Full opinion text
MEMORANDUM-DECISION AND ORDER MUNSON, Chief Judge. I The present litigation arises out of deal- • ings between the plaintiff, Cibro Petroleum Corporation, Inc. [Cibro], a New York corporation engaged in the business of refining crude oil, and Sohio Alaska Petroleum Company [Sohio], a Delaware corporation which produces, transports and sells crude oil and petroleum products in the United States and abroad. During the relevant damage period involved in this litigation, Sohio was a wholly-owned subsidiary of the Standard Oil Company of Ohio responsible for the marketing of crud§, oil produced from its Alaska North Slope Crude Oil fields. Cibro Petroleum Products, Inc. is owned by the Cirillo family and is operated with other family-owned petroleum distribution companies. Jurisdiction is properly predicated in this action upon 28 U.S.C. §§ 1331 and 1332, and under Section 5(a)(1) of the Emergency Petroleum Allocation Act of 1973 [EPAA or Act], as amended, 15 U.S.C. § 751 et seq., which incorporates by reference the Economic Stabilization Act of 1970, as amended, 12 U.S.C. § 1904 note. Venue is conferred pursuant to 28 U.S.C. § 1391(a). At issue in this litigation is how long defendant Sohio was obligated to supply crude oil to plaintiff Cibro under the terms of their supply agreement. Cibro has pleaded two separate and distinct causes of action. The first cause of action, styled by the parties as the “regulatory cause of action,” is based upon the Emergency Petroleum Allocation Act of 1973. Cibro claims that Sohio violated the Mandatory Petroleum Allocation Regulations enacted pursuant to the Act when it ceased supplying crude oil to Cibro in August of 1979. Cibro contends that Sohio was obligated under the existing regulatory scheme to supply crude to Cibro through January 28, 1981, the date controls were lifted on the sale of crude oil under the Mandatory Petroleum Allocation Regulations. Cibro seeks damages in excess of $20.8 million. Under its regulatory cause of action, Cibro claims that Sohio was compelled as a matter of federal regulatory law to supply crude oil for approximately seventeen months after the date Sohio discontinued supplying crude oil. Cibro maintains that resolution of this cause of action depends upon whether the supply agreement made the subject of this litigation contains a “specific termination date.” Cibro contends that, if there is no specific termination date stated in the agreement, a “supplier-purchaser” relationship was created under applicable federal regulations which preempt the contractual provisions in the agreement that waive application of those regulations. Cibro’s second cause of action lies in the realm of contract law. This claim for damages concerns when notice to terminate the supply agreement could effectively have been given. If notice of termination could have been given at any time during the initial term of the contract, then the contract was for a maximum of eleven months expiring on August 31, 1979. If, as Cibro claims, notice of termination could not have been given until the end of the initial eleven month contractual term, the contract was for a minimum of seventeen months, or until February of 1980. It should be noted that because Cibro’s damage claim under the regulatory cause of action is more extensive than under the contract claim, i.e., the contract cause of action seeks damages for six additional months while the regulatory cause of action would extend the contract eight months, if the court concludes that Cibro should prevail under both the regulatory claim and the contract claim, Cibro’s contract damages will be subsumed within its regulatory cause of action damages. One additional collateral issue has been raised by Cibro in this case. Under the contract between the parties, Sohio was entitled to request an increase in the price it charged Cibro for crude oil once every 90 days or in the event of a change in the official selling price of OPEC marker crude oil. Cibro claims that Sohio violated this contractual provision when it increased its price within 90 days of its last increase and not in response to a change in the official OPEC marker price. Cibro claims that the request was based upon a unilateral decision of the Saudi Arabian government to increase production of crude by one million barrels per day which did not constitute an official OPEC marker price change. A trial to the court was held in this matter from March 21, 1984 through April 2, 1984. After considering the record, the testimony and demeanor of the witnesses, the exhibits, the arguments of the parties and the applicable law, the court now enters its Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal Rules of Civil Procedure. II Commencing in November of 1977 Cibro and Sohio began negotiations for the purchase of crude oil. During this initial period of negotiations Cibro was nearing completion of a refinery in Albany, New York and was seeking a secure long-term source of crude oil from various oil companies. The parties first met in November of 1977 in Houston, Texas at a meeting of the American Petroleum Institute. At that meeting Cibro’s representatives expressed a strong interest in obtaining a crude oil supply contract from Sohio, and Sohio’s representatives expressed an interest in selling Alaska North Slope Oil [ANS] to Cibro. Thereafter, on March 28, 1978, David Snively, a representative of Sohio, sent a written essay to Cibro’s Enrique Carrero concerning ANS crude oil. During this period ANS was a relatively new crude oil, having first been produced in early 1977 from the Prudhoe Bay field in the State of Alaska. Sohio proposed to sell ANS crude oil to Cibro for a term of “one year, commencing July 1, 1978 and 90 days thereafter unless cancelled by either party giving 90 days notice.” This type of supply agreement is commonly referred to in the oil industry as an “evergreen contract,” that is, a contract that will continue ad infinitum until and unless terminated by either party. On April 21,1978, Mr. Snively traveled to New York City with Mr. Christopher Hesketh, a crude oil sales representative of Sohio and met with representatives of Cibro, including Christopher Bohlmann, Chief Negotiator for Cibro and Nicholas Cirillo, Vice-President of Supply and Distribution for Cibro. At the meeting Mr. Cirillo indicated that Sohio’s proposed 90-day notice of termination provision was not long enough. The parties discussed a possible one-year contract and a one-year notice of cancellation provision. The meeting concluded with Cibro agreeing to provide Sohio with a proposal on the term and notice provisions of the contract. After the April meeting Christopher Hesketh assumed responsibility for direct contact with Cibro and its Chief Negotiator, Christopher Bohlmann. On May 4, 1978 Mr. Bohlmann sent a telex to David Snively containing certain comments and amendments to the draft contract which Sohio had previously given Cibro. Paragraph 7 of the proposed draft provided as follows: [The contract] shall be for a period of one year commencing with the date of the first delivery (estimated to be Sept. 1-15, 1978) and evergreen thereafter subject to one year(s) prior written notice of cancellation. See Plaintiff’s Exhibit No. 14. Thereafter, on June 2, 1978, Mr. Hesketh responded to Mr. Bohlmann’s telex stating that: Regret we are unable to agree to one year’s notice of cancellation after the initial year, but would be willing to increase our proposed 90 days notice to 6 months. See Plaintiff’s Exhibit No. 15. After several revisions of the contract a final draft was sent to Cibro. The final term clause contained in paragraph 7 of the agreement provides as follows: The term of this agreement shall be for a period of 11 months commencing on [October 1, 1978] and ending on August 31, 1979 and continuing thereafter unless terminated by either party providing not less than six (6) months notice of termination in writing. See Plaintiff’s Exhibit No. 3. Sohio commenced deliveries pursuant to its agreement with Cibro in September, 1978. Pursuant to that agreement the first month’s supply of crude oil was sent to the General Crude Oil Company of Houston, Texas and Sohio began direct deliveries to Cibro in October, 1978. Thereafter, on January 10, 1979, Christopher Hesketh traveled to New York City and met with Nicholas Cirillo and Enrique Carrero. At that meeting Mr. Hesketh advised Cibro that Sohio was not going to continue the contract beyond August 31, 1979. On January 23, 1979, Mr. Hesketh confirmed his oral notice of termination and advised Cibro that the contract would terminate on August 31, 1979. See Plaintiff’s Exhibit No. 4. Thereafter the present litigation ensued. Ill A. Statutory and Regulatory Overview In response to widespread shortages of petroleum and petroleum products caused by the Arab oil embargo of 1973, Congress enacted the Emergency Petroleum Allocation Act of 1973, 15 U.S.C. § 751, et seq. See generally, Basin Inc. v. Federal Energy Administration, 552 F.2d 931 (Temp.Emer.Ct.App.), cert. denied, 434 U.S. 821, 98 S.Ct. 821, 54 L.Ed.2d 78 (1977). The Act, which became effective November 27, 1973, was based upon a congressional finding that “a national energy crisis” existed and that “the self-regulatory laws of supply and demand [were] not ... operating in the petroleum market,” and, thus, “[i]t [was] imperative that the Federal Government ... accept its responsibility to intervene ... to preserve competition and to assure an equitable distribution of critically short [oil] supplies.” Conference Report, H.R.Rep. No. 93-628, 93d Cong., 1st Sess. (1973), U.S.Code Cong. & Ad.News, pp. 2582, 2688. The primary aim of the statute was to deal with “existing or imminent shortages and dislocations in the national distribution system.” Id. Congress was particularly concerned with protecting “small, independent refiners and marketers from large integrated companies.” See, e.g., Condor Operating Company v. Sawhill, 514 F.2d 351, 356 (Temp.Emer.Ct.App.), cert. denied, 420 U.S. 976, 95 S.Ct. 1975, 44 L.Ed.2d 467 (1975); Basin Inc., supra, 552 F.2d at 936. Upon enactment of the EPAA the President was given 15 days to promulgate regulations providing for the mandatory allocation of crude oil, residual fuel oil and refined petroleum products in amounts and at prices to be specified in the regulations. See 15 U.S.C. § 753(a). The Act further contained nine objectives which the regulations were directed to achieve “to the maximum extent practical.” Those stated objectives included: (A) protection of public health, safety, and welfare (including maintenance of residential heating, such as individual homes, apartments, and similar occupied dwelling units), and the national defense; (B) maintenance of all public services (including facilities and services provided by municipally, cooperatively, or investor owned utilities or by any State or local government or authority, and including transportation facilities and services which serve the public at large); (C) maintenance of agricultural operations, including farming, ranching, dairy, and fishing activities, and services directly related thereto; (D) preservation of an economically sound and competitive petroleum industry; including the priority needs to restore and foster competition in the producing, refining, distribution, marketing, and petrochemical sectors of such industry, and to preserve the competitive viability of independent refiners, small refiners, nonbranded independent marketers, and branded independent marketers; (E) the allocation of suitable types, grades, and quality of crude oil to refineries in the United States to permit such refineries to operate at full capacity; (F) equitable distribution of crude oil, residual fuel oil, and refined petroleum products at equitable prices among all regions and areas of the United States and sectors of the petroleum industry, including independent refiners, small refiners, nonbranded independent marketers, branded independent marketers, and among all users; (G) allocation of residual fuel oil and refined petroleum products in such amounts and in such manner as may be necessary for the maintenance of exploration for, and production or extraction of, fuels, and for required transportation related thereto; (H) economic efficiency; and (I) minimization of economic distortion, inflexibility, and unnecessary interference with market mechanisms. 15 U.S.C. § 753(b)(1). Almost immediately the Federal Energy Office [FEO] responded to Congress’ mandate by promulgating the Mandatory Petroleum Allocation Regulations. See 10 C.F.R. § 211.63 et seq. These regulations essentially provide, with certain exceptions discussed infra, that all supplier/purchaser relationships in effect on December 1, 1973 must remain in effect for the duration of the program. Section 211.63 provides in relevant part as follows: All supplier/purchaser relationships in effect under contracts for sales, purchases, and exchanges of domestic crude oil on December 1, 1973, shall remain in effect for the duration of this program, except purchases and sales made to comply with this program: Provided, however, that (1) any such supplier/purchaser relationship may be terminated by the mutual consent of both parties; (2) the provisions of this paragraph do not apply to the first sale of crude oil pursuant to § 210.32 of this chapter, and (3) the provisions of this paragraph shall not apply to the seller of any new crude petroleum or released crude petroleum, as defined in Part 212, if the present purchaser of such crude petroleum refuses, after notice by the seller, to meet any bona fide offer made by another purchaser— 10 C.F.R. § 211.63(a). These regulations afford qualified purchasers of domestic crude oil a right to continue to receive supplies of crude oil from their existing contractual suppliers beyond the initially contemplated term of a supply agreement. In effect, § 211.63 “lock[s] or freezfes] into place the supplier-purchaser relationships that existed before the freeze date of December 1, 1973.” Basin, Inc., 552 F.2d at 933. Thus, this supplier/purchaser rule stabilized the distribution system and “greatly helpfed] to protect the sources of supply of the small, independent refiners” from victimization on the part of large oil companies in times of shortages. Id. at 936; see also 41 Fed. Reg. 16,662, 16,663 (April 21, 1976). Simply stated, the regulation provides that “[i]f a producer of crude oil had been supplying a certain reseller, or if the reseller had been supplying a certain refiner, then the ‘freeze’ rule required that they continue to do so.” Id. at 933. In effect the regulation preempts private contracts which are inconsistent with the regulations or which specify a particular termination date while the emergency program is still in effect. Basin, Inc. v. Federal Energy Administration 534 F.2d 324 (Temp.Emer.Ct.App.1976). Thus, when the obvious intent of Congress is to give the President broad power to do what reasonably is necessary to accomplish legitimate purposes rendered necessary by a recognized emergency, the court should not interfere with the perogative of the agency to select the remedy which for rational reasons is deemed most appropriate. Condor Operating Co. v. Sawhill, 514 F.2d 351, 359 (Temp.Emer.Ct.App.), cert. denied, 421 U.S. 976, 95 S.Ct. 1975, 44 L.Ed.2d 467 (1975). Once established, a supplier/purchaser relationship can be terminated or waived, notwithstanding § 211.63(b), under the following circumstances: (d) Termination of Supplier/Purchaser Relationships. (1) Any supplier/purchaser relationship established under paragraph (b) [§ 211.63(b)] of this section may be terminated as follows: (i) At the option of the purchaser, as evidenced by its written consent thereto together with notice of the termination date given to the producer, provided all subsequent purchasers of the crude oil involved have consented to such termination in writing; 10 C.F.R. § 211.63(d)(l)(i). The supplier/purchaser relationship set forth in § 211.63 can also be terminated by the supplier unilaterally, pursuant to 10 C.F.R. § 211.63(d)(iv)(A), where the purchaser is a reseller and the constituent components of the regulation are satisfied. Section 211.63(d)(iv) provided at all times relevant to this litigation that a supplier/purchaser relationship could be terminated: (iv) By a producer (as defined in Part 212 of this chapter) as to a reseller purchasing crude oil from that producer: Provided, that: (A) At least thirty days in advance of any termination under this subdivision (iv), the producer shall give to the reseller purchaser from it whose supplier/purchaser relationship is proposed to be terminated a written termination notice stating the date of termination, the source, quality, and estimated volume of crude oil involved (including the portions of that volume that are priced as lower tier crude oil, upper tier crude oil and uncontrolled crude oil under Part 212 of this chapter), and the name and address of the new reseller to which such crude oil is proposed to be sold. Id. However, consistent with the general policy objectives of the EPAA, § 211.-63(d)(iv) provides that once a crude oil reseller has been replaced, the new crude oil reseller is obligated to establish a supplier/purchaser relationship with the former reseller’s customers. The regulation was designed to permit a supplier to substitute one reseller with another in order to foster greater flexibility in the crude oil distribution system. See generally, Basin, Inc., Interpretation 80-6, 45 Fed.Reg. 25,376 (April 15, 1980). B. Application of the Regulations to the Instant Case As noted previously, count II of Cibro’s amended complaint asserts that the Mandatory Petroleum Allocation Regulations required Sohio to continue selling crude oil to Cibro and that Sohio breached its obligation when it ceased supplying crude oil on August 31, 1979. In the instant case there is no dispute that Sohio’s sales of crude oil to Cibro created a supplier/purchaser relationship within the meaning of § 211.-63(b)(2). Rather, the central dispute between the parties concerns whether the supplier/purchaser relationship was validly waived by Cibro and whether Sohio properly terminated the relationship. The dispositive inquiry with respect to whether the relationship was validly terminated and/or waived concerns whether the contract for the sale of crude oil contains a “specific termination date.” Cibro claims that if there was no specific termination date expressly stated in the supply agreement, Sohio was obligated to supply crude oil to Cibro until January 28, 1981, the date federal controls on the allocation of crude oil were removed. There are two sections of the Cibro-Sohio agreement which must be looked to in determining whether the parties’ relationship was validly and properly terminated. The first relevant section is the term clause contained in paragraph 7 of the contract. See Plaintiff’s Exhibit No. 3, ¶ 7. That section provides as follows: Terms The term of this agreement shall be for a period of 11 months commencing on October 1, 1978 and ending on August 31, 1979 and continuing thereafter unless terminated by either party providing not less than six months notice of termination in writing. The second relevant provision is contained in paragraph 12 of the contract. That section provides an agreement by each party to consent to termination of any supplier/purchaser relationship that might be imposed under 10 C.F.R. § 211.63. Paragraph 12 provides as follows: Mutual Intention to Terminate The parties hereby agree that under any “freeze” of Supplier/Purchaser relationships imposed under Department of Energy Regulation 10 CFR Section 211.-63, or any future governmental regulation which has the same effect which requires the consent of either or both parties to the termination of such relationships such consent to termination shall be given by either party at the request of the other should this Agreement terminate or be terminated in accordance with the termination provisions provided herein. In order to implement the foregoing under Federal regulations, Buyer hereby agrees to include a similar provision in any contract of resale of the Oil purchased under this Agreement. See Plaintiffs Exhibit No. 3, 1112. Cibro contends that paragraph 7 clearly indicates that the parties failed to agree that the contract would terminate on a date certain. Specifically, Cibro claims that the phrase “and continuing thereafter unless terminated by either party ...” means that the contract is “evergreen” in nature and, thus, by definition indefinite. Sohio, of course, claims that August 31, 1979 is the effective termination date of the contract, provided that notice of termination was provided at least six months prior to termination. According to Cibro, because the contract could continue after the initial term, i.e., after August 31, 1979, the contract cannot envisage a specific termination date. Moreover, Cibro maintains that, under numerous binding Department of Energy precedents, such “evergreen” contracts have been held as a matter of federal law to lack specific termination dates. Sohio contends that the language of the term clause, which provides for a “contingent” extension of the contract, does not negate an express end date of August 31, 1979. Rather, such language is merely precatory or permissive and evinces no more than an understanding between the parties that they might contract again in the future. In other words, Sohio posits that the supply agreement could only continue after August 31, 1979 contingent upon future election, by act or omission of either party, thereby rendering the specified end date a “specific termination date” within the meaning of the supplier/purchaser rule. Sohio further argues that, assuming arguendo the contract lacks a specific termination date, the contract was nonetheless properly terminated because (1) the supplier/purchaser regulation and the relevant DOE interpretations do not require a specific termination date for advance consent to terminate clauses; (2) the provision of the contract which permits the agreement to continue after the initial term constitutes an unenforceable “agreement to agree;” (3) CIBRO validly waived the protections of the supplier/purchaser rule under paragraph 12 of the supply agreement; (4) valid waivers under relevant DOE interpretations do not require a specific termination date; and (5) Cibro’s past resale conduct allowed Sohio to validly terminate under an alternate regulatory scheme, viz., 10 C.F.R. § 211.63(d)(iv)(A). In resolving plaintiffs regulatory cause of action, the court must make a threshold determination with respect to the interpretation of paragraph 7 of the parties' supply agreement. Although during trial a substantial number of evidentiary objections were raised under the parol evidence rule relating to the contract cause of action in this case, both parties assert that the parol evidence rule should be applied in resolving the regulatory cause of action. The court agrees. In the present case the court concludes that paragraph 7 of the contract may be interpreted solely as a matter of law with respect to whether a “specific termination date” is contained therein. Where, as here, the contract’s language admits of only one reasonable interpretation, the court need not look to extrinsic evidence of the parties’ intent or to rules of construction to ascertain the contract’s meaning. See American Home Products v. Liberty Mutual Insurance Co., 748 F.2d 760 at 765 (2d Cir.1984). The only determination to be made is the significance of the phrase “and continuing thereafter” and whether this language causes the contract to have a specific termination date vel non. Cibro’s regulatory cause of action is grounded in large part on a number of regulatory interpretations rendered by the DOE (and its predecessor, the Federal Energy Administration) and certain Temporary Emergency Court of Appeals [TECA] decisions which the court finds dispositive of this issue. These Department of Energy interpretations have expressly addressed this question with specific reference to the regulatory provision implicated in count II of Cibro’s amended complaint. In light of these interpretations the court finds that the language of the contract is clear and unambiguous, and, thus, the question of whether the agreement contains a specific termination date will be determined solely by reference to the terms of paragraph 7. Accordingly, the parol evidence rule will operate to bar all extrinsic evidence relating to this issue, including evidence of trade usage and custom in the petroleum industry proffered at trial. C. DOE Interpretations As a preliminary matter, the court notes that DOE rulings are entitled to substantial deference in this case. As early as 1945, and consistently thereafter, the Supreme Court has announced certain “fundamentals” about judicial interpretation of rules: Since this involves an interpretation of an administrative regulation a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt. The intention of Congress or the principles of the Constitution in some situations may be relevant in the first instance in choosing between various constructions. But the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation. Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (1945); United States v. Larinoff, 431 U.S. 864, 872-73, 97 S.Ct. 2150, 2155-2156, 53 L.Ed.2d 48 (1977); see also 2 Davis, Administrative Law Treatise § 7:22 (2d ed. 1979). Thus, an administrative interpretation is entitled to substantial deference unless plainly erroneous or inconsistent with the regulation. See United States v. Larinoff, 431 U.S. 864, 872-873, 97 S.Ct. 2150, 2155-2156, 53 L.Ed.2d 48 (1977); Udall v. Tallman, 380 U.S. 1, 4, 85 S.Ct. 792, 795, 13 L.Ed.2d 616 (1965). Moreover, an agency’s interpretations are entitled to particular deference when, as here, Congress has provided DOE with expansive discretion in implementing a complex allocation scheme for the petroleum industry: [S]uch cases are only episodes in the evolution of adjustment among private interests and in the reconciliation of all these private interests with the underlying public interest in such a vital source of energy for our day as oil. Certainly so far as the federal courts are concerned the evolution of these formulas belongs to the Commission and not to the judiciary. A controversy like this always calls for fresh reminder that courts must not substitute their notions of expediency and fairness for those which have guided the agencies to whom the formulation and execution of policy have been entrusted____ It is not for the federal courts to supplant the Commission’s judgment even in the face of convincing proof that a different result would have been better. Powerline Oil Co. v. Federal Energy Administration, 536 F.2d 378, 385 (Temp.Emer.Ct.App.1976) (quoting Railroad Com. v. Rowan & Nichols Oil Co., 310 U.S. 573, 580-584, 60 S.Ct. 1021, 1024-1025, 84 L.Ed. 1368 (1940).) As noted previously, and of particular importance for purposes of the present discussion, DOE regulations effectively preempt all private contracts which are inconsistent with those regulations. For purposes of count II of Cibro’s amended complaint, 10 C.F.R. § 211.63 has specifically been held to supersede private contractual provisions which conflict with the supplier/purchaser rule. See Condor Operating Co., supra, 514 F.2d 351 at 361. In Condor, Condor Operating Company, a crude oil supplier, entered into a contract with Phillips Petroleum Co., a crude oil refiner, to sell certain crude oil to Phillips. Condor challenged in the district court a remedial order issued by the FEA which required it to continue supplying crude oil to Phillips, notwithstanding a contractual provision which provided that Condor had the option to cease supplying crude oil to Phillips provided that proper notice was effected. The district court concluded that FEA’s determination that the supplier/purchaser rule superseded the contract was invalid. TECA reversed, holding that the supplier/purchaser relationship created under § 211.63 was a valid rule intended, inter alia, to protect small and independent refiners from severe economic dislocations and hardships. TECA determined that the rule should be upheld. In noting that Congress validly enacted the EPAA with obvious intent to give the President and his delegates broad power to do what reasonably is necessary to accomplish legitimate purposes, id. at 359, TECA concluded that: The effect of invalidating the administrative action here would be far-reaching. The authority of the FEA, or its counterpart under any future stabilization plan, to cope with an energy crisis on the basis of a coordinated and balanced plan could be rendered questionable indeed. Essential powers of government to meet this or other crises in perilous times would be frustrated by the adoption of an excessively rigid and unprecedented construction inhospitable to broad realities. A limit in time, to tide over a passing trouble, well may justify a law that could not be upheld as a permanent change. Id. at 362. Moreover, in summarily rejecting Phillips’ fifth amendment challenge, the court observed that: A reasoned decision for the temporary suspension of usual ownership prerogatives based upon broad national needs does not constitute necessarily an unconstitutional taking; and the issue of whether it does properly turns upon the circumstances of each case. United States v. Central Eureka Mining Co., 357 U.S. 155, 78 S.Ct. 1097, 2 L.Ed.2d 1228 (1958). The regulation of future action based on rights previously acquired by the person regulated is not per se prohibited by the constitution. Fleming v. Rhodes, 331 U.S. 100, 67 S.Ct. 1140, 91 L.Ed. 1368 (1947). Reasonable and practical regulations which are generally fair and equitable, although not necessarily so as applied to a particular person, are not unconstitutional when general regulations are necessary to accomplish an appropriate congressional purpose. Id. at 361 (quoting Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892 (1944).) Thus, in the instant case the court may validly apply § 211.63, notwithstanding the fact that the. Cibro-Sohio agreement contains a provision wherein the supplier/purchaser rule is specifically waived. However, as will be discussed in further detail infra, DOE has established certain rigorous standards for determining whether § 211.63 will apply to contracts which disclaim its applicability. Once a supplier/purchaser relationship is established, the purchaser is entitled to continued access to crude oil from its supplier for the duration of the allocation program unless consent to termination is given in advance, or the requirements of § 211.63 are specifically waived. Because of the strong policy objectives underlying the EPAA, however, both TECA and the DOE have established stringent requirements for determining when, and to what extent, advance consent to terminate or waiver clauses will serve to preempt § 211.63. Cibro relies principally upon three DOE interpretations which in substance conclude that advance written consent to terminate clauses contained in supply contracts must contain a specific termination date in order to comply with the termination provision contained in 10 C.F.R. § 211.63(d)(1)(i). See Arizona Fuels Corporation, Interpretation 1979-18, 44 Fed.Reg. 60,266 (October 19, 1979); Giant Industries, Interpretation 1981-2, 46 Fed.Reg. 27,279 (May 18, 1981), petition for reconsideration denied, 46 Fed.Reg. 46,299 (September 18, 1981); and Murphy Oil, Interpretation, 1981-17M, 47 Fed.Reg. 13,771 (April 1, 1982). Sohio primarily relies upon three interpretations of the FEA, in existence at the time of the parties’ agreement, which hold that 10 C.F.R. § 211.63 may be contractually waived by the parties under certain limited circumstances. See State of Alaska, Interpretation 1977-7, 42 Fed.Reg. 31,143 (June 20, 1977); Alaska Petrochemical Company, Interpretation 1978-1, 43 Fed.Reg. 5797 (Feb. 10, 1978); and The Permian Corporation, Interpretation 1978-45, 43 Fed.Reg. 34,436 (August 14, 1978). The primary issue in the Arizona Fuels case was whether the termination clause in the parties’ agreement constituted consent to terminate in accordance with 10 C.F.R. § 211.63(d)(l)(i). Arizona Fuels was a small independent refiner who contracted with Comp-Cal Corporation, resellers of crude oil, to purchase domestic crude oil from Trans World Corporation. The agreement between Arizona Fuels and Comp-Cal included an advance consent to terminate provision whereby the agreement was “to continue unless cancelled by either party giving a minimum of sixty-five (65) days prior written notice to the other party.” Id. at 60,267. The agreement between Comp-Cal and Trans World contained a similar provision. Trans World provided Comp-Cal with 65 days notice in accordance with the agreement. Thereafter, Comp-Cal notified Arizona Fuels of the termination and provided notice of termination to Arizona Fuels. Arizona Fuels sought an interpretation from DOE that the advance consent to' terminate clause was invalid because it did not comport with § 211.63, and that Trans World, thus, had a continuing obligation to supply Comp-Cal with crude. DOE initially noted that supplier/purchaser relationships were created between Arizona Fuels and Comp-Cal as well as Comp-Cal and Trans World. DOE next concluded that in order to be effective advance consent to terminate clauses must meet all three of the following requirements: First, that the consent be in writing; second, that all subsequent purchasers con- . sent; and, third, that a specific termination date be indicated at the time the purchaser gives his consent. Id. at 60,267 (emphasis added). Because both parties in Arizona Fuels conceded that the termination clause contained in the agreement and relied upon by Trans World did not give notice of a specific termination date, DOE concluded that the termination clause was insufficient on its face to constitute consent to terminate pursuant to § 211.63(d)(l)(i), and, thus, the supplier/purchaser relationship was not validly terminated. The Arizona Fuels interpretation served to clarify several previous DOE and FEA interpretations to the extent that it was now clear that, while consent to termination of a supplier/purchaser relationship could be given by a purchaser, such consent must meet the specific requirements that the consent be in writing, that all subsequent purchasers consent, and that a specific termination date be indicated at the time the purchaser gives his consent. Moreover, and critical for purposes of the present discussion, for the first time the DOE strongly suggested, sub silentio, that a contract containing an “evergreen” clause which specifies an initial term for the contract and permits the contract to remain effective beyond that term unless terminated by either party, does not contain a specific termination date. The next significant interpretation relevant to this litigation was rendered in 1981. In Giant Industries, Interpretation 1981-2, 46 Fed.Reg. 27,279 (May 18, 1981), petition for reconsideration denied, 46 Fed.Reg. 46,299 (September 18, 1981), the DOE concluded that a contract clause waiving protections afforded a purchaser under 10 C.F.R. § 211 must contain a specific termination date in order to be effective. Thus, waiver clauses were construed to require the same regulatory treatment as advance consent to terminate clauses analyzed in Arizona Fuels. Giant Industries, Inc., a small independent refiner, had entered into a contract with The Crude Oil Company [TCC], a reseller of crude oil, for the purchase of crude oil. The agreement contained an “evergreen” provision providing that the contract would “continue month to month thereafter unless cancelled by either party giving thirty days notice.” The contract also included a waiver provision which contained the following language: All of the terms and conditions of this Contract shall be subject to the applicable laws, statutes, directives, orders, rules and regulations (including interpretations thereof) of all governmental authorities having jurisdiction hereof. However, no present or future Federal, State, County or Municipal law, rule, regulation or ordinance shall have the effect of perpetuating the relationship created hereby beyond the limited scope and term contemplated and agreed upon herein. Thus, it is expressly understood and agreed hereto that, upon termination of this contract, any crude oil supplier/purchaser relationship created hereby pursuant to the Department of Energy’s Mandatory Regulatory Administration shall be automatically terminated. If it is deemed necessary, the parties hereto also agree to execute any and all written instruments required to evidence the termination, by mutual relationship created hereby. Id. Pursuant to this provision TCC notified Giant of its intent to terminate Giant’s crude oil supply agreement. Similar to Arizona Fuels, the parties agreed that there was no specific termination date provided for in the supply contract. Instead, the supplier, TCC, asserted that the waiver clause served to supplant or .displace the supplier/purchaser rule. Relying upon earlier PEA and DOE interpretations, DOE concluded that the termination clause did not constitute consent to terminate the supplier/purchaser relationship in accordance with § 211.63. Significantly, DOE further concluded that “[t]he option to terminate this supply [agreement] ... belongs to the purchaser alone, based in part upon the recognition of the pressure that suppliers may apply by conditioning a supply agreement on the purchaser’s advance consent to terminate.” Id. at 27,280 (emphasis added). In wholly rejecting TCC’s contention that a waiver serves as a blanket repudiation of § 211.63(d)(l)(i), DOE stated: By consenting in advance to a termination of the supplier/purchaser relationship, the purchaser is waiving its rights to continued supplies of crude oil. The vehicle provided by the regulations for effecting such a waiver is the purchaser’s option to terminate. By requiring that this option be exercised in strict accordance with § 211.63(d), the DOE protects the purchaser from the unexpected interruption of its crude oil supplies at the discretion of its supplier. A purchaser’s advance consent to terminate is a limited waiver of its rights and the only waiver allowed under the rule as it applies to supplier/purchaser relationships entered into before October 1,1980. Id. at 27,281. The Giant Industries interpretation was subsequently endorsed by TECA in Johnson Oil Co., Inc. v. Department of Energy, 690 F.2d 191 (Temp.Emer.Ct.App.1982). Johnson Oil also involved a situation in which a purchaser was alleged to have waived its right to a crude oil supplier/purchaser relationship. In concluding that paragraph 8 of the parties’ agreement did not effect a valid waiver, TECA specifically adopted the Giant Industries interpretation, noting that “[a]dvance consent to terminate [is] recognized by the DOE if it was written, specific as to the rights under § 211.63 and had a specific termination date.” Id. at 195. Thus, relying upon Giant Industries, the court held that because paragraph 8, relied upon by Johnson Oil was a general waiver which failed to specify any rights under § 211.63, it was invalid. A distillation of the various holdings of these DOE and TECA decisions may be stated as follows. First, consent to a termination of a supplier/purchaser relationship may be given by the purchaser. Such consent, however, must meet the specific requirements that the consent be in writing, that all subsequent purchasers consent and, most importantly, that a specific termination date be indicated at the time the purchaser gives his consent. Second, a contract clause waiving protections afforded a purchaser under 10 C.F.R. § 211.63 must contain a specific termination date to be effective. Waiver clauses are to be strictly construed and a clause which simply waives the applicability of the supplier/purchaser rule, or which provides consent to terminate upon the request of the other, is invalid absent a specific termination date. Finally, a contract which contains an evergreen clause does not contain a specific termination date and, hence, cannot constitute either advance consent to terminate or a waiver of 10 C.F.R. § 211.-63(d). In an attempt to distinguish these controlling DOE pronouncements, Sohio has taken the position that both Arizona Fuels and Giant Industries are of dubious precedential value because the parties in both cases conceded that a specific termination date was lacking in their respective supply contracts. Consequently, Sohio asserts that Arizona Fuels and Giant Industries can only be read to establish the undifferentiated abstract proposition that a specific termination date is required to terminate pursuant to § 211.63. Specifically, Sohio asserts that the contracts involved in those cases are radically distinguishable from the present contract because the Cibro-Sohio contract denominates an express “end date.” In other words, Sohio contends that it is legally significant that the Cibro-Sohio contract contains an evergreen clause after a designated end date. Sohio maintains that the contractual termination language scrutinized in these DOE interpretations sharply contrasts with the language in the crude oil contract between Sohio and Cibro, wherein paragraph 7 designates the end date of the initial term as August 31, 1979. Cibro, however, claims that although a date is mentioned in paragraph 7, it is not a specific termination date. Rather, Cibro claims that it merely sets forth a date prior to which the contract cannot be terminated. Cibro maintains that the primary focus of the DOE in these cases was whether the contracts at issue were evergreen in nature, not whether an initial term was specified. The court agrees with Cibro. A careful analysis of both these interpretations reveals that the DOE primarily focused upon the strong policy objectives underlying the supplier/purchaser rule in resolving the disputes in those cases, not the precise terms of the contracts at issue. Although DOE concluded out of hand that the contracts lacked a specific termination date, it also concluded that use of advance consent to terminate and/or waiver clauses would thwart the legislative policies behind the supplier/purchaser rule unless the contracts contained a specific termination date. In so ruling the DOE also implicitly concluded, in this court’s view, that evergreen provisions do not comport with the legislative objectives of the supplier/purchaser rule. DOE specifically noted that the option to terminate under § 211.63(d)(l)(i) belongs “to purchasers alone,” based upon the recognition that suppliers may apply pressure “by conditioning a supply agreement on the purchaser’s advance consent to terminate.” Giant Industries, 46 Fed. Reg. at 27,280. In this court’s view, DOE’s focus on the “option to terminate” as “belonging to the purchaser alone,” necessarily presupposes that evergreen provisions cannot have specific termination dates within the meaning of § 211.63. The court’s conclusion is based upon the following reasoning. First, § 211.63 was intended to safeguard a crude oil purchaser’s rights under the DOE allocation regulations and to warrant that the purchasers continue to receive crude oil. Second, in enacting § 211.63, DOE determined as a matter of policy that advance consent to terminate and/or waiver clauses would be valid, provided that the contract contained a specific termination date. The rationale behind requiring a specific termination date was to ensure that when purchasers entered the market, they would know precisely how long the contract would continue and, thus, they could plan their operational existence in a way which would foresee a definite cessation of crude oil supplies. The purchaser would know that the contract would end on a date certain and could plan ahead to obtain alternate supplies to prevent a sudden dislocation of crude. However, when a contract contains a provision whereby it designates a specific initial term that may continue indefinitely at the option of either party, this takes the “option to terminate” outside the province of the “purchaser alone.” Put another way, if a term clause allows Jhe supplier to continue a contract on a month-to-month basis after the initial term, the purchaser cannot be protected from the unexpected interruption of its crude oil supplies at the discretion of the supplier. This analysis is completely consistent with a plain reading of the Cibro-Sohio contract. In contending that August 31, 1979 is a specific termination date, Sohio is necessarily reading the phrase “and continuing thereafter unless terminated by either party ...” out of the contract. In the court’s view, therefore, this phrase means that the contract will continue after August 31, 1979 unless terminated at the option of either party (not the purchaser alone), and consequently no specific termination date is contemplated. A specific termination date could not have been envisaged prior to execution of the contract because at that time there was no way for Cibro to ascertain precisely when Sohio intended to terminate the relationship. Until Sohio had actually given notice of termination, no termination date could be determined. This court’s analysis is supported by the DOE’s subsequent interpretation in Murphy Oil, Interpretation 1981-17M, 47 Fed. Reg. 13,371 (April 1, 1982). In Murphy Oil, the Murphy Oil Corporation, a small and independent refiner, entered into a series of purchase/sale agreements with Ferguson Energy Corporation, a reseller of crude oil. The contracts stated that the relationship would be effective for an initial term of one month, and “continu[e] thereafter until cancelled by either party hereto on thirty (30) days advance written notice to the other party.” Thus, similar to the Cibro-Sohio contract, the contracts in Murphy Oil contained termination clauses which specified an initial term, but would remain in effect thereafter until and unless cancelled by either party giving advance notice. Additionally, «the contracts contained waiver clauses which specifically waived the protections of 10 C.F.R. § 211.-63. DOE held that the termination clauses contained in the contracts did not constitute consent by Murphy to terminate the supplier/purchaser relationship in accordance with § 211.63(d)(l)(i). In reaffirming its Arizona Fuels and Giant Industries interpretations, DOE concluded that the contracts failed to specify a specific termination date, and, thus, purported advance consent to terminate and/or waiver was ineffectual. DOE also specifically noted that Arizona Fuels, Giant Industries and Southwestern Refining Co., Inc., Interpretation 1981-7 (March 12, 1981), made clear that “it was consistent with the objectives of the Emergency Petroleum Allocation Act ... to require that the purchaser’s option to terminate be exercised in strict compliance with § 211.63(d).” Id. at 13,772 n. 4. Murphy Oil clearly and compellingly supports this court’s conclusion that paragraph 7 of the Cibro-Sohio contract contains an “evergreen” provision devoid of a specific termination date. The only way purchasers could minimize the number of unexpected disruptions of crude oil supply if crude became scarce was to specify a precise and definitive end date in the contract. By providing “evergreen” provisions which effectively give the supplier a preemptive right to terminate, the purchaser is forced, in direct contradiction to. the express purposes underlying the EPAA, to secure supplies only by capitulating to the supplier’s demand that the purchaser give advance consent to termination or waive any rights secured under Section 211.63. See 45 Fed.Reg. 29,770 (May 5, 1980). The court also finds Sohio’s reliance upon the State of Alaska, Alaska Petrochemical Co., and The Permian interpretations misplaced. All of these interpretations have been substantially modified by subsequent DOE interpretations, and a careful analysis reveals that they were narrowly limited to the facts presented. The State of Alaska interpretation, for example, merely held that a waiver was valid to “permit termination of deliveries of crude oil in the event that the State of Alaska elect[ed] to take ... crude oil in kind as [a] royalty payment.” 42 Fed.Reg. at 31,144. Although the FEA had expressly authorized the State to require its lessees to sign a waiver agreement and in turn to require its lessees to include a similar provision in their leases, the waiver was expressly limited to the amount of royalty oil taken by the State of Alaska. Id. at 31,143. Similarly, DOE’s subsequent interpretation in Alaska Petrochemical Co. merely confirmed that the waivers permitted in State of Alaska were limited to royalty oil in the State, specifically Prudhoe Bay. There is no suggestion in the interpretation that DOE had any intention of generalizing its limited waiver allowance concept beyond the royalty oil context. Indeed, DOE specifically noted that “[t]his interpretation is limited solely to the State of Alaska’s royalty crude oil derived from North Slope production____” Id. at 5,799. DOE’s decision was solely based upon a determination that it was “increasingly important for the State to find feasible means of retaining a portion of the North Slope crude production within the State.” It is also important to note that neither of these interpretations even collaterally addresses the now central question of whether waivers must comport with the specific termination date concept. Similarly, the Permian interpretation does not address the question of whether a specific termination date is required to effectuate a waiver, and the decision was rendered under DOE regulations which were amended in June of 1976, prior to the time when there was a regulatory requirement that a specific termination date be included in anj valid consent to terminate. The previous discussion makes clear that the Cibro-Sohio contract fails to contain a specific termination date. As a consequence thereof, it cannot be said that plaintiff Cibro validly gave advance consent to terminate the contract on August 31, 1979. Moreover, based upon the various DOE interpretations herein analyzed, and based upon a policy analysis of the objectives underlying the EPAA, it is clear that paragraph 12 of the Cibro-Sohio agreement does not constitute a valid waiver in accordanee with 10 C.F.R. § 211.63. The use of such a waiver provision in this case thwarts the legislative policy that the supplier/purchaser rule was designed to effectuate, namely, protection of a small and independent purchaser against the interruption of its crude oil supply by a major oil company. D. Cibro’s Putative Status as a Reseller Sohio has asserted as an affirmative defense that, assuming 10 C.F.R. § 211.63 operates to bar Sohio from terminating Cibro pursuant to paragraphs 7 and/or 12 of the supply agreement, it was nevertheless justified in unilaterally terminating Cibro pursuant to 10 C.F.R. § 211.63(d)(l)(iv)(A). Sohio claims that Cibro was a de facto reseller and not a small refiner with respect to all the ANS crude oil that was sold under the crude oil contract. Sohio also claims that it substantially complied with the requirements of § 211.63(d)(iv)(A) in providing Cibro with notice of termination. Cibro asserts that it holds the status of refiner not reseller, and thus § 211.-63(d)(iv)(A) is inapplicble. Cibro alleges that it would have refined the ANS crude oil during the relevant damage period. Alternatively, Cibro argues that, assuming arguendo it is a reseller within the meaning óf the regulation, Sohio failed to substantially comply with the stringent termination provisions therein contained. In August of 1979 § 211.63(d) provided that a supplier/purchaser relationship could be terminated: (iv) By a producer (as defined in Part 212 of this chapter) as to a reseller purchasing crude oil from that producer: Provided, that: (A) At least thirty days in advance of any termination under this subdivision (iv), the producer shall give to the reseller purchaser from whose supplier/purchaser relationship is proposed to be terminated a written termination notice stating the date of termination, the source, quality, and estimated volume of crude oil involved (including the portions of that volume that are priced as lower tier crude oil, upper tier crude oil and uncontrolled crude oil under Part 212 of this chapter), and the name and address of the new reseller to which such crude oil is proposed to be sold. A “reseller” within the meaning of § 211.-63(d)(iv) is defined in 10 C.F.R. § 212.31 as follows: “Reseller” means a firm (other than a refiner or retailer) or that part of such a firm which carries on the trade or business of purchasing covered products, and reselling them without substantially changing their form to purchasers other than the ultimate consumers. The regulations further provide in 10 C.F.R. § 211.9(e) as follows: Dual capacities. A supplier may act in the capacity of a wholesale purchaser and an end-user. A wholesale purchaser-consumer may also be a wholesale purchaser-reseller. A firm which is acting in one or more different capacities shall comply with the appropriate regulations governing each capacity in which it acts. Thus, for Sohio’s termination to have been proper (1) a new reseller was required to be substituted for the existing reseller; (2) notice and filing requirements must have been strictly observed; and (3) all small refiners in the chain of distribution must have consented to the termination. Additionally, a producer is required under the regulation to give 30-days notice of the substitution listing and, among other things, give the identity of the new reseller. Each reseller who received a “substitution notice” was then required to renotice downstream customers as follows: (B) Any reseller that has received a termination notice from a producer as provided in subclause (A) of this subdivision, which proposed termination would effect a reduction in deliveries of crude oil by that reseller, either directly or through exchanges, to any refiner or other reseller shall: (1) Within 10 days of receipt of the termination notice, provide a copy of the termination notice, together with a statement as to the volume, quality, and price level of crude oil involved for the particular purchaser, to the purchasers of the crude oil subject to such termination notice. 211.63(d)(vi)(B)(l). The existing reseller was also required to inform the new reseller of the identity of its customers. Subsection (d)(l)(iv)(2) provides: At the same time that the notices required under subclause (b)(1), of this subdivision, are provided, provide copies of such notices to the proposed new purchaser, including the name and address of each person to which a copy of the termination notice was provided and the volume, quality, and price level of the crude oil affected for each such person. The proposed new reseller was then required to make a written offer to supply the refiner at the end of the chain of distribution: The proposed new purchaser of the crude oil shall make a written offer to continue to supply the volume of that crude oil to each refiner provided with a copy of the termination notice as that refiner would otherwise lose as a result of the proposed termination. 211.63(d)(iv)(C). Subsection (d)(l)(iv)(D) further provides that: Upon the acceptance or rejection of the offer or offers under subclause (C) of this subdivision by the refiner or refiners concerned, the proposed new purchaser may be substituted by the producer for the purchaser whose supplier/purchaser relationship has been proposed to be terminated. Provided, that, if a small refiner that was notified as to a proposed termination does not accept the offer of the proposed new purchaser, the proposed termination shall not be effective as to the volume of the crude oil being delivered to that small refiner. Id. In the instant case the court need not reach the issue of whether Cibro is a “reseller” within the meaning of 10 C.F.R. §§ 212.31 or 211.9(e) because Sohio failed to comply with the stringent termination requirements under 10 C.F.R. 211.-63(d)(l)(iv). First, Sohio’s “termination” did not comply with the specific “notice” and “offer” requirements of the regulations. In its notice of termination sent to Cibro on January 23, 1979, see Plaintiff’s Exhibit No. 4, Sohio merely confirmed that the contract would terminate on August 31, 1979. However, and fatal to Sohio’s claim that § 211.63(d)(l)(iv) is applicable, the notice failed to identify a new reseller. Without the identity of a new reseller, there could be no proper substitution, and the “ultimate refiner” of the crude was deprived of the opportunity to establish a supplier/purchaser relationship with the new reseller. See generally, Basin, Inc., Interpretation 1980-6, 45 Fed.Reg. 25,376 (April 15, 1980); Husky Oil Co., Interpretation 1977-15, 42 Fed.Reg. 31,150 (June 20, 1977). Second, and particularly relevant in light of Sohio’s claims that it substantially complied with the regulations, Sohio failed to ever substitute another reseller for Cibro. The testimony at trial makes clear that rather than substitute another reseller for Cibro, Sohio either retained the crude oil for its own use or sold it to another refiner. Mr. Hesketh, Sohio’s representative, testified that Sohio had the intention of selling the crude originally allocated to Cibro to people on the West Coast with the ability to refine the oil, “some who already were customers and wanted extra quantity, and some new ones.” Mr. Hesketh further testified that most of these people were small refiners or major refiners, but not resellers. Additionally, Mr. Michael W. Press, a representative of Sohio’s ANS crude oil operation, testified that it was impossible to determine precisely what happened to the 15,000 barrels of crude oil per day that were taken out of the Cibro-Sohio contract. Mr. Press concluded that because this oil was particularly fungible, all that could be said was that it was “taken off the Gulf Coast and put on the West Coast.” Sohio failed to show at trial that it supplied crude oil taken from Cibro to another reseller. And, as noted above, § 211.-63(d)(iv) only permits a producer to substitute one reseller with another. For the provision to properly operate, the ultimate refiner must stay the same. Because Sohio failed to comply with this requirement, it cannot rely on § 211.63(d)(iv) as a justification for Cibro’s termination. Sohio did not substantially comply with the regulations in its termination of Cibro. IV A. Preliminary Statement Plaintiff Cibro originally filed a complaint in September, 1979 alleging that Sohio had failed to negotiate in good faith with respect to contract prices for the months of July and August, 1979. Thereafter, in June, 1980, Cibro amended its complaint to allege three counts of improper price renegotiation against Sohio. The original price complaint, redrafted as the third count to Cibro’s amended complaint, was discontinued by Cibro in November, 1983. The remaining counts continued to be unreso