amendment
would make it difficult to collect energy information. It
goes much further than the study before us and would
apply to all information.
I quote from the statement of the Energy Administra-
tion Service, headed by Mr. Lincoln Mosher. He says:
Two of the Federal Trade Commission’s bureaus
nicely illustrate the same problem. The Bureau of
Economics operates among other things, the Line of
Business reports, essential to understanding concen-
trations and profits within particular industrial sec-
tors. That Line of Business reporting system is in-
tended to promote understanding of particular in-
dustries, otherwise strongly obscured by the cross-
industry aggregation of revenues and outlays in the
operating statements of conglomerates. The product
of the Line of Business reporting system is the abil-
Tla
ity to follow profitability, concentration and, by in-
ference, the competitive status of particular indus-
tries, not individual companies. Although the infor-
mation has been furnished by individual companies,
the product is an understanding of whole industries.
A second bureau in the Federal Trade Commission
is the Bureau of Competition. Its program is, doubt-
less, informed by industry-wide statistics like those
coming from the Line of Business reports. But to
perform its enforcement and prosecutorial functions
the Bureau of Competition must have individually
identifiable company data.
In a word, the Department of Energy Information
Service opposes the amendment by the Senator from
Massachusetts.
I thank the Senator from Arkansas for yielding.
Mr. BUMPERS. Madam President, along the lines of
the comments of the Senator from Wyoming, here is
what happened when the Federal Power Commission
sought all kinds of information from the energy compa-
nies of this country on what they called Form 40. Form
40 was tied up in court for years, because we were doing
what the Senator from Massachusetts is asking us to do
now. The energy companies simply were not going to re-
lease that information voluntarily; they were not going
to release it until after a court told them to.
If we adopt this proposal, we are Saying to the oil
companies that we are trying to prove a point that we
do not like what they are doing. I will stand out on the
Capitol steps and denounce the oil companies with the
Senator from Massachusetts as loudly as he wants to,
but that will not help the small independent dealers in
the country.
What we are doing is calling them in and saying, “We
are just going to ask you a few simple questions; don’t
worry about the sheriff and the prosecuting attorney,
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they are just sitting here wanting to listen in, but you
be as truthful as you can.”
Then if they ask, “What if we tell you something that
will be incriminating,” we say, “Well, that could get a
little hairy”; we are saying, “We cannot guarantee that
you will not get in trouble, but don’t worry about all
these people sitting around that could prosecute you.”
I will guarantee you we will be back here in 18 months
without one scintilla of information. All the small deal-
ers will still be going broke, nobody will know why, and
we will not be able to do anything about it.
Madam President, on most tax matters I agree with
the Senator from Massachusetts. But when we are in a
time constraint of 18 months for the study, I say that
we will not be able to get the information. If you want
to bring the country down on your head to prove a point,
the Senator’s amendment is the greatest thing since night
baseball. But if we are going to try to help the small
dealers, the Senate should reject the amendment and pass
something the oil companies will cooperate on and pro-
vide the small dealers with information they can act on,
one way or the other.
I urge that the Senate reject the amendment.
Mr. KENNEDY. Madam President, I yield myself 3
minutes.
The issue we are talking about here is one of the most
basic and fundamental competitive issues involving the
petroleum industry, and that is the question of down-
stream subsidy of various levels of the oil industry.
It is interesting that the major oil companies do not
have as much difficulty in providing information to the
Department of Energy as they do to other departments
in our Government that are supposedly protecting the
little guy, the Federal Trade Commission and the Anti-
trust Division, by promoting competition. It just seems
to me, Madam President, that they are going to have to
get that information in order to make an informed judg-
ment on these matters. It is
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imperative as a matter of public policy, and it is im-
perative that those agencies of the Government be able
to obtain it. I would hope that we would make it easier
on the smaller companies, and, when the information is
provided to the Department of Energy, provide that it be
shared with the other agencies of the Government.
Mr. BUMPERS. Madam President, do I have any time
remaining?
The PRESIDING OFFICER.
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