Case No. RF300-18151

March 20, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Applications for Refund

Names of Applicants: Amerigas Propane, Inc.

Utility Propane Co.

Dates of Filing: November 5, 1991

November 7, 1991

Case Numbers: RF300-18151

RF300-18293

This Decision and Order will consider Applications for Refund submitted in the Gulf Oil Corporation overcharge refund proceeding by Amerigas Propane, Inc. (Amerigas) and KCS Group, Inc. (KCS), under the name Utility Propane Co. (UPC). The Applicants have filed competing claims for a refund for propane purchases made by UPC, a former propane distributor that is no longer in existence. As explained below, we will grant the refund to KCS and deny the Application of Amerigas.

The Applicants have requested a refund from Gulf funds available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (the Department) under the provisions of 10 C.F.R. Part 205, Subpart V. A consent order between the Department and Gulf resolved allegations that Gulf had violated the Mandatory Petroleum Price and Allocation Regulations in its sales of crude oil and refined petroleum products from January 1, 1973 through January 27, 1981. In accordance with the goals of 10 C.F.R. Part 205, Subpart V, the OHA set up a process for refunding consent order funds to purchasers of Gulf refined petroleum products who demonstrate that they were injured by Gulf's regulatory violations. The procedures for disbursing the Gulf funds were set forth in Gulf Oil Corp., 16 DOE ¶ 85,381 (Gulf).

In Gulf, we adopted a presumption that the alleged Gulf overcharges attributable to refined products had been dispersed equally in all sales of refined products made by Gulf during the consent order period. Gulf, 16 DOE at 88,736. We stated that, in the absence of a demonstration of a disproportionate overcharge, an applicant would be allocated a share of the consent order funds on a volumetric basis. We provided that eligible applicants would receive $.00064 per gallon of covered Gulf product purchased.(1) Gulf at 88,739. We established that a refiner, reseller, or retailer applicant generally would be required to demonstrate that it was injured as a result of its Gulf purchases; that is, that it did not pass through to its customers Gulf's alleged overcharges. We established that a refiner, reseller, or retailer Applicant generally would be required to demonstrate that it was injured as a result of its Gulf purchases; that is, that it did not pass through to its customers Gulf’s alleged overcharges. We also established, however, two presumptions that permit certain Applicants to receive refunds without submitting a demonstration of injury. Gulf at 88,740. The first presumption is the small claims presumption of injury. This presumption applies to an Applicant claiming a refund less than $5,000 in principal, or less than 7,812,500 gallons (7,812,500 gallons × $0.00064 per gallon = $5,000). Under the small claims presumption, an Applicant is presumed injured and does not need to submit a showing of injury to receive the full allocable share.

The second presumption is the forty percent presumption level. This presumption applies to an Applicant claiming a refund of $5,000 or more, but less than $50,000 (i.e., at least 7,812,500 gallons but less than 78,125,000 gallons). An Applicant using this presumption can receive forty percent of its allocable share without submitting a demonstration of injury.

Both Applicants submitted a computer printout from Warren Petroleum Company (a subsidiary of Gulf) which shows that UPC purchased 27,130,018 gallons of propane from Warren Petroleum Company during the consent order period. Furthermore, both Applicants have declined to submit a showing of injury, and have requested consideration under the forty percent presumption level. The sole issue in this case is whether KCS or Amerigas is the proper recipient of a refund for UPC’s purchases.

According to information submitted by both Applicants, UPC was a subsidiary of KCS. In September 1989, KCS sold substantially all the assets of UPC to Amerigas.

The refund procedures we have established provide that the refund generally remains with the owner of the business that made the purchases for which the refund is sought. There are two exceptions to this rule. The first is where the business is a corporation and the stock of the corporation is sold. The second is where an agreement transferring the business (i) specifically includes the right to the refund or (ii) contains language so broad as to encompass the right to a refund. Primerica Corp., 26 DOE ¶ 85,050 (1997).

According to the "Asset Sale and Purchase Agreement" (the Agreement) submitted by Amerigas, UPC transferred to Amerigas "certain of the assets relating to the liquefied petroleum gas business and fuel oil distribution business of [UPC]." The Agreement includes a schedule of assets retained by UPC. These assets include certain real property and capital stock, accounts receivable from KCS, insurance premium refunds, and tax refunds.

There is no indication that the right to claim future Gulf refunds was explicitly included in the purchase agreement. Nor do we find, given the extent of retained assets, that the language of the Agreement is so broad as to effect an implicit transfer of the refund. Consequently, KCS is the appropriate recipient of a Gulf refund for purchases made by UPC. We will therefore deny the Application submitted by Amerigas and grant the Application submitted by KCS.

The total gallonage approved in this Decision and Order is 27,130,018 gallons of refined petroleum products. The refund amount will be calculated by multiplying UPC’s approved gallonage by the total volumetric to date, which is $0.00125 (principal volumetric of $0.00064 + interest volumetric to date of $0.00061 = $0.00125). The refund granted under the forty percent presumption described above is therefore $13,565 (27,130,018 × $0.00125 × 40% = $13,565).

It Is Therefore Ordered That:

(1) The Application for Refund filed by Amerigas Propane, Inc., Case No. RF300-18151, is hereby denied.

(2) The Application for Refund filed by KCS Group, Inc., under the name Utility Propane Co., Case No.RF300-18293, is hereby granted.

(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 $13,565 from the DOE deposit fund escrow account maintained at the Department of the Treasury and funded by Gulf Oil Corporation, Consent Order No. RGFA00001Z, to:

KCS Group/Utility Propane Co.

or Wilson, Keller & Assoc.

PO Box 221145

Memphis, TN 38122

(4) The determinations made in this Decision and Order are based on the presumed validity of statements and documentary material submitted by the Applicants. Any of these determinations may be revoked or modified at any time upon a determination that the factual basis underlying any Application for Refund is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: March 20, 1998

(1) 1/ This amount was derived by dividing the fund received from Gulf allocable to refined products ($42,499,566) by the estimated volume of refined products sold by Gulf from August 1973 through the date of decontrol of the relevant product (66,387,563,569 gallons).