August 12, 2004

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Firm: Lubrizol Corporation

Dates of Filing: December 22, 1987

May 31, 1988

Case Numbers: RF272-20947

RD272-20947

This Decision and Order considers an Application for Refund filed by the Lubrizol Corporation (Lubrizol). Lubrizol purchased refined petroleum products during the period August 19, 1973 through January 27, 1981 (refund period) and has requested a refund from crude oil monies available for disbursement by the Office of Hearings and Appeals of the Department of Energy pursuant to the Statement of Modified Restitutionary Policy In Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986). Lubrizol relies on the presumption of injury for end-users as the basis for its refund claim. Under this presumption, OHA will presume applicants were injured at the refund level of $0.0016 per gallon of product purchased if they were end-users of petroleum products and were not covered by the DOE or its predecessors’ price controls. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987).(1)

We have reviewed the information submitted by Lubrizol and determined that it was an end-user of eligible petroleum products. Specifically, Lubrizol is a speciality chemical company that makes a large number of products. Lubrizol has shown that the additives and processes it uses to convert petroleum products to speciality chemicals substantially change the nature of the petroleum products themselves. Consequently, Lubrizol is an end-user and not a reseller of petroleum products. See 10 C.F.R. § 212.31 (“reseller” defined as a firm in the business of purchasing covered products and reselling them “without substantially changing their form to purchasers other than ultimate consumers.” (emphasis added)); DVD presentation by Cal Schroeck, Lubrizol (December 8, 2003).

Further, the majority of Lubrizol’s products by volume contain less than 50 percent petroleum products. 10 C.F.R. § 212.31 (definition of “covered product” includes a blend of covered products if the covered product consists of more than 50 percent by volume of the covered product).

The refund request is based on purchases of 348,907,223 gallons of various oils, fuel oil, gasoline and solvents.(2) These purchase figures were derived in its purchase volume claim by consulting actual records and by using reasonable estimation techniques. After considering the Application carefully, we have concluded that a refund for its purchases of 348,585,189 gallons should be granted. (3) The refund granted in this Decision is $557,736 (348,585,189 gallons x $0.0016 per gallon).

It Is Therefore Ordered That:

(1) The Application for Refund filed on behalf of Lubrizol Corporation, Case No. RF272-20947, is hereby approved as set forth in Paragraph (3) below.

(2) The Motion for Discovery, Case No. RD272-20947, filed by a group of States and Territories is denied.

(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 $557,736 via wire transfer from the DOE deposit fund escrow account maintained at the Department of the Treasury denominated Crude Tracking-Claimants IV, Account No. 999DOE010Z, to Lubrizol Corporation. Lubrizol Corporation’s address is given below:

Lubrizol Corporation

c/o Joseph W. Bauer

General Counsel

29400 Lakeland Boulevard

Wickliffe, OH 44092-2298

(4) To facilitate the payment of a future refund, if the DOE should determine an additional payment is warranted, the applicant 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:

Office of Hearings and Appeals

HG-1/L’Enfant Plaza Building

U.S. Department of Energy

1000 Independence Avenue, S.W.

Washington, D.C. 20585-1615

(5) 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 the refund applications is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: August 12, 2004

(1) A group of States and Territories filed a Motion for Discovery to Lubrizol’s Application, Case No. RD272-20947. This filing requests that we permit the States to conduct discovery concerning pertaining to the extent that Lubrizol’s experienced economic injury. The general information presented by the States in this case is not sufficient to justify authorizing discovery in this case. Consequently we will deny the Motion for Discovery pertaining to Lubrizol, Case No. RD272-20947.

(2)Lubrizol claimed purchases of 335,623,921 gallons of various base oils, 6,929,618 gallons of gasoline and 6,353,684 gallons of solvents. See Letter from Roberta J. Major, Lubrizol corporate attorney to Richard T. Tedrow, Deputy Director, Office of Hearings and Appeals (July 2, 1992).

(3)The vast majority of Lubrizol’s solvent purchases (6,031,650 gallons) consisted of petroleum products we have previously found to be covered products. The remaining products (S0-46, S-16, SO-44, SO-49, SO-48, SO-45, SO-7, SO-30 and methyl cellosolve), totaling 322,034 gallons, we find to be ineligible products, because there is an insufficient description in the record for us to make a determination as to whether they are covered products or there is evidence that they were purchased from petrochemical firms and not refineries.