Court Opinion

ID: 6934150
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:21:54.192608+00
Date Added: 2024-06-11T16:07:20.678206
License: Public Domain

ARCHER, Chief Judge,
dissenting.
I cannot join the majority’s opinion for, in my view, the administrative record does not disclose a rational basis for the Department of Energy’s decision on how to allocate the Texaco settlement. Without such a rational basis, the agency’s action is arbitrary or capricious under our statutory standard of review and cannot be sustained.
One of the purposes of the legislation at issue here, the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note, as incorporated in the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 751 et seq., is to provide restitution to purchasers of petroleum products for overcharges by oil producers in contravention of regulatory price controls. See generally Texas American Oil Corp. v. United States Dep’t of Energy, 44 F.3d 1557 (Fed.Cir.1995) (in banc). The Department of Energy (and its administrative predecessors) have been entrusted by Congress with this task. Energy does not, however, have unfettered discretion to decide how to allocate this restitution. Congress provided that interested parties may appeal such decisions to the district courts, 12 U.S.C. § 1904 note, and that any appeal from a district court’s decision will be had to the Federal Circuit, 12 U.S.C. § 1904 note (as amended October 29, 1992); 28 U.S.C. § 1295.
The majority affirms the trial court’s judgment sustaining Energy’s action because it is a “judgment call,” involving policy matters beyond the purview of the judicial branch. While I certainly agree with the majority that courts should not substitute their own *994policy judgments for those of the cognizant agency, this axiom of agency law does not, in my view, warrant the wholesale abdication of our statutory role on review. Whether this agency action is characterized as “rule-making” or “adjudication,” it must satisfy the “arbitrary or capricious” test set forth in 5 U.S.C. § 706(2)(A).1 I conclude that, on this record, it does not.
An agency action subject to 5 U.S.C. § 706(2)(A) “may be invalidated by a reviewing court under the ‘arbitrary or capricious’ standard if [it is] not rational and based on consideration of the relevant factors.” Federal Communications Comm’n v. National Citizens Committee for Broadcasting, 436 U.S. 775, 803, 98 S.Ct. 2096, 2116, 56 L.Ed.2d 697 (1978). ’While an agency need not make detailed factual findings to support its actions under this standard, the agency’s rational basis must be evident in the administrative record, which is the sole source for the reviewing court’s “searching and careful” review. Id. In this case, the administrative record demonstrates that Energy’s rationale for distributing the over $1 billion of settlement monies according to a 10:90 (refined products vs. crude) split consisted primarily of conelusory statements with a few vague references to its consideration of “litigation risks” and “the number and complexity of the legal and factual issues and the time and expense required for the government to fully litigate every issue in order to obtain any recovery.” In other words, Energy told settlement claimants, “take our word for it.” That is not, in my view, a rational basis for Energy to choose the allocation proportion for at least the reason that it virtually precludes judicial review.
The 10% allocated by Energy to refined products overcharges may be reasonable in light of the estimated 16% of Texaco’s maximum possible liability that Energy attributed to refined products overcharge allegations during the settlement. But the conelusory basis Energy gives for its actions could just as easily justify a 5% or a 15% allocation. Without more, we simply cannot review whether or not such an allocation was arbitrary or capricious. Moreover, in spite of the presumption of regularity accorded to governmental actions, I would not so readily discount the fact that the United States has a significant pecuniary interest in the outcome of how the settlement monies are apportioned in this case and that its interest is diametrically opposed to that of the appellants.
I would vacate the district court’s judgment with instructions to remand the case to the agency for further development of the factual record underlying the agency’s decision.

. Because I conclude Energy’s action cannot be sustained under the “arbitrary or capricious" test, X need not discuss whether the agency action also meets the requirements of the “substantial evidence” test, which some Temporary Emergency Court of Appeals precedent applies to agency regulations, as well as orders. See International Drilling & Energy Corp. v. Watkins, 920 F.2d 14, 20 & n. 6 (Temp.Emer.Ct.App.1990); see also Texas American, 44 F.3d at 1561 (adopting the precedent of the Temporary Emergency Court of Appeals as Federal Circuit precedent).