Administrator's decision of June 30, 1967. A hearing was held by the Appeals Board on August 22, 1967. On December 19, 1967, the Appeals Board with one of its three members dissenting, denied Plaintiff's petition and left standing the decision of the Administrator.
15. During 1967, Plaintiff was unable to import some 461,464 barrels of the 1,082,199 barrels of crude and unfinished oils which it was licensed on December 27, 1966 to import during the said year. This amount was not imported during 1967 because of the general disruption in oil imports caused by the crisis in the Middle East. On January 12, 1968, Plaintiff in compliance with the Administrator's notice of January 3, 1968 and with Section 23 of Oil Import Regulation 1 (Rev. 6) returned its partially used license to the Oil Import Administration pursuant to this provision of the Regulation that without further application it would have a license reissued to it for the amount of the unused portion of the returned license. On March 1, 1968, Plaintiff was informed by the Administrator that it would not be permitted to import the unimported balance of said 461,464 barrels. The Administrator's action was not preceded by a hearing. As indicated by the Administrator's Release of March 1, 1968, all other refiners, having an unimported balance for 1967, were granted permission, without further application, to import the unimported balance of their 1967 licenses during 1968 and 1969.
16. On October 27, 1967, Plaintiff applied for an allocation and license under Section 10 to import crude oil for the year 1968. No allocation or license has been issued. Getty has received an allocation for 13,140 barrels per day for the current period. On March 22, 1968, Plaintiff made application to the Administrator requesting a license for its appropriate share of the 1968 allocation given to Getty.
17. In December, 1966 and at all subsequent times pertinent hereto, Getty owned not less than 64.77% of the voting stock of Mission Corporation, which in turn owned 71.09% of the voting stock of Plaintiff. From the foregoing, it is apparent that Getty has the power to vote a substantial majority of the Plaintiff's voting stock. Five (5) of the nine (9) members of Plaintiff's Board of Directors are also members of Mission Corporation's six (6) member Board of Directors and two (2) of Plaintiff's directors until recently also served as directors of both Mission Corporation and Getty. While none of Plaintiff's officers serve as officers of Mission Corporation, four (4) of Mission's officers also serve as officers of Getty.
18. In December, 1966 and at all subsequent times pertinent hereto, Plaintiff Skelly was operated as an independent company. Getty has made no attempt, through its power to vote a majority of Plaintiff's voting stock, to control the management policy, decisions and operations of Plaintiff as a separate corporation. More specifically, Plaintiff conducts its buying, refining and marketing operations as a Skelly enterprise. Its business dealings with Getty and Tidewater are both infrequent and limited, being no more and perhaps less than those it conducts with other major oil companies.
19. The loss of its eligibility for a separate allocation for the second half of 1967 is estimated to have cost Plaintiff a sum in excess of $1,000,000. For the year 1968, further costs in excess of $3,000,000 are estimated as the result of Plaintiff's continued loss of eligibility. Both of these figures, reflected in increased refinery import costs, arise from the fact that the price differential between domestic and foreign crude oil is approximately $1.25 per barrel.
20. Getty has not made available to Plaintiff any part of its 1968 allocation of foreign crude oil. It has recently filed suit in the Chancery Court at Wilmington, Delaware, for a declaratory judgment asking that it not be required to share its allocation with Plaintiff. Said suit, which has been removed to the United States District Court at Wilmington, is presently pending.
CONCLUSIONS OF LAW
1. The Administrator's decision of June 30, 1967, determining that Plaintiff was not eligible for a separate allocation and license was not a revocation or suspension of Plaintiff's license. Hamlin Testing Laboratories, Inc. v. United States Atomic Energy Commission, 6 Cir., 357 F.2d 632. Plaintiff was not entitled to a hearing, prior to such action, as is provided for under Section 20 of Regulation 1 and under the Administrative Procedure Act.
2. The Administrator, in his interpretation of Section 4(g) of Regulation 1, was correct when he determined that Plaintiff, because of Getty's ability to vote a majority of Plaintiff's voting stock, was under the control of Getty and therefore not eligible for a separate allocation and license to import foreign crude oil under the Mandatory Oil Import Program.
3. Section 4(g) of Regulation 1 has a rational basis consistent with the purposes of the Mandatory Oil Import Program. Udall et al. v. Washington, Virginia and Maryland Coach Co., Inc. D.C.Cir., (slip opinion, June 12, 1968). In promulgating Regulation 1, containing said provision, the Secretary of the Interior acted in accordance with the authority delegated to him in Presidential Proclamation 3279 and according to law.
4. The Oil Import Appeals Board in its decision of December 19, 1967, did not act arbitrarily or capriciously when it failed, after hearing, to reverse and set aside the Administrator's decision of June 30, 1967.
5. The Administrator's decision of March 1, 1968 that Plaintiff would not be permitted to import the licensed but unimported balance of 461,464 barrels, which Plaintiff was prevented from importing in 1967 because of the Middle East crisis, was a pro tanto revocation of Plaintiff's 1967 license and invalid because it was not preceded by the hearing required under the provisions of Section 20 of Regulation 1. Irrespective of the matter of a hearing, said decision of March 1, 1968 was invalid because it was in violation of Section 23 of Oil Import Regulation 1 (Rev. 6). Under said Section 23, the determination of ineligibility for an allocation is not conclusive of one's eligibility for a license. See also Section 4(g) of Oil Import Regulation 1, which permits the issuance of a license to one otherwise ineligible for an allocation.
Counsel will submit an appropriate order.
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