Court Opinion

ID: 9308618
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:20:43.165647+00
Date Added: 2024-06-11T17:14:02.527734
License: Public Domain

JAMESON, Judge,
dissenting.
I respectfully dissent. While a close question is presented, I would hold that the district court did not abuse its discretion in setting aside the remedial order issued by the DOE.
As the district court noted, a unique factual situation is presented: a small isolated oil field with an exceptionally high quality product, with only three producers and six purchasers, most of them operators of small refineries, and comprising a market distinct from the larger oil companies. The purchasers customarily made oral offers to Mountain Fuel, which in turn passed the offers on to its two operating partners, Belco and Exxon.1
The same practice was followed with regard to Cowboy Oil Company’s offer in April, 1973 to purchase all Dry Piney Nugget crude that could be allocated to it at “Amoco, plus 47$.” Mountain Fuel communicated the offer to Belco and Exxon. Bel-co agreed to its terms. Exxon did not at that time participate in the sale due to prior commitments. Acting for itself and as agent for Belco, Mountain Fuel then entered into the contract to purchase a specified amount of crude oil.2 Copies of the contract were sent to the other producers.
In August of 1973 the Cost of Living Council (CLC) promulgated the regulations tying the price of lower tier oil to the “highest posted price” on May 15, 1973. The term “posted price” was not defined in the regulation. In September, 1973, the CLC circulated CLC Form 90, a monthly compliance form, which defined posted price as:
A public offer to buy a specific grade of petroleum in a specific geographical area at specified price.... The term is inclusive of any other term which may be used in a manner which coincides with the above definition.
Shortly after CLC Form 90 was issued, Mountain Fuel’s legal department rendered an opinion that the Cowboy offer fell within the definition of posted price, because it was made and circulated to all the producers in the field, the relevant “public.”
It was not until December, 1973, that the agency promulgated the definition requiring a publicly circulated writing.3 As the district court stated, the agency’s interpre*696tation of posted price was in the developing stages during the relevant period; thus it was not of longstanding public knowledge. Cf. Udall v. Tallman, 380 U.S. 1, 16-18, 85 S.Ct. 801-802, 13 L.Ed.2d 616 (1965). The agency acknowledged that considerable confusion surrounded the posted price concept as late as January, 1977, when the FEA issued Ruling 1977-1. The district court expressly noted that
The agency interpretations defining, “posted price” issued in CLC Form 90, 10 C.F.R. § 212.31, and in Ruling 1977-1 became progressively more restrictive, injecting a manifest burden of retroactivity upon those regulated, with the very real prospect of economic loss through after-the-fact application of the regulations, plus the risk of litigation, with its costs and penalties.
In May of 1977 Mountain Fuel received a Notice of Probable Violation, charging pricing violation for the period of September 1, 1973 through December 31, 1974.4
While an agency’s interpretation of its regulations is normally deemed controlling, as this court recognized in Standard Oil Co. v. DOE, 596 F.2d 1029, 1056 (1978), this is not a “hard and fast rule.” “The weight to be given to an administrative interpretation depends upon the ‘thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all of those factors which give it power to persuade, if lacking power to control’. Skidmore v. Swift & Co., 323 U.S. 134, 140 [65 S.Ct. 161, 164, 89 L.Ed. 124]....” 5 An agency interpretation is “less potent than it otherwise would be where it does not rest upon matters peculiarly with the [agency’s] field of expertise,” Southern Mutual Help Association, Inc. v. Califano, 574 F.2d 518, 526 (D.C.Cir.1977).
I think the district court could properly conclude that the definition of posted price is not peculiarly within the DOE’s field of expertise. Both parties refer to a general text on oil and gas law for a definition of posted price. The definition is indefinite, indicating that the meaning of the term depends in part on its application to the practices of a particular oil field. In other words, the definition has varied with time and place.
The district court followed the guidelines set out in Standard Oil, supra, 596 F.2d at 1063-64, in “balancing the degree of burden it would impose on a party against the statutory interest to be served by retroactive application.” The court found that Mountain Fuel “made good-faith efforts to ascertain the meaning and comply with the regulations as they were promulgated.” The court also considered the specific objectives of the Emergency Petroleum Act, 15 U.S.C. § 753(b)(1), and concluded that recognizing the Cowboy price as the highest posted price in the Dry Piney field better served the EPAA objectives.
To uphold the Cowboy price as the highest posted price in the Dry Piney field would not require this court to abrogate its holding in Grigsby v. DOE, 585 F.2d 1069 (Em.App.1978); nor would it invalidate the posted price definition in general. Grigsby is distinguishable. In that case the parties stipulated that there was no posted price in the field in question, and the producers were attempting to establish a contract price as a related price for a nearby field even though a posted bulletin existed in that field for the particular quality of oil in question. As this court noted in Grigsby, under FEA Ruling 1977-1, “a written contract will not qualify as a posted price ‘because it represents an agreement between a buyer and specific producer, not a bona fide *697offer to purchase from all producers.” Id. at 1079. Here there was a bona fide offer to purchase from all producers. The oral offer, made to Mountain Fuel, was promptly communicated to all of the other producers, and copies of the contract based on that offer were likewise sent to all of the other producers. This was in accordance with the “historic practices” in the Dry Piney field. There was no regulation requiring a written statement publicly circulated when the Cowboy contract was made.
The district court found that “the Cowboy contract price was in substantial, if not complete, compliance with the pertinent regulations. ...” The court found further that the objectives of the EPAA “would be better served ... by recognizing the Cowboy contract price as the posted price,” and that “it is more ‘equitable’ to allow the Cowboy contract price which reflects the value of the oil more accurately than the Amoco bulletin, especially since that price was determined by a good faith setting of the posted price according to a good faith application of the pertinent regulations in force at the time of the determination.”
I would affirm.

. As the district court stated, “These buyers generally used the Amoco bulletin only as a base reflecting market fluctuations of a national and foreign character and upon which additional sums per barrel were added.” Premium prices were uniformly paid, most purchases having been made at Amoco, plus 3 cents a barrel.

. In October of 1973 Mountain Fuel was instructed by Exxon to allocate its proportionate interest to the Cowboy contract. In November of 1973 the United States Geological Survey notified Mountain Fuel that it had elected to take its royalty interest in kind as “royalty oil,” and instructed Mountain Fuel to sell the oil to Sage Creek and Mountaineer Refiners at Amoco plus 47c, i. e., the Cowboy contract price.

. The “written statement” was to be circulated publicly “among buyers and sellers in a particular field in accordance with historic practices and generally known by sellers and buyers within the field.”

. Commencing in the Fall of 1974 and ending in the Spring of 1975, DOE auditors reviewed the books of Mountain Fuel. They advised counsel for Mountain Fuel of a possible violation of CLC regulations relative to price ceilings on old oil, that a review would be made of the results of the audit, and that Mountain Fuel would be advised as soon as possible of their recommendations.

. In concluding that the “court may and should substitute its judgment” in the interpretation of “highest posted price” under the peculiar facts of this case, the district court relied upon this court’s decision in Standard Oil v. DOE and Energy Reserves Group, Inc. v. DOE, 589 F.2d 1082, 1093 (TECA 1978).