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APEX OIL CO. v. FEDERAL ENERGY ADMIN.

December 16, 1977

APEX OIL COMPANY, Plaintiff,
v.
FEDERAL ENERGY ADMINISTRATION, ET AL., Defendants



The opinion of the court was delivered by: GASCH

 This matter is before the Court on cross-motions for summary judgment. In this action, plaintiff Apex Oil Company (Apex) seeks review of a final decision and order issued by defendant Federal Energy Administration (FEA) denying plaintiff's application for fee-exempt import licenses for the importation of finished petroleum products and for rebate of license fees that plaintiff paid to the Government in the amount of $78,266.94. Apex is an independent petroleum terminal operator and marketer of residual fuel oil, No. 2 fuel oil, and motor gasoline throughout the Missouri, Illinois, and Iowa area. The FEA's Office of Exception and Appeals has authority to consider fee-exempt licenses and refunds. Apex contends that the FEA, in considering applications for such licenses and refunds, applied a more stringent standard to Apex than did the FEA's predecessor, the Oil Import Appeals Board (OIAB).

 In its motion for summary judgment, plaintiff argues that such departure from the criteria previously established by the OIAB without adequate explanation is "arbitrary and capricious" in violation of Section 706(2)(A) of the Administrative Procedure Act (APA). Apex further contends that the FEA was bound by the doctrine of equitable estoppel to grant the requested licenses. Finally, Apex claims that it was denied procedural due process, because its application and appeal were considered by the same individuals within the FEA. Defendants seek summary judgment on the basis that the agency decision was neither a departure from OIAB precedents nor arbitrary and capricious, equitable estoppel is inapplicable to the instant case, and the FEA's review of plaintiff's application comported with due process. For the reasons hereinafter stated, the Court will grant summary judgment in favor of defendants on all claims.

 BACKGROUND

 Authority for the present license fee system for oil imports derives from Presidential Proclamation 3279, 24 Fed. Reg. 1781 (1959), which authorized the imposition of quotas on the importation of petroleum products in the United States. The quota system was abolished, and a license system substituted. Proclamation 4210, 38 Fed. Reg. 9,645 (1973). The Oil Import Appeals Board (within the Department of the Interior) was authorized to grant fee-exempt import licenses to established independent marketers "who are experiencing exceptional hardship, or in emergencies in order to assure, insofar as practicable, that adequate supplies are available" and refunds of license fees previously paid by importers who subsequently became entitled to fee-exempt licenses. 38 Fed. Reg. 19,820 (1973).

 Pursuant to the Federal Energy Administration Act (FEAA), 15 U.S.C. § 761 et seq. (1974), the functions of the Secretary of the Interior in regard to import licenses were transferred to the Administrator of the FEA; the OIAB continued as an entity within the FEA. *fn1" Upon the abolition of the OIAB, effective August 15, 1975, the Office of Exceptions and Appeals assumed the duties of the OIAB. 40 Fed. Reg. 36,554, 36,558-559 (1975).

 At the time of the transfer of functions to the FEA, the FEA stated in a Notice of Proposed Rulemaking that only procedural, not substantive, changes would result from the transfer. Further, in the announcement accompanying the implementing regulations, the FEA stated:

 
FEA recognizes that the criteria for relief under Proclamation No. 3279, as amended, are broader than those generally applicable under [10 C.F.R., Part 205] Subpart D. Accordingly, § 205.55(b)(2) is amended to provide that with respect to exceptions from the base fee, the Office of Exceptions and Appeals shall utilize the criteria applicable under the Proclamation, rather than the general criteria applicable with respect to exceptions from other FEA programs. In applying these criteria, it will be FEA's policy to follow the basic approach of the Oil Import Appeals Board.

 40 Fed. Reg. 36,555 (1975). On June 17, 1975, in a meeting with representatives of independent marketers, Robert Montgomery, then General Counsel of the FEA, and George Breznay, then Acting Chairman of the OIAB, similarly represented that the transfer would be merely procedural.

 During the period from 1970 to August, 1975, when OIAB had jurisdiction over grants of license fee exemptions and refunds, Apex was granted seven fee-exempt licenses to import 6,548,000 barrels of fuel oil and other finished products. The last exemption granted by the OIAB to Apex was on January 9, 1975. However, the Office of Exceptions and Appeals, since its assumption of jurisdiction, has denied one application by Apex for a fee-exempt license *fn2" in addition to the instant application.

 Apex imported 745,403 barrels of gasoline during August and September of 1975 and expended $78,266.94 for license fees. It contends that it would not have imported these cargoes if it had not been assured that the standard for awarding fee-exempt licenses would remain the same. On March 8, 1976, the Office of Exceptions and Appeals denied Apex's application for fee-exempt licenses and license rebates for the importation of the above-stated cargo. 3 FEA P 83,121 (1976). The decision was affirmed on appeal on April 28, 1976. 3 FEA P 80,623.

 MERITS

 This action does not involve a review of the agency's findings of fact, where judgment upon the pleadings rather than summary judgment is appropriate. *fn3" Rather, this case involves a claim that the agency departed from precedent without adequate explanation as well as a due process challenge. Because summary judgment is a proper form in which to present these claims to the Court, affidavits and other information outside the administrative record have been considered. The Court finds that there are no genuine issues as to any material facts with respect to the three claims before the Court. The Court therefore concludes that it is appropriate to resolve the entire matter on summary judgment.

 I. Departure From Established Precedent.

 Plaintiff contends that the FEA Office of Exceptions and Appeals, in denying it a fee-exempt license and rebate, deviated from OIAB precedent without adequate explanation, thus rendering the decision arbitrary and capricious. The Court finds, however, that the FEA has adequately explained its departure from precedent.

 The Court of Appeals for the District of Columbia Circuit has recognized the claim that an agency's departure from established precedent without any explanation is arbitrary and capricious in violation of Section 706(2)(A). See, e.g., Garrett v. FCC, 168 U.S. App. D.C. 266, 513 F.2d 1056 (1975); Greater Boston Television Corp. v. FCC, 143 U.S. App. D.C. 383, 444 F.2d 841, cert. denied, 403 U.S. 923, 29 L. Ed. 2d 701, 91 S. Ct. 2233 (1971). It has required that "[an] agency changing its course must supply a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored." Greater Boston ...


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