Case No. RR304-00054

June 19, 2002

Application for Refund

Name of Petitioner:Atlantic Richfield Company/Swann Oil Co.

Date of Filing: January 19, 1993

Case Number: RR304-00054

This proceeding involves $46,387,976, plus accrued interest, which the Atlantic Richfield Company (ARCO) remitted to the Department of Energy (DOE) under the terms of the June 27, 1985 Consent Order entered into by DOE and ARCO.(1) The Consent Order settled, except for those items specifically excluded therein, all civil and administrative claims and liabilities 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 (OHA) of the DOE instituted special refund procedures for the distribution of those funds. See ARCO, 17 DOE at 88,142. 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, natural gas liquids, and natural gas liquid products) to file Applications for Refund from the ARCO consent order fund.(2) Refunds can be sought only for regulated products purchased between March 6, 1973 and January 27, 1981, the end of the period of petroleum price controls. See ARCO, 17 DOE at 88,143 n.5. This Decision and Order concerns an Application for Refund filed by Swann Oil Co.

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 and Gasoline Co., 12 DOE

¶ 85,054 (1984). In order 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 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, 17 DOE 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. Applicants may have received ARCO volume information distributed by the DOE. In such cases, applicants may rely on this data rather than submitting a schedule of ARCO purchase volumes. Unless an applicant demonstrates that it was disproportionately affected by ARCO’s alleged practices, it cannot receive a refund greater than this allocable share of the consent order fund. Id. at 88,151.

Resellers and retailers claiming refunds of less than $5,000 in principal, those who have elected to limit their refunds to $5,000, and end users are presumed to have been injured by ARCO’s alleged overcharges are not required to submit a detailed showing of injury. Mid-level resellers and retailers whose full volumetric refunds exceed $12,193 may elect to receive up to 41 percent of their full volumetric share up to $50,000 without providing detailed demonstrations of injury. Id. at 88151-2. To qualify for a refund, such an applicant must only submit either a schedule of its monthly purchases of ARCO products during the consent order period or the ARCO volume information distributed by the DOE.

II. Analysis

Swann Oil Co. (Swann) is a distributor that has claimed a refund less than $5,000 in principal. In calculating its refund, the ARCO volume information supplied to the DOE was used as a basis for determining the applicable gallonage.

We have reviewed Swann’s application and have found it meritorious. See e.g. Eason Oil Company/M&M Gas Company, 26 DOE ¶ 85,011 (1996). Accordingly, we find that Swann should receive a refund of that applicant’s adjusted volumetric allocation of the ARCO consent order fund(3). In addition, Swann should receive a proportionate share of the interest accrued on the consent order fund. The total volume approved in this Decision is 1,525,836 gallons. The refund granted to Swann in this Decision is $2,938, representing $1,121 in principal and $1,817 in interest.

Although we have carefully examined the applicant’s 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 specified in this Decision and Order is hereby granted 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. 999DOE035W) $2,938, ($1,121 in principal plus $1,817 in accrued interest) to Swann Oil, Inc. The check should be made payable to Charles Twining, Jr. or McMickle and Edwards, and sent to the address below:

Mr. Charles W. Twining, Jr.

Swann Oil, Inc.

or McMickle and Edwards

PO Box 221135

Memphis TN 38122

(3) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary material submitted by the applicant. The determination 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: June 19, 2002

(1)1/ Under the terms of the Consent Order, ARCO remitted a total of $68,035,516 to the DOE. These funds were divided between ARCO’s alleged violations regarding refined product sales and crude oil sales. The crude oil portion of the Consent Order fund ($21,647,540) will be distributed in accordance with the procedures established in Atlantic Richfield Company, 17 DOE ¶ 85,069 (1988) (ARCO). See A. Tarricone, Inc. 15 DOE ¶ 85,495 (1987).

(2)2/ For purposes of this proceeding, any reference to ARCO includes its subsidiaries and affiliates.

(3)3 In a separate Decision and Order issued on February 27, 1991, Case No. RF304-11062 et al., the refund for the Applicant Swann was not issued directly to the Applicant, but instead placed in an interest-bearing escrow account until further order from the Director of the Office of Hearings and Appeals. The material currently in the file indicates that Swann has satisfied its obligation to DOE, as per agreement between the parties, and there being no further basis for withholding the refund, it is recommended that the refund be granted.