Opposition — Energy Consumers & Producers Ass'n v. Department of Energy

rr Supreme Court, U.S,

FILED

No. 79-1875 JUL 18 1980

PWICHAEL RODAK, JR, CLERK

In the Supreme Court of the Hnited States

OCTOBER TERM. 1979

ENERGY CONSUMERS AND PRODUCERS ASSOCIATION,

INC.. PETITIONER

Vv.

DEPARTMENT OF ENERGY

ON PETITION FOR A WRIT OF CERTIORARI TO

THE TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

BRIEF FOR THE RESPONDENT IN OPPOSITION

Wank H. McCrer. Jr.

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

FRANK W. KROGH

RUSSELL L. WEAVER

Attorney's

Department of Energy

Washington, D.C. 20461

In the Supreme Court of the Hnited States

OCTOBER TERM, 1979

No. 79-1875

ENERGY CONSUMERS AND PRODUCERS ASSOCIATION,

INC., PETITIONER

Vv.

DEPARTMENT OF ENERGY

ON PETITION FOR A WRIT OF CERTIORARI TO

THE TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

BRIEF FOR THE RESPONDENT IN OPPOSITION

QUESTIONS PRESENTED

1. Whether the exclusive appellate jurisdiction of the

Temporary Emergency Court of Appeals over “all appeals

from the district courts of the United States in cases and

controversies arising under” the Emergency Petroleum

Allocation Act of 1973 extends to an appeal by the

Department of Energy, in an action brought under the

EPAA, from a judgment of the district court declaring

invalid a ruling issued by DOE for failure to comply with

the notice and comment procedures of the Administrative

Procedure Act, 5 U.S.C. 553.

2. Whether the Department of Fnergy’s ruting relating

to an exemption from price controls of crude oil produced

from “stripper wells” was interpretative and therefore

exempt from the notice and comment procedures of the

Administrative Procedure Act under 5 {i.S.C. 553(b)(A).

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Bray v: United States, 423 UB. 73 ccvcccscuxcssescicsns 5

British Caledonian Airways, Ltd. v. CAB,

Be i FH aiid csthihesdiiicepeb ta inichks Binzahiens 6

Chrysler Corp. v. Brown, 441 U.S. 281... 6

Energy Reserves Group, Inc. v. Department

OF Eteeey, TEP FB TEES, occcrsistnccmncrionies 5

Garelick Mfg. Co. v. Dillon, 313 F. 2d 899 ....... 5

General Electric Co. v. Gilbert, 429

Ren ARIE a ietbietls as itsics veapaepenabeoain hess imdieeeaesainavalan 6

Gibson Wine Co. v. Snyder, 194 Fk. 2d 329 ....... 6

Joseph v. United States Civil Serv. Comnin,

Fe <5 TI sainnschcdicnaagctnsnsieckcdscubeaenenniiaeics 6

National Retired Teachers Ass'n v. U.S.

i ee ee 0 ene 6

samen GE Co. wv. Fre. GA BBE R? oi recsicisics 6

Page

Cases—Continued:

Texaco, Inc. v. Department of Energy.

I a a a VE at 5

Ven-Fuel, Inc. v. Duncan, cert. denied.

No. 79-1498 (June 9. 1980) oo... 4

Statutes and regulations:

Administrative Procedure Act. 5 U.S.C

551 et seq. :

Be I) CO nn a emhsyeiet |

I; «IIR Secs Dan cvcd ce nn tices snidtecs ssnsaneks 3

Department of Energy Organization \ct.

Pub. L. No. 95-91. 91 Stat. S65, 42 USC,

TE TE. Or 6 icra vs. cs sg ski nasaoneners z

Economic Stabilization Act of 1970. 12 U.S.C.

I tie eo enbeaaceuah |

SI ME er Sr gee |

SII psoas candy scan dcvanpibaaetls< usca Posbent

Emergency Petroleum Allocation Act of 1973,

Pub. L. No. 93-159. 87 Stat. 627. 15 ULSLC,

751 et seq. :

Section 4(e)(2)(A). 1S ULS.C. (Supp. IV

ag Be Ba FSR ee |

Section S(a)(l). 1S ULS.C.

TR ah htc she sie, sceee OM, PON Hs” Se

oe Aiet be BS Gy 5 |) 2

Energy Conservation and Production Act _

of 1976, Pub. L. No. 94-385, Section 121..

WF MN RI eich ncckeracignarde castes cotudsascsdudasdeleunsses 2

lV

Page

Statutes and regulations--Continued:

Energy Policy and Conservation Act.

Pub. L. No. 94-163. 89 Stat. 871 oo... 2

Trans-Alaska Pipeline Authorization Act.

a Oe Se ee

Bi RM MI orgies ago cas csdeck cosas sasckocedaentos 5

age aes CED UID. aay rivcce as cvacersnsuciisepebceuveers 2

Pe es TRS obouiivceiaicksbcvpincs covcedacainecss 2

Miscellaneous:

Exec. Order No. 12009 (42 Fed. Rey. 46267

ig CBS RSI SC CORE Ce eer a ne 2

The Attorney General's Manual on the

Administrative Procedure Act (V947) ooo... 6

OPINIONS BELOW

The opinions of the court of appeals (Pet. App. A-I to

A-32) and the district court (Pet. App. A-39 to A-53) are

unreported.

JURISDICTION

The judgment of the court of appeals was entered on

April 4, 1980. A petition for rehearing was denied on

April 28, 1980 (Pet. App. A-33). The petition for a writ of

certiorari was filed on May 27, 1980. The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1) and Section

211(g) of the Economic Stabilization Act of 1970, 12

U.S.C. 1904 note.

STATUTES INVOLVED

The pertinent provisions of Section 211(b)(2) of the

Economic Stabilization Act of 1970. 12 U.S.C. 1904 note,

which is incorporated into Section S(ay(l) of the

Emergency Petroleum Allocation Act of 1973. 1S U.S.C.

754(a)(1), are set forth at Pet. 2. The pertinent provisions

of 5 U.S.C. 553(b) are set forth at Pet. 3.

STATEMENT

In 1973, Congress enacted the Emergency Petroleum

Allocation Act (““EPAA”), Pub. L. No. 93-159. 87 Stat.

627 et seq., which imposed an emergency mandatory

system of allocation and control of prices of petroleum

products. Section 4(e)(2)(A) of the EPAA exempted from

price control regulations crude oil from leases whose

average daily production did not exceed ten barrels per

well; such low-yield wells are known as “stripper wells.”!

'The stripper well exemption first appeared in Section 406 of the

Trans-Alaska Pipeline Authorization Act. Pub. 1. No. 93-153, 87

Stat. 576. Although the exemption in Section 4(e 2) A) of the EPAA

was repealed in 1975 by the Energy Policy and Conservation Act,

Pub. L. No. 94-163, 89 Stat. 871 e¢ seg... it: subsequently was

2

Regulations implementing the stripper well exemption

were originally codified at 6 C.F.R. 150.54(s) (1974) and

were later recodified at 10 C.F.R. 210.32 (1976). In 1975,

the Federal Energy Administration (“FEA”). a

predecessor agency to the Department of Energy

(“DOE”) issued Ruling 1975-12. Part Ul. which

interprets the stripper well exemption to allow producers

to count a “multiple completion well” as more than one

well in calculating the average daily production per well

for purposes of the exemption. A multiple completion

well produces oil from more than one crude oil reservoir

through a common well casing while segregating the oil

produced from each reservoir into a separate tubing

string.

Petitioner filed this action for declaratory and

injunctive relief in the United States District Court for the

Eastern District of Oklahoma. claiming. jer alia. that

Part Ill of Ruling 1975-12 was invalid because it was

arbitrary and capricious and was issued without

observance of the notice and comment procedures of the

Administrative Procedure Act. 5 U.S.C. 553. Petitioner

brought this suit on behalf of its members producing oil

from “commingled wells.” which, under Part HI of Ruling

1975-12, are not counted as more than one well for

purposes of the stripper well exemption. A commingled

well, like a multiple completion well. produces oil from

more than one crude oil reservoir through a common well

reinstated by Section 121 of the Energy Conservation and Production

Act of 1976. Pub. L. No. 94-385. 90 Stat. 1132-1133. The exemption

is currently codified at 1S U.S.C. 757(i).

"Effective October 1. 1977, the statutory responsibilities of the

Federal Energy Administration were transferred to the Department

of Energy pursuant to the Department of Pnergy Organization Act,

Pub. L. No. 95-91, 91 Stat. 565. 42 U.S.C. (Supp. Hl) 7101 er seq.

and Exec. Order No. 12009 (42 Fed. Reg. 46267 (1977)).

3

casing. However, a commingled well is fundamentally

different from a multiple completion well because, among

: Other things, it does not segregate the oil from each

reservoir into separate tubing strings (see Pet. App. A-5 to

A-6, A-43 to A-44). After a trial. the district) court

concluded that Part III of Ruling 1975-12 was not an

interpretative rule (S U.S.C. 553(b)(A)) and. accordingly,

that the ruling was void because of FFA’s failure to

comply with the notice and comment provisions of the

APA prior to issuing the ruling (Pet. App. A-39 to A-54).

On appeal, the Temporary Emergency Court) of

Appeals. reversed (Pet. App. A-I to A-32). TECA first

concluded that it had jurisdiction over the appeal,

observing that the notice and comment provisions of the

APA had been incorporated by reference in Section

S5(a)(1) of the EPAA, 15 U.S.C. 754(a)(1). and that it was

uncontroverted that TECA “has exclusive jurisdiction of

appeals from final decisions by district courts on issues

arising under the EPAA” (Pet. App. A-20 to A-21). In

addition, TECA concluded that while the agency's

designation of Part III of Ruling 1975-12 as interpretative

was not binding on the courts. “an examination of the

material statute, the legislative history. the regulation, and

the rule demonstrates that it is interpretative. and

expressly exempt from the notice and comment

procedures of the APA” (Pet. App. A-27).'

After examining the trial record. TECA concluded that.

although it was not compelled to accept Part HI of Ruling

1975-12 as a correct interpretation of the stripper well

‘In support of its conclusion that the ruling ts interpretative. EECA

noted (Pet. App. A-27) that “Part HI of Ruling 1975-12 ts in form

and substance an interpretation of the preexisting ‘stripper well

statutory exemption and the preexisting regulation * * *) Neither in

form or substance did it expand or contract the meaning of the term

‘well’ as used in the statute or regulation.”

.

4

exemption, the ruling was a reasonable interpretation of

the underlying statute and regulatory exemption (Pet.

App. A-28 to A-31). TECA also concluded that FEA’s

construction of the stripper well exemption in Part III of

Ruling 1975-12 to permit only a multiple completion well

and not a commingled well to be counted as more than

one well was consistent with the statutory and regulatory

scheme (ibid.).

; ARGUMENT

1. Petitioner contends (Pet. 5-9) that TECA’s

jurisdiction is limited only to those issues that are directly

linked to the price control program established by the

EPAA and does not extend to issues of general law that

arise in the course of adjudicating an action brought

under the EPAA. In this case, petitioner claims, the only

issue raised in DOE’s appeal was one olf general

administrative law, i.e., whether Part III of Ruling 1975-

12 is an interpretative rule, and that such issues are not

within TECA’s jurisdiction, but are instead within the

exclusive jurisdiction of the eleven circuit courts of

appeals. In Ven-Fuel, Inc. v. Duncan. cert. denied, No.

79-1498 (June 9, 1980), this Court recently declined to

review a similar contention. concerning TECA’s

jurisdiction over an appeal from the dismissal of an

EPAA claim for failure to exhaust administrative

remedies. There is even less reason to grant review here,

since, as TECA noted, the notice and comment provisions

of the APA were expressly incorporated by reference in

Section S(a)(l) of the EPAA. As the court below

observed, “ ‘{a]n issue arising under the APA is not a

collateral issue, then, but. by virtue of Section S(a)(1) of

the EPAA an issue arising under the FPAA itself * (Pet.

+We are sending petitioner a copy of our brief in opposition in Ten-

Fuel.

5

App. A-20, quoting Texaco, Inc. v. Department of

Energy, 616 F. 2d 1193, 1198 n.4 (TECA 1979)).

Petitioner’s reliance (Pet. 6) on Brav v. United States,

423 U.S. 73 (1975), is misplaced. In Bray. this Court held

that TECA did not have jurisdiction to review a contempt

conviction arising solely under a federal criminal statute

(18 U.S.C. 401) not within TECA’s appellate jurisdiction,

even though the contempt had been committed in a case

arising under a statute that is within TECA’s jurisdiction.

Here, unlike the contempt proceeding in Bray. petitioner's

action arises directly under EPAA. and the procedural

issue presented in DOE’s appeal is based on a statute that

is expressly incorporated in the EPAA. Accordingly.

TECA properly concluded that it had jurisdiction over the

instant case.

2. Petitioner contends (Pet. 9-12) that Part HI of

Ruling 1975-12 was not an interpretative rule and that

therefore DOE was required to comply with the notice

and comment provisions of the APA (5 U.S.C. 553) prior

to issuing the ruling. We submit that the court below

correctly determined (Pet. App. A-27) that the ruling was

interpretative in nature because it neither expanded nor

contracted the statutory and regulatory exemption but

merely clarified the term “well” for purposes of the

stripper well exemption. See Energy Reserves Group, Inc.

v. Department of Energy, 589 F. 2d 1082. 1092 (TECA

1978); Garelick Mfg. Co. v. Dillon, 313 F. 2d 899, 900

(D.C. Cir. 1963) (regulation clarifying terms contained in

preexisting regulation was interpretative rule).

In holding that the ruling was interpretative. TECA

correctly observed that DOE claimed for the ruling only

the limited effect of an interpretative rule. Although a

legislative regulation is treated as having the torce and

effect of law, an interpretative rule will, at most. be

6

accorded deference. Chrysler Corp. v. Brown, 441 ULS.

281, 295-296, 301-302, 313-315 (1979). Interpretative rules.

in other words, have no binding effect. See General

Electric Co. v. Gilbert, 429 U.S. 125. 141-142 (1976).

Rather, they reflect the position of the agency on the

particular subject addressed therein. Gihson Wine Co. \

Snyder, 194 F. 2d 329, 331 (D.C. Cir. 1952).

In sum, the issue presented here is simply whether

TECA was correct in determining that an agency ruling

was interpretative in nature. Resolution of that issue

involves the application of settled principles of law to the

particular ruling in the context of the entire statutory and

regulatory scheme. TECA’s thorough discussion

demonstrates that it employed the proper analysis and

reached the correct result in this case. Further review is

especially inappropriate here. in view of petitioner's

failure to challenge TECA’s additional conclusion that the

ruling was a reasonable st ain ian of the stripper well

exemption.®

‘Accord, National Retired Teachers Ass'n v. ©.S8. Postal Serv.. 593

F. 2d 1360, 1363 (D.C. Cir. 1979): British Caledonian Airways, Ltd.

v. CAB, 584 F. 2d 982, 989 (D.C. Cir. 1978): Joseph v. United States

’ Civil Serv. Comm'n, 554 F. 2d 1140. 1153 0.24. 1154 0.26 (D.C. Cir.

1977): Shell Oil Co. v. FPC, 491 F. 2d 8&2. 88 (Sth Cir. 1974). See also

The Attorney General's Manual on the Adminisirative Procedure Act

30 (1947).

*It should be noted that prior to the issuance of Ruling 1975-12.

Part III, producers were not expressly authorized to count any type

of well as more than one well for purposes of the stripper well

exemption. Thus, even if petitioners were to succeed in invalidating

the ruling on procedural grounds. DOF would still be authorized to

interpret the stripper well exemption to refuse to permit: petitioner's

members to count a commingled well as more than one well under

the exemption. Because petitioner's members would scom to have

little, if anything, to gain by overturning the DOL ruling. turther

review of TECA’s decision is especially inappropriate.

7

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

Wapre H. McCrer. JR.

Solicitor General

FRANK W. KROGH

RUSSELL L. WEAVER

Attorneys

Department of Energy

Jury 1980

DOJ- 1980-07