Case No. RF272-78413
June 25, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Applicant:Aristech Chemical Corporation
Date of Filing: June 30, 1988
Case Number: RF272-78413
This Decision and Order will consider an Application for Refund filed by Aristech Chemical Corporation (Aristech), a manufacturer and marketer of industrial chemicals, thermoplastic polymers, and specialty chemicals. In its Application, Aristech requests a refund from crude oil overcharge funds pursuant to 10 C.F.R. Part 205, Subpart V. As explained below, we will deny the Application.
Aristech was incorporated on October 14, 1986 as a wholly owned subsidiary of USX Corporation. USX transferred to Aristech substantially all of the assets and business of USS Chemicals (USSC), another subsidiary of USX.(1)See Enron Corp. / Aristech Chemical Corp., 24 DOE ¶ 85,078 at 88,263 (1994). Aristechs Application is based on 1,407,321,799 gallons of chemical products it claims were purchased by USSC.
Formerly, purchasers of refined petroleum products during the crude oil price control period (August 19, 1973 through January 27, 1981) could apply for a refund from crude oil overcharge funds. 51 Fed. Reg. 27899 (August 4, 1986). (2)
Aristech was not in existence during the price control period. Its right to apply for a refund, therefore, depends on its status as a successor firm to USSC.
In establishing the refund proceeding for these funds, we announced that we would accept Applications for Refund from injured parties that had not waived their claims by participating in one of the "Stripper Well" refund proceedings. 51 Fed. Reg. 29689 (August 20, 1986); 52 Fed. Reg. 11737 (April 10, 1987).
The "Stripper Well" refund proceedings were created to carry out the terms of the Settlement Agreement reached in The Department of Energy Stripper Well Exemption Litigation, 653 F. Supp. 108 (D. Kan. 1986). The Settlement Agreement established escrow accounts to refund crude oil overcharges to eight groups of petroleum product purchasers: Refiners, Retailers, Resellers, Agricultural Cooperatives, Airlines, Surface Transporters, Rail and Water Transporters, and Utilities.
In creating the escrow accounts, the court announced that "all parties and claimants receiving refunds under this agreement will waive any further claims to crude oil refunds." 653 F. Supp. at 114. Following the court's holding, the Settlement Agreement provides that the settling parties waive their right to participate in any future refund proceeding based on crude oil overcharges. Settlement Agreement, Paragraph III.A.1, 6 Fed. Energy Guidelines ¶ 90,509 at 90,660. Furthermore, this waiver provision is binding not only on the settling parties, but on their affiliates as well. Settlement Agreement, Paragraph VI.A, "Agreement Binding on Parties and their Affiliates," 6 Fed. Energy Guidelines at 90,667.
As defined in Paragraph VI.A of the Settlement Agreement, an affiliate of a party
includes any Person ... which controls, is controlled by or is under common control with such party. For this purpose, "control" means the power (existing on the Payment Date) to control the policies and business operations of a person, including ... the ownership ... of shares of stock ... of more than 49 percent of a person....
The Settlement Agreement goes on to define the "Payment Date" as "the date on which funds are distributed to all of the Parties or their Escrows." Paragraph III.B.1.b, 6 Fed. Energy Guidelines at 90,654. The court directed the transfer of funds to the escrows in an Order dated August 7, 1986. In Re: The Department of Energy Stripper Well Exemption Litigation, 3 Fed. Energy Guidelines ¶ 26,568. Therefore, August 7, 1986 is the Payment Date. Any firm that was an affiliate of a party to the Settlement Agreement on August 7, 1986 is bound by the waiver provision.
As noted above, Aristech is eligible for a refund only to the extent that its predecessor firm, USSC, would be eligible. USSCs right to participate in the crude oil refund proceeding, however, was waived by Marathon Oil Company (Marathon), another subsidiary of USX. Marathon participated in the Stripper Well Refiners escrow refund proceeding. See USX Corporation, 20 DOE ¶ 85,672 (1990). Since USSC and Marathon were affiliates on the Settlement Agreement Payment Date, USSCs crude oil refund claim, and Aristechs claim deriving from it, are precluded by Marathons waiver under the Settlement Agreement.
Both the Settlement Agreement and the Waiver and Release forms required of all Stripper Well applicants have been held to contain very clear and unambiguous provisions that the one who executes the waiver releases all claims of affiliates to further recovery of overcharges in Subpart V proceedings. Mid-American Dairymen, Inc. v. Herrington, 878 F.2d 1448 (Temp. Emer. Ct. App. 1989) (emphasis in the original); see also In Re: The Department of Energy Stripper Well Exemption Litigation, 707 F. Supp. 1267 (D. Kan. 1987). By choosing to obtain relief from the Surface Transporters escrow account, Marathon waived USSCs right to participate in the Subpart V crude oil proceeding, and USSC would be ineligible to apply for a refund. Since Aristechs right to apply derives from its status as successor to USSC, Aristech is also ineligible. We will therefore deny Aristechs Application for Refund.(3)
It Is Therefore Ordered That:
(1) The Application for Refund filed by Aristech Chemical Corporation (Case No. RF272-78413) 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 25, 1997
(1) Later in 1986, USX sold Aristech. Moodys 1987 Industrial Manual, Vol. 1 at 2529; Vol 2 at 6254.
(2)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).
(3) Since we are denying Aristechs Application on the ground that its right to participate was waived, we do not reach the issue of whether it would have been eligible to receive a refund for the chemical products that form its volume claim.