Slip Op. 03-64

UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Judge Judith M. Barzilay

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FORMER EMPLOYEES OF :

MARATHON ASHLAND PIPELINE, LLC,

Plaintiffs, : Court No. 00-04-00171

Public Version

v.

:

ELAINE CHAO, UNITED STATES

SECRETARY OF LABOR,

:

Defendant.

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[Plaintiffs’ Motion for Judgment upon an Agency Record granted; Certification Ordered for

TAA Benefits Eligibility.]

Decided: June 11, 2003

Katten, Muchin, Zavis, Rosenman, (Marianne Rowden, James L. Sawyer) for Plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General, Civil Division, United States Department

of Justice, David M. Cohen, Director, Commercial Litigation Branch, Lucius B. Lau, Assistant

Director, (Delfa Castillo), Trial Attorney; Gary E. Bernstecker, Attorney, Office of the Solicitor,

Division of Employment & Training Legal Service, United States Department of Labor. 

OPINION

BARZILAY, JUDGE:

I. INTRODUCTION

Before the court is the Remand Determination performed by the United States

Department of Labor (“Labor”) pursuant to this court’s opinion and remand order. See Fmr.

Emps. of Marathon Ashland Pipeline, LLC v. Chao, 26 CIT ___, 215 F. Supp. 2d 1345 (2002)

(“Marathon I”). In Marathon I the court considered an appeal from a determination by the

Secretary of Labor denying certification for Trade Adjustment Assistance (“TAA”) to former
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1

 This matter has been before Labor four times: its initial denial on December 28, 1999

(64 Fed. Reg. 72,690, 72,691); its denial of reconsideration (printed in 65 Fed. Reg. 8,743 (Feb.

22, 2000)); its denial upon voluntary remand of August 20, 2001 (printed in 66 Fed. Reg.

52,784(October 17, 2001)); and its denial pursuant to court remand dated October 17, 2002.

2

 For purposes of this opinion, Remand Determination refers to the “Notice of Negative

Determination of Reconsideration on Remand” by Labor, and the administrative record

supporting that notice, done pursuant to this court’s order in Marathon I. For purposes of

employees of Marathon Ashland Pipe Line (“MAPL”), who were laid off from their jobs as

“gaugers.” See id. Labor denied their claim reasoning that they were service workers, not

production workers - who did not meet the statutory criteria because their separation was caused

by the sale of the company division they served, and not the importation of crude oil.1

In its remand opinion the court instructed Labor to verify and further investigate the

circumstances surrounding the asset sale and specifically Plaintiffs’ claims that the sale was

prompted by Marathon Oil’s increased imports of oil from Mexico and Canada. The remand

opinion also instructed Labor to define the term “production” within the context of the oil and

gas industry. Regrettably, Labor has not followed the court’s remand instructions. For this and

other reasons discussed below, the court orders certification of Plaintiffs’ petition for trade

adjustment assistance.

II. BACKGROUND

The Plaintiffs in this case are eight former employees of a company called Marathon

Ashland Pipe Line LLC. Marathon Ashland Pipe Line is a subsidiary of Marathon Ashland

Petroleum LLC. Marathon Ashland Petroleum, in turn, is a partnership owned by Marathon Oil

Corporation and Ashland Inc. In March 1999, Marathon Ashland Petroleum announced that it

had reached an agreement to sell off one of its subdivisions. See Remand Determination at 14.2
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citation, the page numbers of the Remand Determination refer to the hand-written, encircled

numbers at the bottom of each page of the document. The First Remand Determination refers to

the notice and record filed by Labor following the voluntary remand which was the decision

considered by Marathon I.

That subdivision, Scurlock Permian LLC, was the “crude oil gathering business” which

employed the Plaintiffs. Nothing in the public record indicates why the subdivision was sold. 

The confidential record before the court gives only vague and generic business reasons.

The sale of Scurlock Permian coincided with several announcements that Marathon or

one of its subsidiaries had reached agreements to purchase crude oil from overseas sources,

including Canada and Mexico. See First Remand Determination at 2. Plaintiffs in this case,

who lost their jobs following the sale of the assets, claim that the increase in imports of foreign

crude oil contributed to their termination. Plaintiffs worked at the Illinois Basin crude oil field

located in Bridgeport, Illinois. Their primary job, according to Labor, was to perform quality

control on the crude oil collected in tanks from various independently-operated crude oil sources

(called leases). Once the crude was tested and verified for quality, the gaugers would release for

delivery amounts sold to the parent company for refining at the Robinson, Illinois plant. 

Plaintiffs contend that the Robinson plant was “converted” so that it could “refine crude oil

imported from Mexico and Canada at cheaper prices, reducing the need for Illinois Basin ‘sweet’

crude.” First Remand Determination at 1. 

Plaintiffs are seeking TAA benefits. This program “allows workers whose job losses are

attributable to import competition to receive unemployment compensation, training, job search,

relocation allowances, and other employment services.” Fmr. Emps. of Alcatel Telecomms.

Cable v. Herman, 24 CIT 655, 660 (2000) (citing 19 U.S.C. §§ 2291-2298 and Fmr. Emps. of
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Linden Apparel Corp. v. United States, 13 CIT 467, 715 F. Supp. 378, 379 (1989)). The

requirements for TAA certification are set out in 19 U.S.C. § 2272 (1999). Under the statute, a

three-prong test must be met: 

(a) The Secretary shall certify a group of workers (including workers in any agricultural

firm or subdivision of an agricultural firm) as eligible to apply for adjustment assistance

under this subpart if he determines–

(1) that a significant number or proportion of the workers in such

workers’ firm or an appropriate subdivision of the firm have become

totally or partially separated, or are threatened to become totally or

partially separated,

(2) that sales or production, or both, of such firm or subdivision

have decreased absolutely, and

(3) that increases of imports of articles like or directly competitive

with articles produced by such workers’ firm or an appropriate subdivision

thereof contributed importantly to such total or partial separation, or threat

thereof, and to such decline in sales or production. 

This is the third time this case has come before the court. See Marathon I at 1349. In

Marathon I the court issued a remand order with explicit instructions, having found that Labor’s

previous investigation fell “below the threshold requirement of reasonable inquiry by failing to

offer any explanation of the analysis used to determine that Plaintiffs’ work as gaugers did not

constitute ‘producing’ an article within the meaning of Section 2272.” Marathon I at 1352. The

court was concerned that Labor relied solely on the information provided by the Plaintiffs’

former employer, despite the fact that Plaintiffs had cast doubt on the veracity of those

statements. Id. at 1352-53. Labor relied on that information not only to establish facts as to the

nature of the Plaintiffs’ work, but also to interpret the statute in question. 

 If allowed to stand, the Secretary’s negative determination would provide a

definition of “production” that excludes those duties performed by gaugers. This

definition, however, essentially would be an interpretation of the statute by
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3

 The remand order also directed Labor to investigate if the gaugers were considered

service workers, and whether there were sufficient facts to support extending benefits under that

test. See Marathon I at 1355. Though Labor failed to adequately address this issue in the

Remand Determination, it is not integral to the court’s disposition here.

Marathon Ashland’s company officials, and not, as the law requires, by the

Secretary. Whether Plaintiffs provided a service and did not participate in the

“production” of an “article” within the provisions of Section 2272 is a

determination that the Secretary must make based on evidence in the record by

discussing the duties performed by the gaugers and how their responsibilities fit

into the oil production scheme of their parent company, Marathon Oil. 

Id. at 1353.

The court also instructed Labor to investigate further “Plaintiffs’ claim that imports from

Mexico and Canada prompted the sale of Marathon Oil’s assets, and as a result, caused the loss

of petitioning employees’ jobs.” Id. at 1356 (citations omitted). The court noted that the general

business reason given by the company for selling the assets (which led to the Plaintiffs’ layoff)

was not in conflict with the cause given by the Plaintiffs.3

In the Remand Determination now before the court Labor again denied TAA

certification, finding that the gaugers did not “produce” an article.

Since the gaugers, who are employed by the pipeline company were

merely responsible for certifying the quality and quantity of crude oil being

shipped to customers, the gaugers were not engaged in activities related to the

exploration or production of crude oil. The gaugers worked from crude oil

already in tanks. Their functions were after the stage of the production of crude

oil.

Remand Determination at 18-19.

As to the question of whether crude oil imports led to the decision to sell the relevant

subdivision the Remand Determination states:

These assets were part of an overall sale of assets by Marathon Ashland

Petroleum LLC because they were not of strategic value to the company. 
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Marathon Ashland Pipeline LLC still transports Illinois Basin crude oil (gauged

and trucked by various companies from the wellhead to Marathon Ashland

Pipeline LLC facilities) to locations determined by the crude oil purchases. The

company indicated that the employees at Marathon Ashland Pipe Line LLC,

Bridgeport, Illinois were terminated as a result of an asset sale in May 1999, not

the decision by Marathon to import crude oil.

Id. at 20.

III. STANDARD OF REVIEW

The court will sustain the Department of Labor’s determination if it is supported by

substantial evidence and is otherwise in accordance with law. See 19 U.S.C. § 2395(b);

Woodrum v. Donovan, 5 CIT 191, 193, 564 F. Supp. 826, 828 (1983), aff’d, 737 F.2d 1575 (Fed.

Cir. 1984). The factual findings of the Secretary must be accepted if supported by “substantial

evidence.” “Substantial evidence has been held to be more than a ‘mere scintilla,’ but sufficient

enough to reasonably support a conclusion.” Former Employees of Swiss Industrial Abrasives v.

United States, 17 CIT 945, 947, 830 F. Supp. 637, 639-40 (1993) (citing Ceramica

Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F. Supp. 961, 966 (1986), aff’d, 810

F.2d 1137 (Fed. Cir. 1987)). “Additionally, ‘the rulings made on the basis of those findings

[must] be in accordance with the statute and not be arbitrary and capricious, and for this purpose

the law requires a showing of reasoned analysis.’” Former Employees of General Electric Corp.

v. U.S. Dep’t of Labor, 14 CIT 608, 610-11 (1990) (quoting Int’l Union v. Marshall, 584 F.2d

390, 396 n.26 (D.C. Cir. 1978)). 

IV. DISCUSSION

A. The gaugers are engaged in the production of oil.

To understand the legislative history and role of the workers in this case it is necessary to
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provide a basic overview of the industry. The petroleum industry in the United States is divided

into various segments. These segments range from exploration to retail operations, with drilling,

transportation, refining and other functions in between. Three key segments of the industry are

at issue in this case: crude oil production, transportation, and refining. The first step toward

producing crude oil is exploring for an oil deposit. Once a site is found, drilling to reach the oil 

below the earth’s surface is the next step. After access to the crude oil reservoir is secured

through drilling, the oil is then extracted and placed either into tanks or funneled directly into a

mode of transportation. These modes include sea-borne tankers, trucks, railroad cars and

pipelines. The crude is then transported from the site of the extraction to a refinery, where it is

converted into various fuels, including gasoline. 

The term gauger encompasses multiple tasks within the industry. The gaugers at issue

here fall under the most common definition. They performed “quality control” on the crude oil

extracted from the wells, to guarantee that it was “acceptable for purchase.” Remand

Determination at 18. If the gaugers determined the oil was not acceptable for purchase, it was

not allowed to enter into the pipeline or be loaded onto trucks for transport to the Robinson

refinery location. If it was acceptable for purchase, gaugers would control the quantity of oil

released from the tanks and into the “stream of commerce.”

In order to qualify for TAA, the gaugers at issue in this case must have been employed by

a “firm, or appropriate subdivision of a firm, that engages in exploration or drilling for oil or

natural gas, or otherwise produces oil or natural gas.” § 2272(b)(2)(B). In this case, the gaugers

perform their function after the exploration and drilling stage, so the only issue is whether they
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4

 Workers who are considered to be providing merely a “service” as opposed to actually

engaged in “production” may still qualify for TAA benefits, however the test is more stringent. 

See Marathon I at 1353 see also Abbott v. Donovan, 6 CIT 92, 101, 570 F. Supp. 41, 49-50

(1983) (remanding a Labor determination for lack of supporting data to determine causal nexus

between service workers and increased imports, where plaintiffs did not challenge their status as

service workers).

5

 Labor implicitly breaks the petroleum industry into two distinct production processes,

one being oil and gas extraction, the other being refining. This determination excludes

transportation as part of the production process. The court notes that this determination is not

demanded by the statute. Indeed, Labor’s decision to break up the petroleum industry suffers

from the same lack of support as its determination about the scope of the phrase “otherwise

produces oil.” A different interpretation is that the petroleum industry is a chain of segments,

from exploration through refining, and that there is a single production process, which begins,

according to the 1988 amendments, with exploration. See Save Domestic Oil v. U.S., 24 CIT

994, 1013, 116 F. Supp. 2d 1324, 1341 (2000); see also H.R.Conf. Rep. 100-576 at 694 (“the oil

and gas industry (exploration to refining)”). Those integral to that chain of production, including

pipeline workers, could be considered producers for purposes of eligibility. In order to grant

relief in this case, the court need not reach the issue of whether Labor’s interpretation of the

1988 amendments on this point is supportable. See United States v. Mead Corp., 533 U.S. 218,

227-28 (2001). However, nothing in this opinion should be seen as affirming that part of

Labor’s interpretation.

otherwise produce oil.4

 The court must then determine what constitutes the production of crude

oil for purposes of the statute, and whether the work of the gaugers falls within that production

process. Two significant production segments exist in the industry, extracting crude from the

earth and refining that crude for use as fuel in various applications. The pipeline industry (and

other transportation modes) integrates the two segments by making possible the introduction of

crude oil into the refining segment.5

 The gaugers performed a unique role in this system. The

gaugers at issue guaranteed the quality of the extracted crude which was a benefit to both the

lease operators who pumped the oil and the refining company that purchased the product. They

performed their job at an oil field where crude oil was produced, and without the gauging

function no crude could be sold and released from the production site.
Court No. 00-04-00171 Page 9

The Remand Determination, relying solely on the description provided by the Human

Resources Representative of MAPL, described the gaugers’ role as the following:

They were responsible for determining the quality and quantity of crude

oil bought by the purchasing company from third party leases. The gaugers were

responsible for ensuring quality control by collecting representative samples from

crude oil tanks and certifying that the crude oil was acceptable for purchase. 

Once the crude oil quality was certified, the gauger would verify the quantity of

the product from the tank and allow delivery into the Marathon Ashland Pipe

Line facility either by truck to the pipeline or directly into the pipeline. After the

crude oil was placed in the pipeline, it was then delivered to the customer’s

specified destination or Marathon Ashland Petroleum’s refinery in Robinson,

Illinois. Thus, based on the functions performed by the gaugers they did not

“produce” an article. 

Remand Determination at 18.

The Remand Determination goes on to explain that “[t]he gaugers worked from crude oil

already in tanks. Their functions were after the stage of the production of crude oil.” Id. at 19. 

The court notes that after describing the gaugers’ duties as primarily related to “quality control”

of the tanks, and done before any oil was purchased and released into the pipeline, the Remand

Determination states that the gaugers “were primarily responsible for activities related to the

transportation of crude oil.” Id. at 18. Labor essentially describes the gaugers as performing

their job prior to the point at which the oil is transported and doing “quality control” unrelated to

transportation, yet concludes the gaugers’ role was one primarily related to “transportation.” 

This conclusion has no relationship to the description above, and there is nothing in the record to 

support it, except, perhaps, the fact that the gaugers were employees of a company with the word

“pipeline” in its name. Id. at 6. Moreover, this conclusion contains nothing with regard to the

critical legal determination that must be made, whether the gaugers are employed by a

subdivision of a firm that produces oil.
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6

 Defendant in its brief states, “[i]t is not clear from the record whether the crude oil was

always stored in tanks or whether some may have come directly from a wellhead. Both

scenarios would result in a negative determination under the facts of this case.” Def.’s Resp. to

Pls.’ Mot. for Summ. J. on the Admin. Rec. at 8. The court agrees that it is not relevant whether

the oil was sent into a pipeline directly from the wellhead or from tanks to determine whether the

gaugers were engaged in production. In fact, according to Labor’s description of the gaugers’

job, it is not relevant whether it went into a pipeline or fed directly into a refinery. The gauger

role was necessary no matter how, or if, the crude was transported. As discussed below,

transportation is tangential to the gaugers’ job.

Under the law, courts will generally grant some deference to an agency’s interpretation. 

See Mead, 533 U.S. at 227-28 (citing, inter alia, Chevron USA Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 845 (1984) and Skidmore v. Switft & Co., 323 U.S. 135,

139-40 (1944)) . However, it is incumbent upon the agency to exhibit reasons for its choices,

and those reasons must be plausible. See Madison Gas & Elec. Co. v. E.P.A., 25 F.3d 526, 529

(7th Cir. 1994); see also S.E.C. v. Chenery Corp., 332 U.S. 194, 196 (1947) (“If the

administrative action is to be tested by the basis upon which it purports to rest, that basis must be

set forth with such clarity as to be understandable.”). Here, there was no attempt by Labor to

propound a coherent legally sufficient definition of a key term in the statute - production. In

Marathon I, this court criticized Labor for failing to “interpret the meaning of ‘production’ under

Section 2272.” Marathon I at 1353. Despite this admonition, the Remand Determination does

not define the term production, nor does it provide any support for its conclusion that the gaugers

do not engage in production. It does not attempt to define or describe the production process. It

does not explain why gauging raw crude to determine if it can be sold for refining does not

qualify as part of the production process. It does not say at what point the production process

ends. It does not explain why oil already “in tanks” falls outside the production process.6

 It does

not explain why gaugers who monitor the quality and quantity of oil going directly into the
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pipeline (and not into tanks), are not part of the production process. It does not explain why

quality control may be different for oil than for other products. It does not explain how a raw

product like crude oil can be “produced” at all. It does not explain how workers employed by

the pipeline company were able to work on oil tanks owned by the crude oil producers, but not

be part of the production process. In the absence of any attempt by the responsible agency to

discern the statutory meaning of the phrase “otherwise produces oil,” the court must look to

other sources.

The court begins with the language of the statute. To discern what Congress intended to

be the scope of the crude oil production process the court must establish if phrase “produces oil”

has a commonly understood meaning. See Perrin v. United States, 444 U.S. 37, 42 (1979)

(“[W]ords will be interpreted as taking their ordinary, contemporary, common meaning.”) (citing

Burns v. Alcala, 420 U.S. 575, 580-581(1975). The traditional test used by this Court and Labor

in TAA cases to determine if workers are part of the production process is whether the firms

where the employees work “create or manufacture a tangible commodity, or transform it into a

new and different article.” Nagy v. Donovan, 6 CIT 141, 145, 571 F. Supp. 1261, 1264 (1983). 

However, this test is not always applicable. In some cases articles produced are not complicated. 

They are simple products, such as steel pipe, in which a minor act results in an alteration. See

Fmr. Emps. of Shaw Pipe v. U.S. Sec’y of Labor, 21 CIT 1282, 1287, 988 F. Supp. 588, 592

(1997). This is especially true of crude oil. The essential quality of the product never changes,

as its name indicates. Even those workers clearly fitting under the rubric of oil production do not

manufacture, create or transform. Therefore, an explanation of the phrase “otherwise produces

oil” cannot rest solely on a generic meaning of the term production, but must take into account
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7

 The Career Guide to Industries is available at http://stats.bls.gov/oco/cg.

the specific nature of the crude oil industry.

The U.S. Department of Labor, Bureau of Labor Statistics (BLS), Career Guide to

Industries7

 describes the crude oil production process in the following manner:

When oil or gas is found, the drill pipe and bit are pulled from the well,

and metal pipe (casing) is lowered into the hole and cemented in place. The

casing’s upper end is fastened to a system of pipes and valves called a wellhead,

or “Christmas tree,” through which natural pressure forces the oil or gas into

separation and storage tanks.

The process is not complex. Crude oil is drawn from the ground. Natural gas is

separated out. The oil is placed in tanks. Gaugers monitor those tanks for quality control. 

When a purchase is made the gaugers then measure out the quantity to be released. The only real

production process at issue is the movement from underground to above-ground and the

separation of crude oil and accompanying natural gas. The gaugers verify that the crude oil can

be sold. It is clear that gaugers are integral to this production process. If the crude oil were

never transported and, instead, fed directly into a refinery, gaugers would still be necessary. The

gaugers do most, if not all, of their work before the crude oil is purchased or transported. 

Remand Determination at 18. Labor’s determination that the gaugers “were primarily

responsible for activities related to the transportation of crude oil,” is undermined by its own

description of the oil production process. See id.

The Career Guide to Industries, under the heading “Oil and Gas Extraction” states the

following:

Pumpers and their helpers operate and maintain motors, pumps, and other surface

equipment that force oil from wells and regulate the flow. . . . Gaugers measure and
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8

 This description of the oil production process and the role of gaugers within it is

consistent with the Department of Labor, Dictionary of Occupational Titles

(http://www.oalj.dol.gov/public/dot/REFRNC/DOT09A.HTM), which gives the following entry:

914.384-010 GAUGER (petrol. & gas; petrol. refin.; pipe lines) alternate titles: field

gauger; pipe-line gauger; tank-farm gauger; terminal gauger

Gauges and tests amount of oil in storage tanks, and regulates flow of oil and, other

petroleum products into pipelines at wells, tank farms, refineries, and marine and rail

terminals, following prescribed standards and regulations: Gauges quantity of oil in

storage tanks before and after delivery, using calibrated steel tape and conversion tables.

Lowers thermometer into tanks to obtain temperature reading. Turns bleeder valves, or

lowers sample container into tank to obtain oil sample. Tests oil to determine amount of

bottom sediment, water, and foreign materials, using centrifugal tester. Calculates test

results, using standard formulas. Records readings and test results. Starts pumps, and

opens valves on pipelines and tanks to regulate and direct flow of oil from and into tanks,

according to delivery schedules. Reads automatic gauges at specified time intervals to

determine flow rate of oil into or out of tanks and amount of oil in tanks. Inspects

pipelines, valves, and flanges to detect malfunctions, such as loose connections and leaks.

Tightens connections with wrenches, greases and oils valves, using grease gun and

oilcan. Reports leaks or defective valves to maintenance personnel. Clamps seal around

valves to secure tanks. May gauge tanks containing petroleum and natural gas

byproducts, such as condensate or natural gasoline. May operate pumps, teletype, and

mobile radio. May clean pumps, machinery, and equipment. May issue delivery or

receiving tickets. May record meter and pressure readings at gas wells. May regulate

flow of products into pipelines, using automated pumping equipment. When gauging oil

received from and delivered to terminals, tank farms, and refineries, may be designated

Gauger, Delivery (pipe lines). 

record the flow, taking samples to check quality.8

(emphasis in original). Under the category of “Production occupations” the Career Guide to

Industries lists the following categories:

First-line supervisors/managers of production and operating workers

Welders, cutters, solderers, and brazers

Petroleum pump system operators, refinery operators, and gaugers.

Labor’s descriptions of the oil production process indicate a common understanding that

the production process includes the point at which the crude is pumped into “separation and
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storage tanks.” Furthermore, at least one bureau within the Department of Labor places the work

done by gaugers squarely within the production process, along with pump system operators.

Courts have affirmed Labor, upon occasion, when it denied certification to workers

considered outside the production process. These cases often turn on whether the workers in

question perform their job prior to the good being released into the stream of commerce. In

Pemberton v. Marshall the Court of Appeals for the District of Columbia affirmed a Labor

decision to deny benefits to workers who performed repairs and maintenance on marine vessels. 

639 F.2d 798 (1981). The Secretary found that the work done at the shipyard was a service and

not production. The Court upheld the Secretary’s reasoning:

The repair and maintenance of a ship is clearly a service to an existing

commodity. Even if the repair necessitates the use of new materials, it cannot be

said to be the creation of a new ship any more than overhauling an automobile can

be said to manufacturing a car.

Id. at 800. In this case, however, crude oil does not “exist” as a “commodity” until after the

gaugers perform their job.

In Woodrum v. Donovan this Court followed the reasoning of the Pemberton court and

affirmed a decision by Labor to deny benefits to workers at a car dealership that repaired and

inspected cars prior to their retail sale. 5 CIT 191, 192-93, 564 F. Supp. 826, 828 (1983). The

Court agreed with Labor that the workers “did not manufacture new articles.” Id. at 832. The

Court quoted Pemberton for the proposition that “semantics do not overcome the reality that

nothing new is entered into the stream of commerce. Id. (quoting Pemberton, 639 F.2d at 800.)

In contrast to the workers in Pemberton and Woodrum, all of the work done by the

gaugers here was done before the oil “entered into the stream of commerce.” Using entry into

the pipeline as the end point for the crude oil production process is supported by the United
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States Department of Energy’s method of determining the amount of crude oil production. The

Energy Information Administration, Definition of Petroleum Products and Other Terms, defines

“Crude Oil Production” as:

The volume of crude oil produced from oil reservoirs during given periods of

time. The amount of such production for a given period is measured as volumes delivered from

lease storage tanks (i.e., the point of custody transfers) to pipelines, trucks, or other media for

transport to refineries or terminals with adjustments for (1) net differences between opening and

closing lease inventories, and (2) basic sediment and water (BS&W).

Therefore, following the reasoning of Pemberton and Woodrum requires that the gaugers

at issue here be considered part of the crude oil production process. If the production process is

complete when the goods enter the stream of commerce, then the Remand Determination’s

description of their role places the gaugers squarely within the definition of production. See

Remand Determination at 18. Such a reading is also consistent with descriptions of the oil and

gas industry used by Labor and the Department of Energy.

Still, it is possible that even though the gaugers at issue performed their tasks prior to the

crude entering the stream of commerce, they might be considered service employees because of

the nature of their work. The court now turns to the question of whether the work performed by

the gaugers should be considered production or service.

As noted above, the Department of Labor, Bureau of Labor Statistics classifies “gaugers”

under the general heading of “production occupations” within the oil and gas extraction field. 

BLS lists them as similar to “petroleum pump system operators.” The Remand Determination

describes the gaugers as “responsible for quality control by collecting representative samples

from crude oil tanks and certifying that the crude oil was acceptable for purchase.” Remand

Determination at 18. Labor gives no reason why it does not consider “quality control” part of
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the production process. The term “quality control” is a common business term often associated

with the manufacturing process. The Dictionary of Business and Economics defines the term as

follows:

In business and industry, the system of methods, procedures, and policies

used to maintain acceptable and dependable levels of quality in a company’s

output of goods and services, as well as in its purchases. . . . In industrial

organizations quality control is usually part of the manufacturing division.

Christine Ammer & Dean S. Ammer 348 (1977). This definition is consistent with the

description provided by Labor of the gaugers providing quality control for the oil to guarantee

that it is appropriate to be sold. As the Dictionary of Business and Economics states, quality

control is generally considered part of the production process.

The foregoing discussion indicates that the common and generally accepted

understanding of the phrase “otherwise produces oil” includes work done by those workers who

act prior to the time the oil is transported. The court also notes that including the gaugers within

the scope of oil production for purposes of TAA is consistent with the intent of the statute to

assist those workers who lose their jobs because of “increases of imports of articles like or

directly competitive with articles produced by such workers’ firm or an appropriate subdivision.”

§2272(a)(3). In the crude oil industry, an increase in crude oil from foreign sources places

domestic gaugers in direct competition with those workers who perform the same function in the

production process overseas.

Generally, the court will “assume ‘that the legislative purpose is expressed by the

ordinary meaning of the words used.’” I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 431 (1987)

(citations omitted). However, it is also appropriate to consult the legislative history to confirm

congressional intent. See id. at 432. The court finds the “message conveyed by the plain
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9

 Labor denied certification of the oil and gas workers in Zapata on November 4, 1986

(see Zapata, 11 CIT at 842). On March 12, 1987, Sen. Johnston introduced S. 734, to extend

coverage to “any affected worker in the whole oil and natural gas chain.” Statement of Sen.

Johnston, 133 Cong. Rec. S3100. It appears that the language of S. 734 was then inserted into

the Senate version of the Omnibus Trade and Competitiveness Act of 1988.

language of the [statute] is confirmed by an examination of its history.” Id. In 1988 several

amendments were made to the provisions of the United State Code which govern the Trade

Adjustment Assistance program. Some of these changes directly addressed workers in the oil

and gas industry. Employees of firms or subdivisions that produce oil or natural gas were

explicitly covered, and Congress made clear that workers engaged in crude oil exploration and

drilling should be considered part of a broader category of those who produce oil or natural gas.

This amendment was in response to a Labor determination appealed to this Court. See

Former Employees of Zapata Offshore Co. v. United States, 11 CIT 841 (1987). In Zapata, the

Court affirmed a determination by Labor that workers engaged in the drilling of offshore oil

wells did not produce oil, but, rather, performed a service in support of oil production. The

Court noted that the relevant provisions of the Act and its legislative history were silent “as to

what Congress intended with respect to workers in the oil industry and contains no discussion as

to how to interpret the term “produced.” Id. at 845.

With the 1988 amendments Congress filled this void. During consideration of the

Omnibus Trade and Competitiveness Act of 1988, the Senate included language that would have 

expand[ed] eligibility to all workers and firms in the oil and natural gas industry

(exploration to refining) and to workers and firms who supply essential goods or

essential services as their principal trade or business to firms in the oil or natural

gas industry.

H. R. Conf. Rep. No. 100-576, at 694, reprinted in 1988 U.S.C.C.A.N. 1547, 1727.9

 

Although the House of Representatives did not address the issue of the treatment of oil
Court No. 00-04-00171 Page 18

and gas workers in its version of the trade bill, the Conference Report included language

providing coverage to these workers. The Conference Report granted TAA “eligibility to

workers and firms engaged in exploration and drilling in the oil and gas industry. . . . on the

same basis as workers employed by firms that are engaged in the production of crude oil.” Id.

The report provides additional explanation and background as to the amendments’ intent and

purpose:

The purpose of this amendment is to facilitate the availability of benefits

under the trade adjustment assistance program for workers employed by firms

engaged in exploration or drilling for crude oil or natural gas. Under present law,

workers employed by such firms have been denied program benefits because they

are not considered to be employed by firms that produce articles that are like or

directly competitive with increased imports. However, under present law, workers

engaged in exploration or drilling for firms that also produce crude oil or natural

gas are considered as eligible to apply for such benefits. 

The conferees intend that workers employed by independent firms

engaged in exploration or drilling be eligible to apply for program benefits on the

same basis as workers employed by firms that are engaged in the production of

crude oil or natural gas as well as exploration or drilling. Thus, a group of

workers in a firm engaged in exploration or drilling could be certified as eligible

for program benefits if the Secretary of Labor determined that increased imports

of crude oil or natural gas contributed importantly to their unemployment and to a

decline in sales by such firms (providing that the other requirements under the

law for certification were met). 

The conferees do not intend that certification of workers from independent

firms engaged in exploration or drilling serve as a basis for certifying workers

from producing firms to which such exploration or drilling workers provide

services if such production workers have not petitioned for such certification. 

Because exploration, drilling, and production activities in the crude oil and

natural gas industries are inextricably linked, the amendment provides that

workers engaged in exploration, drilling, or production of either crude oil or

natural gas shall be considered as producing either product. Typically, the imports

that have had an adverse impact on these workers in recent years are of crude oil. 

For the purposes of this amendment, the conferees consider firms engaged

in exploration or drilling to include, for example, independent drillers, pumpers,

seismic and geophysical crews, geological crews, and mud companies.

Id.

Thus, the 1988 amendments settled the question of when the production of crude oil
Court No. 00-04-00171 Page 19

begins, but did not explicitly state when it ends. However, the amendments do provide some

guidance on this question. Prior to the 1988 amendments the statute was silent with respect to

the oil and gas industry. See Zapata, 11 CIT at 845. The amendments added two relevant

provisions under § 2272(b)(2):

(A) Any firm, or appropriate subdivision of a firm, that engages in exploration or drilling

for oil or natural gas shall be considered to be a firm producing oil or natural gas.

(B) Any firm, or appropriate subdivision of a firm, that engages in exploration or drilling 

for oil or natural gas, or otherwise produces oil or natural gas, shall be considered to be

producing articles directly competitive with imports of oil and with imports of natural

gas.

The language of the amendments indicates that Congress intended to expand Labor’s

existing definition of oil production to include exploration and drilling. After drilling the next

step is pumping the crude into tanks or directly into a pipeline. Gaugers play an integral role in

this step of the production. The legislative history to the amendment supports the idea that

Congress intended to enlarge a restricted interpretation of what it means to produce oil. “The

amendment provides that workers engaged in exploration, drilling, or production of either crude

oil or natural gas shall be considered as producing either product.” H. R. Conf. Rep. No. 100-

576 at 694. The effect of requiring that persons engaged in these activities be considered

“producing oil” means that they can apply for TAA benefits on their own, regardless of whether

the firm employing them performs all of the production functions or only one of them. This

means that many of the small firms and independent contractors that perform some component

function toward the overall production of oil are considered producers of oil, and not as merely

providing a service to an oil production company. In 1988, Congress explicitly expanded the

TAA provisions of the statute to include oil and gas workers, the only occupation other than

agricultural workers specified. When they did so it was with the clear intent to broaden the
Court No. 00-04-00171 Page 20

definition of production. The purpose of the amendments was to help those workers impacted by

a significant increase in crude oil imports. See id. (“Typically, the imports that have had an

adverse impact on these workers in recent years are of crude oil.”). 

In Zapata, the pre-1988 case, the Court said that if drilling is not considered production,

then production would presumably include “those companies which own the wells and manage

the extraction of the oil.” Zapata, 11 CIT at 846. To manage the extraction, it is necessary to

verify that the oil being pumped from the ground is of such quality that it can be sold. Including

quality control as part of the production process (as opposed to an outside service) is consistent

with the common business understanding of the term. Including gaugers as part of the oil

production process is consistent with their classification by the Department of Labor, Bureau of

Labor Statistics. Placing the gaugers within the production process is also consistent with

previous cases before the courts which hold that production extends to the point goods are placed

into the stream of commerce.

The court finds that the Plaintiffs in this case engaged in the production of crude oil, by

definition of their job as described by Labor’s Remand Determination. As either independent

contractors or as employees of Marathon Ashland Pipe Line, they were employed by a “firm, or

appropriate subdivision of a firm, that engages in exploration or drilling for oil or natural gas, or

otherwise produces oil or natural gas.” 

B. Labor has failed for the fourth time to investigate Plaintiffs’ claim that crude oil imports

led to the company’s decision to sell assets.

In their original complaint before this court contesting the denial, Plaintiffs reasserted all

arguments made originally before the agency and additionally claimed that the Secretary failed
Court No. 00-04-00171 Page 21

to request information concerning: 1) Marathon Oil’s importation of foreign oil between 1997

and 1999; 2) the extent to which the importation of oil by Marathon Oil caused or contributed to

Marathon Ashland’s decrease in domestic oil production and sales; 3) the basis for Marathon

Oil’s cessation of purchasing oil from the Illinois Basin Area; and 4) the nexus between

Marathon Ashland’s activities and the crude oil purchased or produced by its parent or related

companies. Plaintiffs asked that the Secretary’s determination be reversed or, in the alternative,

remanded back to Labor for further investigation.

The court generally agreed with Plaintiffs and remanded to the Secretary, noting,

while “this court will defer to [Labor’s] choice of reasonable methodologies,

Labor must base its determination upon sufficient evidence for a reasonable mind

to concur in the result.” Bennett [v. U.S. Sec’y of Labor, 18 CIT 1063,1068

(1994)]. Here, on the facts at odds in the record, Labor could not have

conclusively determined that imports did not contribute to the petitioning

workers’ separation. Plaintiffs do not dispute evidence showing that company

assets were sold to [ ]; however, Plaintiffs submit that these assets were sold

because [“ .”] A.R. at 1. In its negative determination, Labor ignored the issue of

whether Marathon Oil’s decisions to purchase crude oil imported from Mexico

and Canada resulted in the sale of company assets. Such information is crucial in

ascertaining the impact of imports on the loss of Plaintiffs’ jobs.

An adequate investigation by Labor would have addressed Plaintiffs’

claim that imports from Mexico and Canada prompted the sale of Marathon Oil’s

assets, and as a result, caused the loss of petitioning employees’ jobs. See Motor

Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct.

2856, 77 L.Ed.2d 443 (1983) (stating that an administrative determination is

arbitrary and capricious if the agency has “entirely failed to consider an important

aspect of the problem”). In order to fulfill its duty to conduct an investigation

with the utmost regard for the petitioning workers, Labor should conduct a

thorough investigation to fully assess both [MAPL Human Resources

Representative’s] information and Plaintiffs’ claims. The failure to do so would

render the Secretary’s investigation cursory at best. 

Marathon I at 1355-56.

Despite these clear instructions, Labor’s current determination falls short. The findings

and analysis part of the Remand Determination (excluding the agency record) consists of five
Court No. 00-04-00171 Page 22

10 Not all crude is the same. According to the Energy Information Administration of the

U.S. Department of Energy, the “quality of crude oil dictates the level of processing and reprocessing necessary to achieve the optimal mix of product output.” A shift in the type of crude

used by a refinery will shift how the crude is processed. Generally crude oil is classified based

on its density (light or heavy) and sulfur content (sweet or sour). Plaintiffs describe the crude

gauged from the Illinois Basin as “sweet.” The crude which Marathon Ashland Petroleum

contracted to purchase from Mexico, according to their press release was “heavy Maya crude

pages. The record of the investigation pursuant to remand contains two exchanges of letters with

company officials and two press releases announcing the sale. Labor did inquire specifically in

its letter of August 12, 2002

3) Were the layoffs at the Bridgeport, Illinois (Illinois Basin) related to a

decision by Marathon Oil to import crude oil? Explain in detail.

4) Describe in detail the reasons for the sale of Marathon’s oil assets

at Illinois Basin Lease.

Remand Determination at 1.

The company human resource representative responded by essentially giving the same

answer he provided in the First Remand Determination. He stated that the assets were sold

because they were no longer of strategic value to the company. See Remand Determination at

20. The Remand Determination states the gaugers were “terminated as a result of an asset sale in

May 1999, not the decision by Marathon to import crude oil.” Interestingly, the letter upon

which this statement is based does not say that Marathon made a “decision to import crude oil.” 

See Remand Determination at 7. The letter also does not state that the asset sale was unrelated to

any decision to import crude oil. The letter does not answer, and, indeed, does not even dispute,

Plaintiffs’ contention that the Robinson, Illinois plant was converted to refine foreign oil. The

Remand Determination does not answer, nor does it dispute, Plaintiffs’ charge that the Robinson

refinery was converted to process a greater amount of foreign crude.10
Court No. 00-04-00171 Page 23

oil.” 

11In Fmr. Emps. of Tyco Electronics, Fiber Optics Div. v. United States, this Court

recently noted a number of instances when the Court has become so exasperated by Labor’s

refusal or inability to comply with remand orders in TAA cases that it ordered certification. Slip

Op. 03-49 at 13, 18-19, 27 CIT __, __, (2003). 

12 Plaintiffs’ contention that Marathon was importing a significant amount of foreign

crude oil is plausible. Defendant’s Response Brief notes that some Marathon Oil workers in

other states were certified for TAA benefits for the same relevant time period for which the

Plaintiffs are seeking TAA.

Labor’s and the company’s inability or unwillingness to answer with any specificity the

questions necessary for this court to evaluate the legitimacy of Plaintiffs’ claim place the court in

a difficult position. This court retains the ability to remand again, “for good cause shown,” 19

U.S.C. § 2395(b), or can order the Secretary to certify Plaintiffs for eligibility. See United Elec.,

Radio and Mach. Workers of Am. v. Martin, 15 CIT 299, 308 (1991) (citing 19 U.S.C. § 1395(c)

(which confers on this Court “jurisdiction to affirm the action of the Secretary of Labor . . . or to

set such action aside, in whole or in part.”)).11

Labor has had four chances to determine whether the Robinson plant was converted to

accommodate increased foreign crude imports, and if those increased imports contributed to the

decision to sell the assets in question.12 Plaintiffs have placed serious, specific and relevant

questions in the record that Labor did not adequately address, even after being directed by this

court to do so. Therefore, no evidence exists in the record to support Labor’s conclusion that the

gaugers’ termination was not the result of a decision by Marathon to import crude oil. See Fmr.

Emps. of Hawkins Oil v. Labor, 17 CIT 126, 130, 814 F. Supp. 1111, 1115 (1993) (“[T]he Court

has combed the administrative record in search of substantial evidence to support Labor’s

determination.”).
Court No. 00-04-00171 Page 24

As a general rule, the court will refrain from ordering certification until an additional

remand would be “futile.” See Fmr. Emp. of Barry Callebaut v. Herman, 26 CIT ___, ___, 240

F. Supp. 2d 1214, 1228 (2002) (citing Hawkins Oil, 814 F. Supp. at 1115). During the last

remand Labor directly asked MAPL to “describe in detail” the business reason for the sale of the

assets. In response, MAPL essentially said it had business related reasons. This is not an

adequate answer. Nothing in the record indicates that MAPL will be more forthcoming if the

court were to remand again. Nothing in the record indicates that Labor has the resources or

willingness to conduct an investigation beyond making inquiries of MAPL. The court sees little

benefit to be gained by an additional remand.

TAA is a remedial program. See Woodrum, 564 F. Supp. at 833. Its purpose is to assist

those workers and communities harmed by the impact of international trade to recover from the

losses they incur. See Linden Apparel, 715 F. Supp at 379. Congress has recognized that the

loss of jobs in specific communities is the price paid for the overall public benefit of a liberalized

international trading system. See Int’l Union, 584 F.2d at 395. The court is mindful that TAA

cases are different from most litigation before this court. This is not a situation, such as in

customs or antidumping duty cases, where a bond can be posted to cover anticipated cost and

reduce liability. The workers at issue here suffered a loss. To perpetually delay remedying that

loss would inflict additional hardship contrary to the purpose of the statute. See Fmr. Emps. of

Parallel Petroleum Corp. v. U.S. Sec’y of Labor, 14 CIT 114, 119, 731 F. Supp. 524, 527 (1990). 

In weighing the decision to remand the court must consider the purpose of the statute and factor

the welfare of the workers into its decision to bring the litigation to a conclusion. See United

Elec., Radio & Mach. Workers of Am., 15 CIT at 308. The gaugers at issue filed for TAA

benefits on October 23, 1999, approximately three and a half years ago. Past experience
Court No. 00-04-00171 Page 25

compels the court to conclude that the likely result of any remand will be only a marginally more

supported investigation which will not significantly assist the court in determining whether crude

oil imports directly led to the gaugers’ termination. For such a small benefit, the court sees no

reason to delay extending real benefits to the Plaintiffs.

IV. CONCLUSION

The court finds that Labor’s denial of Plaintiffs’ petition for certification is not supported

by substantial evidence and not in accordance with law, and, therefore, the Secretary of Labor

shall certify Plaintiffs as eligible for trade adjustment assistance. Plaintiffs’ motion for judgment

on an agency record is granted. Judgment will be entered accordingly.

Dated:______________________ __________________________

New York, New York Judith M. Barzilay

Judge