Case No. RK272-04088

June 10, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Supplemental Order

Name of Applicant: Hagglunds Denison Corp./MacGregor (USA), Inc.

Date of Filing: December 19, 1996

Case Number: RK272-04088

This Decision and Order will consider an Application for Supplemental Refund filed in the Subpart V crude oil refund proceeding by MacGregor (USA), Inc. (MacGregor). (1) The Application is based upon purchases of petroleum products made by Hagglunds Denison Corp. (Hagglunds) from August 1973 to January 1981.

In the Application, MacGregor explains that it bought one division of Hagglunds and, as such, believes it is entitled to receive a supplemental refund due to Hagglunds because “the division that was transferred to MacGregor was entitled to the refund.(2) In a telephone conversation with Office of Hearings and Appeals (OHA) Staff Analyst Matthew Comeau on December 19, 1996, MacGregor confirmed that it purchased only the assets of one division of Hagglunds, and that the purchase did not include any of the capital stock of the Hagglunds corporation. After that conversation, MacGregor submitted one page of the asset purchase agreement between itself and Hagglunds, which listed a few of the assets included in the purchase (e.g., fixed assets, prepaid expenses, tax refunds, leashold interests, contract rights).

After reviewing the information submitted by MacGregor, the OHA determined that additional information was necessary to process the case. On April 25, 1997, we sent a letter to MacGregor that stated:

In situations where the original refund applicant was a corporation, the right to receive a crude oil refund generally remains with the capital stock of the firm. It does not appear that MacGregor (USA) purchased the capital stock of Hagglunds Denison Corp. when it purchased the company’s assets. In rare cases, however, the OHA has allowed the right to receive a refund to be transferred from one owner to another, regardless of a stock transfer, when the asset purchase agreement specifically mentions the crude oil refund or uses similar language to express intent to transfer refund monies through an asset sale. We do not have enough information to make that determination in this case.(3)

In response, MacGregor contacted the former Hagglunds, now known as Denison Hydraulics, and requested that the company write a letter to the OHA “explaining that [MacGregor is] entitled to the refund due to the sale of the Drives Division to Hagglunds, Inc.(4) Accordingly, Denison Hydraulics provided a letter stating that “Hagglunds, Inc. (formerly part of Hagglunds Denison Corp.) was sold and changed the company name to MacGregor (USA), Inc... The refund claim amount of $1,001.04 is due payable to MacGregor (USA), Inc.(5)

We have a statutory duty to identify and provide restitution to injured persons. 15 U.S.C. § 4502 (b). We would be negligent in discharging that duty if we granted a refund to someone other than an identified injured person. Texaco/Huffy Gas, 22 DOE ¶ 85,220 at 88,586 n. 4. A potential crude oil refund is not generally considered an asset that can be bought, sold or transferred, for the simple reason that the refund itself does not exist until the OHA issues a Decision and Order granting a particular refund claim. As such, the refund procedures we have established provide that the right to receive a refund generally remains with the owner of a firm during the price control period. However, we have determined that the right to receive a refund can be transferred to a subsequent owner of the firm if: (i) the firm is a corporation, the entire capital stock of which was purchased by the subsequent owner; or (ii) the firm's assets were sold under an agreement that indicated, either explicitly or implicitly, that potential refunds were being transferred. Mrs. M.B. Troy, 23 DOE ¶ 85,049 (1993).

MacGregor confirmed that it did not purchase the capital stock of Hagglunds when it purchased the assets of one division of the company. Absent a stock purchase, the right to receive a refund in the Subpart V crude oil refund proceeding can be transferred to a second party only when there is a sales agreement containing specific contractual language addressing the right to receive a crude oil refund. This was explained to MacGregor in the April 25, 1997 letter, in which we requested confirmation of the assets included in the purchase. In its response, MacGregor chose not to submit any further information regarding the asset purchase which would indicate that the firm is in any way entitled to receive refund monies due to Hagglunds.

Instead, the firm chose to submit a letter from Denison Hydraulics, dated May 20, 1997, asserting that MacGregor is entitled to the refund monies due to the original applicant. We do not believe this statement, written several years after the asset purchase was completed, is sufficient to justify a departure from our usual standard. The OHA has stated that:

The OHA has a duty to identify injured persons and, to the extent possible, to make direct refunds to them. This duty arises from Section 209 of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904, the Petroleum Overcharge Distribution and Restitution Act of 1986, 15 U.S.C. § 4502 (b) (PODRA), and Paragraph IV.B.1 of the Stripper Well Settlement Agreement.

Firestone Tire & Rubber Company, 21 DOE ¶ 85,396, at 89,172 (1991). In this case, we have determined that Hagglunds was injured by the alleged crude oil price overcharges during the price control period. Although the assets of one division of that company were later sold to MacGregor, MacGregor itself did not suffer injury from the alleged overcharges. Purchasing the assets of a firm which suffered injury during the refund period does not entitle the purchaser to adopt the original firm’s status as an identified injured party.

MacGregor was not injured by the alleged crude oil overcharges suffered by Hagglunds during the refund period. The OHA has no statutory authority to grant a refund to a party that was not injured by the alleged overcharges; the fact that MacGregor and Hagglunds believe that MacGregor is entitled to receive refund monies due to Hagglunds is irrelevant, because the OHA has neither the statutory authority nor the inclination to grant the refund monies in the way requested by the firms. See Georgia Kraft Company, 25 DOE ¶ 85,075 (1995).

MacGregor has submitted nothing that would indicate that it is entitled to receive supplemental refund monies due to Hagglunds. Accordingly, we will deny the Application for Supplemental Refund submitted by MacGregor.

It Is Therefore Ordered That:

(1) The Application for Supplemental Refund filed by MacGregor (USA), Inc., Case No. RK272-04088, is hereby denied.

(2) This is a final Order of the Department of Energy.

George B. Breznay

Director

Office of Hearings and Appeals

Date: June 10, 1997

(1) For information pertaining to the Supplemental Distribution of Subpart V Crude Oil Refund Monies, see State of Montana, et al., 25 DOE ¶ 85,059 (1995).

(2)” See Application for Supplemental Refund filed by MacGregor on December 19, 1996, Case No. RK272-04088, by Thomas Hedger of MacGregor.

(3) See Letter from Thomas L. Wieker, OHA Deputy Director, to Thomas Hedger of MacGregor, dated April 25, 1997.

(4)” See Letter from Thomas Hedger of MacGregor to Anthony Mustacchio, Controller of Denison Hydraulics, dated May 16, 1997.

(5)” See Letter from Anthony Mustacchio of Denison Hydraulics to the OHA, dated May 20, 1997, submitted by MacGregor to the OHA on June 3, 1997.