Case No. RF272-55648

February 18, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Motion for Discovery

Name of Applicant:Delta Asphalt Paving Company

Dates of Filing:May 9, 1988

August 1, 1988

Case Numbers:RF272-55648

RD272-55648

This Decision and Order grants in part an Application for Refund filed by Delta Asphalt Paving Company (Delta). The firm purchased refined petroleum products during the period August 19, 1973, through January 27, 1981, and has requested a refund from crude oil monies available for disbursement by the Office of Hearings and Appeals of the Department of Energy pursuant to the Statement of Modified Restitutionary Policy In Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986). This Decision also denies a Motion for Discovery filed by a group of States and Territories of the United States (States) that contest Delta's claim.

To receive a refund for crude oil overcharges, an Applicant generally must (1) document its purchase volumes and (2) show that it was injured by the overcharges. Applicants are presumed to have been injured if they were end-users of petroleum products and not covered by the DOE's or its predecessors' price controls. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). However, the presumption of injury is rebuttable. In an attempt to rebut the presumption, the States have filed Objections to the Delta's Application and a related Motion for Discovery. They contend that Delta did not experience an injury because it could pass through most or all of the crude oil overcharges to its customers. The Objections are based upon an economic analysis of business conditions during the price control period and upon the argument that to the extent that Delta's asphalt sales were made pursuant to contracts containing price escalation provisions, the firm could not have been injured by any crude oil overcharges.

We have previously determined that “a description of the general economic climate of an industry is insufficient to rebut the end-user presumption of injury.” Parker Drilling Co., 20 DOE ¶ 85,480 at 89,099 (1990); see W.H. Johns, Inc., 18 DOE ¶ 85,574 (1989); see also In Re: The Department of Energy Stripper Well Exemption Litigation, 764 F. Supp. 1446 (1990) (Stripper Well Litigation). Similarly, we have found that such requests for discovery are not appropriate in the Subpart V proceeding where the States have presented little evidence to rebut the presumption of end-user injury. See Stripper Well Litigation 764 F.Supp. at 1450; Christian Haaland A/S, 17 DOE ¶ 85,439 at 88,464 (1988); Copper Range Co., 18 DOE ¶ 85,431 at 88,692-93 (1988). We therefore find that to the extent the States’ Objections are based upon the general conditions prevailing in the industry, they are without merit. We shall also deny their Motion for Discovery.

Nonetheless, the majority of Delta's asphalt purchases were used for construction projects under contracts with the State of Florida and other governmental entities that contained cost adjustment clauses. Such clauses adjust payments under the contract to reflect increases or decreases in the cost

of materials. We have previously held that refund applicants were not injured by overcharges where they were able to pass through increases in their costs of petroleum products through cost adjustment provisions. Because crude oil refunds are appropriate only to remedy injury, we have consistently denied refunds based upon volumes of petroleum products that were used to fulfill contracts having price adjustment clauses. See, e.g., Cook Construction Co., 18 DOE ¶ 85,267 (1988); B&B Trucking, Inc., 18 DOE ¶ 85,636 (1989); West Lake Quarry, 21 DOE ¶ 85,020 (1991); Wildish Sand & Gravel Co., 21 DOE ¶ 85,035 (1991); Daley Corp., 23 DOE ¶ 85,130 (1993).

Delta argues that it was not able to pass through all crude oil overcharges through the cost adjustment clauses. The firm notes that the cost adjustment provisions applied only to the extent that asphalt prices increased or decreased more than five percent from the price at the time the contract was bid.(1) However, the firm has submitted no evidence or credible estimate of the volume of its asphalt purchases that fell within this five percent threshold.(2) We therefore find that Delta had not established its claim for a refund with respect to the volume of its asphalt purchases that was used in contracts containing adjustment clauses. See, Cook Construction Co., 18 DOE at 88,430. In addition, although specifically asked to do so, Delta has also not provided any material, evidence, or credible estimate of the volume of its asphalt purchases that was used in projects not covered by cost adjustment clauses. Accordingly, we shall deny Delta's claim with respect to all of its asphalt purchases after April 1, 1974, when Florida began making cost adjustments.

We will, however, grant Delta a refund with respect to the volume of asphalt it purchased prior to April 1974 (2,188,044 gallons) and for its purchases of gasoline and diesel fuel (1,629,769 gallons).(3) It is the current policy of the DOE to pay eligible crude oil refund Applicants at the rate of $0.0016 per gallon. The total refund approved is $6,109 ($0.0016 x 3,817,813 gallons). We will decide after the resolution of a few outstanding enforcement proceedings whether sufficient funds are available for additional refunds.

It Is Therefore Ordered That:

(1)The Application for Refund filed by Delta Asphalt Paving Company, Case No. RF272-55648, for all available crude oil overcharge funds are hereby approved as set forth in Paragraph (3) below.

(2)The Motion for Discovery filed by the consortium of States and Territories, Case No. RD272-55648 is hereby denied.

(3)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 $6,109 from the DOE deposit fund escrow account denominated Crude Tracking - Claimants II, Account Number 999DOE010Z, maintained at the Department of the Treasury. The check shall be made payable to Delta Asphalt Paving Company and shall be sent to the following address:

Delta Asphalt Paving Company

c/o Douglas B. Conner

P.O. Box 16686

Tampa, FL 33687-6686

(4)In order to facilitate the payment of future refunds, the Applicant shall notify the Office of Hearings and Appeals in the event that there is a change of address. 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

(5) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary materials submitted by the Applicant. These determinations may be revoked or modified at any time upon a finding that the basis underlying any refund application is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: February 18, 1998

(1)1/ Delta also asserts that because the cost adjustment clauses adjust for changes in the cost of asphalt, they do not compensate for the amount per gallon of overcharges that existed in April 1974 (the first month that Florida had cost adjustment provisions) or on the date that each contract was bid. Delta argues that if crude oil overcharges were constant during the refund period, then none of them would have been reimbursed through the cost adjustment provisions. This argument incorrectly assumes that crude oil overcharges were constant throughout the refund period. The rate of overcharges was generally increasing over this period.

(2)2/ We note if prices declined by more than five percent during some parts of the refund period with the result that Delta had to pay an adjustment to the State, the firm would not have been injured since any overcharges would have reduced the adjustment it would have been required to pay.

(3)3/ Delta has complete records of its asphalt purchased during the refund period, but its records of gasoline and diesel purchases begin in 1977. Delta's gasoline and diesel purchases for the period prior to 1977 were estimated by calculating the volume of its gasoline and diesel purchases per gallon of asphalt for the period 1977 to 1981 and multiplying its pre 1977 asphalt volume by that factor.