Case No. RF304-04889

May 11, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Applications for Refund

Names of Petitioners:Atlantic Richfield Company/

Arlington Oil Company, et al.

Dates of Filings: September 6, 1988, et al.

Case Numbers: RF304-4889, et al.

This Decision and Order considers 14 Applications for Refund from the funds that the Atlantic Richfield Company (ARCO) remitted to the Department of Energy. Under the terms of a June 27, 1985 Consent Order, ARCO remitted $46,387,976, plus accrued interest to the DOE. The Consent Order settled, except for certain matters specifically excluded, all claims regarding ARCO's compliance with the Federal Petroleum Price and Allocation Regulations during the period January 1, 1973, through January 27, 1981 (the consent order period). On January 28, 1988, the Office of Hearings and Appeals of the DOE instituted special refund procedures for the distribution of those funds. Atlantic Richfield Co., 17 DOE ¶ 85,069 (1988) (ARCO). The special refund procedures allow purchasers of ARCO products which were regulated during the period of price controls (e.g., motor gasoline, propane, middle distillates, and natural gas liquid products) to file Applications for Refund from the ARCO consent order fund. Refunds can be sought only for regulated products purchased between March 6, 1973, and the date the product was decontrolled, January 27, 1981, for gasoline. See id. at 88,143 n.5. The applications in this case were all filed by William J. Lussow, on behalf of retail outlets and distributorships that he owned during the refund period. As explained below, we shall grant the nine applications listed in Appendix A and we shall dismiss the five applications listed in Appendix B.

I. Background

Evaluating applications in this proceeding involves both an allocation of an appropriate portion of the consent order fund to each applicant and an evaluation of economic harm or injury suffered by that applicant. Id. at 88,151; see Sid Richardson Carbon & Gasoline Co., 12 DOE ¶ 85,054 (1984). To determine the portion of the fund to be allocated to each claimant, we assume that any overcharges were distributed equally over every gallon of regulated products sold by ARCO during the consent order period and have allocated the consent order monies accordingly, i.e., by dividing the value of the fund by ARCO's total sales of covered products during the period. ARCO at 88,151. This calculation produces a "volumetric factor" of $0.000735 per gallon. When that factor is multiplied by an applicant's total eligible purchases, the result is a claimant's allocable share of the consent order fund. Id. at 88,151.

Resellers and retailers with an allocable share of less than $5,000 and end users are presumed to have been injured by ARCO's alleged overcharges and are not required to submit a detailed

showing of injury. Mid-level resellers and retailers whose allocable share exceeds $5,000 may receive the greater of $5,000 or 41 percent of their allocable share (up to a maximum of $50,000) without providing detailed demonstrations of economic injury. Id. at 88,151-12. To qualify for a refund, such an applicant must submit evidence of its volume of purchases of ARCO products during the consent order period.(1)

II. Analysis

Mr. Lussow filed claims on behalf of Arlington Oil Company (Arlington Oil), a distributor of motor gasoline, M.C. Giles Company, a distributor of fuel oil, seven Village Pump retail outlets, three Bay County Stores retail outlets, and two Country Stores of Illinois retail outlets. During the course of this proceeding, Mr. Lussow indicated that Arlington Oil supplied the gasoline sold by the three Bay Country Stores outlets and one of the Country Stores of Illinois outlets. Since the ARCO purchases of these four retail outlets will be reflected in the Arlington Oil's ARCO purchases, these four applications will be dismissed. See Texaco Inc./Gruver Texaco Wholesale, 20 DOE ¶ 85,652 (1990) (volumes of product purchased by one firm and sold to another related firm included only once in calculating the appropriate refund). In addition, Mr. Lussow indicated that he acquired M.C. Giles after fuel oil was decontrolled. As Mr. Lussow does not claim to have acquired the right to the prior owner's refund, that claim shall also be dismissed.(2) In addition, Mr. Lussow owned Barrington Oil Company, which purchased a small volume of ARCO products. The purchases by Barrington Oil are included in our calculation of the refund for Arlington Oil.

In support of its claim, the applicant has submitted ARCO records showing that Arlington Oil purchased 40,542,702 gallons of ARCO products during the period from March 6, 1973 through May 1977. From June 1977 through June 1979, at which time the firm went out of business, Arlington Oil obtained ARCO products through Wageman Oil Company and Kane County Oil Company. The firm has submitted a monthly schedule of its total gasoline purchases from these firms. In addition, the applicant has submitted copies of these firms' purchase and sales journals for December 1977 and December 1978. These journals show that a portion of the motor gasoline sold to Arlington Oil originated with firms other than ARCO. To estimate Arlington Oil's ARCO purchases during this period, we reduced the firm's total gasoline purchases by the fraction of non-ARCO gasoline reflected in these purchase journals. This same method has been used to calculate the ARCO purchases by the retail outlets during the period from June 1977 through June 1979. Mr. Lussow has submitted evidence that his retail outlets were in business for the entire refund period, but he has been unable to submit direct evidence of their ARCO purchases for the period prior to June 1977. We have therefore estimated their monthly purchases during this period by assuming that they were the same as their average monthly purchases during the June 1977 through June 1979 period. A summary of our calculations of the applicant's ARCO purchases is set forth in Appendix C.

We find the applications listed in Appendix A to be meritorious. As set forth in Appendix C, we find that Mr. Lussow's related entities purchased 91,642,348 gallons of ARCO products during the refund period. Rather than attempt to demonstrate the amount of injury that resulted from ARCO's overcharges, the applicant has elected to use the presumption of injury described above and accept a refund equal to 41 percent of his allocable share. In addition, the applicant shall receive a proportionate share of the interest that has accrued on the consent order funds. The total refund approved in this Decision is $59,522 ($27,617 in principal plus $31,905 in interest).

Although we have carefully examined each claim and supporting data, the determinations reached in this Decision are based on the representations made in the applications. If the factual basis underlying any of our determinations in this Decision is later shown to be inaccurate, this Office has the authority to order appropriate remedial action, including rescission or reduction of the refunds ordered.

It Is Therefore Ordered That:

(1) The nine Applications for Refund specified in Appendix A to this Decision and Order are hereby granted as set forth in Paragraph (3) below.

(2) The five Applications for Refund specified in Appendix B to this Decision and Order are hereby dismissed.

(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 from the DOE deposit fund escrow account maintained at the Department of Treasury and funded by Atlantic Richfield Company, (Consent Order No. RARH00001Z) $59,522 ($27,617 in principal plus $31,905 in interest) to:

William J. Lussow

or Richard W. Bliss

1079 Papermill Court, N.W.

Washington, DC 20007

(4) The determinations made in this Decision and Order are based upon the presumed validity of statements and documentary material submitted by the applicants. The determinations may be revoked or modified at any time upon a finding that the factual basis underlying any of the Applications for Refund is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: May 11, 1998

APPENDIX A

Refunds Approved

CASE NUMBER

APPLICANT NAME

VOLUME

PRINCIPAL

INTEREST

REFUND

RF304-4889

Arlington Oil Company

51,824,992

$15,617

$18,041

$33,658

RF304-4893

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4894

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4895

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4905

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4906

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4907

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4908

Village Pump, Inc.

4,977,167

$1,500

$1,733

$3,233

RF304-4909

Country Stores of Illinois

4,977,167

$1,500

$1,733

$3,233

9 Applicants

91,642,328

$27,617

$31,905

$59,522

APPENDIX B

Applications Dismissed

CASE NUMBER

APPLICANT NAME

RF304-4872

M.C. Giles, Inc.

RF304-4890

Bay Country Stores, Inc.

RF304-4891

Bay Country Stores, Inc.

RF304-4892

Bay Country Stores, Inc.

RF304-4910

Country Stores of Illinois

Appendix C

Calculation of ARCO Purchases

ARCO Purchases

June 1977 — June 1979

Wageman Oil Kane County Total PurchasesARCO %Total ARCO

Arlington Oil(3) 7,667,5692,759,987 10,427,556 96.0 10,010,454

Barrington Oil 3,967,046 1,001,063 4,968,10925.6 1,271,836

Retail Outlets 12,599,237 5,497,194 18,096,43171.4 12,920,852

Arlington Oil Purchases

Arlington Oil 1973—77 (ARCO Printouts) 40,542,702

Arlington Oil 1977—79 (from above) 10,010,454

Barrington Oil 1978—79 (from above) 1,271,836

Total Arlington Oil 51,824,992

Retail Outlet Purchases

Retail Outlets 1977—79 (from above) 12,920,852

Divided by 24.5 months = 527,382 per month

Retail Outlets 1973—77 (527,382 x 51 months) 26,896,484

Total 8 Retail Outlets 39,817,334

Average per retail outlet 4,977,167(4)

Total ARCO Purchases 91,642,328

(1)The principal purpose of the presumptions of injury described above is to reduce the burden on small claimants. As a result, in applying the presumptions, we aggregate the purchase volumes of all related firms. Separate analysis of individual claims by related applicants is inappropriate because affiliated firms are in a better position to undertake the burden of demonstrating injury and have less need for the presumption of injury. Separate treatment of affiliated firms under the small or medium- range presumptions of injury would therefore result in windfall benefits. See, e.g., Texaco Inc./Triple A Oil Co., 22 DOE ¶ 85,156 ar 88,440-41 (1992).

(2)Where a change in ownership of a sole proprietorship or partnership has occurred this Office presumes that the owners during the price control period should receive the refund unless the sales contract contains clear provisions transferring the refund to a purchaser. See, e.g., Texaco Inc./Tenbarge Oil Co., 21 DOE ¶ 85,121 (1991); Texaco Inc./General Gas & Oil Co., 22 DOE ¶ 85,130 (1992).

(3)The refund application filed on behalf of Arlington Oil contained a monthly schedule of purchases for this period indicating purchases of 17,989,910 gallons of ARCO motor gasoline. Mr. Lussow, however, stated that he no longer has records to substantiate this claim. Accordingly, we shall base our refund with resepct to Arlington Oil on the schedules and purchase journals that have been submitted in this proceeding.

(4)For administrative purposes, we shall assume that each of the eight outlets purchased this volume of ARCO products.