November 12, 2002
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: Cato Oil and Grease Co.
Date of Filing: July 5, 1994
Case Number: RF272-98807
This Decision and Order will consider an Application for Refund filed by Cato Oil and Grease Co. (Cato). Cato requests a refund from crude oil monies available for disbursement by the Office of Hearings and Appeals of the Department of Energy pursuant to 10 C.F.R. Part 205, Subpart V.
Pursuant to DOE policy, purchasers of refined petroleum products could 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). We established refund procedures for these funds which had 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). 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. An applicant who was an end- user of refined petroleum products and whose business was unrelated to the petroleum industry is presumed to have been injured. See, e.g., City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987).
In contrast, petroleum product refiners, resellers, and retailers must submit a detailed demonstration of injury. See Crude Oil Refund Procedures, 52 Fed. Reg. 11737 (April 10, 1987), reprinted at 6 Fed. Energy Guidelines ¶ 90,512. As defined in the petroleum price regulations, a reseller was a firm (other than a refiner or retailer) or that part of such a firm which carries on the trade or business of purchasing covered products and reselling them to ultimate consumers without substantially changing their form. 10 C.F.R. § 212.31. Cato was a reseller of petroleum products during the crude oil refund period. Its claim is based on purchases of 105,982,684 gallons of gasoline, middle distillates, and base oil stock used in manufacturing of lubricating oils and greases. Some of the products were
blended to produce motor oil, transmission fluid, and greases.(1) The remainder of the products were used in the manufacturing process.
In these transactions, each product which Cato sold was a covered product because motor oil and transmission fluid are each 60-70 percent base oil, and therefore, both the product that Cato purchases and the mixtures that it produces and sells are covered products. Further, Cato sold greases, a category of product specifically mentioned as a covered product.
Because Cato resold covered products, it is not eligible to use the end-user presumption of injury. See LPS Laboratories, Inc., 24 DOE ¶ 85,128 (1995) (denying application because applicant sold product that constituted 70-80 percent covered product and the remainder of its purchases were not separate and distinct from its reseller operations). Instead, we require a detailed demonstration that the applicant was unable to pass through the effects of crude oil overcharges to its own customers. Cato has not submitted any reasoned arguments or information indicating that it was injured by crude oil overcharges. All of Catos consumption of covered products was related to its reseller operations, since it defined itself as a manufacturer of lubricating oils and greases. Application for Crude Oil Refund, Case No. RF272-98807, submitted July 5, 1994. Accordingly, its Application for Refund should be denied.
It Is Therefore Ordered That:
(1) The Application for Refund filed by Cato Oil and Grease Co., Case No. RF272-98807, on July 5, 1994, is hereby denied.
(2) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: November 12, 2002
(1) Greases are specifically mentioned as a covered product in the regulations; motor oil and transmission fluid are formulated of 60 to 70 percent base oil stock. The Applicant stated that the motor oil and transmission fluid that it made are 60 to 70 percent base oil. Memorandum of Telephone Conversation dated March 7, 1995, between Linda Lazarus, OHA, and Tom Clanton, Cato. The Regulations defined covered product as
aviation fuels, benzene, butane, crude oil, gas oil, gasoline, greases, hexane kerosene, lubricant base oil stocks, lubricants, naphthas, natural gas liquids, natural gasoline, No. 1 heating oil and No. 1-D diesel fuel, propane, special naphthas (solvents), toluene, unfinished oil, xylene and other finished products. A blend of two or more particular covered products is considered to be that particular covered product constituting the major portion of the blend.
10 C.F.R. § 212.31 (removed September 1, 1976); Fed. Energy Guidelines (Petroleum Regulations 1974-1981) ¶ 15,431.