Case No. RR272-00270

July 1, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Supplemental Order

Name of Petitioner:Champion Spark Plug Company

Date of Filing: December 4, 1996

Case Number: RR272-270

This Decision and Order considers an Application for Refund filed by Champion Spark Plug Company (Champion), and originally denied by the Office of Hearings and Appeals (OHA). Letter of Dismissal, Champion Spark Plug Division, Case No. RF272- 93723 (September 15, 1994). Champion had requested a refund from crude oil overcharge monies currently available for disbursement by the Office of Hearings and Appeals (OHA) pursuant to the OHA's authority under 10 C.F.R. Part 205, Subpart V. For the reasons stated below, the OHA will reconsider Champion’s Application for Refund.

I. Background

Pursuant to current DOE policy, purchasers of refined petroleum products may apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. Statement Of Modified Restitutionary Policy To Be Implemented In Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986) (MSRP).(1) The MSRP specifies that in all Subpart V proceedings involving crude oil the DOE will reserve up to 20 percent of refund monies for direct restitution to injured persons and will divide 80 percent between the state and federal governments for indirect restitution. Any funds remaining after payment to injured claimants will also be divided between the state and federal governments. We have established refund procedures for these funds, which have been made available through consent orders entered into by the DOE and several firms that sold crude oil during the regulated period. See, e.g., Berry Holding

Co., 16 DOE ¶ 85,405 (1987); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986). The refund procedures set forth in these cases specify that in order to receive a refund, an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by alleged crude oil overcharges.

End-users of petroleum products whose businesses are unrelated to the petroleum industry are presumed to have absorbed the crude oil overcharges, and need not submit any further proof of injury to receive a refund. See, e.g., Dorchester Gas Corp., 14 DOE ¶ 85,240 (1986); see also April 10 Notice, 52 Fed. Reg. at 11742, and cases cited therein. The end-user presumption of injury is rebuttable, however. Berry Holding Co., 16 DOE at 88,797. If an interested party submits evidence which is of sufficient weight to rebut the end-user presumption, the applicant will be required to produce further evidence of injury.

Generally, a claimant is eligible for a refund equal to the number of gallons it purchased multiplied by a per gallon refund amount. The refund amount currently available is $.0016 per gallon. This figure is referred to as the volumetric refund amount. We derived the volumetric refund amount by dividing the total crude oil refund monies currently available by the total U.S. consumption of petroleum products during the period of crude oil price controls (2,020,997,335,000 gallons). As additional crude oil monies become available, meritorious claimants will automatically receive a share of the additional funds.

In the MSRP, the OHA states that it will accept Applications for Refund in the Subpart V crude oil proceedings from injured parties that had not waived their claims by electing to participate in one of the "Stripper Well" refund proceedings. 51 Fed. Reg. 29689 (August 20, 1986). See also 52 Fed. Reg. 13291 (April 22, 1987); 52 Fed. Reg. 11737 (April 10, 1987).(2) Accordingly, any claim filed in the Subpart V crude oil refund proceedings must state that neither the claimant, its parent, nor any affiliate has elsewhere waived the claimant's right to a refund. A. Tarricone, Inc., 15 DOE ¶ 85,495 at 88,898 (1987).

On July 7, 1992, Champion filed an Application for Refund, Case No. RF272-93723. OHA issued a letter of dismissal on September 15, 1994, in which it stated that representatives of OHA and Champion had agreed that Champion’s Application should be dismissed because its parent company, Cooper Industries, had previously filed for a refund from the Surface Transporters escrow account, one of funds established in the “Stripper Well” proceeding. In so doing, Cooper Industries had signed a statement in which it waived its rights and the rights of its affiliates to receive a refund in the Subpart V refund proceeding.

On December 4, 1996, however, Champion filed a request that OHA reconsider its dismissal of Champion’s Subpart V refund application, on the grounds that Cooper Industries did not acquire Champion until after August 7, 1986. We have held that the Surface Transporter Claim Form and Waiver bound only those companies affiliated with the Surface Transporter claimant as of "[t]he date on which funds are distributed to all of the Parties of their escrows." Chrysler Motors Corp., 21 DOE ¶ 85,407 (1991) (quoting Stripper Well Settlement Agreement at ¶ II.B.1.b.iv). We have also determined that the distribution date was August 7, 1986, the date on which the court in the Stripper Well case ordered that the funds be placed in the various escrow accounts. Id. Cooper Industries acquired the majority of Champion’s stock on March 23, 1989, and Champion became a wholly-owned subsidiary of Cooper Industries on July 24, 1989. Certificate of Assistant Secretary of Champion Spark Plug Company, July 17, 1996. As in the cases of other crude oil applicants that became affiliates of Stripper Well claimants after August 7, 1986, Champion should not be denied a refund based on its subsequent affiliation with Cooper Industries. See, e.g., Stone Container Corporation, 21 DOE ¶ 85,034 (1991). In order to accord Champion’s claim the same treatment as was given to those of similarly situated claimants, we have decided, for reasons of fairness and equity, to reconsider Champion’s Application for Refund.

II. The Application for Refund

Champion, a manufacturer of spark plugs seeks a refund for its purchases of gasoline, motor oil and diesel fuel. In its Application, Champion states that it purchased a total of 3,770,806 gallons of petroleum products. The Applicant states that its claim of petroleum product purchases during the refund period is based in part on contemporaneous laboratory records and in part on estimates of the number of company cars and tractors in use during the consent order period. The Applicant seeks a refund on the basis that, as an end-user of petroleum products outside of the petroleum industry, it was presumptively injured by crude oil overcharges.

We have determined that Champion was an end-user of the refined petroleum products which form the basis for its refund application, i.e. the firm did not resell these products but consumed them in business operations unrelated to the petroleum industry. We have further found that Champion was injured by its purchases as a result of crude oil overcharges, based upon the reasoning set forth in the April 10 Notice. Accordingly, the Applicant is eligible to receive its full allocable share of the available crude oil monies. The principal refund amount equals the approved gallons of petroleum products which the firm purchased during the period of crude oil price controls, multiplied by the current volumetric amount, $.0016 per gallon. The principal refund amount, thus derived, is $6,033, based upon purchases of 3,770,806 gallons.

It Is Therefore Ordered That:

(1) The determination issued on September 15, 1994, to Champion Spark Plug Division, Case No. RF272-93723, is hereby modified as set forth below.

(2) The Application for Refund filed by Champion Spark Plug Company for its share of all available crude oil overcharge funds is hereby approved.

(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 to Champion Spark Plug Company $6,033 from the DOE deposit fund escrow account denominated Crude Tracking- Claimants IV, Account No. 999DOE010Z, maintained at the Department of Treasury.

(4) The refund check should be made payable to “Champion Spark Plug Company or Baker & McKenzie” and sent to:

Teresa A. Gleason

Baker & McKenzie

815 Connecticut Avenue, N.W.

Washington, D.C. 20006-4078

(5) To facilitate the payment of future refunds and interest, Champion Spark Plug Company 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

(6) 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 this refund application is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date:July 1, 1998

(1)1/ See Order Implementing the MSRP, 51 Fed. Reg. 29689 (August 20, 1986); see also Notice Discussing Comments, 52 Fed. Reg. 11737 (April 10, 1987) ("April 10 Notice").

(2)2/ The "Stripper Well" refund proceedings refer to the eight escrow accounts created by the U.S. District Court for the District of Kansas to implement the terms of the Settlement Agreement approved in In Re: The Department of Energy Stripper Well Exemption Litigation, M.D.L. 378 (July 7, 1986). The escrow accounts were created to refund a portion of the 1.4 billion dollars in crude oil overcharges to eight enumerated groups of petroleum product purchasers: Refiners, Retailers, Resellers, Agricultural Cooperatives, Airlines, Surface Transporters, Rail and Water Transporters, and Utilities.