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MOBIL Oil Corp. v. Federal Trade Commission and Michael Pertschuk

decided: September 14, 1977.

MOBIL OIL CORPORATION, GULF OIL CORPORATION, SHELL OIL COMPANY AND STANDARD OIL COMPANY OF CALIFORNIA, PLAINTIFFS-APPELLEES,
v.
FEDERAL TRADE COMMISSION AND MICHAEL PERTSCHUK, CHAIRMAN, PAUL RAND DIXON, MEMBER, M. ELIZABETH HANFORD DOLE, MEMBER, CALVIN J. COLLIER, MEMBER AND DAVID A. CLANTON, MEMBER AND CAROL M. THOMAS, SECRETARY, AS OFFICERS OF THE FEDERAL TRADE COMMISSION, DEFENDANTS-APPELLANTS



Appeals from orders of the U.S. District Court for the Southern District of New York, Cannella, J., invalidating Rule 1.82(d) of the Federal Trade Commission as violative of § 102(2)(C) of the National Environmental Policy Act and directing the immediate filing of an Environmental Impact Statement. Reversed.

Van Graafeiland, Circuit Judge, Motley*fn* and Neaher,*fn** District Judges.

Author: Van Graafeiland

VAN GRAAFEILAND, Circuit Judge:

The issue on this appeal is whether the Federal Trade Commission is required by § 102(2)(C) of the National Environmental Policy Act, 42 U.S.C. § 4332(2)(C), to file an Environmental Impact Statement (EIS) at the outset of an adjudicatory proceeding brought pursuant to § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, because of the possibility that the proceeding might some day culminate in an order "significantly affecting the quality of the human environment."

On July 18, 1973, the Commission issued a complaint charging appellees and four other major oil companies with violating § 5. The complaint charged in substance that the respondents named therein combined to monopolize the refining of crude oil, restrain trade and maintain a non-competitive market structure. Rule 3.11(b)(3) of the Commission's Rules of Practice, 16 C.F.R. § 3.11(b)(3) provides that the complaint shall also contain "where practical, a form of order which the Commission has reason to believe should issue if the facts are found to be as alleged . . . ." In this case, the complaint provided that "the Commission may order such relief as is necessary or appropriate in order to correct or remedy the effects of [respondents'] anti-competitive practices."

On February 22, 1974, complaint counsel, upon the direction of the presiding administrative law judge, indicated that on the basis of current information they were prepared to urge certain remedies. These included divestiture of 40 to 60 percent of respondents' refinery capacity, divestiture of certain pipe lines, a ban against future refinery acquisitions and limitations on joint ventures and processing arrangements. Counsel also stated, however, that the appropriateness of the remedies would be determined "on the basis of a full litigative hearing before the administrative law judge" and that "on the basis of such hearings, the proposed relief may be modified." Moreover, the Commission itself has never approved or endorsed the suggested proposals for relief.

Section 102(2)(C) provides in part that all agencies of the federal government shall:

(C) include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on --

(i) the environmental impact of the proposed action,

(ii) any adverse environmental effects which cannot be avoided should the proposal be implemented,

(iii) alternatives to the proposed action,

(iv) the relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity, and

(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.

On June 17, 1974, respondents moved before the administrative law judge for an order requiring complaint counsel to file such an EIS. This motion was denied because Rule 1.82(d) of the Commission's Rules of Practice, 16 C.F.R. § 1.82(d), specifically provides that § 102(2)(C) does not apply to any adjudicatory proceeding commenced by the Commission.*fn1 Administrative relief by ...


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