Case No. RG272-00076

May 30, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Applicant:Calcasieu Refining Company

Date of Filing: April 3, 1995

Case Number: RG272-76

This Decision and Order will consider an Application for Refund submitted by Calcasieu Refining Company (Calcasieu). In its application, Calcasieu requests a refund from crude oil overcharge funds. These funds are 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 during the crude oil price control period were allowed to apply to the OHA for a refund from crude oil overcharge funds.(1)51 Fed. Reg. 27899 (August 4, 1986). The DOE obtained the 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 that we have established specify that an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by alleged crude oil overcharges. We presume an end-user applicant absorbed rather than passed on alleged crude oil overcharges, and we therefore presume that crude oil overcharges injured such an applicant.(2)In contrast to an end-user applicant, an applicant that was not an end-user -- a refiner, reseller, or retailer -- must submit a detailed

demonstration establishing that the alleged crude oil overcharges caused it injury. 52 Fed. Reg. 11737 (April 10, 1987), reprinted at 6 Fed. Energy Guidelines ¶ 90,512.(3)

The applicant that is not an end-user is not presumed injured because of the Entitlements Program. During the price control period, the Entitlements Program spread crude oil overcharges evenly throughout the petroleum industry. This resulted in a uniform increase in the cost of all crude oil to refiners.(4)Applicants that were not end-users received compensation for the increased costs of petroleum products purchased from refiners through higher selling prices in their marketplace.

It is unlikely that any applicant that was not an end-user had to absorb the crude oil overcharges. Therefore, we have not established a presumption of injury for such an applicant in this proceeding. To make a sufficient showing of injury, an applicant that was not an end-user must: (1) show that the selling prices in its market did not increase because of the crude oil overcharges; and (2) show that it was thus unable to pass through the overcharges to its customers. Chet's Cedarville Quiki-Stop, 17 DOE ¶ 85,081 (1988).

Calcasieu's Application for Refund is based on its claimed purchases of 2,075,987 gallons of middle distillates, 3,113,980 gallons of residual fuel, and 1,566,272 gallons of propane. According to its application, Calcasieu used the petroleum products to refine crude oil.(5)As a refiner, Calcasieu must provide a detailed demonstration to establish injury in this proceeding.

Calcasieu did not submit a detailed showing of injury with its application. Because we are unable to find that Calcasieu suffered injury from crude oil overcharges, we will deny Calcasieu's Application for Refund. Nox-crete, Inc., 22 DOE ¶ 85,120 (1992).

It Is Therefore Ordered That:

(1) The Application for Refund filed by Calcasieu Refining Company (Case No. RG272-76) 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 30, 1997

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

(2) We consider an end-user to be the 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.

(3) See definition of "refiner," "reseller," and "retailer" at 10 C.F.R. § 212.31, reprinted at Fed. Energy Regulations, "Petroleum Regulations, 1974-81.".

(4) The DOE established the Entitlements Program to equalize access to the benefits of crude oil price controls among all domestic refiners and their downstream customers. To accomplish this end, the DOE required refiners to make transfer payments among themselves through the purchase and sale of "entitlements." The program evenly dispersed overcharges resulting from crude oil miscertifications throughout the domestic refining industry. See Amber Refining, Inc., 13 DOE ¶ 85,217 (1985).

(5) Application at 1.