Case No. RG272-00010

May 14, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Applicant:Cal-Car Service Company

Date of Filing: December 30, 1994

Case Number: RG272-10

This Decision and Order will consider the Application for Refund filed by Cal-Car Service Company (Cal-Car). The application is based upon Cal-Car’s purchases of refined petroleum products during the crude oil price control period (August 19, 1973 through January 27, 1981). Cal-Car has requested a refund from crude oil funds available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) under the provisions of 10 C.F.R. Part 205, Subpart V. As explained below, we will deny the application.

In the past, purchasers of refined petroleum products were allowed to apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been made available through consent orders between the DOE and numerous 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 that we have established specify that, to receive a refund, an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by crude oil overcharges.

We have further established that an applicant is presumed to have absorbed rather than passed on crude oil overcharges if it (1) was an end-user (ultimate consumer) of petroleum products; (2) was in a business unrelated to the petroleum industry; and, (3) was not subject to the price regulations of the DOE or its predecessors. 52 Fed. Reg. 11737 (April 10, 1987); City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). Such an applicant is presumed to have been injured and does not need to provide a showing of injury.

Cal-Car is an agricultural cooperative. Its application is based on petroleum products that it purchased for resale to the farmers who were its members. We regard a refund application filed by a

cooperative that resold petroleum products to its members as a claim filed on behalf of the members themselves. Farmers Union Oil Co., 17 DOE ¶ 85,464 (1988). A cooperative can thus claim the presumption of end-user injury to the extent that its members were end-users. Consequently, we will consider granting a refund to a cooperative based on products resold to its members on the condition that it certify that it will pass through the refund to its members.

Cal-Car went out of business since filing its application and is currently in the process of liquidation. On April 14, 1997, we contacted Cal-Car’s attorney, Edward Parker, by telephone to find out if Cal-Car was still able to pass through a refund to its members. Mr. Parker explained that due to a provision in Cal-Car’s sales agreement, any crude oil refund received would be sent to Growmark, Inc., one of the purchasers of Cal-Car’s assets. We explained that since the purpose of the refund proceeding is to make restitution to injured purchasers, Cal-Car would have to pass through the refund to Cal-Car’s members.

In another telephone conversation with us on April 16, 1997, Mr. Parker explained that he would distribute any refund received to Cal-Car’s members and Cal-Car would make up the refund amount owed to Growmark by sending Growmark other assets. We responded to Mr. Parker by letter on April 18, 1997. We explained that the injured parties, Cal-Car’s members, must be the beneficiaries of the refund. If funds that were otherwise to have been distributed to Cal-Car’s members are alternatively sent to Growmark after a crude oil refund is received, then Growmark, not Cal-Car’s members, would be the beneficiary of the refund. We informed Mr. Parker that, in order to receive the refund as an end-user, he must certify that Cal-Car’s members will receive their share of the refund with no reduction in their receipt of other assets currently scheduled to be distributed to them.

Mr. Parker responded in a letter to us dated April 25, 1997. He stated that “while Cal-Car can certify that any crude oil refund monies from [the DOE] will be distributed to its shareholders, it cannot, and is not required by the grant application, to otherwise guarantee what other assets it will have available to distribute to its [members] outside of the crude oil refund monies.”

This statement does not meet the requirements for Cal-Car to receive a refund. Cal-Car has not shown that its members will benefit from a crude oil refund. In fact, we believe that a refund granted to Cal-Car would ultimately benefit another party. Therefore, we will deny Cal-Car’s application.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Cal-Car Service Company is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: May 14, 1997