Case No. RR272-00274

January 21, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Motion for Reconsideration

Name of Petitioner:Land Paving Company

Date of Filing:October 8, 1996

Case Number: RR272-00274

On June 6, 1996, the Office of Hearings and Appeals (OHA) granted a refund filed by Land Paving Company (Land Paving), Case No. RF272-96134, in the Subpart V crude oil refund proceeding. That application was filed with the assistance of Federal Refunds, Inc. (FRI), a private filing service. FRI has now submitted a Motion for Reconsideration, requesting that we rescind the refund granted to Land Paving and grant the refund instead to Nebraska Asphalt Paving Company or to Anthony E. Dombrowski, former president of Land Paving, recently deceased.

I. Background

The original Application, Case No. RF272-96134, was filed under the name of Land Paving Company and signed by Anthony E. Dombrowski, President. Land Paving's refund claim was based on purchases of liquid asphalt, cut-back oils, diesel fuel, and gasoline. The company stated it had made these purchases while operating two asphalt plants during the period August 19, 1973, through January 27, 1981. The applicant estimated its purchases from contemporaneous records of production of asphaltic concrete. On June 6, 1996, we granted a refund of $42,973 to Land Paving, based on purchases of 26,858,098 gallons of petroleum products.

On October 8, 1996, the refund check sent to Land Paving, in care of Anthony E. Dombrowski, was returned to our office by FRI. On December 16, 1996, FRI sent to us by facsimile a letter dated September 26, 1996, and signed by Christian R. Blunk, an attorney in Omaha, Nebraska. In that letter, Mr. Blunk states:

I have been instructed to return [the refund] check and ask to have it issued to Nebraska Asphalt Paving Company. Nebraska Asphalt Paving Company was a subsidiary of Land Paving Company, and was the actual manufacturer of the Hot Mix [asphaltic concrete] which was then sold to Land Paving Company.

Letter from Christian R. Blunk; Andersen, Berkshire, Lauritsen & Brower; to Evelyn Sheffield; Office of Hearings and Appeals Analyst (September 26, 1996). The following day, December 17, 1996, we received another letter by facsimile from FRI dated December 16, 1996, and again signed by Mr.

Blunk. In that letter, Mr. Blunk states that, "Mr. [Anthony E.] Dombrowski is deceased and my firm represents the personal representatives of Mr. Dombrowski's Estate. They have asked to have the check reissued in Mr. Dombrowski's name or Nebraska Asphalt Paving Co." Letter from Christian R. Blunk to John Broberg, FRI (December 16, 1996). Enclosed with Mr. Blunk's letters were documents which were purported to "clearly show the claimed subsidiary nature of Nebraska Asphalt Company, and that Nebraska Asphalt Company's business was the production of asphaltic concrete to Land Paving Company." Letter from Christian R. Blunk to Evelyn Sheffield (September 26, 1996).

On December 18, 1996, we spoke with Mr. Blunk. He informed us that Land Paving had filed for bankruptcy in the 1980s, and that the bankruptcy proceeding was still pending. Memorandum of telephone conversation between Christian Blunk and Steve Goering, OHA (December 18, 1996). He also stated that Land Paving had been dissolved for nonpayment of taxes in 1990. Id. We subsequently spoke with personnel in the U.S. Bankruptcy Court for the District of Nebraska and the U.S. Trustee's Office in Omaha, Nebraska. We were informed that Land Paving filed for bankruptcy under the provisions of chapter 11 of the U.S. Bankruptcy Code in 1987, and that the bankruptcy proceeding is still open. Memorandum of telephone conversation between Jerry Jensen, U.S. Trustee's Office, and Steve Goering, OHA (December 27, 1996). The company continues to operate as "debtor in possession" and exercises the powers of a bankruptcy trustee. Id. The Trustee's Office provided us with the name of the law firm representing Land Paving in the bankruptcy proceeding. We contacted that firm and spoke to a partner familiar with the case. He stated that he was not aware that Land Paving had received a crude oil refund, and stated that he believed the refund check should be issued to Land Paving as debtor in possession of the bankruptcy estate. Memorandum of telephone conversation between James Napier; Biggs, Derr & Napier; and Steve Goering; OHA (January 7, 1997).

II. Analysis

We have reviewed the documents that Mr. Blunk submitted to our office. First, none of the documents, which include tax returns and an auditor's report, demonstrate that Nebraska Asphalt was the purchaser of the petroleum products originally claimed by Land Paving in its refund application. In addition, far from "clearly show[ing] the claimed subsidiary nature of Nebraska Asphalt" to Land Paving, the documents provided indicate that the late Anthony Dombrowski owned 100% of the stock of Land Paving, and that his son Michael owned 99% of the stock of Nebraska Asphalt. In contrast to the unsupported assertions of Mr. Blunk, we have in the record the 1994 application for refund signed by Anthony Dombrowski as President of Land Paving, certifying that Land Paving purchased the products claimed in the application.

It is our responsibility to pay only injured parties, which is why we look to the enterprise which purchased petroleum products during the relevant period, inasmuch as it was the firm that experienced crude oil overcharges when it paid increased prices for the products. Based on the evidence before us, we conclude that Land Paving made the purchases at issue in the present case, and is therefore the company eligible to receive a crude oil refund.

Mr. Blunk has provided certification from the Nebraska Secretary of State that Land Paving was dissolved for nonpayment of taxes on April 16, 1990. In the case of a dissolved corporation, the OHA has generally directed that refunds be issued to the stockholders of a corporation at the time of dissolution according to their respective percentage of stock ownership. See, e.g., Texaco Inc./Van Tex Inc., 22 DOE ¶ 85,183 (1992). However, in the present case Land Paving was dissolved by the State of Nebraska while it was a party in an ongoing federal bankruptcy proceeding that has not yet been closed. Thus, because Land Paving still exists as an entity under the jurisdiction of the U.S. Bankruptcy Court, and because we have determined that the company is entitled to the refund for which it originally applied, we reject FRI and Mr. Blunk's request that the refund check be reissued to either Nebraska Asphalt Paving Company or Anthony Dombrowski.

Accordingly, a new refund check will be issued to Land Paving and sent in care of the law firm representing the company in its chapter 11 bankruptcy proceeding. We will also send notification to the U.S. Bankruptcy Court for the District of Nebraska that a refund will be issued to Land Paving. Finally, the refund check returned to our office by FRI will be forwarded to the DOE Controller's Office to be redeposited in the crude oil escrow account. For the reasons stated above, the present Motion for Reconsideration should be denied.

It Is Therefore Ordered That:

(1) The Motion for Reconsideration filed by Federal Refunds, Inc., Case No. RR272- 00274, is hereby denied.

(2) The Director of Special Accounts and Payroll, Office of Departmental Accounting and Financial Systems Development, Office of the Controller, of the Department of Energy shall take appropriate action to disburse from the escrow fund denominated Crude Tracking- Claimants 4, Account No. 999DOE010Z, maintained at the Department of Treasury, the sum of $42,973 to Land Paving Company, Case No. RF272-96134, at the following address:

c/o William Biggs

Biggs, Derr & Napier

1650 Farnam St. - Suite 900

Omaha, NE 68102

(3) To facilitate the payment of future refunds, the applicants shall notify the Office of Hearings and Appeals in the event that there is a change in its address, or if an address correction is necessary. Such notification shall be sent to:

Director of Management Information

Office of Hearings and Appeals

Department of Energy

1000 Independence Avenue, S.W.

Washington, D.C. 20585-0107

(4) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary material submitted by the applicant. This Decision and Order may be revoked or modified at any time upon a determination that the basis underlying a refund application is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: January 21, 1997