Case No. RR272-00148

November 6, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Motion for Reconsideration

Name of Petitioner:Star-Kist Foods, Inc.

Date of Filing:July 6, 1994

Case Number: RR272-148

This Decision and Order will consider a Motion for Reconsideration filed by William L. Walton & Associates, Inc. (Walton & Associates) on behalf of Star-Kist Foods, Inc. (Star-Kist) with the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE). In its reconsideration request, Star-Kist asks OHA to reconsider its March 27, 1992 dismissal of Star-Kist’s Application for Refund (Case No. RF272-25303), and to reinstate that refund application, as amended.

I. Background

Pursuant to DOE policy, purchasers of refined petroleum products were permitted to apply to the OHA, until June 30, 1995, for a refund from crude oil overcharge funds collected by the DOE. Statement of Modified Restitutionary Policy to be Implemented in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been made available through consent orders entered into by the DOE and numerous firms that sold crude oil during the price control period. E.g., Berry Holding Co., 16 DOE ¶ 85,045 (1987); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986). The refund procedures set forth in these cases specify that in order to receive a refund, an applicant generally must: (1) document its purchase volumes; and (2) show that it was injured by alleged crude oil overcharges. In order to receive a refund for crude oil overcharges, an applicant that was an end-user (i.e., consumer) of refined petroleum products must document its purchase volumes. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). Each applicant’s refund share is calculated using the current refund amount of $0.0016 per gallon.

Star-Kist, a subsidiary of H.J. Heinz-Pittsburgh, is a leading producer of canned tuna and pet food products. On December 20, 1987, Brian Leamy, Vice President of Star-Kist’s Pet Food Operations, filed an Application for Refund based on the company’s purchases of 24,055,975 gallons of petroleum products. In its application, Star-Kist stated that it consumed petroleum products to fuel its fishing vessels, to produce process steam, and to direct heat drying in the course of its business operations. The company did not, however, submit any documentation to support its refund claim

either at the time it filed its refund application in 1987 or in response to subsequent requests by OHA for that information. As a consequence, OHA dismissed Star-Kist’s refund application on March 27, 1992.

Two years later, on July 6, 1994, Walton & Associates filed the Motion for Reconsideration under consideration on behalf of Star-Kist. In its reconsideration request, as supplemented on April 8, 1997, October 9, 1997, and October 29, 1997, Walton & Associates asks OHA to reinstate Star- Kist’s Application for Refund, as amended, and provides documentation in support thereof.

II. Analysis of Motion for Reconsideration

The DOE regulations do not explicitly provide for reconsideration of a determination in a refund proceeding. See 10 C.F.R. Part 205, Subpart V. However, in prior cases, we have used our discretion to consider the factual and procedural merits of Motions for Reconsideration if the movant presented compelling reasons to demonstrate that reconsideration was warranted. See Tenneco Oil Co./Major Oil Co., 13 DOE ¶ 85,322 (1985) (motion granted); Aminoil U.S.A., Inc./Saber Marketing Co., 17 DOE ¶ 85,491 (1988) (motion denied). In the past, OHA liberally accepted reconsideration motions when they were filed before the final filing deadline in the crude oil special refund proceeding, June 30, 1995. See Wheless Drilling Company, 25 DOE ¶ 85,110 (1996) (Wheless).

In the case at hand, Star-Kist submitted its reconsideration request prior to the June 30, 1995 crude oil filing deadline. As we stated in Wheless, “[w]hen a refund application is dismissed because of an applicant’s failure to supply requested information, we generally reopen the case when the information is provided in a timely manner.” Id. at 88,282. As discussed below, we find that Star-Kist has submitted sufficient documentation to correct the deficiency that caused us to dismiss the earlier application. Since Star-Kist corrected the deficiency prior to the crude oil filing deadline, we will grant Star-Kist’s reconsideration request and consider the firm’s crude oil refund claim, as amended.

III. Analysis of Refund Claim

As an initial matter, we find that Star-Kist was an end-user of eligible petroleum products, viz., it did not resell any of the refined petroleum products for which it requests a refund, but used them in its business operations. In addition, Star-Kist has certified that it has not elsewhere waived its right to receive a Subpart V crude oil refund.

Star-Kist has provided OHA with worksheets from four of its processing plants that show the company’s estimated consumption of middle distillates, residual fuel oil, and propane during the period in question. That documentation shows the aggregate total of petroleum products consumed at Star-Kist’s Samoa-Pago Pago, American Samoa; Terminal Island, California; Perham, Minnesota; and Mayaguez, Puerto Rico locations as 24, 055,975 gallons. According to the worksheets, Star-Kist obtained its gallonage data from several sources. First, the company relied on Annual Energy Reports for the years 1978 through January 27, 1981. For the earlier period, 1973 to 1978, Star-Kist consulted its tax and cost accounting personnel. At OHA’s request, Star-Kist verified that the volume it claimed for its Terminal Island, California plant did not include volume attributable to one of its independent subcontractors, Canners Steam Company, a company that has already received a crude oil refund based on petroleum products consumed at that the Terminal Island, California facility. See Record of Telephone Conversation between Ann Augustyn, OHA Attorney, and William Walton (October 21, 1997). In addition, since Star-Kist did not retain copies of the Annual Energy Reports referenced in its worksheets and its tax and accounting personnel who completed the worksheets many years ago are no longer available, OHA asked Star-Kist to compare current petroleum product consumption with the volume claimed for the period 1973-1981. To this end, Star- Kist’s Manager of Treasury Operations provided OHA with actual consumption information for the year 1991 for its two largest facilities, i.e, Samoa-Pago Pago, American Samoa, and Mayaguez, Puerto Rico. Those figures closely mirror those set forth in the worksheets for the two plants, and support Star-Kist’s assertion that production at those two facilities has remained constant for the last two decades. After reviewing all the documentation provided by Star-Kist, we find that the company has provided a sufficient basis to justify the 24,055,975 gallons for which it originally claimed a refund.

During the pendency of its reconsideration request, Star-Kist discovered that it had inadvertently omitted gallonage used by its fishing fleet from its refund claim. As a result, Star-Kist filed an amended refund application to include the additional volumes attributable to its fishing fleet. Since Star-Kist did not retain records of its fishing fleet’s petroleum product usage during the period in question, Star-Kist relied on its fleet’s consumption levels for the fiscal year ending April 30, 1997 to derive purchase volumes for earlier period. Star-Kist also consulted knowledgeable veteran company officials who (1) advised that Star-Kist has the same number of vessels now that it had 20 years ago; and (2) opined that the overall fuel consumed by Star-Kist’s fishing vessels now has not changed significantly since the period 1973-1981.

We have examined the documentation Star-Kist has supplied to support its estimation techniques for its fishing fleet and have determined that the estimation methodology is reasonable. The estimates will therefore by accepted, with the following adjustments. The yearly fishing fleet consumption figure of 7,534,754 gallons will be multiplied by 7.44 years (the period for which a refund is granted), not the 89 months submitted by Walton & Associates. The volume approved for Star-Kist’s fishing fleet only is 56,058,570 gallons. This amount, added to the amount requested in its original application, 24,055,975, equals 80,114,545 gallons. The total volume approved, 80,114,545 gallons, is then multiplied by the current volumetric amount of $0.0016 per gallon. The refund amount granted to Star-Kist is $128,183.

Although we have carefully scrutinized the applicant’s claim and supporting data, the determination reached in this Decision is based on the representations made by the applicant. If the factual basis underlying our determination in this Decision is later shown to be inaccurate, this Office has the authority to order appropriate remedial action, including recision or reduction of the refund.

The deadline for the crude oil proceeding, June 30, 1995, has passed. It is the current policy of the DOE to pay eligible crude oil refund claimants at the rate of $0.0016 per gallon., We will decide after the resolution of a few outstanding enforcement proceedings whether sufficient funds are available for additional refunds.

It Is Therefore Ordered That:

(1) The Motion for Reconsideration filed by William Walton & Associates, Inc. on behalf of Star- Kist Foods Inc., Case No. RR272-148, be and hereby is granted as set forth in Paragraph (2) below.

(2) 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 refund in the amount of $128,183 from the DOE deposit fund escrow account maintained at the Department of the Treasury denominated Crude Tracking-Claimants IV, Account No. 999DOE010Z. The check should be made payable to Star-Kist Foods, Inc. and William L. Walton & Associates, Inc. and sent to Star-Kist Foods, Inc.’s representative, William L. Walton at the following address:

William L. Walton & Associates, Inc.

10501 Wilshire Blvd. #619

Los Angeles, CA 90024

(3) 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 in its 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

1000 Independence Avenue, S.W.

Washington, D.C. 20585-0107

(4)The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary material submitted by the applicant. This Decision and Order may be revoked or modified at any time upon a determination that the basis underlying the refund application is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: November 6, 1997