Case No. RK272-04387

June 18, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Supplemental Order

Name of Applicant: Frank B. Hall & Co., Inc./Aon Service Corporation

Date of Filing: March 20, 1997

Case Number: RK272-04387

This Decision and Order will consider an Application for Supplemental Refund filed in the Subpart V crude oil refund proceeding by Aon Service Corporation (ASC). (1) The Application is based upon purchases of petroleum products made by Frank B. Hall & Co., Inc. (Hall) from August 1973 to January 1981.

In the Application, ASC explains that it’s parent company, Aon Corporation (Aon), bought the operating assets of Hall in 1992. ASC believes it is entitled to supplemental refund monies due to Hall based on that asset purchase.(2) At the request of the Office of Hearings and Appeals (OHA), ASC submitted a portion of the sales agreement between Aon and Hall which lists the assets purchased by Aon. The assets purchased include such items as: assets listed on the Balance Sheet, licenses, trademarks, customer lists, renewal rights, prepaid expenses and “all right, title and interest to claims and causes of action relating to the Assets or the Business.(3)

Although the purchase agreement allowed Aon to reserve the right to purchase the capital stock of Hall within forty-five (45) days of the

Closing Date, ASC confirmed in a letter dated May 30, 1997 that Aon did not exercise that right.(4) Instead, the sale included only the assets of Hall, with certain assets specifically excluded from the sale.

We have a statutory duty to identify and provide restitution to injured persons. 15 U.S.C. § 4502 (b). We would be negligent in discharging that duty if we granted a refund to someone other than an identified injured person. Texaco/Huffy Gas, 22 DOE ¶ 85,220 at 88,586 n. 4. A potential crude oil refund is not generally considered an asset that can be bought, sold or transferred, for the simple reason that the refund itself does not exist until the OHA issues a Decision and Order granting a particular refund claim. As such, the refund procedures we have established provide that the right to receive a refund generally remains with the owner of a firm during the price control period. However, we have determined that the right to receive a refund can be transferred to a subsequent owner of the firm if: (i) the firm is a corporation, the entire capital stock of which was purchased by the subsequent owner; or (ii) the firm's assets were sold under an agreement that indicated, either explicitly or implicitly, that potential refunds were being transferred. Mrs. M.B. Troy, 23 DOE ¶ 85,049 (1993).

ASC confirmed that its parent company, Aon, did not purchase the capital stock of Hall when it purchased Hall’s operating assets in 1992. Absent a stock purchase, the right to receive a refund in the Subpart V crude oil refund proceeding can be transferred to a second party only when there is a sales agreement containing specific contractual language addressing the right to receive a crude oil refund. There is no such provision in the Asset Purchase Agreement submitted by ASC.

ASC has also submitted a statement from Prometheus Funding Corporation (f/k/a Frank B. Hall & Co., Inc.) (Prometheus) which asserts that ASC is, indeed, entitled to receive refund monies due to Hall despite the fact that the purchase included only the assets of the firm.(5) We do not believe this statement, written several years

after the asset purchase was completed, is sufficient to justify a departure from our usual standard. The OHA has stated that:

The OHA has a duty to identify injured persons and, to the extent possible, to make direct refunds to them. This duty arises from Section 209 of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904, the Petroleum Overcharge Distribution and Restitution Act of 1986, 15 U.S.C. § 4502 (b) (PODRA), and Paragraph IV.B.1 of the Stripper Well Settlement Agreement.

Firestone Tire & Rubber Company, 21 DOE ¶ 85,396, at 89,172 (1991). In this case, we have determined that Hall was injured by the alleged crude oil price overcharges during the price control period. Although the assets of that company were later sold to Aon, neither Aon nor ASC suffered injury from the alleged overcharges. Purchasing the assets of a firm which suffered injury during the refund period does not entitle the purchaser to adopt the original firm’s status as an identified injured party.

Neither Aon nor ASC were injured by the alleged crude oil overcharges suffered by Hall during the refund period. The OHA has no statutory authority to grant a refund to a party that was not injured by the alleged overcharges; the fact that Aon, ASC and Hall (n/k/a Prometheus) agree that ASC is entitled to receive refund monies due to Hall is irrelevant. See Georgia Kraft Company, 25 DOE ¶ 85,075 (1995).

ASC has submitted nothing that would indicate that it is entitled to receive supplemental refund monies due to Hall. Accordingly, we will deny the Application for Supplemental Refund submitted by ASC.

It Is Therefore Ordered That:

(1) The Application for Supplemental Refund filed by Aon Service Corporation, Case No. RK272-04387, 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 18, 1997

(1) For information pertaining to the Supplemental Distribution of Subpart V Crude Oil Refund Monies, see State of Montana, et al., 25 DOE ¶ 85,059 (1995).

(2) See Application for Supplemental Refund filed by ASC on March 20, 1997, Case No. RK272-04387, by George Douglas of ASC.

(3)” See Asset Purchase Agreement between Frank B. Hall & Co., Inc. and Aon Corporation, dated July 24, 1992, submitted to the OHA by ASC on April 18, 1997.

(4) See Letter from Jerome S. Hanner, Senior Counsel of Aon, to Thomas L. Wieker, OHA Deputy Director, dated May 30, 1997.

(5) See Letter from Peter J. Dranginis, Jr., Senior Vice President and General Counsel of Prometheus Funding Corporation, to Thomas L. Wieker, OHA Deputy Director, dated March 13, 1997.