Case No. RF304-04106

May 8, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Names of Petitioner:Atlantic Richfield Company/

Southern Railway Company

Dates of Filing: August 8, 1988

Case Number: RF304-4106

This Decision and Order grants in part an Application for Refund from the funds that the Atlantic Richfield Company (ARCO) remitted to the Department of Energy that was filed by Southern Railway Company (Southern), which is now owned by Norfolk Southern Corp. 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.

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.

II. Analysis

Southern claims to have purchased about 320,000,000 gallons of ARCO products during the refund period. If approved, this claim would result in a refund of $235,000. However, about 315,000,000 of these gallons consist of distillates, and Southern has not been able to substantiate this portion of its claim. Southern has no direct evidence of its ARCO distillate purchases. The firm bases its claim upon its purchases of distillates during the refund period from Gulf Oil Corporation. Southern asserts that it purchased about the same amount from ARCO.

In evaluating refund applications, we will accept estimates of ARCO purchases, provided those estimates are reasonable and based upon data and information that is verifiable. We will, for example, estimate purchase volumes based upon the amount paid for the products, and we will estimate purchase volumes during the refund period based upon volumes purchased during a subsequent year, where there is evidence that the firm was purchasing ARCO products during the refund period at about the same rate. In the present case, Southern has presented simply no evidence that it purchased ARCO distillates in significant volumes during the refund period. The unsupported statement by an official of Southern that according to his recollection the firm purchased about the same from ARCO as from Gulf is self-serving and is not sufficient to support the substantial refund that it seeks. Accordingly, we shall deny this portion of the firm's claim.

Nonetheless, Southern has provided evidence of 4,538,589 gallons of ARCO purchases.(1) This yields an allocable share of $3,336. In addition, the firm will receive a proportionate share of the interest accrued on the consent order funds. The total refund approved in this Decision is $7,190, representing $3,336 in principal plus $3,854 in interest.

Although we have carefully examined the claim and supporting data, the determinations reached in this Decision are based on the representations made in the application. 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 refund ordered.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Southern Railway Company on August 8, 1988, is hereby granted in part as set forth in Paragraph (2) below.

(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 DOE deposit fund escrow account maintained at the Department of Treasury and funded by Atlantic Richfield Company, (Consent Order No. RARH00001Z) $7,190 ($3,336 in principal plus $3,854 in interest) to:

Norfolk Southern Corporation

? W.T. Eng

110 Franklin Road, S.E.

Roanoke, VA 24042

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

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: May 8,1998

(1)The schedule submitted by the applicant included ARCO purchases for the entire period from January 1973 through December 1981. However, refunds are only approved for purchases beginning March 1973 through the last day that the product was subject to price controls, e.g., January 27, 1981 for gasoline and August 31, 1976, for lubricants and greases. The volume approved in this decision includes only purchases during the price control period.