Case No. RF272-74782

March 21, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Motion for Discovery

Name of Applicant: Carol Management Corporation

Dates of Filing: August 23, 1988

January 9, 1989

Case Numbers: RF272-74782

RD272-74782

This Decision and Order will consider an Application for Refund submitted by Carol Management Corporation. Carol requests a refund from crude oil funds available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) pursuant to 10 C.F.R. Part 205, Subpart V.

In the past, purchasers of refined petroleum products during the crude oil price control period could apply for a refund from crude oil overcharge funds. 51 Fed. Reg. 27899 (August 4, 1986).(1)The DOE collected the crude oil overcharge funds through consent orders with certain firms that sold crude oil during the price control period. E.g., Berry Holding Co., 16 DOE ¶ 85,405 (1987); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986).

The refund procedures specify that in order to receive a refund, an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by alleged crude oil overcharges. An applicant who was an end-user (ultimate consumer) of petroleum products, whose business was unrelated to the petroleum industry,

and who was not subject to the price regulations of the DOE or its predecessors, is presumed to have absorbed rather than passed on alleged crude oil overcharges, and is therefore presumed to have been injured. 52 Fed. Reg. 11737 at 11743 (April 10, 1987).

The presumption of end-user injury is, however, rebuttable. If a party produces evidence of sufficient weight to rebut the presumption, we will require the applicant to provide evidence of injury. Berry at 88,797. A group of States and Territories of the United States (the States) has filed an objection to Carol's Application, attempting to rebut the presumption of injury.

The States argue that Carol suffered little or no injury because it could pass through most or all of its crude oil overcharges to its customers. The argument is based on an economic analysis of the textile industry. The States do not provide any evidence about Carol's pricing practices during the price control period.

We find that the Objections are insufficient to rebut the presumption of end-user injury. A party may rebut an applicant's use of the presumption only by showing that the particular applicant passed through a specific amount of crude oil overcharges. W.H. Johns, Inc., 18 DOE ¶ 85,574 (1989); see also In re: the Department of Energy Stripper Well Exemption Litigation, 746 F. Supp. 1446 (1990) (Stripper Well). In contrast, "a description of the general economic climate of an industry presents no direct evidence that a specific applicant was able to pass through its increased energy costs to its customers, and is therefore insufficient to rebut the end-user presumption of injury." Parker Drilling Co., 20 DOE ¶ 85,480 at 89,099 (1990). The States have not given us evidence that Carol passed through any specific amount of crude oil overcharges. We will therefore deny the Objection and presume that Carol, as an end-user, was injured by crude oil overcharges.

The States have also submitted a Motion for Discovery. The States seek to discover, through interrogatories and the production of documents, Carol's petroleum costs and pricing policies during the price control period. Such general requests for information are inappropriate where the States have presented insufficient evidence to rebut the presumption of injury. Christian Haaland A/S, 17 DOE ¶ 85,439 (1988). The U.S. District Court for the District of Kansas has explained that "OHA's decision to … forego discovery and other litigation methods is rational given the equitable nature of the Subpart V refund process." Stripper Well at 1450. We will therefore deny the States' Motion for Discovery.

We have carefully reviewed Carol's Application. It is based on purchases of heating oil for residential apartment buildings. As an end-user, Carol is presumed injured by the crude oil overcharges and is entitled to its full allocable share of crude oil overcharge funds. Carol verified its gallonage estimate by submitting copies of petroleum purchase logs from the price control period. We find that Carol’s gallonage claim is reasonable.

As an end-user, Carol is entitled to receive its full allocable share of crude oil overcharge funds. We calculated the refund amount by multiplying an applicant's approved gallonage claim by the current volumetric refund amount of $.0016 per gallon. The total volume that we have approved for Carol is 49,394,753 gallons of refined petroleum product. The total refund that we will grant Carol is therefore $79,032.

The final deadline for the crude oil refund proceeding was June 30, 1995. It is the current policy of the DOE to pay eligible crude oil refund claimants at the rate of $0.0016 per gallon. We will decide whether sufficient crude oil overcharge funds are available for additional refunds for this and other successful applicants when we are better able to determine how much additional money will be collected from firms that have either outstanding obligations to the DOE or enforcement cases currently in litigation.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Carol Management Corporation (Case No. RF272-74782) is hereby approved as set forth in Paragraph (3) below.

(2) The Motion for Discovery and Request for the Issuance of a Special Report, and for Stay of Proceedings, filed by a group of States and Territories of the United States (Case No. RD272-74782) is hereby denied.

(3) The Director of Special Accounts and Payroll, Office of Departmental Accounting and Financial Systems Development, Office of the Controller of the Department of Energy shall take appropriate action to disburse a total of $79,032 from the DOE deposit fund escrow account denominated Crude Tracking Claimants 4, Account No. 999DOE010Z, maintained at the Department of the Treasury, to:

Carol Management Corporation

c/o Donald L. Wentworth

Doral Arrowwood

Anderson Hills Road

Ryebrook, NY 10573

(4) To facilitate the payment of future refunds, Carol Management Corporation shall notify the Office of Hearings and Appeals in the event that there is a change of address, or if an address correction is necessary. Such notification shall be sent to:

Director of Management Information

Office of Hearings and Appeals

Department of Energy

1000 Independence Avenue, S.W.

Washington, D.C. 20585-0107

(5) The determination made in this Decision and Order is based upon the presumed validity of the statements and documentary materials submitted by Carol Management Corporation. This determination may be revoked or modified at any time upon a finding that the basis underlying the Application for Refund is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: March 21, 1997

(1)The crude oil price control period extended from August 19, 1973 through January 27, 1981.