Case No. RR300-00261

November 3, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Motion for Reconsideration

Name of Petitioner: Gulf Oil Corporation/

Ryder Energy Distributing

Date of Filing: November 8, 1994

Case Number: RR300-261

Ryder Energy Distributing (Ryder Energy) requests reconsideration of Gulf Oil Corp./Ryder Energy Distributing, 21 DOE ¶ 85,345 (1991) (Gulf/Ryder Energy). As explained below, we have determined that the motion should be denied.

I. Background

A. The Gulf Refund Proceeding

The Gulf refund proceeding is the result of a consent order entered into between the DOE and Gulf. The consent order resolved DOE allegations that Gulf violated the mandatory petroleum regulations in its sales of crude oil and refined petroleum products from January 1, 1973 through January 27, 1981 (the consent order period).

The procedures for the Gulf refund proceeding are set forth in Gulf Oil Corp., 16 DOE ¶ 85,381 (1987) (Gulf). Gulf provides for a two- stage proceeding for distributing the portion of the consent order amount attributed to refined product violations ($42,499,566). The first stage consists of granting refunds to firms that are able to demonstrate that they were injured by such violations. Any funds remaining after the first stage will be used to make indirect restitution in accordance with the provisions of the Petroleum Overcharge Distribution and Restitution Act of 1986, 15 U.S.C. § 4501 et seq.

Gulf adopts a presumption that each claimant was overcharged $.00064 per gallon of covered Gulf product purchased. This volumetric amount was calculated by dividing the portion of the consent order amount attributed to refined product violations ($42,499,566) by the estimated volume of refined products sold by Gulf from August 1973 through the date of decontrol of the relevant product (66,387,563,569 gallons). Gulf, 16 DOE at 88,736.

Gulf further provides that refiner, reseller, or retailer claimants must demonstrate that they were injured as a result of their Gulf purchases; that is, that they were unable to pass through the presumed overcharge amount to their customers. Gulf establishes a presumption of injury for end-users (the end-user presumption). Gulf also establishes a presumption of injury for claims of $5,000 or less (the small claims presumption) and a 40 percent presumption of injury for claims between $5,000 and $50,000 (the medium range presumption).

Successful applicants receive interest. When Gulf/Ryder Energy was issued, the interest volumetric was $.00034. The current interest volumetric is $.00061 per gallon.

B. Ryder Energy’s Gulf Application

Ryder Energy is a part of Ryder Systems, Inc. (Ryder). Ryder Energy filed on behalf of Ryder. In the application, Ryder Energy requested a refund for a total of 93,461,261 gallons, citing four entries on the Gulf customer list, one for “Ryder Truck Rental” and three for “Ryder Energy Distributing Co.” Of the total 93,461,261 gallons, Ryder Energy claimed that Ryder purchased 74,299,786 gallons for resale and 19,161,475 gallons for end-use. In support of its claim that Ryder purchased 19,161,475 gallons for end-use, Ryder Energy supplied a schedule showing the portion of Ryder’s total purchases from all suppliers that Ryder attributed to end- use. Ryder Energy then applied that percentage to Ryder’s total Gulf purchases.

In Gulf/Ryder Energy, we granted Ryder Energy’s application in part. We noted that (i) under DOE regulations vehicle renting and leasing companies were retailers and (ii) the end-user presumption was intended for businesses “unrelated to the petroleum industry.“ Gulf/Ryder Energy, 21 DOE at 89,038 (citations omitted). Accordingly, we applied the medium range presumption of injury to the total 93,461,261 gallons, and we granted the firm a $36,637 refund.

In its reconsideration request, Ryder Energy argues that the claimed end-use gallons were purchased by common carrier and trucking companies. Ryder Energy maintains that these entities were “maintained separately“ from Ryder’s vehicle rental and leasing division. Motion at 2.

II. Analysis

The end-user presumption of injury does not apply to firms that were subject to price controls. In Gulf, we explained:

Unlike regulated firms in the petroleum industry, end-users generally were not subject to price controls during the consent order period and were not required to keep records which justified selling price increases by reference to cost increases. For these reasons, we found that an analysis of the impact of the alleged overcharges on the final prices of the non-petroleum goods and services would be beyond the scope of a special refund proceeding. See Texas Oil & Gas Corp., 12 DOE ¶ 85,069 at 88,209 (1984).

Gulf, 16 DOE at 88,736. Thus, an end-user affiliated with a regulated firm must demonstrate that it operated separately from the regulated firm in order to receive a refund based on the end- user presumption of injury.

The price controls applied to vehicle rental and leasing companies such as Ryder and, therefore, those businesses are resellers for the purpose of refund proceedings. See Texaco Inc./Ryder System, Inc., 25 DOE ¶ 85,063 (1995) (Texaco/Ryder); Ryder Truck Rental, Inc., 20 DOE ¶ 85,069 (1990); The Hertz Corp., 20 DOE ¶ 85,257 (1990); Evans Truck Leasing, Inc., 17 DOE ¶ 85,538 (1988); Standard Oil Co./The Hertz Corp., 11 DOE ¶ 85,202 (1931). Thus, an end-user affiliated with a vehicle rental and leasing company must demonstrate that it operated separately from that company in order to receive a refund based on the end-user presumption.

In the Texaco refund proceeding, Ryder Energy demonstrated that certain Ryder companies that purchased Texaco product for end-use were separate from the vehicle renting and leasing division. Texaco/Ryder, 25 DOE at 88,163-64. In that case, the Texaco customer list contained the names of various firms; Ryder Energy demonstrated that some of those firms were end-users with separate operations. We described the latter group as follows:

The companies . . . are operated under a division of Ryder that is separate from Ryder Truck Rental. They are primarily trucking companies which haul automobiles, and they would, on their own, be classified as end-users. They were acquired by Ryder late in or after the refund period. Because the nature and operations of these companies was and remains entirely separate from that of Ryder Truck Rental and the other renting and leasing companies, we have determined that Ryder should receive a refund as an end-user based on these purchases.

Texaco/Ryder, 25 DOE at 88,163-64 (citations omitted). Thus, we applied the end-user presumption of injury to volumes purchased by the following firms: Ryder Contracting, Transport Storage & Dist., All States Truck Lines, Motor Transportation, and Fleet Transportation. Id. at 88,164.

In this case, Ryder Energy has not identified any part of Ryder, separate from the vehicle rental and leasing division, that purchased Gulf product for end-use. Ryder Energy simply cites (i) the four entries on the Gulf customer list, one for Ryder Truck Rental and three for Ryder Energy, and (ii) Ryder Energy’s calculation that 20 percent of Ryder’s total refined product purchases was for end-use. Both of the companies identified on the Gulf customer list were associated with the vehicle rental and leasing division. Ryder Truck Rental is obviously part of that division. Ryder Energy was formed in 1981 to consolidate and coordinate fuel purchases for that division. Memorandum of Telephone Conversation between Todd Dressler, Fuel Manager, Ryder, and Paul Rooney, OHA Analyst, dated July 10, 1991. Given the foregoing, there is no basis for concluding that Ryder’s end-use percentage of total purchases, even if accurate, represents its end-use percentage of Gulf purchases.

Despite the fact that Ryder Energy has not identified any separate Ryder company as the purchaser of the volumes shown on the four Gulf customer listings, it appears that one of those listings reflects purchases by a Ryder subsidiary, M & G Convoy, Inc. (M & G Convoy). The listing for Ryder Energy on page 757 of the Gulf customer list falls between “M&A Petroleum” and “M&I Electric Co.” Ryder’s 1993 Securities and Exchange Commission (SEC) 10-K Report lists M & G Convoy as a subsidiary.

There is no basis in the record, however, for concluding that Ryder Energy is entitled to the end-user presumption of injury for the gallons listed for M & G Convoy. First, there is nothing in the record concerning whether M & G Convoy maintained separate operations from Ryder’s vehicle rental and leasing division. In Texaco/Ryder, we concluded that certain firms had operated independently from the vehicle rental and leasing operation because the firms were purchased by Ryder near, or after, the end of the refund period. Publicly available information indicates that Ryder owned M & G Convoy throughout the refund period. Secondly, even if Ryder had demonstrated that M & G Convoy maintained separate operations during the refund period, we question whether Ryder would be entitled to the refund. As a corporation, M & G Convoy is a separate legal entity. Texaco/Ryder, 25 DOE at 88,162 and cases cited therein. Ryder’s 1996 SEC 10-K Report indicates that it no longer owns M & G Convoy. Thus, although Ryder was entitled to receive a refund for M & G Convoy volumes in 1991, when Gulf/Ryder Energy was issued, we question whether it would remain entitled to any refund resulting from a modification of that order.

III. Conclusion

We have concluded that Ryder Energy’s reconsideration request should be denied. Ryder Energy received a $36,637 refund based on the 40 percent presumption of injury applicable to resellers. Ryder Energy has failed to demonstrate that it is entitled to the end-user presumption of injury for any of its Gulf purchases. Ryder Energy has not demonstrated that any of the Gulf purchases were for end-use by an entity separate from Ryder’s vehicle rental and leasing division. Although it appears that a former Ryder subsidiary, M & G Convoy, may have made end-use purchases, Ryder has not demonstrated that M & G Convoy operated separately or that Ryder is entitled to a refund for that entity.

It is Therefore Ordered That:

(1) The Motion for Reconsideration filed by Ryder Energy Distributing be denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: November 3, 1997