Opposition — Zang v. United States

Office Supreme Court, U.S.

BONN 25 A ep OF

AUG 26 1981

No. 81-146

ALEXANDER L. STEVAS,

| CLERK

In the Supreme Gasctat the Hnited States

OcTOBER TERM, 1980

W. DARRELL ZANG AND LouIS PORTER, PETITIONERS

A

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE TEMPORARY EMERGENCY COURT OF APPEALS OF

THE UNITED STATES

BRIEF FOR THE UNITED STATES IN OPPOSITION

Rex E. Lee

Solicitor General

D. LOWELL JENSEN

Assistant Attorney General

Louis M. FISCHER

Attorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTION PRESENTED

Whether the exclusive appellate jurisdiction of the Tem-

porary Emergency Court of Appeals over “all appeals from

the district courts of the United States in cases and contro-

versies arising under” the Emergency Petroleum Allocation

Act of 1973 extends to an appeal by a criminal defendant

from a judgment convicting him on charges of mail fraud,

wire fraud, racketeering, and conspiracy.

(I)

TABLE OF CONTENTS

Opinions below .......ccceeeseecceeeeeeeeeens

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TABLE OF AUTHORITIES

Cases:

Bray v. United States, 423 U.S. 73 .....+.++:

United States v. Cooper, 482 F.2d 1393 .....

United States v. Uni Oil, Inc., 646 F.2d 946 ..

Statutes:

‘ Economic Stabilization Act of 1970, Section

211(b)(2), 12 U.S.C. 1904 note ...........-

Emergency Petroleum Allocation Act of 1973,

15 U.S.C. 751 et seq.:

~ Section 5, 15 U.S.C. 754 .c.. cece eeeeee

Section 5(a)(1), 15 U.S.C. 754(a)(1) ......

1B U.S.C. 371 wc ccc cccccccccescccccececces

18 U.S.C. 1941... cccccccccccccevcccceeces

18 U.S.C. 1343 ....cccccccccccvvcccesccees

18 U.S.C. 1962(a) ....cccccccccccccccccvees

On the Supreme Court of the Hnited States

OcToBer Term, 1980

No. 81-146

W. DARRELL ZANG AND LOuIS PORTER, PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE TEMPORARY EMERGENCY COURT OF APPEALS OF

THE UNITED STATES

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 2a-8a) is

not yet reported. That court's earlier opinion dismissing

petitioners’ appeals from the denial of their motions to

dismiss the indictment is reported at 645 F. 2d 999.

JURISDICTION

The judgment of the court of appeals was entered on May

22, 1981. A petition for rehearing was denied on June 23,

1981 (Pet. App. la). The petition for a writ of certiorari was

filed on July 23, 1981. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1) and Section 21 1(g) of the

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

STATEMENT

After a jury trial in the United States District Court for

the Northern District of Oklahoma, petitioners were con-

victed on one count of conspiracy to commit mail and wire

2

fraud and to defraud the United States (18 U.S.C. 371), six

counts of mail fraud (18 U.S.C. 1341), eight counts of wire

fraud (18 U.S.C. 1343), and one count of investing income

derived from a pattern of racketeering activity in the acqui-

sition and operation of an enterprise engaged in interstate

commerce (18 U.S.C. 1962(a)). Petitioners were each sen-

tenced to five years’ imprisonment and a fine of $49,000,

and their interests in certain businesses were forfeited.

The evidence at trial, which is not in issue here, showed

that petitioners reaped an illegal profit of almost $7.5 mil-

lion by reselling oil at an inflated price. Between December

1976 and September 1978, petitioners purchased quantities

of oil from Cities Service Corporation at the maximum

price for “old” oil. They then resold this oil to Western

Crude Oil, Inc. (“Western”), as either “new” or “exempt”

oil. See 645 F. 2d 999, 1000-1001 (1981).' Western had

agreed to pay petitioners their cost of acquiring the oil plus

a customary fee for gathering and handling. /d. at 1001. As

a result of petitioners’ fraud, Western paid petitioners at an

inflated rate and resold the falsely priced oil to its own

purchasers, including Charter Oil Co., Gulf Oil Co., and

OKC Corporation. These refiners passed along to the

Department of Energy the false information generated by

Old” oil is that amount of domestically produced oil that falls under

a previously calculated base level of production for a particular oil-

producing property. See 645 F. 2d at 1001 n.1. For the time period

encompassed by the instant indictment, Cities Service’s maximum sell-

ing price for “old” oil was approximately $5.25 per barrel. /d. at

* 1000-1001 n.1. “New” oil is that amount that exceeds a property's base

period level of production. /d. at 1001 n.2. The average selling price for

“new” West Texas crude oil during the indictment period was approxi-

mately $11.25 per barrel. /bid. “Exempt” oil includes other categories of

oil, such as stripper or foreign, that were exempt from price controls.

Ibid. The average price, during the indictment period, of West Texas

stripper crude oil was about $13.50 per barrel. /bid.

3

petitioners concerning the designation of the oil in question.

Petitioners’ miscertification of the oil thus frustrated the

Department of Energy's program to monitor and regulate

the maximum lawful selling price for crude oil. In addition,

petitioners’ fraudulent scheme resulted in increases in the

prices of oil and gasoline sold to the public. /d. at

1001-1002.

Prior to trial, petitioners moved to dismiss the indict-

ment, arguing, inter alia, that the misdemeanor sanctions

imposed by Section 5 of the Emergency Petroleum Alloca-

tion Act of 1973, 15 U.S.C. 754 (*“EPAA”), preempted or

impliedly repealed the general criminal statutes under

which petitioners were charged in the indictment. See 645

F. 2d at 1000, 1012. The district court denied the motions

and the Temporary Emergency Court of Appeals

(“TECA”) dismissed petitioners’ interlocutory appeals.

TECA concluded that because the instant indictment

charged various offenses under Title 18 of the United States

Code, the charges did not “aris[e] under” the EPAA and

hence the court lacked jurisdiction over the appeals. 645

F. 2d at 1002-1005.

Following their convictions, petitioners filed simultane-

ous appeals in both the Tenth Circuit and TECA.? Relying

on its earlier decision in this case, TECA again dismissed

petitioners’ appeals (Pet. App. 2a-8a). The court reiterated

that petitioners were prosecuted not for violation of the

EPAA miscertification regulations but for general criminal

offenses. The court further noted that “[{petitioners’]

repeated efforts to have this court take over jurisdiction of

[their] appeals have resulted in delay in the disposition of

these appeals by the Tenth Circuit Court of Appeals upon

Petitioners have filed their appellate briefs in the Tenth Circuit but

hive requested that their appeals to that court be stayed pending

resolution of the instant petition (Pet. App. 3a; Pet. 2).

4

which Congress has expressly conferred jurisdiction under

28 U.S.C. § 1291, and it is inimical to the goal of expeditious

review of criminai cases for this Court to interfere with the

Tenth Circuit Court in the disposition of these appeals”

(Pet. App. 7a).

ARGUMENT

Petitioners contend that the EPAA and its underlying

regulations formed the basis for their indictment, and that

therefore TECA has exclusive appellate jurisdiction over

the appeals from their criminal convictions. This argument

is without merit.

Under Section 211(b)(2) of the Economic Stabilization

Act of 1970, 12 U.S.C. 1904 note, which is incorporated into

Section 5(a)(1) of the EPAA, 15 U.S.C. 754(a)(1), TECA

has “exclusive jurisdiction of all appeals from the district

courts of the United States in cases and controversies aris-

ing under” the EPAA. As TECA twice correctly held (Pet.

App. 7a; 645 F. 2d at 1001-1003), petitioners’ criminal

prosecution is not a case or controversy “arising under” the

EPAA. Petitioners’ activity was made criminal not because

they violated the EPAA regulations, but rather because

they misrepresented the price at which they obtained the oil

and they used or caused the use of the mails and wire

communications to facilitate this fraud. Thus, contrary to

petitioners’ claims, the EPAA did not form the basis for

their indictment. See United States v. Uni Oil, Inc., 646

F, 2d 946, 949 (Sth Cir. 1981).

The decision below is consistent with Bray v. United

States, 423 U.S. 73 (1975), where this Court held that TECA

did not have jurisdiction over an appeal from a conviction

for criminal contempt based on the defendant's failure to

comply with an IRS subpoena issued in connection with an

investigation under the Economic Stabilization Act of

1970. The Court recognized that “{nJothing in the Act or in

its legislative history indicates that Congress intended ‘to

5

include existing offenses, already covered under Title 18,

under the umbrella of the Stabilization Act.’ ” /d. at 75,

quoting from United States v. Cooper, 482 F. 2d 1393,

1398 (Temp. Emer. Ct. App. 1973). Noting that review of

Bray’s criminal contempt conviction by TECA was “not

necessary to assure uniform interpretation of the substan-

tive provisions of the stabilization scheme”( Bray v. United

States, supra, 423 U.S. at 75), the Court observed that

requiring TECA to review all criminal convictions related

to enforcement efforts would burden TECA with additional

appeals and undermine the statutory purpose of affording

prompt resolution of Stabilization Act questions. /bid.

The decision below is also in accord with an earlier deci-

sion of TECA and with the decision of the only other court

of appeals that has specifically addressed the issue. Thus, in

United States v. Cooper, supra, the defendant was prose-

cuted for making a false statement to an IRS agent (18

U.S.C. 1001) in connection with a Stabilization Act investi-

gation. TECA dismissed the appeal, holding that the case

was not one “arising under” the Stabilization Act. 482 F. 2d

at 1397-1398. Similarly, in United States v. Uni Oil, Inc.,

supra, the defendants—like petitioners here—were charged

with miscertifying “old” and “new” oil and were indicted on

charges similar to those involved here. 646 F. 2d at 948-949.

The Fifth Circuit held that it had jurisdiction over the

appeal because the case did “not involve ‘interpretation of

the substantive provisions’ of the EPAA” (id. at 952) and

thus did not arise under the EPAA or its regulations. In

light of these uniform decisions interpreting TECA’s juris-

diction over appeals in cases involving violations of crimi-

nal statutes of general applicability, TECA correctly deter-

mined in this case that it did not have jurisdiction over

vetitioners’ appeals.

6

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

Rex E. Lee

Solicitor General

D. LOWELL JENSEN

Assistant Attorney General

Louis M. FISCHER

Attorney

AuGustT 1981

DOJ-1981-08