Petition for Writ of Certiorari — Getty Oil Co. v. Department of Energy

- Supreme Court, U.S.

FILED }

NOV 5 1984

84-730 a

No.

OER L. STEVAS.

TT ESK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

GETTY OIL COMPANY,

Petitioner

We

DEPARTMENT OF ENERGY, et al.,

AND

UNITED STATES OF AMERICA,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

WILLIAM E. WICKENS

SURREY & MORSE

1250 Eye Street, N.W.

Washington, D.C. 20005

(202) 682-4000

Attorney for Getty Oil Company

ania

WILGON - Eres PRINTING Co.. INC. - 789-0096 - WASHINGTON. D.C. 20001

4) ? Wi NM

QUESTIONS PRESENTED

1. May an agency order imposing liability be sustained

where the agency’s proceeding was conducted: without

disclosure by the agency of the ex parte submissions

upon which it relied, without allowing discovery sought

on material facts in dispute, with the burden of proof

placed on the accused party, without any administrative

law judge or independent finder of facts, without the

requested adversarial hearing, without any rules of evi-

dence or discovery, and without notifying the accused

party that the period of the alleged price violation would

be extended by 15 months?

2. May evidence qualify as substantial for the purpose

of substantial evidence review where there was never

any opportunity for adversarial testing of that evidence,

either before the agency or in the District Court?

3. May prejudgment interest be awarded where the

only regulation providing for prejudgment interest was

adopted without compliance with applicable rulemaking

requirements, and where the amount of the underlying

claim was both uncertain and incalculable prior to judg-

ment?

4. May the Department of Energy impose liability

contrary to the plain meaning of an undefined term for

the period before a prospective regulation mandating a

different definition had been adopted?

(i)

ii

PARTIES TO THE PROCEEDING

The Respondents are the Department of Energy; Don-

ald P. Hodel, Secretary of Energy; George Brezney, Di-

rector, Office of Hearings and Appeals, Department of

Energy; and the United States of America.

Petitioner Getty Oil Company’s parent is Texaco Ac-

quisitions Inc., which is in turn wholly-owned by Texaco

Inc. Getty Oil Company has the following non-wholly-

owned subsidiaries and affiliates: Manito Pipelines Ltd.,

Chemplex Company (Joint Venture), Chemplex Construc-

tion Corporation, Iricon Agency Ltd., Butte Pipe Line

Company, Gibson Holdings, Ltd., Northern Tier Pipeline

Company, Texoma Pipe Line Company, Wascona Pipe

Line, Inc., Wascona Pipe Line, Ltd., Chase Transporta-

tion Company (Joint Venture), Chisholm Pipeline Com-

pany, MAGEC Finance Company (Partnership), Osage

Pipe Line Company, Seminole Pipeline Company, Hai-

bouty Alaska Oil Company, Chase Terminal Company

(Joint Venture), Tide Water Oil Company (India), Ltd.,

Yong-Nam Chemical Company, Ltd.

TABLE OF CONTENTS

- eee

Neen ee aise ciiinnrdeenictesinengnebinedagiinien

Nee Sa acninsbbeemannednedehonensisancmmeczons

CONSTITUTIONAL PROVISIONS, STATUTES,

AND REGULATIONS INVOLVED ..........0.....-.-.....

STATEMENT OF THE CASE ........000200.222222222--211200--0+--

FACTUAL BACKGROUND ............00..2000.22...2---------

THE PROCEEDINGS BELOW ............................

The Administrative Proceedings .....................

The Judicial Proceedings .......................-..--.------

REASONS FOR GRANTING THE WRIT ....................

I.

II.

III.

IV.

THE DOE VIOLATED THE MOST FUNDA-

MENTAL REQUIREMENTS OF PROCE-

DURAL DUE PROCESS ................-.......-......~-.-

EVIDENCE WHICH COULD NOT BE

TESTED CANNOT AS A MATTER OF LAW

CONSTITUTE SUBSTANTIAL EVIDENCE..

TECA ERRED IN ALLOWING AN AWARD

OF PREJUDGMENT INTEREST WHERE NO

VALID REGULATION PROVIDED FOR PRE-

JUDGMENT INTEREST AND WHERE THE

AMOUNT OF DAMAGES CLAIMED WAS

BOTH UNCERTAIN AND INCALCULABLE

PRIOR TO THE ENTRY OF JUDGMENT BY

ee

TECA ERRED IN ALLOWING THE DOE TO

APPLY THE SUBSTANCE OF A PROSPEC-

TIVE RULE RETROACTIVELY .........................

SE ol iigstaiivacniebdtdaAisinbeciisdaicinataninssnecohanenionunsis

eCenmnoanwo wo N

11

16

18

19

26

iv

TABLE OF AUTHORITIES

Cases: Page

Alaska Airlines, Inc. v. CAB, 545 F.2d 194 (D.C.

ER __- Sae kee ea IR ee O EBON STL ANN NA OP 13

Belcher v. Birmingham Trust National Bank, 488

i £ f fs | See ee orn 19

Eastern Air Lines, Inc. v. Atlantic Richfield Co.,

712 F.2d 1402 (Temp. Emer. Ct. App. 1983)... 19

Fry v. United States, 421 U.S. 542 (1975) ............... 9

Getty Oil Co. v. DOE, 581 F.2d 838 (Temp. Emer.

SA TI wicca iahtedh asdleneandcnan 25

Glendenning v. Ribicoff, 213 F. Supp. 301 (W.D.

SRO RE Rc RR RPS N/R ry Oe 17

Goldberg v. Kelly, 397 U.S. 254 (1970) ................ 12

Gonzales v. Freeman, 334 F.2d 570 (D.C. Cir.

RANGER See ie ire Re tate Sen ot 13

Gulf Oil Corp. v. DOE, 633 F.2d 296 (D.C. Cir.

I a i ee a, 14

Hannah v. Larche, 363 U.S. 420 (1960) —.............. 11

Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C.

Cir. 1977), cert. denied, 434 U.S. 829 (1977)... 12

Jones v. Pepsi-Cola Co., 223 F. Supp. 650 (D. Neb.

| ISra eeN Siceioe een e PR rE Reoe tee 7 24

Longview Refinina Co. v. Shore, 554 F.2d 1006

(Temp. Emer. Ct. App. 1977), cert. denied, 434

ES ee aye ee 26

Mellon Bank, N.A. v. Aetna Business Credit, Inc.,

619 F'.28 1001 (Sd Cir. 1900) ............................... 21

Mobil Oil Corp. v. FPC, 483 F.2d 1238 (D.C. Cir.

(| ERLE ee 17

Moore-McCormack Lines, Inc. v. United States, 413

sf § 2 Bi | ee eee eee 13

Northern California Power Agency v. Morton, 396

F. Supp. 1187 (D.D.C. 1975), aff'd mem., 539

pe Be | aE 13

Norwood v. Harrison, 413 U.S. 455 (1973) -.......... 14

Pan American World Airways, Inc. v. Boyd, 207

F. Supp. 162 (D.D.C. 1968) ..............---c0c.2.220-22- 14

Peter Fox Brewing Co. v. Sohio Petroleum Co.,

296 F.2d 274 (7th Cir. 1961) .......000020222 ee 20

Vv

TABLE OF AUTHORITIES—Continued

Page

Purdin v. Westwood Ranch & Livestock Co., 67

Mont. 568, 216 P. $326 (1928) ................................ 24

Rodale Press, Inc. v. FTC, 407 F.2d 1252 (D.C. Cir.

BOTTI catedeaectseteesncieseaaesbicetabishcealcnili dale th tei leahaeinbiisinsbacsie 15

Simmons v. United States, 348 U.S. 397 (1955)... 13

SEC v. Chenery, 382 U.S. 194 (1947) ....0...000000...... 25

Tenneco Oil Co. v. FEA, 613 F.2d 298 (Temp.

I: Sa a aiepnte iene 22

Texaco Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969)... 18

Trenton Cotton Oil Co. v. Commissioner, 147 F.2d

Dn I atc 22

Tully v. Mobil Oil Corp., 455 U.S. 245 (1982) _....... 9

Wisconsin v. Constantineau, 400 U.S. 483 (1971).. 11

Constitutional Provisions:

Fifth Amendment to the United States Constitu-

ERIN ELE CE A RAIN MEO Ia EN NET TRAE FEROS 2

Statutes:

Is i a cssainnsebsicniainiiaon 13

5 U.S.C. § 552(a) (1) (C) (1976) .2o2 2

ye ee Pe CD oie 8

Be re Oe re OT icant 2,13

po TR Een 2

15 U.S.C. § 754(a) (1) (1976) _...... Rigg PRD T TOD. eae 13

, Bik eR Rk Ey FANNON nC ae ene een 2

28 U.S.C. §§ 1831-1332, 1337, 1361, 2201-2202

GI Sibi cadrcn cece sthastcssicdicislisnihseincingdi hase aiedloamiaiaians 8

Economic Stabilization Act of 1970 §§ 207(a),

I 200s, scala seth dita ches cajanich ne einaba ictus imandliciin 2,13

Emergency Petroleum Allocation Act of 1975

TR ERA SA Ee tee AR Caer UO Ee 2,13

Regulations:

pe fe | ee eee 3,14

i Pet yp EE 2 LS. 5 | ace ce em 14

10 C.F.R. § 205.106 (b) (2) (1977) -....-022 8, 14

pee Ef Fs) Sameer eenNCrem rE 3,14

pe A 8, ) ene 3,14

vi

TABLE OF AUTHORITIES—Continued

Page

10C.F.R. § 206.1906(a) (1977) .............................. 3,18

a Ms | ee ane a 3,5

eis MUI, CPU ED wsncncscncescccesacsewasetsuosssentncennnnl 8, 5, 22

pee A RL 8: : ) ae sie 3

10 C.F.R. § 212.73 (a) (1977) 2.22 =a 5

43 Fed. Reg. 59,810 (Dec. 21, 1978) -. eee. 18

Miscellaneous:

American Bar Association, Administrative Law

Section, Recommendations and Report to the

House of Delegates, American Bar Association:

Report on Appellate Review for Emergency Pro-

I a ci ie cahialbiaionanie 11

M. Knappen, Constitutional and Legal History of

I i cclepucetinn 16

Elkins, The Temporary Emergency Court of Ap-

pea's: A Study in the Abdication of Judicial

Responsibility, 1978 Duke L.J. 118, 151............... 11

17A C.J.S. Contracts §§ 331, 332, 334 (1968) ........ 23, 24

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

No.

GETTY OIL COMPANY,

Petitioner

v.

DEPARTMENT OF ENERGY, et al.,

AND

UNITED STATES OF AMERICA,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

OF THE UNITED STATES

Petitioner Getty Oil Company respectfully prays that

a Writ of Certiorari be issued to review the Judgment

and Opinion of the Temporary Emergency Court of Ap-

peals of the United States entered in this action on Octo-

ber 5, 1984.

OPINIONS BELOW

The opinion of the Temporary Emergency Court of

Appeals of the United States, No. 3-37, is not yet re-

ported but is reproduced at Appendix A. The decision of

2

the United States District Court for the District of Dela-

ware, Civil Action No. 77-434, 569 F.Supp. 1204 (D.Del.

1983), is reproduced at Appendix B. The Decision and

Order issued October 7, 1977, by the Department of

Energy is reproduced at Appendix F.

JURISDICTION

The decision of the Temporary Emergency Court of

Appeals was ..anded down on September 26, 1984, and

judgment was entered on October 5, 1984. The jurisdic-

tion of this Court is invoked under 28 U.S.C. § 1254(1)

(1976) and § 211(g) of the Economic Stabilization Act

of 1970, 12 U.S.C. § 1904 note, as incorporated in § 5 of

the Emergency Petroleum Allocation Act, 15 U.S.C. § 754

(1976).

CONSTITUTIONAL PROVISIONS, STATUTES,

AND REGULATIONS INVOLVED

The Fifth Amendment to the United States Constitu-

tion provides that “[n]o person shall be . . . deprived of

life, liberty, or property, without due process of law.”

Sections 207(a) and 211(g) of the Economic Stabiliza-

tion Act of 1970, 12 U.S.C. § 1904 note (1976), appear

at Appendix J. Section 754(a)(1) of the Emergency

Petroleum Allocation Act of 1975, 15 U.S.C. § 754(a) (1)

(1876) appears at Appendix K. Section 552(a) (1) (C)

of the Administrative Procedure Act, 5 U.S.C. § 552(a)

(1) (ce) (1976), appears at Appendix L. Relevant por-

tions of Part 205, entitled “Administrative Procedures

and Sanctions,” of the Federal Energy Administration

regulations in effect at the time of the crude oil transac-

tions, 10 C.F.R. §§ 205.106, 205.108, and 205.172 (1977),

appear at Appendix M. Section 205.196(a), entitled

“Remedies,” of the regulations of the Federal Energy Ad-

3

ministration as amended in 1975 and in effect at the time

of the crude oil transactions, 10 C.F.R. § 205.195(a)

(1977), appears at Appendix N. Relevant portions of

Part 212, entitled “Mandatory Petroleum Price Regula-

tions,” of the Federal Energy Office in effect at the time

of the crude oil transactions, 10 C.F.R. §§ 212.31, 212.73

(1977), appear at Appendix O. An interim amendment

regarding exchanges adopted in 1978, 43 Fed. Reg. 59,810

(Dec. 21, 1978), appears at Appendix P.

STATEMENT OF THE CAS£&

This is an appeal by Getty Oil Company (“Getty”)

from an Opinion of the Temporary Emergency Court of

Appeals (“TECA”) modifying and affirming the deci-

sion of the United States District Court for the District

of Delaware. The District Court sustained DOE’s find-

ing that Getty had violated Department of Energy

(“DOE”) producer price regulations by overcharging

The Standard Oil Company (Ohio) (‘Sohio”) on sales of

domestic crude oil and that the DOF had properly as-

sessed prejudgment interest on such overcharges.

FACTUAL BACKGROUND

In May 1973, prior to the imposition of price controls,

Getty and Sohio entered into three agreements:

(1) Sohio sold Getty its interest in Getty’s oil-

producing properties in a California oilfield.

(2) Getty agreed to sell Sohio specified volumes ot

various grudes of domestic crude oil for cash, at

prices which ‘he contract provided could not ex-

ceed the posted prices.

(3) Sohio agreed to sell Getty equivalent volumes of

two foreign crudes for cash at prices which re-

4

flected the then-prevailing differentials between

those crudes and the domestic crude which Getty

sold to Sohio pursuant to the domestic agree-

ment. This agreement provided a price escala-

tion mechanism which could allow the adjust-

ment of prices to market values. This crude

was resold by Getty in Japan and never entered

the United States.

Each sale of crude oil was separately billed and sep-

arately paid for in full in cash, without any set-off or

adjustment. Payment under the domestic agreement was

due within ten days of receipt of invoice; payment under

the foreign agreement was due in ninety days.

The sales of the domestic crude were not conditioned

upon sales of the foreign crude. The termination provi-

sions were not symmetrical between the two crude oil

sales agreements. The two sales contracts involved dif-

ferent types of oil, different gravities, different sulphur

contents, different prices, different countries of origin,

and different delivery points.

Both Sohio and Getty began treating the transactions

as separate purchases and sales, and reported them as

such to the DOE. As the DOE’s Office of Hearings and

Appeals (“OHA”) itself later found, the parties in-

tended to sell the respective crudes at prevailing market

prices: “Thus, when the bargain was struck by Getty

and Sohio, each firm contemplated receiving the other’s

crude oil at the generally prevailing market price for the

grade of crude oil involved at the location where it was

to be transferred.” (Appendix F at 98a.)

Subsequent to the execution of the contracts, the Arab

oil embargo occurred and price controls on domestic crude

oil were imposed. Between August 19, 1973 and Janu-

ary 28, 1981, the maximum price which a producer

could charge for domestic crude oil was determined by

the Mandatory Petroleum Price Regulations, set forth at

10 C.F.R. Part 212 (1977). During the time period per-

tinent to this case, the regulations provided, inter alia,

that “no producer may charge a price higher than the

lower tier ceiling price for any first sale of domestic

crude oil.” 10 C.F.R. § 212.73(a) (1977) (Appendix O).

The regulations defined “price” as “any consideration for

the sale of any property or services and includes commis-

sions, dues, fees, margins, rates, charges, tariffs, fares,

or premiums, regardless of form.” 10 C.F.R. § 212.31

(1977) (Appendix 0). The regulations did not define

“consideration.”

As a result of the Arab oil embargo, the value of the

foreign crude purchased by Getty increased dramatically

while domestic crude prices were frozen. Sohio was, con-

sequently, suddenly selling its foreign crude to Getty at

contract prices which were below prevailing market

prices. Sohio was apparently content with that arrange-

ment because it was passing through to its domestic cus-

tomers not the price it was paying Getty for the domestic

oil it was purchasing, but the higher “value” of the for-

eign crude it was selling to Getty.

THE PROCEEDINGS BELOW

The Administrative Proce.dings

On August 15, 1974, one year after price controls be-

gan, Sohio, unbeknown to Getty, sought DOE permission

to amend its reports so that the transactions with Getty

could be retroactively reported as exchanges. After in-

forming Sohio that the transactions were separate sales,

the DOE conducted an audit of the transactions and is-

sued a Notice of Probable Violation (“NOPV”) to Sohio

on October 11, 1974, charging that Sohio improperly

treated the transactions as exchanges and that the cost

of the domestic crude purchased by Sohio was the price

which it paid Getty, not the value of the foreign crude

which it sold to Getty at a lower price. After a secret

meeting with Sohio officials at which no records were

kept, the DOE suddenly withdrew its NOPV on Novem-

ber 4, 1974.

Thereafter, the Getty/Sohio transactions were exam-

ined by the DOE’s Offices of General Counsel, Compli-

ance, Crude Oil Operations, Regulations Management,

and the Office of the Assistant Federal Energy Adminis-

tration (“FEA”) Administrator. (Appendix G) Person-

nel in each office recognized that Getty’s treatment of the

transactions was lawful. For example, on February 14,

1975, Rendel Alldredge of DOE’s Office of Crude Oil

Operations wrote a memorandum stating:

[I]t cannot be justifiably asserted either that the

Sohio/Getty Arrangement violates any laws or regu-

lations . . . or that it was entered into with any

such intent....

Alldredge recommended that the agency “move quickly to

produce adequate definitions and delineations of and be-

tween sales and exchanges... .” (Appendix G at 156a)

In October 1975, Chuck Boehl of DOE’s Office of Reg-

ulations Management reported to Assistant Administra-

tor Gorman Smith that:

General Counsel now apparently feels that FEA

regulations permit the Getty-Sohio type of exchange

and Sohio’s method of booking costs. GC proposes to

issue a proposed amendment to the regulations to

be applied prospectively ....

Although the two agreements seem related they are

separate and payment is made for the crude in each

case (which would seem to indicate a sale) ... I

am not convinced the Getty-Sohio deal for domestic

crude is an exchange. (Appendix G at 157a)

On July 29, 1975, Assistant Administrator Gorman

Smith ordered prospective rulemaking (Appendix G at

158a), which was not adopted until 1978 when the agency

provided, for the first time, that matching purchases and

7

sales should be treated not as sales, but as exchanges.

See Appendix P at 184a.

Nevertheless, on August 1, 1975, only three days after

ordering such prospective rulemaking, the DOE issued

an NOPV to Getty. On August 12, 1976, the DOE issued

a Remedial Order to Getty charging Getty with a price

violation for the period of October 1973 through October

1974 and an entitlements violation for the period of

November 1974 through January 1976.1

Getty appealed the Remedial Order to the Office of

Hearing and Appeals. The administrative proceeding be-

fore OHA was not conducted under the agency’s rules of

procedure that are now in place. At that time, there

were no rules against ex parte contacts, no rules of dis-

covery, no rules of evidence, no definitive rules of proce-

dure, and no identifiable record. The burden of proof

was on Getty. There were no witnesses, much less any

opportunity to cross-examine them. Large portions of the

record were secret from Getty, including evidence under-

lying the Remedial Order, evidence to support the cal-

culation of the alleged overcharges, and evidence gath-

ered ex parte in the course of OHA’s investigation of

Getty’s appeal.

Getty sought discovery on several disputed issues of

material fact, including objective evidence of Sohio’s con-

tractual intent, the calculation of alleged overcharges,

and contemporaneous construction of applicable regula-

tions. Getty’s discovery was denied except as to the

transfer price data base which the agency never pro-

vided—giving Getty computer summaries instead. Getty

sought an evidentiary hearing on seven occasions which

OHA denied. The chronology of Getty’s unsuccessful at-

tempts to obtain discovery and an evidentiary hearing is

summarized in Appendix I.

1 The price violation assumed a sale, while the entitlements viola-

tion assumed that Getty had retained the crude.

8

On October 7, 1977, OHA issued a Final Decision and

Order which found that the parties initially intended to

receive the contract price for their respective crude oils,

but that subsequent events changed the nature of the

consideration. (Appendix F at 98a-99a) As a result,

the Decision and Order concluded that the Getty and

Sohio transactions thereupon became exchanges rather

than sales. Based solely upon that finding, it concluded

that there was a price violation by Getty because the

foreign crude purchased by Getty thereby became part

of the consideration for the domestic crude it had sold.

Without notice to Getty or any opportunity to respond,

the Decision and Order enlarged the period of alleged

price violation by fifteen months. (Appendix F at 126a-

127a) As a result, Getty’s liability for the alleged price

violation suddenly increased from $35,000,000 to over

$84,000,000, exclusive of interest.

The Judicial Proceedings

Getty brought suit in the United States District Court

for the District of Delaware seeking judicial review of

the DOE’s Decision and Order pursuant to the Adminis-

trative Procedure Act, 5 U.S.C. §§ 702-706 (1976), and

seeking injunctive and declaratory relief pursuant to 28

U.S.C. §§ 1331-1332, 1337, 13861, 2201, and 2202 (1976).

The Government counterclaimed for the amount of the

overcharges found in the Decision and Order and for

additional overcharges which had not been subject to

any prior proceedings before the agency. On cross-

motions for summary judgment,’ the District Court, in

its July 7, 1983, decision, affirmed Getty’s liability for all

2 Contrary to the decision of TECA, by moving for summary

judgment seeking reversal of the DOE’s erroneous rulings, Getty in

no way * imitted that there are no factual disputes in this case.

Rather, Getty’s motion was based on the numerous Constitutional

ana procedural defects in the DOE proceedings below, and other

clear errors of law, and thus no underlying factual disputes were

properly before the court.

9

but the first three-month period of the alleged violation,

but concluded that the DOE had erred in calculating the

amount of the ovecharges by Getty and ordered a re-

mand for a recalculation of damages.* (Appendix B at

43a) Following Getty’s stipulation as to the calculation

of damages which DOE would have made had this ele-

ment of the remand gone forward, the District Court, by

Final Order dated September 20, 1983, entered judg-

ment for the DOE in the amount of $133,220,294.00, in-

cluding prejudgment interest. (Appendix F)

TECA affirmed by decision dated September 26, 1984,

modifying the District Court’s judgment only as to the

remedy, which TECA recognized was not an issue before

it, having previously denied the participation of amici

curiae on that very issue. (Appendix A)

REASONS FOR GRANTING THE WRIT

This Court has never granted a writ of certiorari for

any case arising from TECA involving the issues of

petroleum price controls or DOE procedures.* In the ab-

sence of any such review by this Court, TECA has

evolved doctrines which substantially change the body of

Constitutional law and administrative law, and which

conflict with the decisions in virtually every circuit.

Many of those changes are embodied in this case. They

transcend energy regulation and will impact broad areas

of commercial law.

In an adjudicative proceeding such as the one before

the DOE, an agency may not rely upon ex parte submis-

3 Other elements of the Government’s counterclaim were also re-

manded and remain on remand before the agency.

*This Court has granted certiorari in only two TECA cases.

Tully v. Mobil Oil Corp., 455 U.S. 245 (1982), involved New York

State taxes. Fry v. United States, 421 U.S. 542 (1975), involved

salaries of state employees. By contrast, this Court frequently has

granted certiorari in natural gas cases, which do not emanate

from TECA.

10

sions and secret evidence, but TECA permitted DOE to

do so here, in conflict with previous holdings of this

Court, and of the Ninth and District of Columbia Cir-

cuits. Agencies may not place the burden of proof on

the accused party, but TECA permitted DOE to do so,

in conflict with this Court’s prior ¢ecisions. Although

there were numerous disputed issues of material fact,

TECA upheld an agency adjudication that afforded no

opportunity for the confrontation and cross-examination

of adverse witnesses or for any testing of the evidence

before an administrative law judge or other independent

finder of fact, in conflict with the District of Columbia

Cireuit. Agencies may not enlarge the time period of

alleged violations without notice or opportunity to re-

spond, but TECA permitted DOE to do so here, in con-

flict with the Seventh and the District of Columbia Cir-

cuits. Agencies are required to follow their own rules,

but TECA has permitted DOE to abandon those rules as

well, in conflict with its own prior decisions.

Contrary to established rules, TECA has here, in effect,

allowed evidence to be considered substantial for pur-

poses of substantial evidence review even though there

was no opportunity for adversarial testing of it either

before the agency or in the District Court, in conflict

with the District of Columbia Circuit.

Despite uniform holdings that prejudgment interest

cannot be awarded where the regulation providing for

it was not adopted in compliance with applicable rule

making procedures, or where the amount of damages

claimed was uncertain, TECA has upheld such interest

here, in conflict with the Third Circuit, the Fifth Cir-

cuit, and TECA’s own prior opinions.

TECA has permitted an agency which knew it needed

a prospective rule, and adopted one, to apply the sub-

stance of that rule retroactively, in conflict with TECA’s

own prior decisions. The DOE’s imposition of liability

was based on a radical departure from then-existing reg-

|

|

11

ulations ar... ‘rom common law distinctions of sales ver-

sus exchauges. In so doing the historic definition of con-

sideration and the principles of contract divisibility have

been abandoned.

In the absence of review by this Court, TECA’s de-

parture from general precedent has been noted by com-

mentators. (See Elkins, The Temporary Emergency Court

of Appeals: A Study in the Abdication of Judicial Re-

sponsibility, 1978 Duke L.J. 118, 151.) This criticism of

TECA has been echoed in a report on Appellate Review

for Emergency Programs dated October 1984 by the

American Bar Association Section of Administrative

Law. (American Bar Association, Administrative Law

Section, Recommendations and Report to the House of

Delegates, American Bar Association: Report on Appel-

late Review for Emergency Programs (1984) )

If allowed to stand unreviewed, this decision of TECA

and others like it will have transformed the Constitu-

tional and administrative law of this country, and TECA

will have warped and twisted historic doctrines in ways

that will impact broad areas of commercial life.

I. THE DOE VIOLATED THE MOST FUNDAMEN-

TAL REQUIREMENTS OF PROCEDURAL DUE

PROCESS

In Wisconsin v. Constantineau, 400 U.S. 4338, 436

(1971), this Court declared that “[i]t is procedure that

marks much of the difference between rule by law and

rule by fiat.”

Where, as here, an agency attempts to adjudicate pri-

vate rights and liberties, the necessary procedures must

include traditional judicial procedures. In Hannah v.

Larche, 363 U.S. 420, 442 (1960), this Court said:

[W]hen governmental agencies adjudicate or make

binding determinations which directly affect the legal

rights of individuals, it is imperative that those

12

agencies use the procedures which have traditionally

been associated with the judicial process.

This does not mean that the DOE must convene a full

trial to adjudicate. But it does mean that the agency

must observe certain basic and fundamental procedures.

In Goldberg v. Kelly, 397 U.S. 254 (1970), this Court

specified the following procedures required by due proc-

ess for agency adjudicative proceedings: (1) timely and

adequate notice, (2) confrontation of adverse witnesses,

(3) oral presentation of arguments, (4) oral presenta-

tion of evidence, (5) cross-examination of adverse wit-

nesses, (6) disclosure to the claimant of opposing evi-

dence, (7) the right to retain an attorney, (8) a deter-

mination on the record of the hearing, (9) a statement

of the reasons for the decision and an indication of the

evidence relied on, and (10) an impartial decisionmaker.

Virtually every one of these fundamental procedural

safeguards was missing in the proceeding before the

agency below:

First, the agency relied upon secret evidence which it

received ex parte and never disclosed to Getty during the

course of the agency proceedings. Appendix I lists some

of that evidence. In Home Box Office, Inc. v. FCC, 567

F.2d 9, 54 (D.C. Cir. 1977), cert. denied, 484 U.S. 829

(1977), this Court condemned receipt of evidence on an

ex parte basis:

Even the possibility that there is here one adminis-

trative record for the public and this court and an-

other for the Commission and those “in the know”

is intolerable.

Second, Getty sought but was denied discovery on ma-

terial facts in dispute. It is not proper for the Govern-

ment to withhold the evidence on which it proceeded

while purporting to afford the party an opportunity to

appeal. Such a proceeding would be no more than “a

18

‘game of blindman’s buff.’” Moore-McCormack Lines,

Inc. v. United States, 413 F.2d 568, 585 (Ct. Cl. 1969),

quoting Simmons v. United States, 348 U.S. 397, 405

(1955). It is because DOE has now admitted that con-

sideration is based on intent® that the denial by the

agency of the discovery Getty sought as to Sohio’s objec-

tive intent was so prejudicial.

Third, Getty sought but was denied cross-examination

on material facts in dispute, which violates the doctrine

set forth in Alaska Airlines, Inc. v. CAB, 545 F.2d 194,

200-01 (D.C. Cir. 1976). Not only was there no cross-

examination, but there were no witnesses at all, and there

was no evidentiary hearing.

Fourth, there were only minimal rules of procedure,

and no rules of evidence, and no rules of discovery. The

Administrative Procedure Act, 5 U.S.C. § 552(a) (1) (C)

(1976) (Appendix L), requires administrative agencies

to publish adequate rules of procedure for their proceed-

ings. Those rules should include reasonably detailed

procedures, and include those for notice of charges, op-

portunity to present evidence and to cross-examine ad-

verse witnesses. Gonzalez v. Freeman, 334 F.2d 570, 578

(D.C. Cir. 1964) (agency action “cannot be left to ad-

ministrative improvisation on a case-by-case basis.’’).

In Northern California Power Agency v. Morton, 396

F.Supp. 1187, 1191 (D.D.C. 1975), aff'd mem., 539 F.2d

243 (D.C. Cir. 1976), the court confirmed that a “rea-

sonably complete code of procedures set out in advance

by which actions can be guided, and strategies planned,”

is required.

5 See infra at 20.

6 DOE is subject to this requirement of the APA. Section 207 (a)

of the Economic Stabilization Act subjected the Cost of Living

Council, predecessor to DOE, to Section 552 of the APA. 12 U.S.C.

§ 1904 note (1976) (Appendix J). Section 5 of the Emergency

Petroleum Allocation Act incorporated Section 207 and made it

applicable to any regulation or order issued under the Act’s author-

ity. 15 U.S.C. § 754(a) (1) (1976) (Appendix K).

14

Here, the agency did not have a “reasonably complete

code” of rules. The procedures set out in Subpart H of

DOE’s regulations, 10 C.F.R. Part 205 (1977), merely

described the mechanical steps to be followed in filling an

appeal, and OHA’s discretionary powers in evaluating

the appeal.? Relevant sections of Part 205 appear at Ap-

pendix M.

Fifth, there was no administrative law judge or inde-

pendent fact finder, which undermines any semblance of

a fair adjudication.®

Sixth, the burden of proof was on Getty. Under 10

C.F.R. § 205.106(b) (2) (1977) of DOE’s regulations,

mere allegations in a remedial order were assumed to be

true. (Appendix M) The agency was not required to pro-

duce evidence to support or defend its allegations but the

burden was upon the company to prove that the agency’s

action was erroneous in fact or in law. In Norwood v.

Harrison, 413 U.S. 455, 471 (1973), this Court made

plain that:

No presumptions flow from mere allegations; no one

can be required, consistent with due process, to

prove the absence of violation of law.

In Pan American World Airways, Inc. v. Boyd, 207

F.Supp. 152, 154 (D.D.C. 1962), where as here the

agency reached its tentative conclusions on the basis of

a study, and then set hearings to receive comments on

why the conclusions should not be carried into effect, the

court declared that:

7 Thus, 10 C.F.R. § 205.106 (1977), permitted OHA to initiate an

investigation of any statement in an appeal, solicit and accept

comments from third parties subject to providing the appellant

with an opportunity to respond, and in its discretion convene a

conference or (non-evidentiary) hearing for the exchange of views

on the appeal. (See also 10 C.F.R. §§ 205.108, 205.172 (1977)).

(Appendix M)

8 See Gulf Oil Corp. v. DOE, 668 F.2d 296 (D.C. Cir. 1981), where

OHA engaged in ex parte communications.

15

One cannot conceive a judicial tribunal first tenta-

tively deciding a case in camera ex parte, and then

trying it, putting the burden of proof on the parties

who disagree with the tentative decision. Such a

course seems contrary to the basic traditions of the

common law and the fundamental concepts of our

jurisprudence.

Finally, the time period of alleged price violation was

enlarged by 15 months after Getty’s opportunity to re-

spond had expired. That action alone increased the

amount of alleged price violation by more than $50 mil-

lion exclusive of interest. That is precisely the practice

that was addressed by the court in Rodale Press, Inc. v.

FTC, 407 F.2d 1252 (D.C. Cir. 1968), where the Court

stated:

[I]t is well settled that an agency may not change

theories in midstream without giving respondents

reasonable notice of the change. .. .

By substituting an issue... for the one framed by

the pleadings, . . . the Commission has deprived

petitioners of both notice and hearing on the substi-

tuted issue. The evil at which the statute strikes is

not remedied by observing that the outcome would

perhaps or even likely have been the same. It is the

opportunity to present argument under the new

theory of violation, which must be supplied.

Id. at 1256-57 (emphasis in original) (citations omitted).

TECA dismisses all of this with the assertion that no

facts were in dispute and Getty had stipulated to dam-

ages. Because this was a summary judgment case, only

facts not in dispute were properly before the court. Many

facts, such as Sohio’s intent, were disputed by Getty but

dismissed as irrelevant by the District Court. Because

that intent is now admitted to be relevant, it was preju-

dicial in the extreme to deny Getty’s discovery on that

issue. That issue and the others disputed by Getty go

16

not to the question of damages but to the question of

liability.®

The effect of TECA’s decision is to sustain an order

arising from a proceeding without any of the procedural

safeguards which are the hallmarks of Anglo-American

law.?°

Even if any one of these failures standing alone were

not fatal (and many are), taken together they represent

a complete failure by this agency to provide a fair ad-

judication and violate procedural due process.

If those procedural defects were present in an immi-

gration case or a civil service case, the courts would be

quick to act. They should be no less ready to intervene

when it is an oil company which finds itself before an

agency.

II. EVIDENCE WHICH COULD NOT BE TESTED CAN-

NOT AS A MATTER OF LAW CONSTITUTE SUB-

STANTIAL EVIDENCE

It is self-evident that where critical facts are disputed,

the evidence must be explored and tested at some stage

® Getty’s stipulation made during an oral conference with the

court merely stipulated what DOE’s damages would be, based on

its theory, had a remand been ordered on that limited issue. The

stipulation was entered into for the purpose of obtaining an

appealable final order.

10 DOE’s procedures were not entirely unlike those of the in-

famous Court of Star Chamber. See M. Knappen, Constitutional

and Legal History of England 317 (1942):

The Star Chamber did not use the common law system of

justice, but tended to employ the methods of the Roman law,

which were very much more favorable to the executive. There

was no jury; the suspect was not allowed to cross-examine or,

in some cases, even to see the witnesses against him.

Here, too, there was no independent fact finder. Some of the

evidence was secret and Getty was unable to test or challenge the

remainder.

17

of a proceeding. If substantial evidence review precludes

that testing process in the reviewing court through de

novo discovery and cross-examination, a fortiori the evi-

dence must have been disclosed and tested before the

agency. In Mobil Oil Corp. v. FPC, 483 F.2d 1238 (1).C.

Cir. 1973), the court held that without such testing the

record was inadequate for substantial evidence review:

Informal comments simply cannot create a record

that satisfies the substantial evidence test. Even if

controverting information is submitted in the form

of comments by adverse parties, the procedure em-

ployed cannot be relied upon as adequate.

Id. at 1260 (emphasis in original). The court then ob-

served that:

There must, however, be some mechanism whereby

adverse parties can test, criticize and illumine the

flaws in the evidentiary basis being advanced re-

garding a particular point. The traditional method

of doing this is cross-examination . . . . But what-

ever procedure is followed, it must assure that the

Commission has a substantial evidentiary basis for

its findings and it must provide the court with an

adequate record on review.

Id. at 1262-63. Similarly, in Glendenning v. Ribicoff, 218

F. Supp. 301, 303 (W.D. Mo. 1962), involving adjudica-

tion of a social security disability claim, the court de-

clared:

In an administrative hearing where the facts, as in

the case at bar, are (1) adjudicative, (2) disputed

and (3) critical, nothing less than submission

through evidence, subject to cross-examination and

rebuttal, will normally suffice.

Here, not only was the evidence untested but much of

it was secret and unknown to Getty throughout the dura-

tion of the administrative proceeding.“ If these proce-

11 See Appendix H.

18

dures are allowed to stand as the basis for a judgment—

whether it be for $1.33 or $133 million—then hundreds

of years of Anglo-American procedural law will have

been swept away.

lil. TECA ERRED IN ALLOWING AN AWARD OF

PREJUDGMENT INTEREST WHERE NO VALID

REGULATION PROVIDED FOR PREJUDGMENT

INTEREST AND WHERE THE AMOUNT OF DAM-

AGES CLAIMED WAS BOTH UNCERTAIN AND

INCALCULABLE PRIOR TO THE ENTRY OF

JUDGMENT BY THE DISTRICT COURT

DOE ordered Getty to pay interest on the overcharges

assessed in the Decision and Order. (Appendix F at

126a) Such interest was assessed from the date of the

transactions. This was improper for two reasons:

First, DOE has no regulatory authority to order in-

terest on overcharges because the regulation which pur-

ports to confer that authority was promulgated without

notice and comment. DOE relied upon § 205.195(a) of

its regulations. (Appendix F at 123a-124a) As initially

promulgated, § 205.195(a) was limited to DOE’s author-

ity to order refunds and said nothing whatever about

assessing interest on such overcharges. Subsequently,

without notice or comment, DOE amended § 205.195(a)

to “clarify” that interest was required to be paid on re-

funds. (Appendix N) Such a fundamental change in the

DOE’s rules required the agency to conduct appropriate

rulemaking proceedings. In Texaco Inc. v. FPC, 412

F.2d 740 (3d Cir. 1969), the court set aside a regula-

tion which merely changed the method of calculating

prejudgment interest, because that regulation had been

adopted without complying with rulemaking procedures.

If a regulation which merely changes the rate of interest

for prejudgment interest requires rulemaking, a fortiori,

a regulation imposing prejudgment interest in the first

place would also require rulemaking.

19

Second, in Eastern Air Lines, Inc. v. Atlantic Rich-

field Co., 712 F.2d 1402, 1410 (Temp. Emer. Ct. App.

1983), TECA held that “pre-judgment interest is not

available where the amount of damages claimed to be

due is uncertain.” See also Belcher v. Birmingham Trust

National Bank, 488 F.2d 474 (5th Cir. 1973). In this

case, not only were the amount of damages claimed un-

certain, but every element required to make that calcula-

tion was uncertain. The domestic prices, the volumes,

and the transfer values which together are used to cal-

culate the size of DOE’s claim, were all uncertain, as

demonstrated by the fact that the District Court found

that DOE had used the wrong transfer values, volumes,

and prices and initially remanded those questions for

further proceedings. (Appendix B at 43a)

With respect to the last fifteen months of alleged viola-

tion, until the Decision and Order was issued the Dis-

trict Court recognized that Getty did not even know it

was charged with a violation. (Appendix B at 32a) That

being true, the amount claimed was hardly certain, and

TECA’s conclusions sustaining prejudgment interest, for

which it provided no rationale at all, were in error.

IV. TECA ERRED IN ALLOWING THE DOE TO AP-

PLY THE SUBSTANCE OF A PROSPECTIVE RULE

RETROACTIVELY

This case represents an attempt by the DOE to en-

graft new regulatory mandates onto the regulations as

they existed at the time of the Getty-Sohio transactions.

As set forth in Appendix G hereto, DOE’s officials ac-

knowledged that Getty violated no applicable regula-

tion. They recognized as well that prospective rulemak-

ing was required if sales were to be treated as anything

ether than sales. The agency, in fact, embarked upon 2

rulemaking proceeding which, however, did not change

the rules until 1978. That rulemaking for the first time

defined an exchange as including matching purchases

and sales. See 43 Fed. Reg. 59,810 (Dec. 21, 1978);

Appendix P.

The issue here is whether the value of foreign oil pur-

chased by Getty was part of the consideration for domes-

tic oil sold by Getty prior to February 1976 and before

the 1978 rulemaking was accomplished.

In its Decision and Order of October 7, 1977, the DOE

concluded that the parties initially intended to receive

the contract price for their respective crude oils: “Thus,

when the bargain was struck by Getty and Sohio, each

firm contemplated receiving the other’s crude oil at the

generally prevailing market price for the grade of crude

oil involved at the location where it was to be trans-

ferred.” (Appendix F at 98a).

The DOE then made three fundamental errors of law:

First, it concluded, without citing any legal authority,

that subsequent events changed the nature of the consid-

eration. (Appendix F at 98a-99a) The DOE has now ad-

mitted, at page 25 in its Opposition Brief filed with the

District Court, that consideration “is determined as of the

execution date of the contract.” Thus, the fundamental

rationale of the Decision and Order—that the identity of

consideration can be changed by subsequent events—was

in error. As the Seventh Circuit held in Peter Fox Brew-

ing Co. v. Sohio Petrolewm Co., 296 F.2d 274, 281 (7th

Cir. 1961), “[{t]he rights of the parties fixed by contract

are not governed by comparing their subsequent relative

gains or losses.”

Second, DOE erred in disregarding the express price

provision of the domestic contract in determining con-

sideration. The domestic contract stated that the price

could not exceed posted prices:

The price to be paid for crude oil to Getty . . . shall

be the posted prices specified [in the 1971 contract)

21

or the price which Getty Oil may lawfully charge,

which may in no event exceed posted prices.”

As the Third Circuit held in Mellon Bank, N.A. v. Aetna

Business Credit, Inc., 619 F.2d 1001, 1009 (3d Cir.

1980), “the sanctity of the written words of the contract

is embedded in the law of contract interpretation. .. .

[A] court will make no inference or give any construc-

tion to the terms of a written contract that may be in

conflict with the clearly expressed language of the writ-

ten agreement.”

DOE has cited no authority from any court in the

land that express price terms in contracts can be disre-

garded or erased. The reasons are self-evident. Suppose

a grocer contracts to buy a load of oranges at the then-

market price, and at the same time, and because of that,

loans the grower $15,000 at the maximum legal interest

rate. If a killer frost then made the value of the oranges

soar before they were delivered, would the subsequent

frost make the now higher value of the oranges part of

the consideration for the loan so that the hapless grocer

becomes a violator of the usury law? That hypothetical

is no more absurd on its face than the charge which

Getty finds itself defending against in this case.*

Third, having erred in disregarding the express price

provision of the domestic contract, and having erred in

concluding that subsequent events change the identity of

12 It is not disputed that sales at “posted” prices would not vio-

late any price control regulations. It is also not disputed that Getty

did not receive any cash payment in excess of the posted prices.

“In the case at hand, the agreement as to the domestic crude,

standing alone, was perfectly lawful. But under DOE’s theory,

with the presence of the agreement as to the foreign crude, Getty,

to escape liability in January 1974 under that otherwise lawful

domestic contract, would not only have had to give its oil to Sohio

free, but pay Sohio 43 cents a barrel to take it. By January 1976

Getty would have had to pay Sohio $1.19 to take it. This is because

the so-called excess value itself exceeded the ceiling price.

22

consideration, the DOE erred in concluding that because

of those subsequent events, these sales became exchanges,

thereby making the foreign crude purchased by Getty ad-

ditional consideration for the domestic crude sold by it.

In doing so, DOE erred yet again by disregarding the

plain meaning of its own regulations.

Although the regulations as they then existed defined

“price as any consideration for the sale of any prop-

erty... ,” 10 C.F.R. § 212.31 (1977), they did not de-

fine “consideration.” (Appendix O) In that situation, as

TECA itself *us held in Tenneco Oil Co. v. FEA, 613

F.2d 298, 302 (Temp. Emer. Ct. App. 1979), “(t]he first

principle of regulatory construction is that regulatory

terms must be interpreted according to their commonly

understood definitions in the absence of a specific regula-

tory definition.”

That distinction between sales and exchanges was well

established within industry practice, at common law, and

under DOE’s own regulations. That distinction was

pointed out by the Sixth Circuit, which held in Trenton

Cotton Oil Co. v. Commissioner, 147 F.2d 33, 36 (6th

Cir. 1945), that an exchange “exclud[es] transactions

into which money enters either as the consideration or as

a basis of measure.” Here it was both.

The DOE has also now admitted at page 25 of its

Opposition Brief filed with the District Court that con-

sideration “depends upon the intent of the parties.”

Here, the intent was for matching purchases and sales

and not for exchanges. In this case if the parties had in-

tended exchanges,

—there would have been no price clauses ;

—nothing would have limited the domestic sales to

posted prices ;

—there would have been no price adjustment provi-

sion in the foreign contract to relate prices to

values;

23

—the parties would not have paid for all the pur-

chases in full;

—the payments would not have been at different

times, 10 days for domestic and 90 days for for-

eign ;

—the contracts would not have permitted the do-

mestic deliveries to outlast the foreign if the for-

eign oil was the quid pro quo for the domestic;

and

—both parties would not have begun treating the

transaction as separate sales.

Both the District Court and TECA erred by approach-

ing the problem as though their analyses could end when

they concluded that the transactions could be treated as

one. But that could not even begin a correct analysis.

At common law under the established principles of con-

tract divisibility, even if these agreements had been

written as one contract, the obligations would be sep-

arate, and the considerations would be separate and dis-

tinct.

The doctrines of contract divisibility** are as old and

well-established as contract law itself. Five factors must

be examined in determining whether contracts are divisi-

ble and whether the considerations are separate: (1) in-

tent,” (2) separately stated consideration apportioned to

4A “divisible contract” is one the performance of which is

divided into different groups, each set embracing performances

which are the agreed exchange for the others. 17A C.J.S. Con-

tracts § 381 (1968).

15 This is the most important factor:

Primarily the question of whether a contract is entire or sever-

able is one of intention, to be determined from the language

which the parties use, and the subject matter and circumstances

of the agreement.

17A C.J.8. Contracts § 332 at 309 (1963).

24

value, (3) whether the performances are separate,*’

(4) separate subject matter,’* and (5) separate assents.”

Here, the intent, as shown above, was for matching pur-

chases and sales, rather than for exchanges. The consid-

erations were separately stated and apportioned as to

value, because the domestic contract provided that the

price of the domestic oil sold might “in no event exceed

such posted prices,” and the foreign contract contained a

price adjustment clause which allowed the price to in-

crease according to market value. The performances were

separate because the domestic sales were not conditioned

upon the continuation of the foreign purchases. The

subject matters were separate because the transactions

involved different types of oil, different countries of ori-

gin, different prices, different gravities, different sulphur

contents, and different delivery points. Finally, there

were unquestionably separate assents demonstrated from

the fact that the agreements were written as separate

contracts. .

Thus, under the principles of contract divisibility, the

contracts were divisible, the considerations were sep-

arate, and the foreign crude oil purchased by Getty was

not additional consideration for the domestic crude oil

sold by it. Consequenily there was no price violation.

16 [Where the portion of the contract to be performed by one

party consists of several and distinct items, and the price to be

paid is apportioned to each item according to the value thereof

and not as one unit in a whole or a part of round sum, the con-

tract will ordinarily be regarded as severable... .

17 C.J.S. Contracts § 334 at 312-13 (1963) (emphasis added).

1717A C.J.S. Contracts § 331 (1963).

1817A C.J.S. Contracts § 3383 (1968). Different sales of different

items constitute separate transactions. See, e.g., Jones v. Pepsi-Cola

Co., 228 F.Supp. 650 (D. Neb. 1963) ; Purdin v. Westwood Ranch &

Livestock Co., 67 Mont. 553, 216 P. 326 (1923).

19 17 C.J.S. Contracts § 331 (1963).

25

The remarkable thing about this case is that the DOE,

the District Court, and TECA never found or relied upon

any case law to support the conclusion that the foreign

oil was added consideration for the domestic. Hundreds

of years of contract law were washed away without any

authority or any analysis of the principles of considera-

tion or contract divisibility.

The point here is not that this Court should decide

common law questions concerning consideration and con-

tract divisibility. Instead, the issue is whether the prin-

ciples of a prospective rule, which required matching

purchases and sales to be treated not as sales but, dif-

ferently, as exchanges, can be applied in an enforcement

case to the period prior to that rule’s adoption and effec-

tive date. See generally SEC v. Chenery, 382 U.S. 194,

202-03 (1947).

This is not the first time that TECA has allowed en-

forcement against Getty of a prospective rule which has

not yet ben adopted. In Getty Oil Co. v. DOE, 581 F.2d

838 (Temp. Emer. Ct. App. 1978), when Getty was

charged with overcharging for solvents, Judge Becker,

writing for the majority, dismissed the failure of the

price control regulations to include solvents as “imma-

terial.” Id. at 842. By contrast, Judge Zirpoli, in his

dissent, stated:

If the price of solvents was subject to controls dur-

ing the period of time relevant to this appeal, then

those controls must be found in the agency’s regula-

tions, not in the agency’s assertedly mandatory duty

to issue such regulations. While the majority dis-

misses appellant’s attack on the regulations, even

the agency concedes that the pricing regulations, by

their literal terms and without any need on Getty’s

part to resort to hypertechnical obfuscation, simply

failed to cover solvents. It may well be that the

agency intended to draft regulations covering sol-

vents, but the plain fact is that it did not do so.

26

Id. at 848 (Zirpoli, J., dissenting) (emphasis in origi-

nal).

The issue which needs to be decided by this Court is

whether a business can be subjected to a judgment of

more than $130 million when it is charged with violating

an unstated regulation that the agency’s own people in

its Offices of General Counsel, Compliance, Crude Oil Op-

erations, Regulations Management, and its Assistant Ad-

ministrator, could not find.

If the rule announced by TECA itself in Longview Re-

fining Co. v. Shore, 554 F.2d 1006, 1014 n.20 (Temp.

Emer. Ct. App. 1977), cert. denied, 434 U.S. 836 (1977),

that “[f]undamental fairness requires that the regula-

tions be clear so that men of common intelligence need

not guess at the meaning and differ as to the applica-

tion,” is to be abrogated, it will have a profound impact

upon how our society will be governed.

CONCLUSION

For the foregoing reasons, this petition for a writ of

certiorari should be granted.

vine

SURREY & MoRSE

1250 Eye Street, N.W.

Washington, D.C. 20005

Attorney for Getty Oil Company

November 5, 1984