Petition — Dubno v. Mobil Oil Corp.

g0-1818 [Th

No. APR 28 198}

) ALEXAND..~ L. STEVAS,

In The CLERK

Supreme Court of the United States

October Term, 1980

OREST T. DUBNO, Commisioner of Revenue Services

of the State of Connecticut, et al,

Petitioner

vs.

MOBIL OIL CORPORATION, et al.,

Respondent

CARL R. AJELLO, Attorney General

of the State of Connecticut, et al,

Petitioner

vs.

TEXACO INC., et al

Respondent

ELLA T. GRASSO, Governor of the State of Connecticut, et al

Petitioner

vs.

AMERADA HESS CORPORATION

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Carl R. Ajello

Attorney General

Peter W. Gillies

Deputy Attorney General

Ralph G. Murphy

Robert L. Klein

Assistant Attorneys General

P.O. Box 120

Hartford, CT 06101

(203) 566-2704

Attorneys for Petitioner

——oooaoaoaaaaaoaoEoooEeeeeeEeEeEeEeEeEeEeEeEeeeeeeeEeeEeEeEE—__eeee

4

QUESTIONS PRESENTED

1. Did the Court of Appeals properly conclude that the-rule

of abstention as enunciated by this court in Bellotti v. Baird

(428 U.S. 132), and as raised by the Petitioner’s Motion to Dis-

miss in the District Court for the District of Connecticut, was a

‘*threshold issue’’ and therefore reviewable only by the Tempo-

rary Emergency Court of Appeals, even though the state statute

in question (Sec. 13(b) of Connecticut P.A. 80-71) is susceptible

to a constitutional construction?

2. Did the Court of Appeals properly conclude that the Tem-

porary Emergency Court of Appeals has exclusive jurisdiction

over the issue of whether Sec. 13(b) of Connecticut P.A. 80-71

is preempted by the federal Emergency Petroleum Allocation

Act?

3. Did the Court of Appeals properly conclude that this

action was not barred by 28 U.S.C. Sec. 1341, (known as the

Johnson Act) even though the statute in question effectively

assessed the burden of the gross receipts tax, imposed by Con-

necticut P.A. 80-71, on the respondent oil companies?

LIST OF PARTIES

As Required By Supreme Court Rule 21-1(b)

OREST T. DUBNO, Commissionez of Revenue Services of the

State of Connecticut

ANTHONY V. MILANO, Secretary of the Office of Policy

and Management of the State of Connecticut

Petitioners

V.

MOBIL OIL CORPORATION, AMOCO OIL COMPANY,

GETTY REFINING AND MARKETING COMPANY, GULF

OIL CORPORATION, SUN OIL COMPANY OF PENNSYL-

VANIA, ATLANTIC RICHFIELD COMPANY, CHEVRON,

U.S.A., INC., EXXON CORP., and SHELL OIL COMPANY

Respondents

CARL R. AJELLO, Attorney General of the State of

Connecticut

OREST T. DUBNO, Commissioner of Revenue Services of the

State of Connecticut

ANTHONY V. MILANO, Secretary of the Office of Policy

and Management of the State of Connecticut

Petitioners

TEXACO INC.

Respondent

.

ELLA T. GRASSO, Governor of the State of Connecticut

OREST T. DUBNO, Commissioner of Revenue Services of the

State of Connecticut

ANTHONY V. MILANO, Secretary of the Office of Policy

and Management of the State of Connecticut

Petitioners

V

AMERADA HESS CORPORATION

Respondent

TABLE OF CONTENTS

RO TIOOIIID 6 doce cvsnislevwecsccnie busine ai

ee a ee, eee ee aerate WA

CE ie rere ansehen

Een ae erg ies

Ue as, ier eh ole a gle ciis weenie ee

Statutory Provisions Involved .................45:

NN os a ik whe #6

Reasons For Granting The Petition: ...............

I.

II.

Il.

The Decision Of The Court Of Appeals For The

Second Circuit Holding That The Temporary

Emergency Court Of Appeals Hias Exclusive

Jurisdiction Over The Abstention And Preemp-

tion Questions Is In Conflict With Applicable

Decisions Of This Court, Applicable Decisions

Of The Temporary Emergency Court Of Ap-

peals, And Is In Conflict With The Plain Mean-

ing Of The Language Of 15 U.S.C. Sec. 754....

If This Court Does Not Grant The Writ, The

Petitioner State Of Connecticut Will Be Deprived

Of Review Of Its Appeal On The Merits With

Regard To Important Substantive Questions

That Should Be Answered By This Court ......

The Court Of Appeals Decision Holding That

The District Court Was Not Barred From Hear-

ing This Case By The Johnson Act (28 U.S.C.

16

iV

Page

Sec. 1341) Renders The Prohibitions Of The

| eer 21

ea ERE ate TI tains. Sar pgm wen Se Fa 22

7-4.

CITATIONS

Cases:

Alabama State Federation of Labor v. McAdory, 325

U.S. 450, 655 S. Ct. 1384, 89 L.Ed. 1725 (1944) ...

Associated General Contractors v. Laborers Interna-

tional Union Local 612, 489 F.2d 749 (Em. App.

GREG dt nce ebankeas Sohbandeaeckdebeeees

Atlantic Richfield Co. v. Tribbit, Del. Ch., 399 A.2d

gs EE cor NL Pree Tee ery ee ea

Bellotti v. Baird, 428 U.S. 132, 96 S.Ct. 2857, 49

Rte URED OUD nc ccc ncccosccmacsecteenens

Bray v. U.S., 423 U.S. 73, 96 S.Ct. 307, 46 L.Ed. 2d

BEM ence band Seas eesdwsgcavecesarnenss

Butler v. Dexter, 426 U.S. 262, 96 S.Ct. 1527, 47 L.

I ck. 5p Stee beeen eetbaeescoe.

Chicago and Northwestern Transportation Co. v.

Kalo Brick and Tile Co., 49 U.S.L.W. 4232 (U.S.

ES NCS oo x's Acie seas dededewhdnn sox

Citronelle-Mobile Gathering, Inc. v. Gulf Oil Corp.,

591 F.2d 711 (Em. App. 1979) ...............06-

City of Groton v. Federal Power Commission, 487

Pe eee CP, SEED nn sv cnens ccbacsecsicn

Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 62

fee 6 IR eer err

Coastal States Marketing Inc. v. New England Petro-

leum Corp., 604 F.2d 179 (2d Cir. 1979) .........

Page

11,15

8,13

19

14

Page

Exxon Corp. v. Governor of Maryland, 437 U.S. 117,

128-129, 98 S.Ct. 2207, 57 L.Ed. 2d 91 (1978)..... 12,15,18

Florida Lime and Avocado Growers, Inc. v. Paul,

373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248, 256

PARRY pM EN oS Zs a ga ee ae 18

Goldstein v. California, 412 U.S. 546, 554-555

(1973), 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973)...... 18

Governor of Maryland v. Exxon Corp., 279 Md. 410,

370 A.2d 1102, 1120-1121 (1977) Affirmed 437

U.S. 117, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978) .... 11,15

Harrison v. NAACP, 360 U.S. 167, 177, 79 S.Ct.

POs PO Es OE REDREEIOED oc vce cn ccc cccccnce 9

Huron Portland Cement Co. v. Detroit, 362 U.S. 440,

443, 446, 4 L.Ed.2d 852, 80S.Ct. 813 (1960)...... 18

Joseph E. Seagram and Sons, Inc. v. Hostetter, 384

U.S. 35, 45, 16 L.ED.2d 336, 86 S.Ct. 1254 (1966) . 18

Longview Refining Co. v. Shore, 554 F.2d 1006 (Em.

I as Awd ck O8O0a oh nous Voda EWRAwe 8

Mitchell v. Donovan, 398 U.S. 427, 90 S.Ct. 1527, 26

AE RTS och chs ide ddneescecdhs ches 19

Mountain Fuel Supply Co. v. Johnson, 556 F.2d 1375

Se ig ec. ws valence BAe Ss OBR A 14,20,21

MTM, inc. v. Baxley, 420 U.S. 799, 95 S.Ct. 1278,

EOD 6 ss ue <a's.0-b.0 0 oS open oe 19

Quincy Oil Inc. v. Federal Energy Administration,

620 F.2d 890, 893 (Em. App.) ...............06. 10,11

Railroad Commission v. Pullman Co., 312 U.S. 496,

501, 61 S.Ct. 643, 85 L.Ed. 971 (1940) ...........

Saint Mary’s Hospital v. Ogilvie, 496 F.2d 1324

ARRSPEN gy Omg ieee arin DN are

Spinetti v. Atlantic Richfield Co., 522 F.2d 1401 (Em.

ENE 6s Cae iNE Sa Weds ode oO Rca es

Texaco Inc. v. Department of Energy, 616 F.2d 1193

I, SPUR bs ys awe 60a ado ee eS haa e ese

United States v. Cooper, 462 F.2d 1393, 1398 (Em.

NS ee os a das aoa so ho eae ae es

United States Statutes:

Economic Stabilization Act of 1970, (Sec. 211), as

subsequently codified in note to 12 U.S.C. §1904..

Emergency Petroleum Allocation Act, P.L. 93-159,

as subsequently codified in 15 U.S.C. §751 et

rh aka e Uk Ook bas be wae en bebe Rane aaes

Tol. ESI CaS RE resect RES ane NER Eye

ea ig Ca ia's 6 sb 00 Aw oka wae OE

EO, ie a EN ee eeu et ae bo hi

ME 6 0d oe k's ke ke a edd bob dod aes

ee ea os ca bwhemab eke sens neraue

Connecticut Statutes:

Connecticut Public Act 80-71 §13(b)...............

6,7,20

16

21

Passim

No.

In The

Supreme Court of the United States

October Term, 1980

OREST T. DUBNO, Commisioner of Revenue Services

of the State of Connecticut, et al,

Petitioner

VS.

MOBIL OIL CORPORATION, et al.,

Respondent

CARL R. AJELLO, Attorney General

of the State of Connecticut, et al,

Petitioner

VS.

TEXACO INC., et al

Respondent

ELLA T. GRASSO, Governor of the State of Connecticut, et al

Petitioner

vs.

AMERADA HESS CORPORATION

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioners respectfully pray that a Writ of Certiorari issue to

review the judgment and opinion of the United States Court of

Appeals for the Second Circuit in this matter on January 28,

1981.

OPINIONS BELOW

The January 28, 1981 opinion of the Court of Appeals,

whose judgment is herein sought to be reviewed, is not yet offi-

cially reported and is reprinted in the separate appendix to this

petition (App. A pp. la-7a) The prior opinion of the U.S. Dis-

trict Court for the District of Connecticut, also reprinted in the

appendix, (App. B, pp. 8a-28a) is reported at 492 E. Supp. 1004

(D. Conn. 1980).

The January 28, 1981 opinion in the companion case of

Mobil et al v. Tully et al is also reprinted in the appendix (App.

C, pp. 29a-42a). This decision also is not yet officially reported.

The prior opinion of the District Court in that case is reported

at 499 F. Supp. 888 (N.D.N.Y. 1980).

JURISDICTION

The judgment of the Court of Appeals was entered January

28, 1981. The jurisdiction of this court is invoked pursuant to

28 U.S.C. Sec. 1254(1).

STATUTORY PROVISIONS INVOLVED

This case involves Sec. 13(b) of Connecticut Public Act

80-71. The pertinent portions of this act are reproduced in the

Appendix (App. D, pp. 43a-45a).

It also involves various sections of the Emergency Petroleum

Allocation Act (P.L. 93-159) and amendments thereto. This

act, as amended and as subsequently codified in 15 U.S.C. Sec.

751 et seq., is reproduced in the Appendix (App. E, pp. 46a-85a).

Section 211 of the Economic Stabilizauon Act of 1970 (codified

in note to 12 U.S.C. Sec. 1904) is also involved and it is also

reproduced in the Appendix (App. F, pp. 86a-90a). 28 U.S.C.

Sec. 1341 is also involved and is reproduced in the Appendix.

(App. G, p. 91a).

STATEMENT OF THE CASE

The 1980 Session of the Connecticut General Assembly

enacted Public Act 80-71 which provides for a 2% gross receipts

tax on petroleum companies engaged primarily in the refining

and distribution of petroleum products and which distribute

such products to wholesale and retail dealers for marketing and

distribution in the State of Connecticut. P.A. 80-71, Sec. 1

(App. D).

Section 13 of this Act further provides:

(a) It is not the intention of the general assembly that

the tax imposed under section 1 of this act be construed

as a tax upon purchasers of petroleum products, but

that such tax shall be levied upon and be collectible

from petroleum companies as defined in said section 1,

and that such tax shall constitute a part of the operating

overhead of such companies.

(b) No petroleum company subject to the tax imposed

under section 1 of this act shall raise its posted whole-

sale rack price in Connecticut for any petroleum prod-

uct exempt from the federal Emergency Petroleum

Allocation Act (P.L. 93-159) by an amount higher than

the average amount by which such company raises its

wholesale rack price for such product in all ports on

the eastern coast of the United States.

The respondents are petroleum companies subject to the pro-

visions of this Act. The respondents acknowledged the constitu-

tionality of the ‘tax imposed by Public Act 80-71, but by the

*%

action brought to the District Court, challenged the constitu-

tionality of Sec. 13(b) and sought declaratory and injunctive

relief. The respondents alleged in their complaints that the Dis-

trict Court had jurisdiction of the action under 28 U.S.C. Sec.

1331 and 2201 in that the matter in controversy exceeded the

sum of $10,000 and ‘‘arises under the Constitution of the

United States and under the Emergency Petroleum Allocation

Act (15 U.S.C. Sec. 751 et seq.).

The petitioners moved for dismissal of the action in the Dis-

trict Court based on the following three grounds:

1. That the District Court should have abstained from

exercising jurisdiction in that Sec. 13(b) is susceptible

to such a construction by the state courts that would

moot the constitutional questions raised by the plaintiff.

2. That Sec. 13(b) is in effect a provision assessing the

2% Gross Receipts Tax imposed by P.A. 80-71 on the

oil companies, and as such the District Court was pro-

hibited from issuing an injunction against its enforce-

ment by 28 U.S.C. Sec. 1341 (known as the Johnson

Act).

3. That the District Court should have abstained in

that the plaintiffs had adequate remedies in the state

courts.

The District Court, without specifically ruling on the defen-

dants’ Motion to Dismiss, issued a declaratory judgment that

Sec. 13(b) of Conn. P.A. 80-71 is unconstitutional in that it is

pre-empted by federal law and thus violates the Supremacy

Clause of the U.S. Constitution. The Court deferred action on

the plaintiffs’ request for injunctive relief. (App. B, pp. 27a-28a)

The petitioners appealed the judgment of the District Court

to the Court of Appeals for the Second Circuit. In their pre-

argument statement, the petitioners raised the above jurisdic-

tional grounds and also contested the District Court’s holding

that Sec. 13(b) was preempted by federal law. The respondents

moved to dismiss the appeal alleging that under Sec. 5 of the

Emergency Petroleum Allocation Act (15 U.S.C. Sec. 754(a) (1)

(A)) and Sec. 211(b) (2) of the Economic Stabilization Act

(codified in note to 12 U.S.C. Sec. 1904) (App. F, the Tempo-

rary Emergency Court of Appeals (hereinafter referred to as

TECA) had exclusive jurisdiction over the preemption issue and

that the abstention and 28 U.S.C. 1341 (Johnson Act) issues

were ‘‘threshold issues’’ that had ‘‘no life apart”’ from the pre-

emption issue and therefore were also exclusively within the

jurisdiction of the TECA.

The Court of Appeals in its January 28, 1981 decision held

that the TECA, and not it, had jurisdiction over the preemption

and abstention issues and dismissed the appeal with regard to

those issues. However, the Court of Appeals held that it did

have jurisdiction over the anti-injunction act question and it

affirmed the District Court on that question. (App. A, p. 6a)

The present petition is being brought to review the above

decision.

*%

REASONS FOR GRANTING THE WRIT

I.

THE DECISION OF THE COURT OF APPEALS FOR

THE SECOND CIRCUIT HOLDING THAT THE TEMPO-

RARY EMERGENCY COURT OF APPEALS HAS EXCLU-

SIVE JURISDICTION OVER THE ABSTENTION AND

PREEMPTION QUESTIONS IS IN CONFLICT WITH

APPLICABLE DECISIONS OF THIS COURT, APPLICA-

BLE DECISIONS OF THE TEMPORARY EMERGENCY

COURT OF APPEALS, AND IS IN CONFLICT WITH THE

PLAIN MEANING OF THE LANGUAGE OF 15 U.S.C.

SEC. 754.

A. 15 U.S.C. Sec. 754 Vests The Temporary Emergency

Court Of Appeals With A Very Limited Grant Of

Jurisdiction

Section 5(a) of the Emergency Petroleum Allocation Act

(hereinafter referred to as EPAA), as codified in 15 U.S.C. Sec.

754, in pertinent part provides as follows:

§ 754. Administration and enforcement; delegation of

authority; civil and criminal penalties

(a)(1) Except as provided in paragraph (2), (A) sec-

tions 205 through 207 and sections 209 through 211 of

the Economic Stabilization Act of 1970 (as in effect on

November 27, 1973) shall apply to the regulation

promulgated under section 753(a) of this title, to any

order under this chapter, and to any action taken by

the President (or his delegate) under this chapter, as if

such regulation had been promulgated, such order had

been issued, or such action had been taken under the

Economic Stabilization Act of 1970; and (B) section

212 (other than 212(b)) and 213 of such Act shall apply

to functions under this chapter to the same extent such

sections apply to functions under the Economic Sta-

bilization Act of 1970.

eS

15 U.S.C. Sec. 754(a) (1) (A) incorporates by reference the

Economic Stabilization Act (hereinafter referred to as E.S.A.),

provisions which provide for the jurisdiction of the TECA.

These provisions are reprinted in the notes following 12 U.S.C.

Sec. 1904 (Banks and Banking) (West Supp. 1980). Sec. 211(b)

(2) provides in pertinent part that TECA,

shall have exclusive jurisdiction of all appeals from the

district courts of the United States in cases and contro-

versies arising under this title (ESA) or under regula-

tions or orders issued thereunder.

It should be noted at the outset that 15 U.S.C. Sec. 754(a) (1)

(A) by its language, makes the above TECA jurisdictional pro-

visions applicable to only certain kinds of cases that arise under

the EPAA. It plainly states that the judicial review provisions of

the ESA apply only ‘‘to the regulation promulgated under Sec-

tion 753(a) of this title, or to any order under this chapter, and

to any action taken by the President (or his delegate) under this

chapter.”’

A “regulation promulgated under Section 753(a)’’ is a regula-

tion of the Department of Energy establishing mandatory allo-

cation and maximum prices for regulated petroleum products.”’

Therefore, under 15 U.S.C. Sec. 754, TECA only has exclusive

jurisdiction over cases arising under the EPAA’s pricing regula-

tions or under an ‘‘order’’ or ‘‘action taken by the President

under this chapter.’’ This grant of jurisdiction to TECA to hear

cases arising under the EPAA is thus much more limited than

TECA’s jurisdiction to hear cases arising under the ESA. The

Court of Appeals, in its holding that TECA had exclusive juris-

diction over the preemption and abstention issues in this case,

completely ignored the impact of 15 U.S.C. Sec. 754 on the

TECA’s jurisdiction to hear EPAA questions, and erroneously

equated the TECA’s jurisdiction to hear questions arising under

the EPAA with its jurisdiction to hear questions arising under

the ESA. If the Court of Appeals had properly considered the

impact of 15 U.S.C. Sec. 754 on the TECA’s jurisdiction, it is

a”

submitted that it would have come to the conclusion that it, and

not TECA, has jurisdiction to hear the abstention and pre-

emption issues posed in this case.

B. This Court And TECA Have Recognized The Limited

Nature Of TECA’s Jurisdiction

In Bray v. United States, 423 U.S. 73, 46 L.Ed.2d 215, 96

S.Ct. 307, this court noted that under 28 U.S.C. 1291, the

courts of appeals, and not the TECA have the broad jurisdic-

tion to review, ‘‘all final decisions of the district courts of the

United States.’’ This court stated at 423 U.S. 73-74 that the

judicial review provision creating the TECA:

was designed to provide speedy resolution of cases

brought under the Act and ‘‘to funnel into one court

all the appeals arising out of District Courts and thus

gain in consistency of decision.’’ S Rep No. 92-407, p.

10 (1971). The provision thus carved out a limited

exception to the broad jurisdiction of the courts of

appeals over ‘‘appeals from all final decisions of the

district courts of the United States.’’ 28 U.S.C. § 1291

[28 U.S.C.A. § 1291]. (emphasis added)

TECA has also recognized that it is a court of limited juris-

diction and that its jurisdiction must be strictly construed. It has

repeatedly refused to exercise jurisdiction over issues or claims

such as those in this case which, even though they may touch

upon the EPAA, do not ‘‘arise under’’ the EPAA or involve the

interpretation or the validity of any of its substantive provi-

sions. For instance see Longview Refining Co. v. Shore, 554

F.2d 1006 (Em. App. 1977); Spinetti v. Atlantic Richfield Co.,

522 F.2d 1401 (Em. App. 1975); Associated General Contrac-

tors v. Laborers International Union Local 612, 489 F.2d 749

(Em. App. 1973); City of Groton v. Federal Power Commis-

sion, 487 F.2d 927 (Em. App. 1973). In Spinetti, the plaintiff

asserted claims under the antitrust laws as well as under FEO

regulations. Noting that ‘‘courts of special jurisdiction should

strictly construe their statutory grants of jurisdiction,’’ quoting

United States v. Cooper, 482 F.2d 1393, 1398 (Em. App. 1973),

the TECA held that the antitrust, fair trade, and contractual

claims were appealable only to the Court of Appeals. The Court

took jurisdiction, however, to consider the claim asserted under

the oil allocation regulations.

C. The Court of Appeals And Not TECA Has Jurisdiction

Over The Abstention Issue Raised In This Case

The primary question which the District Court resolved in

this case was the interpretation of Section 13(b) of Connecticut

Public Act 80-71. The State of Connecticut in its appeal to the

Court of Appeals claimed that the District Court erred in the

construction which it applied to Section 13(b). The State has

claimed that Section 13(b) is reasonably susceptible to a con-

struction which would either ‘‘avoid in whole or in part the

necessity for federal constitutional adjudication or at least

materially change the nature of the problem.”’ Bellotti v. Baird,

428 U.S. 132, 96 S.Ct. 2857, 49 L.Ed. 2d 844 (1976); Harrison

v. NAACP, 360 U.S. 167, 177, 79 S.Ct. 1025, 3 L.Ed. 2d 1152

(1959); Alabama State Federation of Labor v. McAdory, 325

U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725.

This court has repeatedly held that where (as here) there has

been no construction of a state statute by a state court and

where the statute is susceptible of a constitutional construction,

the federal courts must abstain from exercising jurisdiction.

Railroad Commission v. Pullman Co., 312 U.S. 496, 85 L.Ed.

971, 61 S.Ct. 643, Bellotti v. Baird, supra.

In Railroad Commission v. Pullman at 312 U.S. 501, this

court stated that:

The doctrine of abstention is a self-imposed limitation

upon the jurisdiction of the federal courts whereby the

federal courts ‘exercising a wise discretion,’ restrain

their authority because of ‘scrupulous regard for the

rightful independence of the state government’ and

for the smooth working of the federal judiciary.

10

The District Court in this case, therefore, should have abstained

and allowed the state court to interpret the state statute.

It is clear that the interpretation of a state statute does not

arise under the federal pricing regulations of the EPAA. Under

the principles of comity and federalism that underly the absten-

tion doctrine, it is the state court and not the TECA that should

construe state statutes. Further, the Court of Appeals and not

the TECA has jurisdiction to review the propriety of the District

Court’s interpretation of Section 13(b) and the District Court’s

failure to apply the doctrine of abstention, since the TECA has

held that its jurisdictional grant of authority is limited and does

not extend to the interpretation of any law other than the Emer-

gency Petroleum Allocation Act of 1973. Texaco Inc. v. Depart-

ment of Energy, 616 F.2d 1193 (Em. App. 1979).

The Court of Appeals, however, with little discussion held

that the question of abstention is a ‘‘threshold question which

has no life apart from the substantive claim’’ of preemption.

(See App. A, p. 6a). As stated by the Court of Appeals, the

TECA has resolved issues such as standing, mootness, ripeness,

and joinder of parties. Those issues, however, were decided

only in conjunction with a substantive EPAA issue on appeal.

The TECA has held that those issues had ‘‘no life apart from

that substantive claim’’ and were decided only as part of the

Court’s normal and necessary appellate function. Quincy Oil

Inc. v. Federal Energy Administration, 620 F.2d 890, 893

(Em. App. 1980). In light of the numerous decisions of this Court

holding that the abstention doctrine is rooted in our federal sys-

tem of government as a means to insure the rightful indepen-

dence of the state governments and to preserve the harmonious

relation between state and federal authority (Railroad Commis-

sion v. Pullman Company, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed.

971 (1940)), it cannot be properly argued that abstention and

the principles which underly that doctrine are not substantive

issues and are, instead, only ancillary questions necessary to

effectuate the general appellate powers of the TECA. Further,

and importantly, the interpretation to be afforded to a statute

of an individual state does not present a situation requiring

1]

TECA review to gain ‘‘consistency of decision.’’ Quincy Oil

Inc. v. Federal Energy Administration, supra.

It should be noted that the interpretation of a state statute

does not become an ‘‘EPAA issue’’ merely because of an

EPAA preemption claim is raised in a complaint. In Governor

of Maryland v. Exxon Corp., 279 m.d 410, 370 A.2d 1102, 1120-

1121 (1977), affirmed 437 U.S. 117, 98 S.Ct. 2207, 57 L.Ed. 2d

91 (1978), and in Atlantic Richfield Co. v. Tribbitt, Del. Ch.,

399 A.2d 535 (1977), the individual states passed new statutes

regulating the retail price of gasoline. The oil companies in-

volved (including the present respondent Gulf Oil Corporation)

instituted declaratory judgment actions in the state courts

contesting the constitutionality of those enactments. Included

in their complaints were allegations of conflicts with the federal

EPAA, with the Commerce Clause and with other provisions of

the United States Constitution. Apparently, neither the com-

panies nor the courts viewed the construction and interpretation

of those state statutes as presenting ‘‘EPAA issues’’ requiring

exclusive review by a Federal District Court under Section 21 1(a)

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

note, or requiring appellate review by the TECA under Section

211(b) (2). As Sections 211(a) and 211(b) (2) of the ESA confer

the same exclusive jurisdiction on a District Court and on the

TECA to hear ail claims ‘‘arising under”? the EPAA,! the fact

that the state courts in Governor of Maryland v. Exxon Corp.,

supra and Atlantic Richfield Co. v. Tribbitt, supra, construed

their own state statutes, despite a claimed conflict with the

EPAA and the Commerce Clause demonstrates that a construc-

tion of a state statute does not constitute an ‘‘EPAA issue’

requiring decision by a Federal District Court and the TECA. In

IThe companies’ EPAA preemption claims in Governor of Mary-

land v. Exxon Corp., supra and in Atlantic Richfield Co. v. Tribbett,

. supra, were raised in their complaints and did not enter the state court

proceedings ‘‘by way of defense’’ which would have constituted an

exception to the District Court’s 211(a) ‘‘arising under’’ jurisdiction.

Coastal States Marketing v. New England Petroleum, 604 F.2d at p.

183.

12

fact, those cases demonstrate that a state court is fully capable

of interpreting its own state statutes and those cases fully sup-

port Connecticut’s instant argument in favor of abstention. It

also should be noted that in the oil companies’ unsuccessful

appeal to this Court, none of the parties questioned the jurisdic-

tion of the State Court to hear that case, even though a claim of

preemption by the EPAA was raised. (See Exxon, supra 437

U.S. 122, N.5).

It is clear, therefore, that the question of the proper construc-

tion of Section 13(b) of Connecticut P.A. 80-71 and the District

Court’s failure to apply the doctrine of abstention do not pre-

sent “‘EPAA issues’? on appeal. Consequently, the proper

appellate avenue was to the Court of Appeals not the Tempo-

rary Emergency Court of Appeals.

D. The Court of Appeais Not The TECA Has Jurisdiction

Over The Preemption Issue Raised In This Case

1. If this case arises under the EPAA it arises under Sec.

6B of the EPAA, which is not mentioned in 15 U.S.C.

Sec. 754

If this case arises under the EPAA, as the Court of Appeals

held, then the only possible provision of the EPAA that it could

have arisen under is Sec. 6(b) of the EPAA, which is codified as

15 U.S.C. Sec. 755(b). This is the EPAA’s explicit preemption

provision and it provides as follows:

Preemption of State or local allocation regulations

and orders

(b) The regulation under section 753 of this title and

any order issued thereunder shall preempt any provi-

sion of any program for the allocation of crude oil,

residual fuel oil, or any refined petroleum product

established by any State or local government if such

provision is in conflict with such regulation or any

such order.

13

However, 15 U.S.C. Sec. 754, as has previously been noted,

only gives the TECA jurisdiction over cases arising under regu-

lations issued under Sec. 753a, which authorizes the EPAA’s

pricing and allocation regulations, or to ‘‘orders”’ or “‘actions’’

by the President under the EPAA. Congress did not include

Sec. 6(b), 15 U.S.C. Sec. 755b, in Sec. 754. If Congress intended

to incorporate the TECA jurisdictional provisions to claims of

preemption under Sec. 6(b) of the EPAA, it easily could have

included Sec. 6(b) in Sec. 754. The fact that it did not do so can

only reasonably be interpreted as meaning that Congress did

not intend that the TECA have jurisdiction over claims of pre-

emption arising under the EPAA such as the claim of pre-

emption in the instant case.

2. A review of the preemption standard applied by the

District Court falls within the Court of Appeals’ exper-

tise and not the TECA’s

The fact that the EPAA is discussed in a decision or that the

EPAA is ‘‘related’’ to the issue is not determinative of whether

an issue is an ‘‘EPAA issue.’’ Saini }4ary’s Hospital v. Ogilvie,

496 F.2d 1324 (1974), Texaco Inc. v. Dept. of Energy, supra.

Instead, an EPAA issue arises only when a determination is to

be made which will directly question either the EPAA, or an

order or regulation issued thereunder or an action of the Presi-

dent, requiring the TECA’s particular expertise to provide

national uniformity and consistency of decision. For instance,

in Bray v. U.S., supra, in which the defendant petitioner was

convicted of criminal contempt for refusing to obey a subpoena

issued as part of an investigation under ESA, this Court, hold-

ing that the Court of Appeals, rather than TECA had jurisdic-

tion, vacated the Court of Appeals judgment and remanded the

case stating at 423 U.S. 75 that:

Review in the TECA of criminal contempt convictions

relating to compliance investigations or enforcement

efforts is not necessary to assure uniform interpreta-

tion of the substantive provisions of the stabilization

scheme. Indeed, a requirement of such review would

14

only serve to undermine the prompt resolution of Sta-

bilization Act questions by burdening the TECA with

additional appeals. (emphasis added)

Similarly, the reasons for exclusive TECA jurisdiction —

consistency of opinion and maximization of TECA’s expertise

— are not present with regard to the preemption claim being

made in the instant case. As this court recently noted in Chicago

and Northwestern Transportation Company v. Kalo Brick &

Tile Company, No. 79-1336, 49 U.S.L.W. 4232 (U.S. March 9,

1981), the determination of whether there is preemption is

‘fessentially a two step process of first ascertaining the construc-

tion of the two statutes and tien determining the constitutional

question of whether they are in conflict.’’

In this case, the District Court construed Section 13(b) of

Connecticut Public Act 80-71 and compared it with the federal

policy contained in the EPAA. No portion of the EPAA or any

order or regulation issued under that Act or any action of the

President was called into question before the District Court or

before the Court of Appeals. Further, Section 13(b) specifically

provides that it does not apply to any product regulated within

the purview of the EPAA and the companies have admitted that

any products which fall within the Connecticut taxing statute

are, in fact, exempt from the EPAA. Unlike the cases interpret-

ing substantive provisions of the EPAA, the instant case does

not present questions which require the TECA’s expertise.

Coastal States Marketing Inc. v. New England Petroleum

Corporation, 604 F.2d 179, (2d Cir. 1979), and Mountain Fuel

Supply Co. v. Johnson, 586 F.2d 1375 (10th Cir. 1978), which

are referred to in the Court of Appeals’ opinion in the Tully

case, (See, App. C) both involved interpretation of substantive

provisions of the EPAA and therefore required the TECA’s

expertise. Neither of these cases or any other cases cited by the

respondents in the Court of Appeals involved claims of pre-

emption under Sec. 6(b) of the EPAA. By its nature, a pre-

emption decision can have no impact on federal policy or

federal law because of the operation of the Supremacy Clause

¢ 15

of the United States Constitution. Whether or not a particular

state statute runs afoul of federal law does not present a ques-

tion of national uniformity, Exxon Corp. v. Governor of Mary-

land, 437 U.S. 117, 128-129, 98 S.Ct. 2207, 57 L.Ed. 2d 91

(1978), and does not require the TECA’s particular expertise to

provide consistency and uniformity of decision as would be the

case where a portion of the EPAA was directly adjudicated. In

its appeal, the State of Connecticut has questioned the pre-

emption standard which the District Court applied to Section

13(b). A review of the proper preemption standard does not

involve the application or interpretation of the EPAA or any

rule or order issued thereunder. Instead, such review would

only involve the application of established preemption law, an

analysis that the Court of Appeals would normally undertake in

any case where a claim of preemption is made.

The fact that the State’s appeal of the District Court’s pre-

emption decision does not constitute an ‘‘EPAA issue’’ is con-

firmed by the decisions in Governor of Maryland v. Exxon

Corp., supra and Atlantic Richfield Co. v. Tribbett, supra

where EPAA preemption claims were raised in and decided by

state courts. If such preemption claims were ‘‘EPAA issues’’ as

the Court of Appeals held, Section 211(a) of the Economic Sta-

bilization Act of 1970 would have required such issues to be ini-

tially adjudicated in a federal District Court and then appealed

to the TECA. As the companies’ EPAA preemption claims

were not adjudicated in the District Courts in Governor of

4 Maryland v. Exxon, supra or in Atlantic Richfield Co. v. Trib-

bett, supra, the instant EPAA preemption claims do not have to

be reviewed by the TECA. Further, it is not apparent that either

the District Court of the companies considered that the instant

case involved an ‘‘EPAA issue.’’ The companies questioned

Section 13(b) on both Supremacy Clause and Commerce Clause

grounds. Such issues present substantial constitutional ques-

tions. The fact that the issues were not immediately certified to

the TECA pursuant to Section 211(c) of the ESA indicates that

neither the Court nor the respondents viewed this case as pre-

senting an EPAA issue at the District Court level.

16

IF THIS COURT DOES NOT GRANT THE WRIT THE

PETITIONER STATE OF CONNECTICUT WILL BE DE-

PRIVED OF REVIEW OF ITS APPEAL ON THE MERITS

WITH REGARD TO IMPORTANT SUBSTANTIVE QUES-

TIONS THAT SHOULD BE ANSWERED BY THIS COURT

A. The District Court’s Decision Raises Important Substan-

tive Questions That Should Be Answered By This Court

The District Court of Connecticut in its opinion did not hold

that Sec. 13b of Connecticut P. A. 80-71 conflicts with any pric-

ing regulation issued under the EPAA. Indeed, it would have

been impossible for the District Court to find such a conflict. A

reading of Sec. 13(b) makes it obvious that the Connecticut leg-

islature carefully drafted this provision so as to avoid any pos-

sible conflict with federal law. By its terms, Sec. 13(b) only

applies to petroleum products ‘‘exempt from the Federal Emer-

gency Petroleum Allocation Act (P.L. 93-159.’’ (See App. D)

Therefore, it is impossible for there to be a conflict between this

section and the federal law, since this section is, by its terms,

automatically inapplicable if the federal law is applicable. Sec.

13(b), even if viewed as a price regulation, could not possibly

directly conflict with any federal regulation on pricing, since so

called ‘‘exempted’’ products fall under no federal regulation as

to price. The grant of an exemption ‘‘means the release from

the obligation to comply with any part or parts, or subparts

thereof this chapter.”’ 10 C.F.R. Sec. 205.2. Simply stated,

there are no federal regulations or orders pertaining to the price

of so called ‘‘exempted’’ products. Therefore, a direct conflict

between such a regulation cr order and Sec. 13(b) is impossible.

The District Court, therefore, did not find any direct conflict

with any federal regulation or order, nor did it find that the

federal government ‘‘occupied the field’’ of petroleum pricing.

Rather, the court found that Sec. 13(b) frustrated an articulated

federal intention that an area which the federal government

temporarily regulated and from which it has now withdrawn be

17

kept altogether vacant: in other words, it said that when the

federal government left the field it took the states with it.

In effect, the District Court ruled that because the federal

government regulated the price of petroleum products for a

short period in response to an emergency and then withdrew

from regulation of a large segment of the market, that the states

were forever barred from regulating the area even a hundred

years from now — even though Congress never said so. This

conclusion is obviously absurd. When Congress spoke of ‘‘a

gradual return to an unregulated market,’’ S. Conf. Rep. No.

94-516, 94th Cong., Ist Sess. 203 (1975) (emphasis added), it

meant a return to the status quo before the enactment of the

EPAA and to restore pre-existing state powers.

We do not doubt that the federal government could, if it

wished, estabiish a free market as the law of the land, nullifying

state laws and effectively granting sellers of petroleum products

a right to charge whatever price they desire. But neither the

respondents nor the District Court explained how it can plau-

sibly be thought that in 1973 Congress singled out the petroleum

industry as one requiring extraordinary federal interference,

and just two years later singled it out as the one industry among

all others in which the free market was functioning so perfectly

as to displace all state authority. So far as appears, in moving

toward deregulation, neither Congress nor the administrators

ever considered that their actions would eradicate ordinary pre-

existing state powers. Certainly the federal authorities never

gave any indication that by phasing out Congressional regula-

tion of prices they intended to override state laws determining

the incidence of states taxes such as Sec. 13b of Conn. Public

Act 80-71.

Imputation of such an intention to Congress flies in the face

of reality. If Congress had expressed any such intention, it

would have been a matter of great public debate and conflict.

Consumer lobbies would have been mobilized, members of

Congress, many of whom even today regard the removal of fed-

eral price controls on petroleum as unwise, would have thun-

dered against such a permanent grant of freedom to the oil

companies.

That none of this happened is the clearest demonstration that

Congress had no such intent. To attribute such an intention to

Congress now — five years later — would be to make a

mockery of the legislative and political processes.

Another logical flaw in the District Court’s theory is that

when the Congress in 1975 provided for expiration of the regu-

latory authority, did it intend to oust state power in the interim?

If Congress did intend to oust state power was the ouster to be

temporary, with state power to regenerate spontaneously on

October 1, 1981, upon expiratién of the EPAA; or did it intend

that the ouster of state power be permanent?

Not only is the District Court’s decision logically flawed, it is

also in clear conflict with numerous decisiuns of this Court.

This Court has repeatedly said that ‘‘it must be clear that the

federal provisions are inconsistent with those of the state to

justify the thwarting of state regulation.’’ Cloverleaf Butter Co.

v. Patterson, 315 U.S. 148, 156, 62 S.Ct. 491, 86 L.Ed. 754

(1942). Florida Lime and Avocado Growers, Inc. v. Paul, 373

U.S. 132, 10 L.Ed.2d 248, 256, 83 S.Ct. 1210 (1963), reh den

374 U.S. 858, 10 L.Ed. 2d 1082, 83 S.Ct. 1861. This Court has

_ also said that there must be an ‘‘actual conflict’’ between the

state and federal regulations as opposed to a ‘hypothetical

one,’’ Huron Portland Cement Co. v. Detroit, 362 U.S. 440,

443 (1960), Goldstein v. California, 412 U.S. 546, 554-555

(1973) and that ‘‘the teaching of this Court’s decision...enjoin[s]

seeking out conflicts between state and federal regulation where

none clearly exists.’’’ Exxon Corp. v. Governor of Maryland,

437 U.S. 117, 130, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978), quoting

from Huron Portland Cement Co. v. Detroit, 362 U.S. 440,

446, 4 L.Ed.2d 852, 80 S.Ct. 813 (1960), and Joseph E. Sea-

gram & Sons, Inc. v. Hostetter, 384 U.S. 35, 45, 16 L.Ed.2d

336, 86 S.Ct. 1254 (1966).

It is submitted that the District Court has sought out such a

conflict ‘‘where none clearly exists’’ in the instant case.

19

B. The State of Connecticut Should Be Allowed A Hearing

On The Merits Of Its Appeal

As noted above, the Petitioner State of Connecticut’s appeal

from the District Court’s decision raised important substantive

questions. The Court of Appeals holding that it lacks jurisdic-

tion to hear the preemption and abstention questions effectively

leaves the petitioner State of Connecticut with no opportunity

for review of these questions, since the state did not appeal to

the TECA. Even if this Court should conclude that the Court of

Appeals is correct in its holding as to the allocation of jurisdic-

tion between it and the TECA, it is, nevertheless, respectfully

submitted that this Court should grant certification, vacate the

judgment of the District Court, and remand this case back to

the District Court and direct it to issue a new judgment from

which the petitioner State of Connecticut can file a timely

appeal to the TECA. This Court has granted this type of relief

in numerous cases where, as in this case, the law was unclear or

uncertain as to where the appeal should be taken. For instance,

see Mitchell v. Donovan, 398 U.S. 427, 26 L.Ed.2d 378, 90

S.Ct. 1763 (1970), Butler v Dexter, 426 U.S. 262, 47 L.Ed.2d

774, 96 S.Ct. 1527 (1976), and MTM, Inc. v. Baxley, 420 U.S.

799, 43 L.Ed.2d 636, 95 S.Ct. 1278 (1975).

In Donovan which was a direct appeal from the decision of a

three judge panel, this Court held that it lacked jurisdiction

under 28 U.S.C. §1253, which provides for direct appeal to this

Court from a three-judge Federal District Court order granting

or denying ‘‘an interlocutory or permanent injunction,”’

because the order appealed from did no more than deny the

plaintiffs a declaratory judgment striking down the Communist

Control Act. However, this court noted at 398 U.S. 431 that:

A simple dismissal for want of jurisdiction, however,

would leave the appellants with no recourse to appel-

late review, because they brought their appeal here

rather than to the Court of Appeals and the time for

appealing to the Court of Appeals has long since

passed.

**

20

This Court therefore remanded the case to the District Court

so that a ‘‘fresh’’ judgment, from which the plaintiff could take

a timely appeal to the Court of Appeals, could be issued.

In the instant case, as in Donovan, and the other cases cited

above, the petitioner would be left with no recourse for appel-

late review if this Court does not grant relief. It should also be

noted that the law as to where the appeal should be taken to in

the instant case was much more uncertain than in Donovan or

the other cases cited above. As noted above, a reading of the

plain language contained in 15 U.S.C. Sec. 754, which incorpo-

rates the TECA jurisdictional provisions with regard to certain

cases arising under the EPAA, would not lead one to the conclu-

sion that the TECA has jurisdiction over a case such as this one

which challenges a state statute on preemption grounds.

Although dicta in some cases discussing the scope of TECA’s

exclusive appellate jurisdiction may be read to suggest that Sec-

tion 754 of the EPAA rendered the ESA judicial review proce-

dures fully applicable to a// cases involving any EPAA issue, see

e.g., Coastal States Marketing, Inc. v. New England Petroleum

Corp., 604 F.2d 179, 182 (2d Cir. 1979); Citronelle-Mobile

Gathering, Inc. v. Gulf Oil Corp., 591 F.2d 711 (Temp. Emer.

1979); Mountain Fuel Supply Co. v. Johnson, 586 F.2d 1375,

1379 (10th Cir. 1978), none of these cases involved challenges to

the constitutionality of a state statute on the ground that the

statute conflicted with the EPAA. None addressed the exclu-

sivity of federal court jurisdiction — at either the trial or appel-

late level — of a preemption claim implicating Section 6(b) of

the EPAA. Indeed, none of them focused on the limited scope

of §754 of the EPAA. Instead, all of them were limited to hold-

ing what 15 U.S.C. §754 plainly states: that TECA has exclusive

appellate jurisdiction — and presumably that the federal district

court has exclusive original jurisdiction — of all suits involving

the interpretation and enforcement of the mandatory allocation

and price ‘‘regulation[s} promulgated under 753(a).’’ See

Citronelle-Mobile Gathering, Inc. v. Gulf Oil Corp., supra,

(purchaser of petroleum contends that it failed to pay seller for

petroleum received because the contract price exceeded the

21

mandatory price controls set forth in 10 C.F.R. §212.2);

Coastal States Marketing, Inc. v. New England Petroleum

Corp., supra (same); Mountain Fuel Supply Co. v. Johnson,

supra, (buyer in breach of contract action counterclaims that

the seller disregarded ceiling prices set forth in the EPAA regu-

lations and alternatively that the allocation and pricing provi-

sions are unenforceable because they destroy his ‘‘competitive

viability’’).

It follows from the above that the instant case was a case of

first impression and was unique. Never before did any court

hold that the TECA has exclusive jurisdiction over a challenge

to a state statute on preemption grounds. Therefore, assuming

that the Court of Appeals’ decision is correct, it is the first deci-

sion to so hold, and prior to that decision, the law was highly

uncertain as to where an appeal, such as that in the instant case,

should be brought.

For the above reasons, we respectfully submit that even if this

court should hold that the appeals court is correct on the pre-

emption and abstention issues, that this Court should grant

such relief in accordance with the Donovan decision as to allow

the petitioner a hearing on the merits of its appeal.

THE COURT OF APPEALS DECISION HOLDING

THAT THE DISTRICT COURT WAS NOT BARRED FROM

HEARING THIS CASE BY THE JOHNSON ACT (28 U.S.C.

SEC. 1341) RENDERS THE PROHIBITIONS OF THE

JOHNSON ACT INEFFECTUAL.

In its appeal to the Court of Appeals, the State of Connecticut

has contended that Section 13(b) of Public Act 80-71 is an

integral part of a state taxing statute insuring the proper assess-

ment of the economic burden created by the Connecticut gross

receipts tax. Although Section 13(b) represents an untraditional

application of an assessment provision of a state taxing statute,

Section 13(b), nevertheless, falls within the scope of the

Johnson Act, 28 U.S.C. 1341, barring federal District Court

review.

22

CONCLUSION

For the reasons outlined above, it is respectfully submitted

that the instant Petition for Writ of Certiorari should be

granted.

Respectfully submitted

CARL R. AJELLO

ATTORNEY GENERAL

PETER W. GIT. LIES

DEPUTY ATTORNEY GENERAL

RALPH G. MURPHY

ASSISTANT ATTORNEY GENERAL

ROBERT L. KLEIN

ASSISTANT ATTORNEY GENERAL