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GULF OIL CORP. v. FEDERAL ENERGY ADMIN.

February 26, 1975

GULF OIL CORPORATION, Plaintiff,
v.
FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Administrator of the Federal Energy Administration


Snyder, District Judge.


The opinion of the court was delivered by: SNYDER

SNYDER, District Judge.

 The Gulf Oil Corporation filed its Complaint seeking a declaratory judgment and injunctive relief as to certain actions of the Defendants taken under the Emergency Petroleum Allocation Act of 1973 (EPAA), Public Law No. 93-159, 15 U.S.C. § 751 et seq. Under a cost equalization program of the Federal Energy Administration (FEA) there were promulgated regulations requiring the purchase or sale of "Entitlements" which are the right to include one barrel of "old" domestic crude petroleum in a refiner's crude oil receipts or, in essence, the right to refine one barrel of "old" oil in that refiner's refineries. Pursuant to an Entitlement Notice, in January, 1975, Gulf was required to buy 775,693 Entitlements based on a national old oil supply ratio for November 1974 costing Gulf $3,878,465. These payments were made by Gulf under protest and in the face of the threatened imposition of daily penalties against Gulf by the FEA as set forth in the FEA's remedial Order dated January 29, 1975. Further, based on the December 1974 adjusted national old oil supply ratio, Gulf will be required to buy in February, 2,905,408 Entitlements for which it will be required to pay $14,527,040 to various refiners and nonrefiner eligible firms with Entitlements for sale. It is alleged that the actions of the FEA are not authorized under the EPAA, are an arbitrary and capricious exercise of administrative authority, unreasonable and irrational, and an abuse of discretion, by which there are imposed unconstitutional burdens upon Gulf. For the reasons hereinafter set forth, the preliminary injunction must be denied.

 The record in this case will show that this Court commenced the Hearing on the motion of Gulf for a preliminary injunction on February 5, 1975. On that date, the hearing was recessed pending a decision by the Temporary Emergency Court of Appeals (TECA) on the request for a stay by Exxon Corporation in its suit against the FEA attacking the validity of the Entitlement program. At that time it was stipulated between the attorneys for the Plaintiff and the Defendants in this case that if the TECA granted Exxon a stay or any form of injunctive relief, a preliminary injunction would be entered for Gulf by this Court, but if Exxon were denied a stay or any form of injunctive relief the hearing on Gulf's motion for preliminary injunction in this case would resume, at which time Gulf would be given the opportunity to present any additional evidence it may have in support of its motion. In the meantime, TECA has denied Exxon's request for a stay and at the same time dissolved a stay order issued by Chief Judge Tamm in a similar suit by Marathon Oil Company against the FEA. *fn1"

 FINDINGS OF FACT

 1. Plaintiff, Gulf Oil Corporation (Gulf) is a corporation incorporated under the laws of the Commonwealth of Pennsylvania, with its principal office and place of business in the Gulf Building, 439 Seventh Avenue, Pittsburgh, Allegheny County, Pennsylvania.

 2. Gulf is engaged in the business of producing and refining crude oil in the United States and elsewhere, and in marketing in the United States crude oil and petroleum products, including motor gasoline, diesel fuel, fuel oil, and heating oil.

 3. Gulf obtains a substantial amount of its crude oil from its own producing properties located in the United States in the development of which there is involved large investments of money. Gulf also refines in its United States refineries, oil from producing properties located outside the United States.

 4. Gulf has substantial operations for the marketing of motor gasoline, diesel fuel, heating oil, fuel oil and other petroleum products in the United States.

 5. Defendant, Federal Energy Administration (FEA) is an agency and an instrument of the United States under the Federal Energy Administration Act of 1974, 15 U.S.C. § 761 et seq.; and was established by Executive Order No. 11,790 (June 27, 1974). The FEA is charged with the responsibility for the administration of the Emergency Petroleum Allocation Act of 1973 (EPAA), signed into law by the President on November 27, 1973.

 6. Defendant Frank G. Zarb, is the Administrator of FEA under the authority delegated by the Executive Order hereinabove set forth.

 7. Under EPAA there is to be a promulgation of regulations by the President or his delegate for the specification of prices and the mandatory allocation of, crude oil, residual fuel oil, and refined petroleum products in or imported into the United States. (§ 4(a)). *fn2" These regulations were to implement "to the maximum extent practicable", the objectives set forth in § 4(b)(1) of EPAA. *fn3"


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