whether to pass the costs along is left to the individual refiner).
24. Gulf has failed to establish that it is likely to suffer irreparable harm as the basis for injunction, or indeed, that its costs associated with the Entitlement purchase for November and December or for future months cannot be recovered.
25. The evidence tends to show, to the contrary, that Gulf will be more protected with respect to crude oil costs and competition under C.E.P. than it would be if the price of domestic crude oil were not frozen.
26. Gulf does not make a convincing show of evidence that the passing through provision is not substantially and wholly beneficial, tending to minimize its injury. It is noted that while 100% recoupment of payments may not be possible, it does not, however, appear to be irreparable injury or damage to the Plaintiff.
27. The Order of January 29, 1975, directing Gulf to immediately comply with the Entitlement program and to purchase the Entitlements as set forth as well as the Entitlement notice of February 19, 1975 requiring the purchase of Entitlements were issued strictly in accordance with the authority of the FEA as conferred by statute and the actions taken thereunder were neither arbitrary or capricious, but were related to rational considerations of the crisis facing the country.
CONCLUSIONS OF LAW
This Court has jurisdiction of this action under Section 5(a)(1) of the Emergency Petroleum Allocation Act, which makes §§ 205-211 of the Economic Stabilization Act of 1970 (ESA) applicable to regulations promulgated under Section 4(a) EPAA.
Under Section 211(d) of the ESA, District Courts of the United States may enjoin, temporarily or permanently, the application of a regulation only if the regulation was in excess of the agency's authority, was arbitrary or capricious, or was otherwise unlawful under the criteria (5 U.S.C. § 706(2)), and no order of such agency may be enjoined unless the final judgment determines that such order is in excess of the agency's authority or is based upon findings which are not supported by substantial evidence.
The Court determines that the mere fact that CEP does not provide for direct allocations of crude oil, residual fuel oil or any other refined petroleum product does not render the program invalid. Allocation may be brought about indirectly by calling for Entitlements (buy and sell) as well as directly by physical transfer requirements. CEP is thus an allocation program and within the statutory authorization.
Gulf contends that CEP is arbitrary, capricious and unsupported by substantial evidence. Here the issue becomes whether or not there is a rational basis for the decision of FEA to use CEP, and the Court's conclusion is in favor of FEA. Pacific Coast Meat Job. Ass'n. Inc. v. Cost of Living Council, 481 F.2d 1388 (T.E.C.A.1973). Mandel v. Simon, 493 F.2d 1239 (T.E.C.A.1974).
The CEP impresses this Court as being the product of a careful selection from many possible programs and the use of indexes of "old" oil supplies was clearly within the objectives found in Section 4(b) of EPAA.
As to Gulf's contention that CEP constitutes taking of property for private purposes without just compensation contrary to the Fifth Amendment to the Constitution of the United States, we find this argument to be without merit. Western States Meat Packers Ass'n. v. Dunlop, 482 F.2d 1401 (T.E.C.A.1973); Local Union No. 11, IBEW v. Boldt, 481 F.2d 1392 (T.E.C.A.1973). And there is no substantial constitutional question to be certified to the Temporary Emergency Court of Appeals, and this Court declines to certify such. Delaware Valley Apartment House Owners Ass'n. v. United States, 350 F. Supp. 1144 (E.D.Pa.1972), aff'd 482 F.2d 1400 (T.E.C.A.1973).
Counsel for Gulf has strenuously urged upon us that in light of Consumers Union of the United States, Inc. v. John C. Sawhill, Administrator of Federal Energy Administration decided by the Temporary Emergency Court of Appeals of the United States on February 18, 1975, that this Court must declare as unauthorized, CEP. However, we do not so read the Opinion as written by Judge Anderson. In that case, Consumers Union alleged that regulations 10 C.F.R. § 212.71-74 violated Section 4 of the Emergency Petroleum Allocation Act. Specifically, Consumers Union claimed that Section 4 of the Act imposed a mandatory duty to establish controls which would insure "equitable" prices for all domestic crude oil; and that FEA, by permitting new and released crude oil to be sold at the free market price, violated such statutory duty and in effect created a massive unauthorized exemption from the Act. After the United States District Court for the District of Columbia denied Consumers Union's motion for declaratory and injunctive relief and granted FEA's cross-motion for summary judgment, the Temporary Emergency Court of Appeals reversed the District Court which, while upholding FEA's released oil regulation (10 C.F.R. § 212.74(b)), then went on to say (p. 15):
"It is not the function of this court to determine what the equitable price is, or should be. We merely hold that the President, through the FEA, by permitting the price of new crude oil to float at free market levels, has not struck any balance and, as a result, has failed to satisfy the requirement that prices be set at an equitable level."
It is apparent that the Temporary Emergency Court of Appeals was not, as urged by Gulf, declaring as unauthorized the two-tier pricing system but only that the formula relating to new oil was in effect no formula at all. In the instant case, it is admitted by all that the value of an Entitlement is determined in light of the barrel price of old oil, the market price of stripper well oil, the market price of imported crude oil, as well as the market price of new oil. In the use of this formula we do not in any way see a violation of the principles set forth in the majority opinion in Consumers Union. Gulf contends that in fixing the price of its Entitlement, FEA made a determination of the approximate difference between the old oil price and the new oil price and then arrived at the value of $5.00 per Entitlement. However, the Government has represented to the Court with agreement of counsel for the Plaintiff that while unquestionably the new oil price was taken into consideration, a determination was made of more than the difference between the old oil price and the new oil price as set forth above. We thus specifically hold that there is a valid basis for the $5.00 per Entitlement value fixed by the FEA in spite of the infirmity in the program pointed out by TECA in Consumers Union.
Counsel for Gulf in his supplemental memorandum argues to this Court that following the decision of TECA in Consumers Union the attorney for Consumers Union, Peter Schuck, was reported as stating that on the basis of the opinion of TECA, he would seek a court order requiring a refund by companies of all amounts which they had received for petroleum products insofar as such amounts are based upon the difference between the old oil price validly fixed by the FEA and the new oil price found by TECA to be invalid. However, as pointed out in the statement of the Government above, the fixing of the Entitlement's price is not based upon the difference between the old oil price and the new oil price. We do not conclude that this argument of Gulf is a sufficient basis on which this Court could grant a preliminary injunction.
Furthermore, Gulf has failed to establish that it has suffered or is likely to suffer irreparable harm in the event an injunction is denied. Gulf's claim of immediate irreparable harm is premised on the assumption that when it was forced to meet its Entitlement obligation on January 31, 1975 and for the following months, that it will not be able to recover these Entitlement costs from the market place. It is argued that at least in the gasoline market, the Plaintiff is presently selling at, or slightly above its competitors' prices and that any additional costs will not be recoverable. However, the Court was impressed with the fact that Plaintiff's affidavits and exhibits ignored the effect of the CEP upon its competitors who will also be required to expend substantial sums in the purchase of Entitlements and which costs they similarly will be seeking to pass through in the market place. Until the competitors begin to readjust their product cost to include Entitlement cost, it becomes only speculative as to whether the Plaintiff will suffer any injury in the sense of having to absorb, rather than pass through to the market place, its Entitlement cost. Such speculative injury is not the basis of finding irreparable harm, Union Oil Company of California v. Federal Energy Administration, CV 74-1943-MML (CD California, filed July 25, 1974). Even if competition should preclude Gulf from passing through its increased costs, the question remains whether such a reduction in profit margin constitutes a legal harm. Such a reduction of profit margin results, we conclude, from a valid exercise of FEA's regulatory power under the Allocation Act and, therefore, the Plaintiff will not suffer irreparable harm that is legally or equitably cognizable under the CEP. In fact, the two-tier pricing system of control brought about a competitive advantage to Gulf and it is this competitive advantage which is equalized under CEP.
The evidence further tends to show that as a result of CEP Gulf is placed in a better position as respects crude oil costs and competition than it was before the price of domestic crude oil was frozen. In addition, the evidence shows that delaying the implementation of CEP caused by an injunction relating to Gulf alone would force the FEA to recalculate its whole crude oil program, a matter of vital public concern and thus the Plaintiff has failed to meet its burden to establish that the public interest would not be harmed by the issuance of the preliminary injunction sought.
As noted by Judge Walinski in Marathon Oil Company v. Federal Energy Administration, No. C 75-36 (N.D.Ohio, filed January 31, 1975), Gulf would seek to have this Court take on a detailed analysis of the very complicated market factors going into the problems connected with competition among refiners in crude oil. We have been enjoined not to do so. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 28 L.E.2d 136 (1971). In finding that there was an adequate basis for FEA's regulations, this Court will not enjoin the program as to Gulf.
As to Gulf's constitutional challenge that CEP constitutes the taking of property for a private purpose without just compensation contrary to the due process clause of the Fifth Amendment, it is clear that this Court is without power to decide the issue. See § 211(c) of ESA. This Court could certify such a question to the Temporary Emergency Court of Appeals if it found the question to be substantial but such question is not substantial and plainly without merit for previous Court decisions have foreclosed the subject (Marathon Oil Company v. FEA, supra) Delaware Valley Apartment House Owners Association v. United States, supra. Hence, this Court finds no substantial constitutional question and declines to certify such to the Temporary Emergency Court of Appeals. For all of the foregoing reasons, Plaintiff's motion for a preliminary injunction is denied. The cause is continued for such further proceedings as may be necessary.
It is so ordered.