Case No. RF272-52464

August 26, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Motion for Discovery

Name of Petitioner: Grumman Aerospace Corporation

Dates of Filings: March 28, 1988

June 30, 1988

Case Numbers: RF272-52464

RD272-52464

This Decision and Order grants in part an Application for Refund filed by Grumman Aerospace Corporation (Grumman). The firm purchased refined petroleum products during the period August 19, 1973, through January 27, 1981, 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). This Decision also denies a Motion for Discovery filed by a group of States and Territories of the United States (States) that contest Grumman's claim.

To receive a refund for crude oil overcharges, an applicant generally must (1) document its purchase volumes and (2) show that it was injured by the overcharges. Applicants are presumed to have been injured if they were end-users of petroleum products and not covered by the DOE's or its predecessors' price controls. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). However, the presumption of injury is rebuttable. In an attempt to rebut the presumption, the States have filed Objections to the Grumman Application and a related Motion for Discovery. They contend that Grumman did not experience an injury because it could pass through most or all of the crude oil overcharges to its customers. The Objections are based upon an economic analysis of business conditions during the price control period.

We have previously determined that “a description of the general economic climate of an industry is insufficient to rebut the end-user presumption of injury.” Parker Drilling Co., 20 DOE ¶ 85,480 at 89,099 (1990); see W.H. Johns, Inc., 18 DOE ¶ 85,574 (1989); see also In Re: The Department of Energy Stripper Well Exemption Litigation, 764 F. Supp. 1446 (1990) (Stripper Well Litigation). Similarly, we have found that such requests for discovery are not appropriate in the Subpart V proceeding where the States have presented little evidence to rebut the presumption of end-user injury. See Stripper Well Litigation

764 F.Supp. at 1450; Christian Haaland A/S, 17 DOE ¶ 85,439 at 88,464 (1988); Copper Range Co., 18 DOE ¶ 85,431 at 88,692-93 (1988). We therefore find that to the extent the States’ Objections are based upon the general conditions prevailing in the industry, they are without merit. We shall also deny their Motion for Discovery.

We have carefully reviewed the Application filed by Grumman. Grumman is an end-user of refined petroleum products. Grumman claims, based upon internal consumption reports, that it purchased 95,353,513 gallons of gasoline, middle distillates, residual fuel, propane, kerosene, jet fuel, and production petroleum solvents. Grumman used these products in its manufacture of airplanes. The standard for determining whether purchases of a particular petroleum product are eligible for a crude oil refund is whether (a) the product was named as a covered product in regulations promulgated pursuant to the Emergency Petroleum Allocation Act (EPAA) of 1973, as amended, 15 U.S.C. § 751, or (b) was purchased from a crude oil refinery or a reseller who purchased from a crude oil refinery but did not substantially change its form. 57 Fed. Reg. 30731, 30732 (July 10, 1992). See Goodyear Tire & Rubber Co., 24 DOE ¶ 85,039 (1994). Gasoline, middle distillates, residual fuel, propane, jet fuel, and kerosene were named as “covered products” in the regulations. However, production petroleum solvents were not “covered products.” See id. at 88,115-24. Therefore, to determine whether they had been purchased or originated in a crude oil refinery and thus eligible for a refund, we requested copies of invoices or some other documentation showing that these products were purchased from a crude oil refinery. Letter dated December 3, 1993, from Richard T. Tedrow, Deputy Director, OHA, to Nellie Ann Wiedenkeller, Grumman. Grumman did not submit any information regarding production petroleum solvents. Recently, Grumman requested that we process its claim for all the products but production petroleum solvents. Therefore, we will deny the portion of Grumman’s claim that is based on purchases of these products.

After considering the Application, we have concluded that the claimed volume for the products identified as covered products in the regulations is accurate, and a refund of $150,023 is warranted ($0.0016 x 93,764,356 = $150,023). It is the policy of the DOE to pay all crude oil refund claims that were filed by June 30, 1995, the final deadline for the crude oil proceeding, at the rate of $.0016 per gallon. We will decide whether sufficient crude oil overcharge funds are available for additional refunds for these and other successful applicants when we know how much money is remaining after all outstanding enforcement proceedings are resolved.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Grumman Aerospace Corporation, for all available crude oil overcharge funds is hereby approved as set forth in Paragraph (3) below.

(2) The Motion for Discovery filed by the consortium of States and Territories, Case No. RD272-52464, is hereby 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 a total of $150,023 from the DOE deposit fund escrow account denominated Crude Tracking - Claimants 4, Account Number 999DOE010Z, maintained at the Department of the Treasury. The check should be made payable to Northrup Grumman Corporation, and shall be sent to:

Northrup Grumman Corporation

Attn: Mr. Eric Howell

2000 NASA Boulevard

M/S HQ2-222

Melbourne, FL 32902

(4) To facilitate the payment of future refunds, the Applicant shall notify the Office of Hearings and Appeals in the event that there is a change of 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

Washington, D.C. 20585-0107

(5) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary materials submitted by the Applicant. These determinations may be revoked or modified at any time upon a finding that the basis underlying this refund application is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date:August 26, 1998