Case Nos. RK272-00841 & RK272-04577

September 19, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Supplemental Order

Names of Petitioners: Neumann Medical Center

Catholic Health Initiatives

Dates of Filing: June 26, 1995

August 19, 1997

Case Numbers: RK272-0841

RK272-04577

Pursuant to the long-standing policy of the Department of Energy (DOE), thousands of purchasers of petroleum products have applied for, and been granted, refunds from crude oil overcharge funds under jurisdiction of the DOE's Office of Hearings and Appeals (OHA). See Statement of Modified Restitutionary Policy To Be Implemented In Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986). The standards for considering Applications for Refund from these crude oil funds are set forth at 10 C.F.R. Part 205, Subpart V.

The OHA has approved more than 87,000 requests for refund from the pool of crude oil overcharge funds. In Subpart V crude oil refund cases, a claimant is generally eligible for a refund equal to the number of gallons of eligible refined petroleum products it purchased during the period from August 19, 1973 through January 27, 1981, multiplied by a per gallon amount. That per gallon refund amount is derived by dividing the total refund monies available by the total U.S. consumption of petroleum products during the crude oil price control period. Refunds had been calculated by multiplying the number of gallons of eligible refined petroleum products purchased by the applicant by $0.0008 (the volumetric factor). That volumetric factor had been in use since April 1989, when it replaced an earlier volumetric factor of $0.0002 per gallon. Any applicant who received a refund at the lower volumetric factor has also received a supplemental refund based on an additional $0.0006 per gallon. See Crude Oil Supplemental Refund Distribution, 18 DOE ¶ 85,878 (1989).

Additional crude oil overcharge funds have become available for disbursement and we can now issue additional refund checks to applicants. Sufficient funds are available to pay applicants at a new, aggregate rate of $0.0016 per gallon.(1) Thus, the amount of the supplemental refund will be equal to the refund already received. Refunds are rounded to the nearest dollar.

In order to receive a supplemental refund check, applicants are being required to verify (directly or through their representatives) that their name and address in our records are correct, to correct any information that is not accurate, and to indicate whether there has been any change in circumstances affecting the payment of the refund. We intend to issue a series of Decision and Orders approving supplemental refunds as we receive completed verification forms from all applicants or certifications from their representatives.

Neumann Medical Center (Neumann), Case No. RK272-0841, and Catholic Health Initiatives (CHI), Case No. RK272-4577, each applied for a supplemental refund based on the refund granted on February 15, 1989, to St. Mary Hospital (St. Mary), Case No. RF272-28663. St. Mary was a non-incorporated entity owned by Franciscan Health System, which later became CHI through a merger. St. Mary entered bankruptcy and its assets were sold in 1988 to Neumann.

Under OHA precedent, the right to receive a refund generally remains with the owner of a firm during the price control period. We have determined that the right to receive a refund can be transferred to a subsequent owner of the firm if: (i) the firm is a corporation, the entire capital stock of which was purchased by the subsequent owner; or (ii) the firm's assets were sold under an agreement that indicated, either explicitly or implicitly, that potential refunds were being transferred. Mrs. M.B. Troy, 23 DOE ¶ 85,049 (1993) (Troy); see also Ward Transport, Inc., 26 DOE ¶ 85,027 (1997). Here, there is no language in the asset purchase agreement submitted by Neumann which would indicate that Neumann is in any way entitled to receive refund monies for the petroleum product purchases of St. Mary Hospital. Therefore, neither of the circumstances described in Troy exists in this case, and we have determined that Neumann is not eligible for a refund based on the purchases of St. Mary. Accordingly, we will deny the Application for Supplemental Refund submitted by Neumann. Further, we will grant CHI’s Application for Supplemental Refund, since it succeeded to Franciscan Health System’s right to this crude oil refund.(2)

If there are any future disbursements of crude oil funds, the St. Mary case will be known by CHI’s RK272- number. The total amount of the refund that CHI is being awarded is $1,503 (1,879,153 gallons x $0.0008 per gallon volumetric).

It Is Therefore Ordered That:

(1) The Application for Supplemental Refund filed by Neumann Medical Center, Case No. RK272-00841, is hereby denied.

(2) The Application for Supplemental Refund filed by Catholic Health Initiatives, Case No. RK272-04577, is hereby approved as set forth in Paragraph (3) below.

(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 supplemental refund in the amount of $1,503 from the escrow fund denominated Crude Tracking- Claimants IV, Account No. 999DOE010Z, maintained at the Department of the Treasury to the following applicant:

Catholic Health Initiatives

c/o Connie Hofmann

Director of Communications

One MacIntyre Drive

Ashton, PA 19014-1196

(4) To facilitate the payment of future refunds, CHI 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 on the presumed validity of the statements and documentary material submitted by the applicants. Any of these determinations may be revoked or modified at any time upon a finding that the basis underlying any supplemental 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:September 19, 1997

(1)We are now paying first-time crude oil refund recipients at the volumetric rate of $0.0016 per gallon.

(2)In cases involving a pending bankruptcy proceeding, payment of a refund is generally made to the bankruptcy trustee. See, e.g., Congress Financial Corp., 25 DOE ¶ 85,102 (1996). However, where the bankruptcy proceeding is closed and neither the trustee nor the creditors wish to reopen it, we have granted refunds to the owners of the bankrupt firm. See, e.g., Texaco Inc./Roy Carberry, 23 DOE ¶ 85,105 (1993) (reconsidering 22 DOE ¶ 85,185 (1992)). We contacted the Office of the U.S. Bankruptcy Trustee which handled the St. Mary bankruptcy case, and that Office was uninterested in reopening the bankruptcy case to disburse this supplemental refund to St. Mary’s creditors. See Record of Telephone Conversation between Dawn Goldstein, Office of Hearings and Appeals, and Debra Roseboro, Office of the U.S. Bankruptcy Trustee (August 20, 1997).