Opposition Brief — VGS Corp. v. United States Department of Energy

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No. 86-1134

OCTOBER TERM, 1986

VGS CORPORATION d/b/a SOUTHLAND OIL COMPANY,

ET AL., PETITIONERS

UNITED STATES DEPARTMENT OF ENERGY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES TEMPORARY EMERGENCY

COURT OF APPEALS

BRIEF FOR RESPONDENTS IN GPPOSITION

CHARLES FRIED

Solicitor General

Department of Justice

Washington, D.C. 20530

. (202) 633-2217

Roy G. WUCHITECH

Acting Deputy General Counsel

for Litigation

SAMUEL SOOPPER

Attorney

Department of Energy

Washington, D.C. 20585

ciate i ETA EIS

QUESTION PRESENTED

Whether sovereign immunity bars petitioners’ claim

for prejudgment interest against the United States.

(1)

TABLE OF CONTENTS

Page

IN I coc scsasmensannen NE SS et eta a RE 1

a cecenctenrsnsens AS kD NORE 1

Statement .................... a 2

SEES ae Rae ee ee al 9

Ses ER ERR OE ROE rea ‘ 17

TABLE OF AUTHORITIES

Cases:

Bray v. United States, 423 U.S. 73 (1975) ............. 9

Carpenters 46 County Conference Board v. Con-

struction Industry Stabilization Committee, 522

f € (Syd oot Te): | ne anenEe 15

DOE Stripper Well Exemption Litigation, In re,

578 F. Supp. 586 (D. Kan. 1983) ...................... 10, 13-14

Henkels v. Sutherland, 271 U.S. 298 (1926)........ -

Husky Oil Co. v. DOE, 582 F.2d 644 (T.E.C.A.

I ha cecsanionepnianecibpenieiiiainebnnss 2

Library of Congress v. Shaw, No. 85-54 (July 1

IEE SLIPS RI Sth eee EE 9, 10,15

Miller v. Robertson, 266 U.S. 243 (1924) ............ 12, 13

Mobil Oil Corp. v. DOE, 520 F. Supp. 420 (N.D.

N.Y.), rev’d, 659 F.2d 150 (T.E.C.A.), cert.

Ss Se BE REN CRED eicciccnsccccenseccsecnsercnses 3

Pasco, Inc. Vv. Federal Energy Administration,

BSR) ie hk ok |: |) ace 15

Southland Oil Company/VGS Corp., 25 F.E.R.C.

{] 62,118 (1983), adopted by 27 F.E.R.C. {| 61,205

Texaco, Inc. v. DOE, 795 F.2d 1021 (T.E.C.A.

1986), cert. dismissed, No. 86-187 (Aug. 19,

li alata ilencansetalncenbionadoonininedaedeteienene 4

Union Oil Co. of California v. DOE, 688 F.2d 797

(T.E.C.A. 1982), cert. denied, 459 U.S. 1202

TR SAG SSR AR RCI ne eee ee OO 3

Cases—Continued : Page

United States v. Louisiana, 446 U.S. 253 (1980)... 12

United States v. N.Y. Rayon Importing Co. (#2),

es er ; 3 Seems ee 12, 16

Statutes and regulations:

Administrative Procedure Act, 5 U.S.C. 702........ 14, 15

Department of Energy Organization Act, Tit. V,

42 U.S.C. 7191 et seq.:

§ 504, 42 U.S.C. 7194.. 7 OTTER a Oe 2

§ 504(b) (1), 42 U.S.C. 7194 (b) (1) .............. 3

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

note:

Emergency Petroleum Allocation Act of 1975, 15

po Fe BNR e Rea ee eermemn eI ne eee

pS kg 8 2S | Se Oe Oe ee mene oe

BaF Se OF GID citintiiecacencandsinabioianccgnionns

BD UB, FREY eccecine snes iceciabasnsinecibclceutssiagiiiaiie

Equal Access to Justice Act, 28 U.S.C. 2412(b).... 1

Exec. Order No. 12,287, 3 C.F.R. 124 (1982)........

30 CPB. BOG BO OE Oe CHG IGD vce ssi ntcckciisctsecentstccctcons

ee gel ceikss secencidnceialsnseiiciaiaiiesbiacaste

—_

NOnNwo © oo Dd

Miscellaneous:

46 Fed. Reg. (1981):

ive)

for)

> >

Miscellaneous—Continued : - Page

0 FI i cerretiniienincnnenstnisnsavesdsinggetnnsenninensimsrenecntsaal 5, 12,14

ya, WT TG nana rccsstttinspecsssemsemntion 5

i Sorc cscas tro viekinsantnaatennnessnentinagntomacnnesitatin 5, 12,14

De 4187 2.......2..2c0220-cceenecsosnanensvnenrnssoescncssoesecensscnsases 5

AINE sa caicnsccencninsncsineicieveicteanfotseinicidtaimesnsbapanigilinsee 5, 6

Op. Comptroller Gen. No. B-210176.2, .3, .4 (Feb.

9D, BOI osisicaninctnniscesimiccsnsnanassieanacinamatcerndisieanaennantiine 16

In the Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-1134

VGS CoRPORATION d/b/a SOUTHLAND OIL COMPANY,

ET AL., PETITIONERS

Vv.

UNITED STATES DEPARTMENT OF ENERGY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES TEMPORARY EMERGENCY

COURT OF APPEALS

BRIEF FOR RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

10a) is reported at 808 F.2d 842. The opinion of the

district court (Pet. App. 21a-25a) is unreported.

JURISDICTION

The judgment of the court of appeals was entered

on December 9, 1986. The petition for a writ of cer-

tiorari was filed on January 8, 1987. The jurisdic-

(1)

tion of this Court arises under 28 U.S.C. 1254(1)

and Section 211(g) of the Economic Stabilization

Act of 1970, 12 U.S.C. 1904 note, as incorporated by

Section 5(a)(1) of the Emergency Petroleum Allo-

cation Act of 1975, 15 U.S.C. 754(a) (1).

STATEMENT

l.a. The Emergency Petroleum Allocation Act

(EPAA), 15 U.S.C. 751 et seq., and regulations prom-

ulgated under it mandated a now-defunct system of

price controls on domestic crude oil. In order to offset

the competitive disadvantage this system imposed on

refiners with below-average access to price-controlled

domestic crude oil, the Department of Energy (DOE

or the Department) established the “entitlements

program,” 10 C.F.R. 211.67 (1980), a system of

transfer payments under which refiners with greater

access to price-controlled crude oil were required to

purchase “entitlements” from refiners with less ac-

cess to such oil. DOE issued monthly “entitlements

notices” specifying the number of entitlements each

refiner was obligated to buy, or permitted to sell,

that month. See generally Husky Oil Co. v. DOE,

582 F.2d 644, 645-647 (T.E.C.A. 1978).

Section 504 of the Department of Energy Organi-

zation Act, 42 U.S.C. 7194, authorizes “exception

relief,” awarded on a case-by-case basis by DOE’s

Office of Hearings and Appeals (OHA), to refiners

found to be suffering a gross inequity or a serious

hardship caused by the price control and entitlements

program. See 10 C.F.R. 205.50 et seg. (1984). OHA

generally awarded exception relief prospectively,

based on projections of a firm’s future performance.

The relief took the form of excusing the firm from

purchasing (or permitting the firm to sell) a specified

quantity of entitlements in a future period. Since

the relief was initially based on a projection, it was

subject to OHA review of actual data after the end

of a firm’s fiscal year. Based on that review, OHA

would issue a final relief order. If the final order

differed from the projection, the firm would be per-

mitted to sell, or required to buy, entitlements on

the next entitlements notice. OHA denials of excep-

tion relief could be appealed to-the Federal Energy

Regulatory Commission (FERC) (see 42 U.S.C.

7194(b)(1)). Pet. App. 2a-3a.

b. The crude oil price control program was termi-

nated, as a general matter, on January 28, 1981, by

Executive Order No. 12,287. 3 C.F.R. 124 (1982).

This left DOE with questions as to how to wind down

the entitlements program. In February 1981, DOE

issued an entitlements notice for December 1980 and

announced that it would issue an entitlements notice

for the first 27 days of January 1981, but the latter

was delayed by a series of injunctions.’ Eventually

DOE determined that it would terminate the entitle-

ments program without issuing any further entitle-

1 The series of preliminary injunctions preventing publica-

tion of entitlements notices after decontrol culminated in the

injunction issued in Mobil Oil Corp. v. DOE, 520 F. Supp.

420 (N.D.N.Y. 1981). While the Temporary Emergency Court

of Appeals reversed the district court’s preliminary injunction

(659 F.2d 150 (1981)), its mandate was stayed until this

Court denied certiorari on December 7, 1981 (454 U.S.

1110). By that time, however, other related litigation was

under way, which called into question the propriety of em-

ploying certain data that would be used to calculate entitle-

ments notices. This litigation was not finally resolved in

DOE’s favor until 1983. Union Oil Co. of California v. DOE,

688 F.2d 797, 801-802 (T.E.C.A. 1982), cert. denied, 459 U.S.

1202 (1983). See generally 49 Fed. Reg. 27410, 27413 (1984).

ments notices after the December 1980 notice. 49

Fed. Reg. 27410, 27413 (1984); 46 Fed. Reg. 12945,

12946 (1981). Challenges to this decision were re-

jected by the Temporary Emergency Court of Ap-

peals (TECA). Texaco, Inc. v. DOE, 795 F.2d 1021

(1986), cert. dismissed, No. 86-187 (Aug. 19, 1986)

(‘Texaco litigation’).

The end of the entitlements program eliminated

the mechanism by which “exception relief” had been

implemented. Of particular relevance here, it elimi-

nated the mechanism for making adjustments re-

quired by final OHA exception relief awards, made

after January 1981, that adjusted the provisional

awards made for prior periods. After considering

how to deal with this problem, DOE on January 9,

1985, issued a “Final Decision” stating that refiners

that would otherwise have been permitted, on account

of exception relief, to sell ‘entitlements should be paid

their exception relief in an alternate manner that

“would be fair to firms with [such] * * * orders,”

yet would still be “in keeping with the transition from

a regulated to a deregulated market and with the

objectives of the EPAA.” 50 Fed. Reg. 1919, 1921

(1985). Specifically, the Final Decision stated that

if OHA determined that refiners as a class had been

injured by violations of the EPAA regulations, DOE

would pay such exception relief as might be due out

of the Department’s crude oil “overcharge fund,”

made up of penalties paid by companies in crude oil

overcharge actions. Thus, DOE determined on Janu-

ary 9, 1985, that it should undertake to award excep-

tion relief from a fund in 7ts charge, rather than pro-

long the entitlements program as a source for such

exception relief. The Final Decision, which was not

challenged in this litigation, made no provision for

the addition of interest to exception relief payments.

See 50 Fed. Reg. 1921-1922.?

At the time of the Final Decision, the challenge in

the Texaco litigation to DOE’s decision not to issue

further entitlements notices had not yet been resolved

in DOE’s favor. Had DOE lost this challenge, there

was still the possibility that exception relief would

be paid by means of entitlements notices. Accord-

ingly, OHA concluded that “any payment pursuant

to [DOE’s Final Decision] * * * will be placed in

an interest-bearing escrow account pending the out-

come of [the Texaco] litigation.” 50 Fed. Reg.

27402, 27403 n.1 (1985). On October 2, 1985, OHA

issued an order establishing interest-bearing escrow

accounts for firms awarded exception relief. 50 Fed.

Reg. 41572. In that order, OHA responded to com-

ments from various firms, including petitioners, who

asserted that in addition to interest that would ac-

crue once the escrow accounts were established, ret-

roactive interest should be paid to each recipient of

relief from the date of its award. OHA rejected this

contention, emphasizing that “if the final Entitle-

ments Notices were to be issued, DOE would clearly

lack the authority under [its] regulations to require

refiner-buyers to add interest to their payments to

refiner-sellers” (id. at 41575 (footnote omitted) ).

2On June 21, 1985, OHA made the necessary finding that

refiners as a class had indeed been injured by violations of

the EPAA regulations (50 Fed. Reg. 27400-27401), and

announced the implementation of the January 9, 1985, Final

Decision, permitting those entitled to exception relief to

apply for payment from the overcharge fund (id. at 27402-

27403).

OHA also explained that interest had never been

awarded in an entitlements exception case during the

program’s history, in spite of routine substantial de-

lays in making necessary adjustments. Since use of

the overcharge monies was “strictly a substitute

method for funding receive orders,” OHA found that

retroactive interest was not appropriate (ibid.).

2.a. Petitioners’ claims against DOE arose out of

two OHA orders, issued on February 23, 1981, re-

calculating and reducing petitioner Southland’s ex-

ception relief for 1977 and 1978 and requiring South-

land to buy an additional $13.4 million in entitle-

ments. Southland paid this amount on the December

1980 entitlements notice but also challenged the or-

ders in two ways: it appealed the orders to FERC,

and it sought and obtained a preliminary injunction

from the U.S. District Court for the Southern Dis-

trict of Mississippi. The injunction directed that in

the January entitlements notice Southland be per-

mitted to sell entitlements so that it would receive

back the amount it had been required by the orders

to pay, which would be placed in an interest-bearing

escrow account and ultimately paid to Southland to

the extent it prevailed before FERC- Pet. App. 3a-

4a. This mechanism was never implemented, how-

ever, because as noted above no January entitlements

notice was ever issued. 49 Fed. Reg. 27410 (1984).

On May 8, 1984, FERC adopted a decision of its

presiding official that OHA had miscalculated South-

land’s exception relief, and that Southland would be

permitted to sell $5,956,499 worth of entitlements on

the next entitlements notice, but that “[i]n the event

no further entitlements notice is issued, DOE will

take other appropriate action to implement this order.”

Southland Oil Company/VGS Corp., 25 F.E.R.C.

{ 62,118, at 63,260 (1983), adopted by 27 F.E.R.C.

/ 61,205 (1984). In reaching this conclusion, the

presiding official specifically rejected petitioners’

claim that interest be added to this amount (25

F.E.R.C. at 63,258-63,259). The full Commission

concluded that “[Southland] has not shown that it is

entitled to any interest on the entitlements it was

required to purchase in February 1981” (27 F.E.R.C.

at 61,398).

b. On March 6, 1985, petitioners filed their

amended complaint in this case, requesting that the

district court require DOE to “implement” the FERC

order immediately. The amended complaint did not

challenge DOE’s January 9, 1985, Final Decision to

pay exception relief from the overcharge funds, nor

did it specifically seek interest. DOE argued that

petitioners’ action had become moot, since petitioners

were guaranteed to receive their entitlements excep-

tion relief, either by means of the overcharge funds

if DOE prevailed in Texaco, or by means of entitle-

ments notices if it did not. Pet. App. 11la-18a.

The district court ruled on July 12, 1985, that peti-

tioners were “entitled to a declaratory judgment that

the DOE has an unconditional and non-discretionary

obligation to implement the May 8, 1984, FERC

order, requiring DOE to restore to [petitioners]

$5,956,499.00” (Pet. App. 17a-18a). The court held

that the positions taken by DOE were “frivolous”

(id. at 18a) and castigated the agency for what it

perceived was a calculated policy of delay (id. at

20a).

On December 4, 1985, the district court granted

petitioners’ motion for summary judgment and di-

rected DOE to make payment within 20 days of the

exception relief granted by the FERC order plus in-

terest from May 8, 1984, the date of the FERC order

(Pet. App. 21a-25a). On December 20, 1985, DOE

paid petitioners $6,055,390, representing its $5,956,499

exception relief award plus $98,891 of interest that

had accrued on its escrow since October 2, 1985, the

date on which DOE created the interest-bearing

escrow accounts out of the overcharge fund. See 7d.

at 6a; page 5, supra. DOE did not pay interest

for the period from May 8, 1984, to October 2, 1985.

Instead, per stipulated order, this amount was se-

questered by DOE in an interest-bearing account

pending appeal (see Pet. App. 28a-29a).

On the interest issue, the district court asserted

that since the payment to petitioners was coming

from the crude oil overcharge funds, DOE’s position

that petitioners would not have been entitled to in-

terest during the entitlements program itself “misses

the point,” and that “FERC’s denial of interest to

[petitioners] is irrelevant to the present issue’’ (Pet.

App. 24a). Rather, the court held, “[p]re-judgment

interest is appropriate where the amount allegedly

due was liquidated when the claim was originally

made or where the denial of the claim was frivolous

or in bad faith” (ibid. (citation omitted) ). The court

held that petitioners were entitled to interest under

either test. Although DOE contended that the claim

for interest was barred by sovereign immunity, the

court did not discuss the issue in its opinion.

ce. DOE appealed the prejudgment interest ruling

to the court of appeals, which reversed (Pet. App.

la-10a), holding that “the doctrine of sovereign im-

munity precludes an award of prejudgment interest”

(id. at 7a). The court applied the longstanding rule

laid down by this Court that “in the absence of a

specific provision in a contract or statute, or express

consent by Congress, interest does not run on a claim

against the United States” (ibid. (emphasis in origi-

nal)). The court held that there was no statutory

authority for payment of interest by the government

(id. at 9a-10a).

ARGUMENT

1. The court of appeals’ decision does not warrant

this Court’s review because the dispute is, to say the

least, sui generis. It turns on the nature of peti-

tioners’ claim arising on account of DOE’s ad hoc

determination to use particular funds—the over-

charge funds—to make an equitable arrangement to

deal with claims remaining after the termination of

a once elaborate but now defunct program of trans-

fer payments within an industry.* There is, of

course, no conflict among the courts of appeals: only

the specialized Temporary Emergency Court of Ap-

peals could have heard such a case. See 12 U.S.C.

1904 note (§211(b)(2)), as incorporated by 15

U.S.C. 754(a) (1); Bray v. United States, 423 U.S.

73, 74 (1975).

2. In any event, the decision of the court of ap-

peals was correct. It routinely applied the firmly es-

tablished rule, reaffirmed by this Court only last

Term, that “interest cannot be recovered in a suit

against the Government in the absence of an express

waiver of sovereign immunity from an award of in- |

terest.” Library of Congress v. Shaw, No. 85-54

(July 1, 1986), slip op. 1. Congress is well aware of

the presumption which runs against an award of pre-

judgment interest against the government. It can

3’ The EPAA, which provided the statutory authority for the

entitlements program, expired on September 30, 1981. See 15

U.S.C. 760(g).

provide for such an award if it deems it wise, and

it has not so provided here. Cf. id. at 8; compare

Pet. 18 & n.12.

Petitioners attempt to distinguish the long line of

precedents in this Court, on which TECA relied, by

asserting that in those cases “the disputed interest

had accrued on funds which the federal government

had collected for its own benefit,” while “[t]his case

involves no claim on funds which the government has

asserted are its own” (Pet. 12, 15). But the asser-

tion that in this case the underlying funds were not

claimed by the United States is both irrelevant and

false.

a. The no-interest rule derives from the more gen-

eral principle that “the United States, in the absence

of its consent, is immune from suit.” Library of

Congress v. Shaw, slip op. 5 (citation omitted). Peti-

tioners cannot seriously dispute that their suit is

against the United States, and that the United States

has not consented to make the payment they. k. No

statute involved in this litigation provides for the

award of prejudgment interest against the govern-

ment. That should end the matter.

The prejudgment interest petitioners claim would

have to be paid out of money that would otherwise

belong to the federal government and remain in the

Treasury. The distribution of monies in the over-

charge fund is governed by the May 5, 1986, settle-

ment in In re DOE Stripper Well Exemption Litiga-

tion, 578 F.Supp. 586 (D. Kan. 1983), which pro-

vides that the federal government, state governments,

and various segments of the petroleum industry will

receive specified shares. The settlement *—to which

Part V.G. of the settlement (at 17) provides in its

entirety: :

petitioners are parties—specifically provides that any

funds required for exception relief, including any in-

terest if awarded by a court, are to be paid by the

federal government “out of its share of funds under

this Agreement, or out of funds * * * to which no

other Party [i.e., besides the federal government] has

a claim by virtue of this Agreement” (emphasis

added) .°

Preservation of Entitlements Claims. This Agreement

specifically excludes and preserves any and all claims by

a Refiner applicant against DOE for payment by DOE

of (i) exception relief from the crude oil Entitlements

Program including, but not limited to, exceptions or ad-

justments based on or pursuant to Delta/Beacon or

Naptha Entitlements relief [particular types of entitle-

ments exception relief], which has been or may be granted

by the [Economic Regulatory Administration], OHA, the

Federal Energy Regulatory Commission, or any court or

(ii) any adjustments or changes to the draft January

1981 Notice or Entitlements Adjustment Notice. This

Agreement also specifically excludes any and all claims

by a Refiner against DOE for interest on such adjustment

or change or exception relief and for ‘attorneys’ fees and

costs incurred in connection with such relief. DOE agrees

to provide all funds necessary to fund and pay all amounts

determined to be due any Refiner pursuant to or as a re-

sult of any such adjustments or changes or relief includ-

ing such interest and attorneys’ fees, if awarded, out of

its share of funds under this Agreement, or out of funds

(other than funds resulting from violations or alleged

violations except Alleged Crude Oil Violations) to which

no other Party has a claim by virtue of this Agreement.

DOE’s obligations shall not affect the amount or timing

of any payment to any other Party made pursuant to this

Agreement.

We have lodged a copy of the settlement with the Court.

5 Prior to the settlement, DOE first planned, in the absence

of contrary instructions from Congress, that all moneys in the

overcharge fund would be paid to the Treasury; later, as dis-

Thus, United States v. N.Y. Rayon Importing Co.

(#2), 329 U.S. 654 (1947)—on which the court of

appeals here relied—is controlling. There the Cus-

toms Court had decided in 1937 that a refund of

customs duties was owed by the government; how-

ever, the companies that had originally sought the

refund had since been dissolved. The refund was

accordingly forwarded to the Comptroller General,

who deposited the money in a trust fund in the

United States Treasury and refused to pay the vari-

ous claimants without a judicial decision as to owner-

ship. The Court of Claims designated the proper

claimant, and awarded prejudgment interest to run

from April 19, 1941, the date of a change in state

law clarifying the capacity of a dissolved corporation

to maintain a suit. This Court reversed the award

of prejudgment interest, because there was no con-

sent on the part of the government that interest

should be paid. The award of interest that was

barred by this Court in N.Y. Rayon was for the

period in which, as described by the court of appeals

here, “the government had no claim to these funds”

and “was merely holding the money until the right-

ful owner appeared.” Pet. App. 9a; see 329 U.S. at

659-660, 661; see also United States v. Louisiana,

446 U.S. 253, 261-266 (1980) (U.S. not required to

pay interest to Louisiana on impounded funds even-

tually awarded to the State).°

cussed above, it planned to make payments from the fund for

exceptions relief, but did not contemplate the payment of

interest. At any time, then, a payment of prejudgment inter-

est would have been out of the U.S. Treasury. See generally

50 Fed. Reg. 27400, 27402, 27403 (1985).

6 Petitioners assert (Pet. 13-14) that the court of appeals’

decision is contrary to Miller v. Robertson, 266 U.S. 243

b. Moreover, the overcharge funds from which

petitioners were paid the principal amount of their

claim ($5,956,499) and from which they seek pre-

judgment interest were collected by DOE in the en-

forcement of its regulations, and from the outset the

federal government did claim an interest in them.

DOF’s initial policy was that, absent specific congres-

sional direction to the contrary, all amounts held in

the overcharge escrow would be paid to the general

fund of the U.S. Treasury.’ This policy was modified

as noted above—first by the decision to pay entitle-

ments relief out of the overcharge fund, and later by

the settlement in In re DOE Stripper Well Exemption

(1924), where the Court upheld an award of interest on a

claim against property seized by the government under the

_ Trading with the Enemy Act. See also Henkels v. Sutherland,

271 U.S. 298 (1926). If the decisions in those cases had been

as broad as petitioners suggest, they would have been limited

by N.Y. Rayon, as petitioners appear to recognize (see Pet.

17). But in fact there is no conflict. In Miller, the Court

stressed that the claim was not against the United States (266

U.S. at 257), and it is unclear whether it was the government

that had to pay the interest (see id. at 259 (“The proposition

that the enemy defendants, as a matter of law, are entitled to

be relieved from interest during the war cannot be sustained’’)

(citations omitted)). In Henkels, the assets seized—mis-

takenly, as it turned out—had been plaintiff’s at the time of

the seizure and had been segregated along with other such

assets and invested by the government. Here, petitioners’

claim is for interest on the amount of their claim for the

period before the money they ultimately received was placed

in separate escrow.

7 The statutory authority for the overcharge fund, 12 U.S.C.

1904 note (§ 209), said only that courts could “order restitu-

tion of moneys received” through overcharges; it did not

specify who would receive the restitution.

Litigation, supra, providing that crude oil overcharge

funds are to be divided between the federal govern-

ment, the governments of the various states, and var-

ious segments of the petroleum industry. It was not

clear until after the Texaco litigation, however, that

petitioners should be paid from the overcharge fund,

and until that time the government had a “claim” on

petitioners’ “share” of the funds insofar as it had a

duty to ensure that they were paid to the proper

party. Whether that party was the federal govern-

ment, a state, petitioners, or another refiner, the

point remains that the funds were properly in the

possession of the federal government, which was—

on its own behalf and for others—in good faith re-

sisting petitioners’ claim to them. See generally 50

Fed. Reg. 27400, 27402, 27403 (1985).

Finally, had DOE decided to issue a new entitle-

ments notice or not to make exception relief pay-

ments from the overcharge fund, petitioners would

clearly have been unable to claim prejudgment inter-

est against anyone. To make an award against DOE

would, therefore, be anomalous and would punish it ~

for making the fundamental and good faith policy

decisions it did.

8. Petitioners also assert that “TECA’s reversal

of the District Court’s interest award is directly con-

trary to the language and intent of the 1976 amend-

ment to § 702 of the Administrative Procedure Act

[5 U.S.C. 702]” (Pet. 18), which waives sovereign

immunity for actions against the United States

which seek relief other than money damages. As pe-

titioners indicate (id. at 20), the court of appeals

ignored this argument in its opinion.

The argument was presumably ignored because it

is wholly without merit. In the first place, Section

15 ;

702 of the Administrative Procedure Act was in-

applicable to the entire entitlements program. The

EPAA—pursuant to which the entitlements regula-

tions were promulgated and revoked—incorporated

by reference Section 207 of the Economic Stabiliza-

tion Act of 1970, 12 U.S.C. 1904 note. 15 U.S.C.

754(a)(1)(A). And Section 207 specifically stated

that “[t]he functions exercised under this title are

excluded from the operation of * * * chapter 7 of

title 5, United States Code,” in which is found 5

U.S.C. 702. See also Pasco, Inc. v. Federal Energy ~

Administration, 525 F.2d 1391, 1405 n.26 (T.E.C.A.

1975); Carpenters 46 County Conference Board v.

Construction Industry Stabilization Committee, 522

F.2d 637, 639 n.5 (T.E.C.A. 1975). In the second

place, Section 702 does not waive sovereign immunity

for claims of “money damages,” and it is well estab-

lished that “[p]rejudgment interest * * * is con-

sidered as damages.” Library of Congress v. Shaw,

slip op. 11 (citations omitted) ; see also id. at 4-5. .

In any event, the clear and unambiguous waiver

of sovereign immunity necessary to justify an award

of prejudgment interest is entirely lacking. Petition-

ers point to nothing in the amendment to Section 702

or its legislative history to indicate that it was in-

tended to affect the no-interest rule, and they do not

assert that any court has ever so held. The need for

some evidence of intent is heightened since petition-

ers’ construction would apply to any action governed

by Section 702—indeed, according to petitioners, it

would apply to any action against the federal govern-

ment (see Pet. 21). Similarly, if one accepts peti-

tioners’ contention that the award of interest here is

permissible because the district court made it in the

exercise of its “equitable powers” (Pet. 19-21), this

would enable any court to make such an award in

any case, thus completely negating the strong pre-

sumption against allowing prejudgment interest. The

contention that courts should be allowed to award

interest against the sovereign where they deem it

equitable was rejected by this Court in N.Y. Rayon,

which stated that “[c]ourts lack the power to award

interest against the United States on the basis of

what they think is or is not sound policy” or on the

basis of what they think to be “just or equitable”

(329 U.S. at 660, 663).° There is simply no reason

to suppose that Congress intended an exception to

that rule.

8In this context, petitioners call upon the Court to rectify

the results of ‘‘agency misconduct,” evidenced by the amount

of time DOE took to pay petitioners their exception relief

(Pet. 21). While both TECA and the district court expressed

dismay at the delay in payment, we note that the latter

denied petitioners’ motion under the Equal Access to Justice

Act, 28 U.S.C. 2412(b), for attorney fees in this matter, be-

cause it found no “bad faith” in the agency’s actions. Order,

Civ. No. J81-0170(B) (May 20, 1986). We also note that the

Comptroller General, in an opinion on this and related mat-

ters, concluded that DOE’s payment before the conclusion of

all related litigation was “premature.” Op. of the Comptroller

General, B-21076.2, .3, .4 (Feb. 7, 1986), slip op. 6-8. While

we do not agree with this opinion, it certainly would seem to

indicate that this is an issue on which serious, good faith dis-

agreement is possible.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

. CHARLES FRIED