Case No. RF272-96206
January 3, 2000
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: H.C. Blakewell, Inc., dba Red Carpet Car Wash
Date of Filing: June 1, 1994
Case Number: RF272-96206
This Decision and Order will consider the Application for Refund filed by H.C. Blakewell, Inc., dba Red Carpet Car Wash, a firm that purchased refined petroleum products during the crude oil price control period, August 19, 1973 through January 27, 1981. Blakewell requests a refund from the crude oil 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.(1)
I. Background
Pursuant to current Department of Energy (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 in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been made available through court approved settlements, remedial orders and consent orders entered into by the DOE and numerous firms that sold crude oil during the period of price controls. See, e.g., New York Petroleum, Inc., 18 DOE ¶ 85,435 (1988); Ernest A. Allerkamp, 17 DOE ¶ 85,079 (1988); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987). The refund procedures set forth in these cases specify that in order to receive a refund, an applicant generally must: (i) document its purchase volumes during the period of price controls; and (ii) 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., City of Columbus, 16 DOE ¶ 85,550 (1987); see also 52 Fed. Reg. 11737 at 11742 (April 10, 1987) (the April 10 Notice) and cases cited therein. The end-user
presumption of injury is rebuttable, however. 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. Berry Holding Co., 16 DOE ¶ 85,405 at 88,797 (1987).
In explaining the rationale for the end-user presumption, we have stated:
The end-user presumption was adopted first and foremost as an evidentiary tool so that parties injured by crude oil overcharges would have the opportunity to obtain some measure of restitution for those overcharges. As we previously noted, the DOE "has a duty to identify injured persons and, to the extent possible, to make direct refunds to them. . . ." To fulfill this Congressional mandate and assure that restitution is achieved, the OHA must take into account the complexity of oil overcharge proceedings, as well as the difficulty in actually proving injury from crude oil overcharges, caused in part by the passage of time since the period of price controls and difficulties applicants may experience in locating records and relevant market data. . . . If end-user claimants were routinely required to submit detailed evidence of injury in order to receive refunds for crude oil overcharges, a great majority of claimants would find that the refunds in question were not worth the time and cost involved in pursuing them. The result would be the complete frustration of the restitutionary purposes of these proceedings, since "virtually no end-users would receive restitution for the crude oil overcharges they experienced."
New York Petroleum, 18 DOE at 88,702 (citations omitted). See also April 10 Notice, 52 Fed. Reg. at 11741-42.
Meritorious claimants are eligible to receive refunds equal to the number of gallons of petroleum products they purchased during the period of price controls multiplied by a per-gallon or volumetric refund amount. The volumetric refund amount currently available is $0.0016 per gallon. We derived this refund amount by dividing the total crude oil refund monies currently available by the total consumption of petroleum products in the United States during the period of price controls (2,020,997,335,000 gallons). As additional crude oil refund monies become available, meritorious claimants will receive a share of the additional funds.
II. Analysis
In its Application for Refund, Blakewell, a car wash operator, seeks a refund for its purchases of motor gasoline that it resold to its retail customers. As explained above, OHA created the end-user presumption because, although injury occurred, there was no practical means of readily measuring the extent to which the overcharges were absorbed or passed through by a given end-user. By contrast, the regulatory scheme in effect during the crude oil price control period leads us to the general belief that resellers and retailers, unlike end-users, were able to pass through crude oil overcharges to their downstream customers in the form of increased market prices. Due to the operations of the Entitlements Program, crude oil overcharges were spread evenly throughout the petroleum industry.(2) As a result, refiners passed through this crude oil cost increase in the form of higher prices of refined petroleum products to their downstream customers, causing an increase in the market cost of petroleum products for all resellers and retailers. See Tarricone, 15 DOE, at 88,896. In turn, resellers and retailers were generally compensated for those overcharges through higher prevailing selling prices to their customers. When all competing resellers and retailers within a market area experience a uniform increase in cost, we believe that absent very unusual circumstances, all market selling prices will rise, thereby eliminating injury to resellers from these particular overcharges. See Coastal Gas, Inc./Solar Gas, Inc., 20 DOE ¶ 85,225 (1990).
Therefore, no presumptions of injury have been adopted for resellers in the crude oil proceeding, and absent a showing by the applicant that selling prices in its market did not increase as a result of the crude oil overcharges and that it was therefore unable to pass through the effects of the overcharges to its customers, such an applicant is ineligible for a refund. Accordingly, because Blakewell has submitted no reasoned argument or specific information demonstrating that it was unable to pass through the effects of crude oil overcharges to its customers and thereby demonstrating that it was injured as a result of the overcharges, we will deny its Application for Refund.
It Is Therefore Ordered That:
(1) The Application for Refund filed by H.C. Blakewell, Inc., Case No. RF272-96206, is hereby denied.
(2) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date:January 3, 2000
(1)1/ Interested parties were given an opportunity to submit comments regarding individual crude oil refund applications. No such comments were filed with respect to Blakewell's application.
(2)2/ The DOE established the Entitlements Program to equalize access to the benefits of crude oil price controls among all domestic refiners and their downstream customers. To accomplish this end, refiners were required to make transfer payments among themselves through the purchase and sale of "entitlements." Because of the manner in which the program worked, it had the effect of evenly dispersing overcharges resulting from crude oil miscertifications throughout the domestic refining industry. See Amber Refining, Inc., 13 DOE ¶ 85,217 (1985).