Petition — Juren v. United States

B2-739 [N

OCT 28 1992

L. STEVAS.

CLERK

In the Supreme Court of the United States

OCTOBER TERM, 1982

DENNIS JUREN and EDWARD W. CROMEY, PETITIONERS

*.

UNITED STATES OF AMERICA

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

WILLIAM E. NELSON ROBERT E. MONTGOMERY, JR.

(Counsel of Record) (Counsel of Record)

SHERLEE S. NELSON PETER BUSCEMI

NELSON & NELSON, P.C. PAUL, WEISS, RIFKIND,

1825 Jefferson Pl., N.W. WHARTON & GARRISON

Washington, D.C. 20036 A partnership including

(202) 659-0815 professional corporations

1714 Massachusetts Ave., N.W.

Washington, D.C. 20036

(202) 822-1816

Attorneys for Petitioner Attorneys for Petitioner

Edward W. Cromey Dennis Juren

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether, under the principles set forth in United

States v. LaSalle National Bank, 437 U.S. 298 (1978),

a federal agency may issue an administrative subpoena

solely for purposes of advancing a criminal investigation,

as long as the agency has not yet decided to refer the mat-

ter to the Department of Justice for criminal prosecution.

(i)

TABLE OF CONTENTS

Page

. i

x-! 1

r 1

Statutory Provisions Involved 2

— . 2

The Factual Background of Petitioners’ Subpoena.. 2

The Proceedings Below

A. The District Court’s Decision 5

r . 6

C. The Sulton Memoran dunn 7

D. The Denial of Petitioners’ Rule 60 (b) Motion. 9

E. The D. C. Cireuit's Decision 9

L . 10

G. The D.C. Circuit’s Grant of Rehearing 10

Reasons for Granting the Petition 11

EERE ee 18

Appendix A

/ ae aoe ove la

Appendix B

D anti ceeiceeeeesihiciainennie tains ee 4a

Appendix C

D.C. Cireuit Order granting petition for rehearing. 10a

Appendix D

RESETS ERSTE SEED a OR 12a

Appendix E

District Court’s Oral Decision — 16a

(iii)

iv

TABLE OF CONTENTS—Continued

Page

Appendix F

February 17, 1982 District Court Order 18a

Appendix G

District Court Denial of Stay 20a

Appendix H

March 8, 1982 District Court Order 2la

Appendix I

March 18, District Court Order 23a

Appendix J

June 3, 1982 District Court Order 25a

Appendix K

C — 27a

Appendix L

TECA Denial of Petition for rehearing and sug-

gestion for rehearing en bane .................................. 28a

Appendix M

The Sulton Memorandum ............-....----2----..--2ceeeeeeee 30a

Appendix N

— eat aiceialehapan iasiamniansdannesnbaiasties 32a

Appendix O

Statutory Provisions Involvei 36a

v

TABLE OF AUTHORITIES

Cases: Page

Bray v. United States, 423 U.S. 7 6

Coastal States Marketing, Inc. v. New England

Petroleum Corp., 604 F.2d 179 (2d Cir. 1979) 6

Donaldson v. United States, 400 U.S. 517, 5338 12, 16

Gulf Oil Corp. v. United States Department of

Energy, 689 F.2d 766 (TECA 198177777 6

ICC v. Gould, 629 F.2d 847 (3rd Cir. 1980), cert.

denied, 449 U.S. 1077 (1981) ........................---.- 13

NLRB v. Interstate Dress Carriers, Inc., 610 F. 2d

r xxx 13

Reisman v. Caplin, 375 U.S. 440, 4» 12

SEC v. Dresser Industries, Inc., 628 F.2d 1368,

1387 (D.C. Cir.), cert. denied, 449 U.S. 998 13

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

D —60ee˖¾ etait teemianntn 6

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

, . 6

United States v. Art Metal-U.S.A., Inc., 484 Supp.

e 13

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

1 ͤ mm ur. ʃ!1 ˙ WA V nainanidaiaiaai 6

United States v. Exxon Corp., 628 F.2d 70 (D.C.

Cir.), cert. denied, 446 U.S. 9644 6

United States v. Giant Industries, Inc., 4 EN.

Maur. (CCH) { 26,324 (D. Ariz. 19817 4, 13

United States v. LaSalle National Bank, 437 U.S.

—— A ˙ » passim

United States v. Uni Oil, Inc., 646 F.2d 946 (5th

Cir. 1981), cert. denied, 102 S. Ct. 1254 (1982) 6

Statutes:

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

EATS TIE ETE CATES Oe a ERE 1

, 6

, . ˙ . -- 1

Emergency Petroleum Allocation Act of 1973, 15

D . 1

Section 4, 16 U.S.C. 788 3

I ce 1,6

Section 5(a), 15 U.S.C. 754(a) 3, 4

vi

TABLE OF AUTHORITIES—Continued

Page

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

42 ..— v ——— 5, 12

Section 645 1 _ „ 0

Federal Trade Commission Act, 15 U.S.C. 49

Section 9 9

A er aa ed 16

28 U.S.C. 1254(1) — 1

28 U.S.C. 1331 1 6

Miscellaneous:

ERA ENFORCEMENT MANUAL (CCH)

Ree 3

— 3, 4, 14

Ex. Order No. 12287, 46 Fed. Reg. 9909 (1981) 3

III 9

Mandatory Petroleum Price and Allocation Regu-

lations, 10 C. F. R. Parts 205, 210, 211 and 212. 2

In the Supreme Court of the United States

OCTOBER TERM, 1982

No.

DENNIS JUREN and EDWARD W. CROMEY, PETITIONERS

v.

UNITED STATES OF AMERICA

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

The undersigned counsel, on behalf of Dennis Juren

and Edward W. Cromey, petition for a writ of certiorari

to review the judgment of the Temporary Emergency

Court of Appeals in this case.

OPINIONS BELOW

The opinion of the Temporary Emergency Court of

Appeals (App. A, infra, la-3a) is not yet reported. The

opinion of the D.C. Circuit (App. B, infra, 4a-9a) is not

reported. The oral opinion of the district court (App.

E, infra, 16a-17a) is not reported.

JURISDICTION

The judgment of the Temporary Emergency Court of

Appeals (App. K, infra, 27a) was entered on September

9, 1982. A petition for rehearing was denied on Septem-

ber 28, 1982 (App. L, infra, 28a). The jurisdiction of

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

tion 211(g) of the Economie Stabilization Act of 1970,

12 U.S.C. 1904 note, incorporated by Section 5(a) (1) (A)

of the Emergency Petroleum Allocation Act of 1973, 15

U.S.C. 754(a) (1) (A).

2

STATUTORY PROVISIONS INVOLVED

The relevant statutory provisions are reprinted in App.

O, infra, 36a.

STATEMENT

Petitioners are vice presidents of the Tesoro Petroleum

Corporation. They live and work in San Antonio, Texas.

During the period from 1974 to 1981, Tesoro was the

subject of a virtually continuous civil audit by the De-

partment of Energy (“DOE”) and its predecessor agen-

cies. On July 17, 1981, apparently as part of a separate

criminal investigation, DOE issued administrative sub-

poenas to petitioners, directing them to appear and testify

in Washington, D.C. (App. N, infra, 32a-33a).

The subpoenas state that petitioners’ testimony is

sought

in the investigation by the Department of Energy to

determine the compliance of Arizona Fuels Corpora-

tion, Demenno Resources, Inc., Goldking Refinery,

Ltd., Hill Petroleum, Inc., J & W Refining, Inc., Kenco

Refining, Kern County Refining, Inc., Pioneer Re-

fining, Inc., Refinery Associates, Inc., Refinery De-

velopment, Inc., San Joaquin Refining, Inc., The Tip-

perary Corporation, and Tesoro Petroleum Corpora-

tion, with the Mandatory Petroleum Price and Allo-

cation Regulations, 10 C.F.R. Parts 205, 210, 211

and 212.

The subpoenas explain only that “(tjhis investigation

concerns purchases, sales, exchanges and processing of

certain volumes of crude oil and the purchases, sales and

exchanges of its refined products during the period Sep-

tember 1976 through December 1977” (App. N, infra,

32a).

Because the facts surrounding the issuance of the sub-

poenas strongly suggested an improper criminal purpose,

and because the subpoenas were insufficiently specific to

permit a reasoned judgment concerning the possibility of

self-incrimination, petitioners declined to comply. Sub-

sequently, in January 1982, the government filed these

subpoena enforcement actions in the United States Dis-

trict Court for the District of Columbia.

THE FACTUAL BACKGROUND OF

PETITIONERS’ SUBPOENAS

Tesoro is a major integrated refiner that was subject

to DOE’s Mandatory Petroleum Price and Allocation Reg-

ulations, promulgated pursuant to Section 4 of the Emer-

gency Petroleum Allocation Act of 1973 (“EPAA”), 15

U.S.C. 753.“ The EPAA authorized both civil and crimi-

nal penalties for regulatory violations, 15 U.S.C. 754(a),

and DOE has established separate enforcement divisions

to conduct civil and criminal investigations. See Eco-

nomic Regulatory Administration (“ERA”) ENFORCE-

MENT MANUAL (CCH) §§ 1.503.04, 1.503.07 (deserib-

ing the functions of DOE’s Program Operations Divi-

sion, which is responsible for conducting civil investi-

gations, and its Special Investigations Division, which is

responsible for conducting criminal investigations).

During the seven-year DOE audit of Tesoro’s compli-

ance with EPAA regulations, DOE auditors had on-site

access to virtually all of Tesoro’s records relating to the

company’s crude oil refining and product marketing ac-

tivities, including those records relating to Tesoro’s proc-

essing agreements with other refiners during the period

October 1976 through May 1977. DOE’s Office of Special

Counsel (“OSC”), which was charged with enforcement

of the regulations as they applied to the 34 major re-

finers, apparently completed its on-site audit of Tesoro

in late 1981. ‘

While OSC was completing its civil audit in San An-

tonio, the Office of Special Investigations (“OSI”) in

Washington, D.C., began an apparently independent in-

1 President Reagan lifted the controls applicable to crude oil and

refined petroleum products on January 27, 1981. Executive Order

12287, 46 Fed. Reg. 9909 (1981). On September 30, 1981, the

EPAA expired. 15 U.S.C. 760068

4

vestigation of suspected willful violations involving cer-

tain of Tesoro’s processing agreements with other re-

finers.“ In pursuit of this investigation, OSI issued the

subpoenas ad testificandum that are the subject of this

litigation.

Before the date for petitioners’ appearances, their coun-

sel learned that Miranda-type warnings were being given

to witnesses testifying before OSI in connection with this

investigation, and that at least one criminal referral

to the Department of Justice had already occurred as a

result of a similar investigation. See United States v.

Giant Industries, Inc., 4 EN. Mar. (CCH) { 26,324 (D.

Ariz. 1981). Because OSC’s auditors were even then con-

ducting an intensive audit at Tesoro’s headquarters, with

the company’s full cooperation, the issuance of formal

subpoenas seeking to compel testimony from two senior ex-

ecutives seemed a highly unusual and unnecessary step.

In an August 1981 letter to DOE, counsel for petitioner

Juren expressed his concern regarding the apparent crim-

inal purpose of the DOE subpoenas (R-14 to R-18).*

DOE officials did not reply to this letter.

Indeed, petitioners heard nothing further regarding the

subpoenas until the government began these actions. In

ensuing discussions with counsel, attorneys for the gov-

ernment declined to provide assurances that petitioners

are not “targets” of a criminal investigation. The gov-

ernment lawyers would say only that the planned in-

terrogation of petitioners would involve “processing.”

2 OSI is “[rJesponsible for the management of special investiga-

tions which center on possible willful violations of ERA regulations,

and those which carry the possibility of referral to the Department

of Justice for consideration of prosecution.” ERA ENFORCEMENT

MANUAL CCH) § 1.503.07. Under Section 5(a) of the EPAA, 15

U.S.C. 754(a), a “willful” violation of the regulations is subject to

criminal penalties.

„R“ refers to the record on appeal in the Temporary Emergency

Court of Appeals, a copy of which has been lodged with the Clerk

of this Court.

5

Moreover, DOE refused to permit petitioners to review in

advance the documents on which they would be questioned.

In response to petitioners’ request for more specific infor-

mation concerning the type of violation being investigated,

OSI refused to go beyond the general regulatory refer-

ences contained in the subpoena (R- 99 to R-100).

In opposing DOE’s subpoena enforcement petitions, pe-

titioners contended that the subpoenas had been issued for

an unlawful criminal purpose, and they sought discovery

to establish that fact (R-168 to R-185). Petitioners also

maintained that, because of DOE’s failure to provide any

coherent statement of the law applicable to the processing

agreements regarding which they were to be questioned,

they were unable intelligently to exercise or waive their

privilege against compulsory self-incrimination and there-

fore were deprived of their Fifth Amendment rights.

Finally, petitioners argued that Section 645 of the De-

partment of Energy Organization Act (“DOEOA”), 42

U.S.C. (Supp. III) 7255, on which the government relied,

did not confer jurisdiction on the district court in the Dis-

trict of Columbia to entertain the government’s subpoena

enforcement actions. Rather, petitioners argued, the ac-

tions should have been filed in the Western District of

Texas, where petitioners live and work, and where the

government’s claims arose.

THE PROCEEDINGS BELOW

A. The District Court’s Decision

Following a hearing (R-230 to R-273), the district

court granted enforcement of the DOE subpoenas. The

court provided little explanation of the reasons for its de-

cision (App. E, infre, 16a-17a). The court noted its “deep

sympathy” for the position confronting petitioners, but it

concluded that the subpoenas should be enforced in light

of DOE’s representations that it has made neither a

“criminal referral” to the Department of Justice nor a

decision to make such a referral. The district court de-

nied petitioners’ request for discovery regarding the pur-

pose of DOE’s investigation (App. F, infra, 18a-19a).

The district court also denied a stay pending appeal

(App. G, infra, 20a).

B. Petitioners’ Appeals

Due to uncertainty regarding appellate jurisdiction, pe-

titioners appeal to both the D.C. Circuit and the Tempo-

rary Emergency Court of Appeals (“TECA”).‘ Petition-

* Section 211(b)(2) of the Economic Stabilization Act of 1970

(“ESA”), 12 U.S.C. 1904 note, incorporated by Section 50a) (1) (A)

of the Emergency Petroleum Allocation Act of 1973 (“EPAA”)

15 U.S.C, 754(a)(1)(A), provides that the TECA

shall have exclusive jurisdiction of all appeals from the district

courts of the United States in cases and controversies arising

under [the ESA or the EPAA] or under regulations or orders

issued thereunder.

Notwithstanding the broad language of Section 211(b)(2), which

appears to track the “arising under” formula of 28 U.S.C. 1331,

the reported cases establish that the TECA's jurisdiction is a

limited “issue” jurisdiction that depends on whether the particular

question in dispute involves some aspect of the ESA or the EPAA.

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

Corp., 604 F.2d 179 (2d Cir. 1979); Texaco, Inc. v. Department of

Energy, 616 F.2d 1193 (TECA 1979); Gulf Oil Corp. v. United

States Department of Energy, 639 F.2d 766 (TECA 1981) ; Spinetti

v. Atlantic Richfield Co., 522 F.2d 1401 (TECA 1975); United

States v. Cooper, 482 F.2d 1393 (TECA 1973).

When a case, or a segregable part of a case, does not involve the

interpretation or application of one or both of those statutes, appeal

from a district court’s ruling lies in the appropriate circuit court

of appeals rather than in the TECA. See, e.g., Bray v. United

States, 423 U.S. 73 (1975); United States v. Uni Oil, Inc., 646

F.2d 946 (5th Cir. 1981), cert. denied, 102 S. Ct. 1254 (1982);

Coastal States Marketing, Inc. v. New England Petroleum Corp.,

supra; Texaco, Inc. v. Department of Energy, supra; Gulf Oil Corp.

v. United States Department of Energy, supra; United States v.

Exxon Corp., 628 F.2d 70 (D.C. Cir.), cert. denied, 446 U.S. 964

(1980).

As the Second Circuit observed in Coastal States, 604 F.2d at 185,

„[plerhaps the clearest indication that the TECA and other courts

7

ers challenged the jurisdiction of the district court, the

improper criminal purpose of the subpoenas, and the reg-

ulatory vacillation of DOE that made it impossible for

petitioners to determine rationally whether to exercise

their Fifth Amendment privilege against compulsory self-

incrimination. The D.C. Circuit granted a stay pending

appeal and set an expedited briefing schedule (App. D,

infra, 12a-15a).

C. The Sulton Memorandum

While the appeals were pending, petitioners acquired

new evidence that substantially bolstered their claim that

the DOE subpoenas were issued for an improper criminal

purpose. The evidence, initially obtained by Tesoro

through a Freedom of Information Act request, is a DOE

file memorandum prepared by the Assistant Solicitor of

OSC, Gloria Sulton (App. M, infra, 30a-3la). Sulton is

one of the two DOE officials before whom petitioners were

commended to appear in response to the disputed sub-

poenas. The Sulton memorandum recounts a March 1979

meeting between DOE officials and attorneys in the Crim-

inal Division of the Department of Justice. In addition to

Sulton, the DOE officials present at the meeting included

of appeals regard the TECA’s jurisdiction as some form of ‘issue’

jurisdiction is the development of a system of bifurcated appeals

from unitary judgments” (citing cases).

Of course, disputes have arisen concerning the proper characteri-

zation of particular issues. The present case involved issues con-

cerning the district court’s jurisdiction, the criminal nature of

DOE’s investigation, and petitioners’ Fifth Amendment privilege

against compulsory self-incrimination. The government argued that

all of these issues fell within the TECA's exclusive jurisdiction.

But none of the issues required any interpretation or application

of the ESA or the EPAA.

The jurisdictional issue, in particular, turns on another statute

altogether, Section 645 of the DOEOA, 42 U.S.C. (Supp. III) 7255.

Accordingly, petitioners believed that at least the jurisdictional

issue, and perhaps the other two issues as well, should be decided

by the D.C. Circuit. To avoid waiving any rights, petitioners

appealed all three issues to both courts of appeals.

Jeffrey Whieldon and Jerome Wiener, the two persons who

have filed affidavits on behalf of the government in these

enforcement actions (see R-198 to R-204).

The memorandum states that the meeting concerned

“approximately 18 ‘cluster’ audits involving the Entitle-

ment Program * * *.” In particular, the meeting focused

on the so-called Tesoro/Young investigation, which was

characterized as “the most fully developed case” of the 18.

(Petitioners have repeatedly asserted their belief that the

subpoenas now in dispute were issued in connection with

one or more of the other 18 “cluster” audits, and the gov-

ernment has never disputed that assertion.) The purpose

of the March 1979 meeting, as reflected in the Sulton

memorandum, was informally to brief Criminal Division

officials on the Tesoro/Young matter, and to discuss “ad-

ditional steps to put the case in a posture for referral”

(App. M, infra, 30a). DOE officials thought such a dis-

cussion “would be helpful for this case as well as those

still under investigation” (ibid.) Among the subjects dis-

cussed were “potential problems with prosecution.”

The memorandum on the March 1979 meeting concludes

with the following paragraph (App. M, infra, 3la; em-

phasis added) :

The last question to be answered was the nature

and extent of further work by DOE before referral

to DOJ. It was agreed that depositions of key per-

sons should be taken before a referral is made. OSC

and OGC will work together in issuing subpoenas and

scheduling the taking of testimony.

The Sulton memorandum thus shows that, in an investi-

gation which either actually encompassed or at least

closely paralleled DOE’s present inquiry, the government

deliberately delayed referral to the Department of Justice

in order to gather further evidence through DOE sub-

poenas. More fundamentally, the memorandum demon-

strates that DOE used its subpoena power in such a case

solely for purposes of a criminal investigation. For these

reasons, petitioners moved in the district court for a new

hearing under Fed. R. Civ. P. 60(b). Petitioners argued

that, at the very least, the Sulton memorandum shows that

petitioners ure entitled to some measure of discovery con-

cerning the purposes for which the present DOE sub-

poenas were issued.

D. The Denial of Petitioners’ Rule 60(b) Motion

The district court denied relief, noting only that DOE

had represented that the Tesoro/Young investigation had

been closed, and that that investigation “involved different

facts and was conducted separately from the investigation

in which the subpoenas in the present case were issued”

(App. J, infra, 26a). The court did not address the peti-

tioners’ contention that the Sulton memorandum revealed

DOE to have used its administrative subpoena power im-

properly with respect to all 18 of the so-called “cluster”

audits—of which the present investigation is apparently

one.

E. The D.C. Cireuit's Decision

In July 1982, the D.C. Cireuit ruled that the district

court did have jurisdietion to hear the government's en-

forcement actions (App. B, infra, 4a-9a). The court of

appeals relied exclusively on Section 645 of the DOEOA

and that provision’s incorporation of Section 9 of the Fed-

eral Trade Commission Act, 15 U.S.C. 49. Although ac-

knowledging the persuasive force of petitioners’ argu-

ment to the contrary, the court held that it makes no

difference whether Congress, in incorporating Section 9,

“referred only to the subpoena issuance authority of the

administrative agency” or “explicitly incorporated both

the agency authority to issue subpoenas and the judicial

authority to enforce subpoenas” (App. B, infra, 6a)“

5In case the Court wishes to examine petitioners’ jurisdictional

argument in the courts below, copies of petitioner Juren’s brief and

reply brief in the D.C. Circuit, together with the petition for re-

hearing in that court, have been lodged with the Clerk of this Court.

10

The D.C. Circuit declined to pass on petitioners’ sub-

stantive challenges to the DOE subpoenas, holding that

those matters are EPAA issues over which the Tempo-

rary Emergency Court of Appeals has exclusive jurisdic-

tion” (App. B, infra, 8a).

F. The TECA’s Decision

In September 1982, the TECA upheld the DOE sub-

poenas (App. A, infra, la-3a). Like the district court, the

court of appeals was persuaded that the subpoenas should

be enforced because “DOE had made no determination

to refer the case for crimina: investigation” (id. at

2a). Without referring to any of the evidence cited by

petitioners to show that the DOE subpoenas were issued

as part of a criminal investigation, the TECA declared

simply that petitioners’ allegations of improper purpose

were not “buttressed with specific facts” (id. at 3a).

The TECA did not address the question of the district

court’s jurisdiction. The court’s brief opinion does not

reveal whether the TECA thought (a) that the district

court had jurisdiction under Section 645 of the DOEOA;

or (b) that, because the D.C. Circuit had already decided

the jurisdictional issue, the TECA should not address it

as well; or (c) that, because the jurisdictional question

turns on a statute other than the ESA or the EPAA, the

TECA lacks authority to review the matter.

G. The D.C. Cireuit's Grant of Rehearing

On October 5, 1982, the D.C. Circuit granted petitioners’

request for rehearing on the question of the district

court’s jurisdiction (App. C, infra, 10a-lla). The court

vacated its July 1982 opinion, and announced that a new

decision “will issue at some future date” on the basis of

the written submissions already made.

11

REASONS FOR GRANTING THE PETITION

This case presents an important question concerning

the authority of federal agencies to use their administra-

tive subpoena power for criminal investigations. The gov-

ernment maintains, and the courts below held, that an

agency may issue such a subpoena solely for purposes of a

criminal investigation, as long as the agency has made no

decision to refer the matter to the Department of Justice

for prosecution. That is not the standard adopted by this

Court in United States v. LaSalle National Bank, 437 U.S.

298 (1978). Under LaSalle, the critical inquiry is whether

the agency issuing a subpoena has made an “institutional

commitment” to treat the matter as a criiuinal case. Here,

there are substantial indications of such a commitment, all

of which were disregarded by the courts below because of

the courts’ erroneous concentration on whether the agency

had actually decided to refer the case to the Department of

Justice. Intervention by this Court is needed to correct

the lower courts’ misapplication of LaSalle, and to ensure

that the subpoena authority of DOE and other agencies is

not used for purposes beyond those sanctioned by Con-

gress.

Before turning to a further discussion of the LaSalle

issue, the peculiar procedural context of this petition

must be mentioned. The D.C. Circuit has granted re-

hearing, and has vacated its opinion sustaining the juris-

diction of the district court. The D.C. Circuit may well

rule on rehearing that the government’s enforcement ac-

tions against petitioners were not properly brought in

the District of Columbia, and should have been brought in

the Western District of Texas. In that event, this Court

should grant the present petition, vacate the TECA’s

decision, and remand for reconsideration in light of the

D.C. Cireuit's ruling. On the other hand, if the D.C.

Circuit adheres to its earlier decision and merely sup-

ports it with a new opinion, petitioners will seek re-

view in this Court, and the Court can simultaneously

12

consider both the jurisdictional and substantive ques-

tions presented.

If this Court does not hold the present petition pend-

ing the outcome of the rehearing in the D.C. Circuit,

undesirable consequences could ensue. If the Court were

to grant this petition now, and the D.C. Circuit were

subsequently to hold that the district court lacked juris-

diction, the precedential value of any decision this Court

might render would be cast in doubt. This is particu-

larly so if, as we believe, the TECA’s appellate jurisdic-

tion does not extend to issues under the DOEOA, and

TECA therefore could not rule on the district court’s

jurisdiction (see note 4, supra).

If the Court were to deny this petition now, and the

D.C. Circuit were subsequently to hold that the district

court lacked jurisdiction, the government might well try

to assert some res judicata or collateral estoppel effect

of the TECA judgment in a subsequent enforcement ac-

tion in the Western District of Texas. Petitioners, of

course, would argue that the TECA decision could have

no such effect in light of the holding on direct appeal

that the district court lacked jurisdiction over the gov-

ernment’s actions. These potential difficulties can easily be

avoided, however, if this Court simply holds the present

petition pending the D.C. Circuit’s decision on rehearing.

1. Returning to the reasons why this petition ulti-

mately should be granted, we begin with the well-

established proposition that an administrative subpoena

may not be used solely to obtain evidence for a criminal

prosecution. United States v. LaSalle National Bank,

supra, 437 U.S. at 316; Donaldson v. United States,

400 U.S. 517, 533 (1971); Reisman v. Caplin, 375 US.

440, 449 (1964). As this Court explained in LaSalle,

absent “an affirmative grant of summons authority for

13

purely criminal investigations,” 437 U.S. at 317 n.18,

an agency that issues an administrative subpoena to

obtain evidence for a criminal prosecution is not exercis-

ing its subpoena power in the good-faith pursuit of a

legitimate objective. Id. at 316 & n.18. The Court ac-

cordingly announced that it would “not countenance

delay in submitting a recommendation to the Justice

Department when there is an institutional commitment

to make [a criminal] referral and the [agency] merely

would like to gather additional evidence for the prosecu-

tion.” Id. at 316-317. “Similarly, the good-faith stand-

ard will not permit the [agency] to become an

information-gathering agency for other departments, in-

cluding the Department of Justice * * *.” Id. at 317.

Although LaSalle involved a summons issued by the

Internal Revenue Service, numerous courts have recog-

nized that LaSalle’s principles apply to other administra-

tive agencies, including DOE. See ICC v. Gould, 629 F.2d

847 (3d Cir. 1980), cert. denied, 449 U.S. 1077 (1981);

NLRB v. Interstate Dress Carriers, Inc., 610 F.2d 99

(8d Cir. 1979); United States v. Giant Industries,

4 EN. MGMT. (CCH) { 26,324 (D. Ariz. 1981) (applied

to DOE); United States v. Art Metal-U.S.A., Inc., 484

Supp. 884 (D. N.J. 1980) (applied to Inspector General

of GSA). See also SEC v. Dresser Industries, Inc., 628

F.2d 1368, 1387 (D.C. Cir.), cert. denied, 449 U.S. 993

(1980) (SEC subpoenas must be issued in good faith,

and not solely for criminal purposes).

2. Here, there are strong indications that the DOE

subpoenas were issued to petitioners solely for a criminal

purpose. Among these items of evidence are the follow-

ing:

a. The administrative subpoenas were issued by OSI,

the division within DOE that has expressly been as-

signed the responsibility for investigating suspected

14

criminal violations of DOE regulations. ERA ENFORCE-

MENT MANUAL (CCH) § 1.503.07.°

b. The subpoenas were issued after DOE’s civil en-

forcement branch (OSC) had already completed its in-

dependent and unrelated investigation of Tesoro’s com-

pliance with the pertinent regulations.

ce. OSI is seeking not simply further information, or

even answers to specific questions concerning Tesoro’s

processing arrangements, but the personal testimony of

petitioners in a way undeniably indicative of a highly

focused criminal investigation. Government attorneys

have announced that they will give petitioners Miranda-

type warnings. DOE will provide no assurance that peti-

tioners are not “targets” of a criminal investigation.

d. Although DOE has in its possession a large number

of documents relevant to the transactions that are the

subject of the subpoenas issued to petitioners, OSI has re-

fused to meet with counsel to discuss the specific subject

matter of the proposed interrogations or to provide peti-

tioners with an opportunity to review in advance those

documents regarding which they would be interrogated.

OSI has also refused to disclose the types of violations

being investigated, beyond the inscrutable references con-

tained in the subpoenas.

e. The Sulton memorandum shows that in conducting

its “Tesoro/Young investigation” DOE not only used its

6 The clear distinction between civil and criminal investigations

within DOE, and the unquestionable focus of this investigation on

suspected criminal violations, are dramatized by the recent internal

reorganization of the ERA, which separated OSI entirely from the

other enforcement arms. In that reorganization, DOE formalized

the separation of the criminal investigatory authority reposing in

OSI from the civil investigatory authority delegated to other divi-

sions of the agency (R-102 to R-136). In anticipation of this reor-

ganization, Mr. Rayburn Hanzlik, the Administrator of ERA, was

quoted in the press describing Mr. Whieldon, the official who signed

the subpoena issued to appellant Juren, as a “criminal expert”

(R-138 to R-140).

15

subpoena power for a purely criminal investigation, but

also consciously conspired with Criminal Division attor-

neys to delay a referral to the Justice Department until

additional evidence could be gathered through administra-

tive subpoenas. The Tesoro/Young investigation was

only one of 18 entitlement “cluster” audits under investi-

gation at the time of the Sulton memorandum; the gov-

ernment has not denied that petitioners’ subpoenas were

issued in connection with one or more of the other 18

such audits which were discussed at the March 1979 meet-

ing. The DOE officials who participated in that meeting

were precisely the same DOE officials who are now seeking

to compel petitioners’ testimony.

3. In response to the foregoing evidence, the govern-

ment has offered only the equivocal affidavits of two DOE

officials who attended the March 1979 meeting memorial-

ized in the Sulton memorandum (R-198 to R-204). Not-

withstanding the government’s conceded obligation to

make a prima facie showing that the subpoenas directed

to petitioners did in fact have a lawful civil purpose, the

affidavits do not contain any clear and unqualified state-

ment to that effect. The affidavits appear to say only that

the information sought through the subpoenas “may” be

used to further a civil purpose, not that the subpoenas

were actually issued with such a purpose in mind.

The affidavits contain lengthy generalized descriptions

of the functions of OSI and the various possible pur-

poses to which information gathered in a special investi-

gation may be put. They also assert that there has been

no criminal referral of, or decision to refer, this case to

the Department of Justice. But, on the simple, direct,

and most relevant issue of whether the disputed sub-

poenas were issued solely for a bona fide civil purpose, th.

affidavits are conspicuously silent.

4. Petitioners identified numerous indicators that the

DOE subpoenas were intended solely to advance a crim-

16

inal investigation. The government responded with in-

conclusive affidavits. Yet the TECA panel found that

petitioners had “presented no evidence that DOE acted

improperly” (App. A, infra, 2a).

This ruling was possible only because the TECA, like

the district court, viewed as dispositive the agency’s

representations that it had not yet decided to refer

petitioners’ case to the Department of Justice (App.

A, infra, 2a; App. E, infra, 17a). That is not

the critical consideration under LaSalle. The critical

question is whether there has been an “institutional com-

mitment” to conduct a purely criminal investigation.

Here, the evidence of such a commitment was substantial.

It was at least sufficient to warrant further inquiry

through limited discovery regarding DOE’s objectives.

The courts below demurred, because they erroneously

focused exclusively on whether a referral] decision had

been made.

LaSalle involved an IRS investigation of a taxpayer’s

tax liability. Unlike the investigating division of DOE,

the investigating division of the IRS is not bifurcated.

It is charged with uncovering both civil] and criminal

violations of the Internal Revenue Code. See 26 U.S.C.

7602; see also Donaldson v. United States, 400 U.S. 517,

535 (1971). Thus, in LaSalle, the only reliable indicator

of whether an investigation was solely criminal may

have been an actual decision to refer the case to DOJ.

Given the “institutional posture” of DOE, however,

reliable indicators of a purely criminal investigation can

be identified well in advance of an actual decision to refer.

It is therefore not necessary to await a referral decision

to ascertain the nature of the “institutional commit-

ment.” DOE has already made an institutional commit-

ment, apparently with the full knowledge and approval

of the Justice Department’s Criminal Division, to con-

duct a criminal, as distinguished from a civil, investi-

gation. At minimum, therefore, the government should

17

be required to make an affirmative showing that the ad-

ministrative subpoenas are not being used “to expand

[the government's] criminal discovery rights,” or as a

means of allowing the DOE “to become an information-

agency for * * * the Department of Justice”

(437 U.S. at 317).

Both the district court and the TECA misunderstood

the standard set forth in LaSalle. Had these courts recog-

nized that LaSalle requires a judicial determ*~~*tion as to

whether the egency has committed itself to . criminal

investigation (whether performed internally or by

the Department of Justice),’ and recognized the differ-

ences in enforcement structure between DOE and the

IRS, they could not have found petitioners’ evidence irrele-

vant, or the government’s representations conclusive.

Those courts erred in accepting DOE’s representation that

no referra! decision has been made as equivalent to the re-

quired showing that “the information sought will advance

a civil, as distinguished from a criminal, investigation.”

In this case, the former simply does not establish the

latter.

This Court should grant review to correct the danger-

ous misimpression that agency subpoenas automatically

satisfy the LaSalle standard, as long as no referral deci-

sion has been made.

TIt can hardly be suggested, and the government has not at-

tempted to suggest, that the prohibition of LaSalle extends only to

criminal investigations conducted by DOJ. The Supreme Court's

warning related to the type and purpose of the investigation being

conducted, not to the identity of the agency conducting it.

18

CONCLUSION

The petition for a writ of certiorari should be held

pending the D.C. Circuit’s rehearing on the question of

the district court’s jurisdiction.

If the D.C. Circuit reverses, this petition should be

granted, the judgment vacated, and the case remanded

for reconsideration in light of the D.C. Cireuit's ruling.

If the D.C. Circuit affirms, this petition should be

granted.

Respectfully submitted.

WruiaM E. NELSON RoBERT E. MONTGOMERY, JR.

(Counsel of Record) (Counsel of Record)

SHERLEE S. NELSON PETER BUSCEMI

NELSON & NELSON, P.C. PAUL, WEiss, RIFKIND,

1825 Jefferson Pl., N. W. WHARTON & GARRISON

Washington, D.C. 20036 A partnership including

(202) 659-0815 professional corporations

1714 Massachusetts Ave., N.W.

Washington, D.C. 20086

(202) 822-1816

Attorneys for Petitioner Attorneys for Petitioner

Edward W. Cromey Dennis Juren