Case No. RF272-98683

January 27, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Applications for Refund

Names of Applicants: Eastern Freightways, Inc.

Associated Transport, Inc.

Date of Filing: July 5, 1994

Case Numbers: RF272-98683

RF272-98763

In this Decision and Order, the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) will determine the eligibility of Myron Shevell, 30 percent shareholder of Eastern Freightways, Inc. (Eastern) and Associated Transport, Inc. (Associated), for refunds from the crude oil monies currently available for disbursement in a proceeding conducted pursuant to the provisions of 10 C.F.R. Part 205, Subpart V. Mr. Shevell has applied for 30 percent of the refunds for Eastern and Associated’s purchases of petroleum products, based on his ownership interest in those corporations at the time of the dissolution of each company. See Gulf Oil Corporation/Pate’s Gulf, 22 DOE ¶ 85,219 (1992). For reasons explained below, we are denying Mr. Shevell’s claims.

Pursuant to DOE policy, purchasers of refined petroleum products were permitted to apply to the OHA for a refund from crude oil overcharge funds under the OHA's jurisdiction until the filing deadline of June 30, 1995. See Statement of Modified Restitutionary Policy to be Implemented in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986) (the MSRP). We have established refund procedures for these funds which have been made available through consent orders entered into by the DOE and numerous 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) (Tarricone); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986). In the Order implementing the MSRP, the OHA stated that it would accept Applications for Refund in the Crude Oil Subpart V proceeding from injured parties who had not waived their claims by electing to take refunds from one of the escrow funds established pursuant to the final Settlement Agreement in the

DOE Stripper Well Exemption Litigation, M.D.L. 378 (D. Kan.).(1) 51 Fed. Reg. 29689 (August 20, 1986). See also Notice Explaining Crude Oil Refund Procedures, 52 Fed. Reg. 11737 (April 10, 1987). Accordingly, any claim filed in the Subpart V crude oil refund proceeding must state that the claimant has not elsewhere waived its right to a refund. See Tarricone, 15 DOE at 88,898.

Mr. Shevell owned 100 percent of a company named New England Motor Freight, Inc. (New England). New England applied for and received a refund from the Surface Transporters (ST) Escrow account (Case No. RF270-1704). See Yellow Cab Company of Greater Buffalo, 16 DOE ¶ 85,186 (1987). In seeking a refund from this account, New England was required to execute a “Waiver and Release,” in which it waived its right to participate in any future refund proceeding based on crude oil overcharges, including this Subpart V proceeding. The waiver provisions of Paragraph III.A.1 of the Stripper Well Settlement Agreement were incorporated into Paragraphs 7 and 10 of the Surface Transporters Escrow Claim Form Waiver which all ST applicants had to agree to in order to be eligible for an ST refund.

After considering all of the circumstances in this case, we have determined that Mr. Shevell is not eligible for crude oil refunds based on the purchases of Associated and Eastern. New England’s ST Escrow Settlement Claim Form and Waiver was signed by its controller, Gerald J. Smith. The Waiver expressly precludes New England from filing any other claim for crude oil refunds:

7. (a) Grantor hereby releases, and waives all Grantor’s existing and future claims whether assertable at law or in equity, and whether known or unknown, that fall within any one or more of the following classes, except such claims as are specifically excepted from this Waiver and Release:

(2) all present and future claims asserting rights to share in existing or future monies paid, ordered to be paid, or held for payment as restitution as a result of any judicial or administrative proceeding relating to the federal mandatory allocation and price regulations applicable to crude oil, and the entitlements program (herein Alleged Crude Oil Violations).

10. Except for the matters described in Paragraph 8 above, Grantor hereby agrees to withdraw and take all necessary steps to file appropriate withdrawals of any and all claims it now has or hereinafter may have for funds in any Court or agency proceedings including “Subpart V” proceedings, where such funds are related to Alleged Crude Oil Violations and to notify the Escrow Administrator when it has done so. Grantor agrees it will not file any such claims for refund of Alleged Crude Oil Violations in these or similar proceedings in the future. ...

Surface Transporters Escrow Settlement Claim Form and Waiver ¶¶ 7 and 10.

Moreover, Paragraph I.A of the Settlement Agreement states:

The parties to this Agreement are those Persons, including any individual, firm, corporation, . . . (herein called a Person), who are or who become signatories to or bound by this Agreement.

Settlement Agreement, ¶ I.A. The Settlement Agreement further describes:

The provisions of this Agreement. . . shall be binding upon (1) all the Parties hereto and (2) all Persons executing waivers or releases pursuant to this Agreement, and with respect to such Parties and Persons, their Affiliates, subsidiaries. . . officers, agents, attorneys and any other Persons while acting under their direction or control. As used herein, an “Affiliate” of any Party includes any Person (and the successors and assigns of such Person) . . . which controls, is controlled by or is under common control with such Party. For this purpose, “control” means the power (existing on the Payment Date), by contract, partnership agreement, stock ownership or otherwise, to control the policies and business operations of a Person, including, without limitation, the ownership, directory or indirectly (thorough one or more intermediaries), of shares of stock having the right to elect a majority of the Board of Directors of a corporate Person, or the ownership (on the Payment Date), directly or indirectly (through one or more intermediaries), of more than 49 percent of a Person.

Settlement Agreement, ¶ VI.A (emphasis added). All of this language is incorporated in the provisions of Paragraph 6 of the Waiver Form signed by New England.

We find that Mr. Shevell is bound by the waiver executed on behalf of New England. That waiver bound any affiliates of New England. Affiliate is defined in Paragraph VI.A. of the Settlement Agreement to include a Person who controls the waiving party. Mr. Shevlle controlled New England because he was the 100 percent owner of that firm. As we have stated in the past, OHA does not have the authority to depart from the plain meaning of the waiver, which is a part of a court-approved settlement. See Nabisco Brands, Inc., 23 DOE ¶ 85,067 at 88,169 (1993) (quoting Mid-America Dairymen, Inc. v. Herrington, 878 F.2d 1448, 1456-57 (Temp. Emer. Ct. App. 1989)). Therefore, since Mr. Shevell became what the ST agreement considers to be an Affiliate and accordingly bound by New England’s ST waiver, Mr. Shevell’s Applications for Refund should be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Eastern Freightways, Inc. on July 5, 1994 (Case No. RF272-98683) is hereby denied.

(2) The Application for Refund filed by Associated Transport, Inc. on July 5, 1994 (Case No. RF272-98763) is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: January 27, 1998

(1)*/ Eight escrow accounts were created by the U.S. District Court for the District of Kansas to implement the terms of the Settlement Agreement. The escrow accounts were created to refund a portion of 1.4 billion dollars in crude oil overcharges to eight enumerated groups of petroleum purchases: Refiners, Retailers, Resellers, Agricultural Cooperatives, Airlines, Surface Transporters, Rail and Water Transporters, and Utilities. The Court appointed the OHA to administer refund proceedings for two of these groups: "Surface Transporters" and "Rail and Water Transporters."