Case No. RF272-86071

March 13, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Sara Lee Graphics

Date of Filing: January 18, 1991

Case Number: RF272-86071

In this Decision and Order, the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) will determine the eligibility of Sara Lee Graphics for a refund from the crude oil monies currently available for disbursement in a proceeding conducted pursuant to the provisions of 10 C.F.R. Part 205, Subpart V. Pursuant to current DOE policy, purchasers of refined petroleum products may apply to the OHA for a refund from crude oil overcharge funds under the OHA's jurisdiction. See Statement of Modified Restitutionary Policy to be Implemented in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986) (the MSRP). Sara Lee Graphics has applied for a refund for purchases of petroleum products on behalf of its subsidiary, Hanes Corp. Central Printing.

In the Order implementing the MSRP, the OHA stated that it would accept Applications for Refund in the Crude Oil Subpart V proceeding from injured parties who had not waived their claims by electing to take refunds from one of the escrow funds established pursuant to the Final Settlement Agreement in the DOE Stripper Well Exemption Litigation, M.D.L. 378 (D. Kan.).(1) 51 Fed. Reg. 29689

(August 20, 1986). See also Notice Explaining Crude Oil Refund Procedures, 52 Fed. Reg. 11737 (April 10, 1987). Accordingly, any claim filed in the Subpart V crude oil refund proceeding must state that the claimant has not elsewhere waived its right to a refund. See A. Tarricone, Inc., 15 DOE ¶ 85,495 at 88,898 (1987).

In a Decision and Order dated June 18, 1987, the Sara Lee Corporation, the parent company of Sara Lee Graphics and Hanes Corp. Central Printing, was approved for a refund from the Surface Transporters (ST) Escrow. Grantee Furniture Rental Corp., 16 DOE ¶ 85,148 (1987). In seeking a refund from that account, the Sara Lee Corporation was required to execute a "Waiver and Release," in which the claimant waived its right and the right of its affiliates, to participate in any future refund proceeding based on crude oil overcharges, including this Subpart V proceeding. The waiver provisions of Paragraph III.A.1 of the Settlement Agreement were incorporated into Paragraphs 7 and 10 of the Surface Transporters Escrow Claim Form Waiver which all ST applicants had to agree to in order to be eligible for an ST refund.

The Waiver and Release form which Sara Lee Corporation filed with OHA as part of its ST application became effective and irrevocable at the time of its filing with OHA. See CF Industries, Inc., 16 DOE ¶ 85,586 at 89,169 (1987); Maritime Overseas Corp., 16 DOE ¶ 85,428 at 88,852 (1987). Accordingly, by virtue of its Application for Refund from the ST Escrow, the Sara Lee Corporation waived its right and all of its affiliates rights to a crude oil refund under Subpart V.

OHA must now determine whether Sara Lee Graphics is precluded from receiving a refund under Subpart V because of its affiliation with Sara Lee Corporation. See Mid-America Dairymen, Inc. v. Herrington, 878 F.2d 448 (Temp. Emer. Ct. App. 1989).

Section VI.A of the Settlement Agreement states:

The provisions of this Agreement . . . shall be binding upon (1) all the Parties hereto and (2) all Persons executing waivers or releases pursuant to this Agreement, and with respect to such Parties and Persons, their Affiliates, subsidiaries. . . officers, agents, attorneys and any other Persons while acting under their direction or control. As used herein, an "Affiliate" of any Party includes any Person

(and the successors and assigns of such Person) which controls, is controlled by or is under common control with such Party. For this purpose, "control" means the power (existing on the Payment Date), by contract, partnership agreement, stock ownership or otherwise, to control the policies and business operations of a Person, including, without limitation, the ownership, directly or indirectly (through one or more intermediaries), of shares of stock having the right to elect a majority of the Board of Directors of a corporate Person, or the ownership (on the Payment Date), directly or indirectly (through one or more intermediaries), of more than 49 percent of a person.

This language is incorporated in the provisions of Paragraph 9 of the ST Release signed by Sara Lee Corporation. Sara Lee Graphics and Hanes etc. were wholly-owned by Sara Lee Corporation on August 7, 1986, the Payment date for the ST proceeding. As Sara Lee Graphics is an "affiliate" of Sara Lee Corporation as that term is defined under Section VI.A of the Settlement Agreement, Sara Lee Graphics is bound by the terms of the Agreement, including the waiver provisions.

In view of the foregoing considerations, Sara Lee Graphics' crude oil Subpart V claim should therefore be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Sara Lee Graphics on January 18, 1991, is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: March 13, 1997

(1)Eight escrow accounts were created by the U.S. District Court for the District of Kansas to implement the terms of the Settlement Agreement. The escrow accounts were created to refund a portion of 1.4 billion dollars in crude oil overcharges to eight enumerated groups of petroleum purchases: Refiners, Retailers, Resellers, Agricultural Cooperatives, Airlines, Surface Transporters, Rail and Water Transporters, and Utilities. The Court appointed the OHA to administer refund proceedings for two of these groups: "Surface Transporters" and "Rail and Water Transporters."