Memorandum and Order
Plaintiff, Goodyear Tire & Rubber Co., brings this suit to appeal from portions of a final order in the Department of Energy's ("DOE") crude oil refund distribution proceedings denying Goodyear a volumetric refund based on its purchases of six petroleum products. This matter is currently before the Court on the parties' cross motions for summary judgment.
A. Regulatory Background
In 1970, Congress enacted the Economic Stabilization Act ("ESA"), giving the President the authority to stabilize prices, rents, wages and salaries, and authorizing the courts to order restitution of funds received in violation of any such order or regulations. 12 U.S.C. § 1904 note (1976). In 1973, Congress enacted the Emergency Petroleum Allocation Act ("EPAA"), to ensure a fair allocation of available petroleum supplies at equitable prices. 15 U.S.C. § 751 et seq. (1982). Congress incorporated much of the ESA into the EPAA's provisions. 15 U.S.C. § 754. The powers set out in the EPAA were transferred to DOE upon its creation in 1977. 42 U.S.C. § 7151 (1994). Under the EPAA, DOE established regulations setting out the procedures it would use in considering applications for the distribution of funds recovered by DOE from crude oil producers and resellers to parties injured by the overcharges. These procedures are known as "subpart V" regulations. See 10 C.F.R. § 205.280-205.288 (1995).
In 1986, Congress promulgated the Petroleum Overcharge Distribution and Restitution Act of 1986 ("PODRA"). 15 U.S.C. § 4501-07 (1994). PODRA imposes an affirmative duty on DOE, through its Office of Hearings and Appeals ("OHA"), to identify persons injured by petroleum overcharges, to establish the amount of such injury, and to make restitution to such persons using funds recovered from companies which violated the petroleum price controls. 15 U.S.C. § 4502(b)(1994).
To aid in processing the crude oil overcharge refund applications, OHA established a presumption of injury for end-users (ultimate consumers) whose businesses are unrelated to the petroleum industry. See 6 Fed. Energy Guidelines P 90,512, 90,718 (1987). Such end-users need only establish the volume of petroleum products that they purchased during the control period, not that they in fact absorbed the overcharges. Id. Other claimants, including end-users affiliated with petroleum companies and companies which have purchased products from endusers, must present detailed evidence of injury. See id.
DOE initially established a standard addressing which refined petroleum products would be eligible for volumetric refunds in a series of adjudications. In its first decision, OHA focused on whether the product was covered by the EPAA and produced from a crude oil refinery, but stated that it would "presume that any product that was regulated by the DOE at any time during the August 19, 1973 through January 27, 1981 Settlement Period meets that standard." Hartsville Oil Mill, 17 DOE P 85,110, 88,237 (1988). After this initial standard was established, OHA granted numerous refunds for petroleum products on the basis that they had been regulated by DOE at any point during the price control period (under the ESA or the EPAA). See, e.g., Mack-Miller Candle Co., 17 DOE P 85,740, 89,408 (1988); Olmos Construction Co., 17 DOE P 85,640, 89,245 (1988). OHA then returned to a more narrow reading of the Hartsville standard, stating that coverage under the ESA served only to establish a rebuttable presumption that the product was eligible for a refund, i.e. that the product was covered by the EPAA and produced by a crude oil refinery. Montana Sulphur & Chemical Co., 20 DOE P 85,625, 85,417 (1990); see also Great Lakes Carbon Corp., 20 DOE P 85,748, 89,755 (1990)(product eligibility standard is whether the product was covered by the EPAA and produced by a crude oil refinery).
In 1992, after notice and comment, OHA issued a rule announcing a change in the agency's standard for determining product eligibility. 57 Fed. Reg. 30,731 (July 10, 1992). OHA stated that:
We will presume that an applicant incurred a crude oil overcharge in the purchase of a petroleum product during the relevant period if either that product was named as a covered product in regulations promulgated pursuant to the EPAA, or (a) was purchased from a crude oil refinery or (b) originated in a crude oil refinery and was purchased from a reseller who did not substantially change its form.
Id. at 30,732.
B. Goodyear's Refund Claims
On December 22, 1987, Goodyear filed a refund application for crude oil overcharges. OHA consolidated Goodyear's application for review with those of five other tire manufacturers. OHA granted some of Goodyear's claims, but, relying on the product eligibility standard of regulation under the EPAA, denied or deferred other claims. The Firestone Tire & Rubber Company, et al., 21 DOE P 85,396 (1991), A.R. 454. On April 17, 1992, Goodyear moved for reconsideration of its refund claims which OHA had denied or deferred. A.R. 635. Goodyear supplemented its request for reconsideration in light of DOE's promulgation of the 1992 product eligibility rule. Upon reconsideration of Goodyear's claims, OHA found that with respect to most of its claims Goodyear had not satisfied the new product eligibility standard.
Goodyear brings this suit, asserting three challenges to OHA's final order: (1) DOE's 1992 product eligibility rule is invalid and DOE's application of the rule to Goodyear constituted an unlawful retroactive application of a substantive agency rule; (2) DOE unlawfully failed to presume that Goodyear, as a purchaser of petroleum products from end-users affiliated with petroleum companies, was injured by crude oil overcharges; and (3) assuming the 1992 product eligibility rule is valid, DOE erred in deciding that Goodyear's claims did not satisfy the standard.
Goodyear contends that DOE's 1992 product eligibility standard is unlawful because Congress did not authorize DOE to issue any new regulations in 1992, much less retroactive rules.
The standard of review of a rule promulgated by DOE is governed by section 211(d)(1) of the ESA, which provides that no regulation of DOE shall be set aside unless "the issuance of such regulation was in excess of the agency's authority, was arbitrary or capricious, or was otherwise unlawful under the criteria set for the in section 706(2) of title 5, United States Code ...." See McCulloch Gas Processing Corp. v. Department of Energy, 650 F.2d 1216, 1220 (Temp. Emer. Ct. App. 1981).
"An administrative agency's power to promulgate legislative regulations is limited to the authority delegated by Congress." Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208, 102 L. Ed. 2d 493, 109 S. Ct. 468 (1988). DOE's authority to promulgate regulations and controls under the EPAA expired on September 30, 1981 pursuant to a sunset provision. See 15 U.S.C. § 760(g). However, PODRA provides in relevant part:
(2) The term "subpart V regulations" means the provisions of Subpart V -- Special Procedures for Distribution of Refunds (10 CFR 205.280-205.288) and any amendment made after October 21, 1986, and all precedents and decisions under such regulations ....