Case No. RF300-14859

October 28, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Applications for Refund

Name of Applicants: Gulf Oil Corporation/Love Tractor Sales, et al.

Date of Filing: January 10, 1991

Case Numbers: RF300-14859, et al.

This Decision and Order will consider Applications for Refund submitted in the Gulf Oil Corporation overcharge refund proceeding by five Applicants. The names and case numbers of these Applicants are set forth in the Appendix to this Decision and Order. As explained below, we will deny the Applications.

The Applicants requested a refund from Gulf funds available for disbursement by the Office of Hearings and Appeals of the Department of Energy under the provisions of 10 C.F.R. Part 205, Subpart V.

The Applicants

The five Applicants considered in this Decision are all firms that were owned by John D. Love during the consent order period. Four of the firms - the Love Oil Co. Pantry Store (Case No. RF300- 14864), C&J Food Center (Case No. RF300-14865), G&J Food Center (Case No. RF300-14866), and John D. Love Car Wash (Case No. RF300- 14871) were retailers of Gulf products. The fifth Applicant, Love Tractor Sales (Case No. RF300-14859), was an end-user of Gulf products.

In addition to these five firms, John D. Love also owned a Gulf distributorship during the consent order period. This firm, the John D. Love Oil Co., has previously applied for and received a refund in the Gulf overcharge refund proceeding. Gulf Oil Corp./Wald Oil Co., et al., 18 DOE ¶ 85,992 (1989). In that Decision and Order, the John D. Love Oil Company received a refund

of $5,000 plus interest, under the small-claims presumption described below, for purchases of 7,922,524 gallons of Gulf products.

In summary, the six firms owned by Love, with their case numbers and gallons of Gulf products purchased, are as follows:

Case No.

Name

Gallonage

RF300-07010

John D. Love Oil Co.

7,922,524

RF300-14859

Love Tractor Sales

843,884

RF300-14864

Love Oil Co., Inc.

669,778

RF300-14865

C & J Food Center

2,745,714

RF300-14866

G & J Food Center

3,000,228

RF300-14871

John D. Love

359,516

TOTAL GALLONAGE

15,541,644

The Standards in the Gulf Refund Proceeding

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 product made by Gulf during the consent order period. Gulf at 88,736. We stated that, in the absence of a demonstration of a disproportionate overcharge, a claimant would be allocated a share of the consent order funds on a volumetric basis. We provided that eligible claimants 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 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 = $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 $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 receives forty percent of its allocable share without submitting a demonstration of injury.

Applicants whose gallonage claim is more than 7,812,500 but less than 19,531,250, however, comprise a special case. If these Applicants were to receive forty percent of their allocable share, their refund would be less than $5,000. If an applicant has elected the 40 percent presumption and the resulting refund is less than $5,000 in principal, the applicant is eligible to receive a refund of $5,000. Gulf Oil Corp./Clyde R. Evans, 18 DOE ¶ 85,640 (1989); Gulf Oil Corp./Fiore Brothers, Inc., 18 DOE ¶ 85,447 (1989).

In summary, successful applicants claiming less than 7,812,500 gallons receive their full allocable share. Successful applicants claiming at least 7,812,500 gallons, but less than 19,531,250 gallons may receive under a presumption a refund of $5,000 plus interest. Successful applicants claiming more than 19,531,250 gallons may receive under a presumption a refund of forty percent of their allocable share, up to a maximum of $50,000 plus interest. Applicants wishing to receive more than the amount available under the presumption must provide a detailed showing of injury for the claimed refund amount.

The Status of Love Tractor Sales as an End-user

The presumptions described above were established to apply only to refiner, reseller, and retailer applicants. An end-user applicant, on the other hand, is eligible to receive its full allocable share, regardless of the volume. Love Tractor Sales, which is one of the Applicants considered in this Decision and Order, is an end-user. Because it is affiliated with other reseller and retailer Applicants, however, it cannot receive its full allocable share without providing a demonstration of injury.

Love Tractor Sales must be included with the other Applicants in determining the proper presumption, because the presumptions were originally established to avoid requiring a firm to make a prohibitively expensive demonstration of injury. We therefore determined that affiliated firms might be eligible to receive separate refunds if they are so operationally distinct that the cost of preparing an injury showing for each of them would be the same as if they were entirely unrelated entities. Gulf Oil Corp./The Circle K Corp., 25 DOE ¶ 85,037 (1995) (Circle K). We stated that firms may be considered operationally distinct if they demonstrate that they (i) have separate facilities, (ii) have separate marketing areas, (iii) use different accountants, (iv) maintain separate business records, (v) are operated separately, and (vi) were not related through common ownership until after the end of the refund period. Circle K at 88,102.

The six firms owned by Love, including Love Tractor Sales, do not meet the criteria of being operationally distinct. For example, all were related by common ownership and operated in the same area of North Carolina. Thus, none of the Applicants qualifies for a separate presumption of injury.

This finding has two consequences for the Applicants. First, we will combine the purchase volumes for all six companies, including the purchase volume that formed the basis of the refund granted to the John D. Love Oil Company, in order to determine the proper refund under the presumption of injury. Second, Love Tractor Sales, although an end-user, will also be considered under the appropriate presumption based on the purchase volumes for all six companies combined.

The Applicants’ Refund under the Presumption of Injury

Each of the five Applicants considered in this Decision and Order stated on its Application that it elected to take the presumption of injury rather than attempt to make a specific demonstration that it was injured by Gulf overcharges. Accordingly, the refund will be based on the volumetric presumption described above.

As noted above, the five firms considered in this Decision and Order have applied for a total of 7,619,120 gallons. When combined, for the purpose of applying the presumption, with the gallonage of the John D. Love Oil Company, the total gallonage is 15,541,644. The total refund, in principal, for this gallonage amount would fall under the small-claim presumption amount of $5,000 (15,541,644 gallons × 40% × $0.00064 = $3,979). The John D. Love Oil Company, however, already received a refund of $5,000 for Case No. RF300-07010. As a result, the Applicants are not eligible to receive an additional refund for the remaining 7,619,120 gallons. We will therefore deny these Applications for Refund.

It Is Therefore Ordered That:

(1) The Applications for Refund filed by Case Nos. RF300-14859, et al., listed in the Appendix to this Decision and Order, are hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: October 28, 1997

APPENDIX

LOVE TRACTOR SALES, ET AL.

CASE NOS. RF300-14859, ET AL.

CASE NO.

CASE NAME

RF300-14859

Love Tractor Sales

RF300-14864

Love Oil Co., Inc.

RF300-14865

C & J Food Center

RF300-14866

G & J Food Center

RF300-14871

John D. Love

(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).