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August 25, 1983


The opinion of the court was delivered by: SPRIZZO


Plaintiff, Hydorcarbon Trading and Transport Company, Inc. ("HTT"), an independent distributor of petroleum products, commenced this action against Exxon Corporation ("Exxon"), a producer, refiner and distributor of petroleum products, alleging that Exxon violated The Economic Stabilization Act of 1970, 12 U.S.C. § 1904, as incorporated into 15 U.S.C. § 753 (1976 & Supp. IV 1980), by refusing to supply it with gasoline in March, April and May of 1979 and 1980.

 During the energy crisis, shortages of petroleum products caused disruption in the economy and the failure of many businesses in the petroleum industry. See H.R. Rep. No. 531, 93d Cong., 1st Sess., reprinted in 1973 U.S. Code Cong. & Ad. News, p. 2586; Conference Report 93-628, Joint Explantory Statement of the Committee of Conference, 93d Cong., 1st Sess., reprinted in 1973 U.S. Code Cong. & Ad. News, p. 2689. In an effort to deal with these problems, Congress enacted the Emergency Petroleum Allocation Act (the "EPAA"), 15 U.S.C. §§ 751-760, which required the President, inter alia, to promulgate regulations to insure the equitable distribution of petroleum products and to preserve the competitive viability of nonbranded, independent marketers. 15 U.S.C. § 753(b)(1)(D) and (F); see H.R. Rep. No. 531, 93d Cong. 1st Sess., reprinted in 1973 U.S. Code Cong. & Ad. News, p. 2586. *fn1"

 The Mandatory Petroleum Allocation Regulations, 10 C.F.R. Parts 211 and 212 ("MPAR"), sought to achieve these goals by (1) requiring suppliers to distribute their supplies of allocated products in accordance with distribution patterns as they existed during a base period as defined in the regulations; and (2) controlling the maximum lawful price which suppliers could charge for regulated products. *fn2" Three sections of the regulatory scheme are pertinent to an understanding of the issues here. The first is section 211.9(a) which contains the obligation to supply. That regulation provides:

 Supplier/wholesale purchaser relationship:

 (1) Each supplier of an allocated product shall supply all wholesale purchaser-resellers and all wholesale purchaser-consumers which purchased or obtained that allocated product from that supplier during the base period as specified in Subparts D through K of this part.

 10 C.F.R. § 211.9(a) (1980) ("Supplier/Purchase Rule").

 The second is section 211.10 which prescribes the method of calculating the volume of product a supplier is obligated to furnish. That regulation provides, in essence, that a supplier's base period obligation for a particular allocated product equals the total of its purchasers' base period volumes, i.e., the volumes of allocated product purchased or obtained during the appropriate base period ("Base Period Volume"). *fn3" See 10 C.F.R. § 211.10 (1980). However, Base Period Volume does not include amounts of allocated product which have been obtained pursuant to in kind exchange agreements involving the same product, except to the extent that amounts received under such exchange agreements exceed amounts supplied under those agreements. 10 C.F.R. § 211.1010(b)(2)(ii) (1980). *fn4"

 Finally, section 212.83 provides that the maximum lawful price a supplier may charge for an allocated product is the sum of (i) the average May 15, 1973 selling price to the class of purchaser to which the customer belongs; (ii) permissible product cost increases; and (iii) permissible operating cost increases ("Maximum Lawful Price"). 10 C.F.R.§ 212.83 (1980).

 In March and April of 1978, HTT and Exxon entered into three separate product exchange agreements, each of which obligated Exxon to supply HTT with 100,000 barrels of motor gasoline in exchange for HTT's supplying Exxon with 100,000 barrels of No. 2 fuel oil plus cash quality differential. Exhibits A, B and C to the Affidavit of Robert S. Bramlett sworn to on December 12, 1980 ("Bramlett Affidavit"). All three exchange agreements were performed according to their terms between March and June of 1978.

 At the time that the parties entered into and performed their exchange agreements, the base period for the allocation of motor gasoline was 1972. In 1979, however, the base period was changed so as to include the months of March through June of 1978. 44 Fed. Reg. 11,202 (February 28, 1979); 44 Fed. Reg. 42,549 (July 19, 1979). On February 28, 1979, HTT sent a telegram to Exxon advising Exxon that since transactions had occurred during the March 1978 base period, it would require its allocation for March 1979. HTT also requested information about the volume of gasoline which would be available as well as the price therefor. See Exhibit D to Bramlett Affidavit.

 Exxon responded by advising HTT that it would not supply the gasoline requested because in its view exchange transactions did not create supply obligations under the MPAR. See Affidavit of Donald A. Campbell, sworn to May 14, 1981 at paras. 8, 9 ("Campbell Affidavit"), Exhibit B to Affidavits in Support of Defendant Exxon Corporation's Memorandum in Opposition to Plaintiff's Motion for Partial Summary Judgment ("Defendant's Affidavits in Support"); Exhibit E to Bramlett Affidavit. HTT made similar demands for product on various occasions in 1979 and in 1980. Bramlett Affidavit at para. 8; Letter from Donald Craven to the Court, dated May 3, 1983 at 2.

 Although on each occasion when product was requested Exxon had responded by declining to provide gasoline, in 1980 it advised HTT that, if HTT had pressing supply problems, it would consider supplying gasoline in exchange for heating oil and an appropriate cost differential. Campbell Affidavit at para. 9. HTT replied that it would consider furnishing heating oil, but only at the 1978 quality differential. Id. The parties never reached agreement and no gasoline was furnished. Thereafter, HTT sought the assistance of the Department of Energy. *fn5" This action for damages was commenced on May 1, 1980.

 Plaintiff moves for partial summary judgment declaring that the MPAR obligated Exxon to supply it with gasoline in 1979 and 1980. In support of its motion, plaintiff argues (1) that the Supplier/Purchaser Rule, by its terms, clearly encompasses exchange agreements; (2) that the regulatory scheme supports that construction; and (3) that the Court should accord considerable weight to the administrative decisions which unanimously hold that exchange transactions create supply obligations.

 Exxon argues that the Supplier/Purchaser Rule was not intended to apply to exchange transactions and that the regulatory scheme as a whole compels that conclusion. Exxon further argues that the agency interpretations upon which HTT relies are not entitled to deference because they are both belated and inconsistent with the agency's contemporaneous ...

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