LOCATION: PACIFIC GAS & ELECTRIC CO.
DOCKET NO.: 82-1066
DECIDED BY: Burger Court (1981-1986)
CITATION: 462 US 74 (1983)
ARGUED: Apr 27, 1983
DECIDED: Jun 06, 1983
Lawrence G. Wallace - on behalf of the Appellant
Stephen F. Williams - on behalf of the Respondent
Facts of the case
Media for United States v. Ptasynski
Audio Transcription for Oral Argument - April 27, 1983 in United States v. Ptasynski
Warren E. Burger:
We'll hear arguments next in United States against Ptasynski.
Mr. Wallace, you may proceed when you're ready.
Lawrence G. Wallace:
Mr. Chief Justice, and may it please the Court:
On cross motions for summary judgment in this tax refund suit, the district court held the Crude Oil Windfall Profits Tax Act of 1980 unconstitutional and ordered refunds for taxable periods in the year 1980.
The district court held, contrary to our contention, that the act violates the uniformity clause of Article I, Section 8 of the Constitution, and rejected our further contentions that no refund should be available in any event in this suit because there was no oil extracted in 1980 that was subject to the exemption at issue, and our contentions regarding severability of the exemption at issue.
The district court stayed its judgment, and the United States appealed to this Court.
The act at issue was the product of many months, almost a year, of Congressional study and deliberations involving extensive hearings, staff studies, committee reports, floor debate, amendments, et cetera.
It was enacted in conjunction with the phaseout of domestic oil price controls.
The decontrol of domestic oil prices was undertaken to achieve two purposes.
One was to alleviate market disparities, distortions that had existed because of market disparities between the controlled domestic oil prices and the rising world prices subject to manipulation by the OPEC cartel.
And the second purpose was to encourage domestic exploration and development to make the United States less dependent on imported oil.
And it was recognized widely in Congress as a quid pro quo for the price increases that would be caused by decontrol this act was required if President Carter was going to go through with decontrol.
Actually, the phaseout was completed by President Reagan.
But we have cited in note 10 of page 14 of our reply brief a number of statements made on the floor by various members of Congress explicitly recognizing that this was a part of the decontrol program in the sense that the windfall tax was a quid pro quo for decontrol.
Now, the structure of the act is summarized in chart form in the appendix to the jurisdictional statement that we filed on page 3A, which is part of the district court's opinion.
The principal provisions of Title I of the act, which is the title that imposes the tax, are set forth there in chart form.
And our contention is that except for the first categories of exceptions, which are not at issue here and which were designed for other purposes because the revenues there were thought to be devoted to public purposes extraneous to the overall purposes of this act, the other provisions of the act, including the so-called provision for exempt Alaskan oil, all fit into a unified theme.
The act was intricately designed to tax what Congress said was the subject of the tax, the windfall profits that would result from the decontrol of domestic oil prices.
But those windfall profits were to be identified through various mechanisms in the act in a way that did not tax all of the decontrol revenues that would ensue, but only those that would be over and above the ones that served the purposes of decontrol, including the purpose to encourage domestic exploration and development of oil that might otherwise not occur.
It was sometimes put that way in the course of the legislative history, and sometimes stated as a corollary, that the act was designed to impose relatively high tax rates where production cannot be expected to respond very much to further increases in price and relatively low tax rates on oil whose production is likely to be responsive to price.
In other words, the windfall that Congress was seeking to identify was that portion of the decontrol revenues that were not needed for one of the purposes of decontrol, which was to stimulate domestic production.
And the mechanisms used included differences in the rate base and these various tiers of taxable rates, all intricately adjusted so as to identify what Congress was getting at, what it considered to be the windfall.
And as might be expected, the highest rate of tax would be on the so-called old oil, the existing oil production that obviously would not have been stimulated by the decontrol.
The windfall was only being taxed at these various rates.
It wasn't being entirely eliminated.
And other adjustments reflect various details such as the fact that heavy oil is more expensive to extract and produce.
There were special adjustments made for independent producers as against vertically integrated producers because they did not have what was referred to as downstream revenues and needed more in the way of return to encourage their further explorations.
These various factors were considered in great detail and painstakingly adjusted for insofar as it was practicable to do so in this rather elaborate statute.
And the exemption for so-called exempt Alaskan oil fits into this same pattern.
This was carefully drawn to identify those sources of oil in... because of extreme climatic and other conditions where no windfall was expected to accrue at all within the meaning of what Congress was getting at.