Case No. RC272-00345

October 20, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Supplemental Order

Name of Petitioner: CertainTeed Corporation

Dates of Filing: July 17, 1996

September 30, 1996

Case Numbers: RC272-345

RC272-353

On June 11, 1990, the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) issued a Decision and Order granting an Application for Refund that CertainTeed Corporation (CertainTeed) filed in the Subpart V crude oil refund proceeding (Case No. RF272-456). See CertainTeed Corp., 20 DOE ¶ 85,399 (1990). In that Decision, the OHA granted CertainTeed a refund of $832,926 based on its purchases of 1,041,159,455 gallons of refined petroleum products from August 17, 1973 through January 27, 1981. In this Supplemental Order, we will rescind the refund granted in the June 11, 1990 Decision and Order as well as another refund granted to CertainTeed in the crude oil refund proceeding.

I. Background

During the recent process of issuing supplemental refunds to all applicants granted refunds in the crude oil proceeding, the OHA discovered that CertainTeed’s Pipe and Plastics Group (P&PG) previously had applied for a refund from the Surface Transporters (ST) Escrow account (Case No. RF270-919).(1) In seeking a refund from that account, P&PG was required to execute a Claim Form and Waiver (ST Waiver) in which it waived its right to participate in any future refund proceeding based on crude oil overcharges, including the Subpart V proceeding. Paragraph 9 of the ST Waiver states that the waiver is binding upon “the Grantor, its parents, subsidiaries, affiliates, successors and assigns.” Paul D. Bruno, General Traffic Manager of P&PG, signed the waiver on behalf of CertainTeed.

In a letter dated April 20, 1987, Joseph Matalaski, CertainTeed’s Purchasing Agent, informed OHA that CertainTeed was withdrawing its ST claim. Together with that letter, CertainTeed submitted the refund application in the crude oil Subpart V proceeding that was docketed as RF272-456. On May 27, 1987, the OHA dismissed the ST claim. See Letter from Thomas L. Wieker, Deputy Director, OHA, to Joseph Matalaski (Case No. RF270-919). The Application for Refund in the Subpart V proceeding (Case No. RF272-456) was subsequently processed and granted in June 1990. This action was erroneous because OHA failed to take cognizance of the fact that CertainTeed had previously filed an ST Waiver.(2)

In a letter dated October 2, 1996, we informed CertainTeed of our intention to rescind the refund CertainTeed had received under Case No. RF272-456 based on the ST Waiver signed by Paul D. Bruno of P&PG. See Letter from Richard W. Dugan, OHA Associate Director, to Marva Haye, CertainTeed Law Department (Case Nos. RF272-456 et al.). We stated that the ST Waiver P&PG had signed and submitted was binding, despite the fact that P&PG had not received a refund from a Stripper Well escrow account. Consequently, we informed CertainTeed that it was not eligible to receive a refund in the Subpart V crude oil refund proceeding. However, we subsequently agreed to the firm’s request to file comments in opposition to our proposed action.

On November 12, 1996, CertainTeed responded to our October 2 letter. See Letter Brief from Bruce S. Deming, Esq., counsel for CertainTeed, to Richard W. Dugan (Case Nos. RF272-456 et al.) (Letter Brief). In its response, CertainTeed argued that its Subpart V crude oil refund should not be rescinded for the following reasons:

(1) When it filed its Subpart V application, CertainTeed notified the OHA of the ST application and waiver, yet the OHA nevertheless adjudicated its crude oil refund claim and granted a refund.

(2) OHA’s rescission of CertainTeed’s crude oil refund would be unprecedented.

.

(3) Since the waiver was filed by the American Trucking Associations, not an authorized CertainTeed official, the waiver is without legal effect.

(4) OHA is barred by the doctrine of equitable estoppel from rescinding CertainTeed’s crude oil refund

CertainTeed therefore requested that the OHA issue a Decision and Order granting a reduced supplemental refund.(3)

II. Analysis

A. Notification of the Withdrawal of the ST Application

The legal rule which applies to the CertainTeed submissions is crystal clear. Under the terms of the Final Settlement Agreement, an eligible firm that signed a duly authorized waiver as part of an application for a refund from a Stripper Well escrow is foreclosed from receiving a refund in the Subpart V crude oil refund proceeding. This principle was clearly stated in a Question and Answer sheet distributed by this Office as early as October 27, 1986. Furthermore, the principle has been consistently applied by this Office and has been affirmed by the courts. As we stated in a leading case in which the applicant, like CertainTeed, had applied for an ST refund:

[W]here a firm is in fact a Surface Transporter, it makes an irrevocable election of remedies when it submits its waiver in the Surface Transporter proceeding. Although the applicant may withdraw its Surface Transporter claim, it cannot withdraw its Surface Transporter waiver. In that waiver the firm relinquishes its right to apply for other crude oil refunds, including Subpart V crude oil refunds. . . .[T]he waiver is effective upon the submission of the claim, and it remains effective even if the claim is withdrawn.

Boise Cascade Corp., 16 DOE ¶ 85,214 at 88,411 (1987) (Boise Cascade), aff’d sub nom. In re Department of Energy Stripper Well Exemption Lit., 707 F. Supp. 1267 (D. Kan. 1987). See also Burlington Industries v. Watkins, 916 F.2d 722 (Temp. Emer. Ct. App. 1990) (Burlington) (affirming District Court dismissal of actions challenging OHA waiver dismissals brought by Boise Cascade et al.).

Our determination that CertainTeed is not eligible for a crude oil refund is not a discretionary one. It is based on longstanding judicial precedent. See Burlington; Mid-America Dairymen v. Herrington, 878 F.2d 1448 (Temp. Emer. Ct. App. 1989) (Mid-America). The fact that CertainTeed’s Subpart V application was processed erroneously and a refund actually paid does not entitle CertainTeed to a refund.

B. Precedent for the Rescission

CertainTeed’s attempt to classify all other rescission cases and then argue that it does not fit into any of these classes is unavailing. Even if no other case fit the parameters that CertainTeed has defined as unique to it, the firm confuses the trees with the forest. The firm contends that the OHA has never rescinded a refund from a firm in the Subpart V proceeding under these exact circumstances -- after the firm notified the OHA in writing of its ST application, asked that it be withdrawn, and simultaneously filed a Subpart V application that the OHA later granted. What the precedents ultimately show, however, is that we have consistently rescinded crude oil refunds when we discovered that they should not have been granted because of Stripper Well waivers. CertainTeed has failed to cite a case, nor are we aware of any case, where the OHA decided not to rescind a crude oil refund after it was brought to our attention that the refund should not have been granted because of a valid ST Waiver.

CertainTeed further asserts that the legal and factual bases underlying the decision to grant its crude oil refund were correct. The firm therefore argues that the refund cannot be rescinded under Ordering Paragraph (5) of the June 11, 1990 Decision and Order. That paragraph states that “the determination made in this Decision and Order is based upon the presumed validity of the statements and documentary material submitted by the Applicant. The determination may be revoked or modified at any time upon a finding that the basis underlying the refund application is incorrect.” CertainTeed’s argument is without merit. In a recent Decision and Order, we rejected the claim of a firm, which, like CertainTeed, argued that a final refund order could not be reopened when there are no inaccuracies or omissions in the firm’s refund application. See Wells Cargo, Inc., 26 DOE ¶ 85,029 (1997). In that case, we stated that “Ordering Paragraph (5) merely suggests one instance in which we will consider revoking a prior determination . . . . However, we are not thereby limited to those occasions in which the applicant has made incorrect assertions upon which we relied.” Id. at 88,064. Similarly, in the present case, once we have determined that CertainTeed is not eligible for a crude oil refund, we have no choice but to rescind it.

C. Validity of the Waiver

As stated earlier, a firm that signed a duly authorized ST Waiver as part of an application for a refund from that escrow is ineligible to receive a refund in the Subpart V crude oil refund proceeding. We find no merit to CertainTeed’s argument that its waiver was invalid because it was filed by an unauthorized representative. CertainTeed does not and cannot dispute the fact that, unlike cases where the application was signed by a representative of the American Trucking Associations (ATA) without authorization by the applicant, in this case the ST application was signed by a CertainTeed official, Paul D. Bruno, General Traffic Manager. While CertainTeed argues that Mr. Bruno was not authorized to waive the rights of CertainTeed’s other divisions and affiliates, we reject this argument for the same reasons we have rejected similar arguments in prior cases. As we stated in Dairymen, Inc., 17 DOE ¶ 85,549 at 89,069 (1988) (Dairymen):

It is not the duty of the OHA to ascertain the precise scope of authority of all of the individuals that filed claims in the ST proceedings, especially when those individuals appear to have the authority to represent their company before the agency. [Footnote omitted.] In fact, it would be administratively impractical to do so. For this reason, the ST Waiver included a notarized statement to the effect that the signatory was authorized to execute the waiver and claim form. “This is by far the most efficient manner in which to assure that the signatory of the waiver had the authority to file the form.” American Cyanamid, 16 DOE ¶ 85,424 at 88,423 (1987). See also Mid-America Dairymen, 17 DOE [¶ 85,015] at 88,029 [1988]..

See also Boise Cascade Corp., 16 DOE ¶ 85,494 (1987) (denying reconsideration of Boise).

CertainTeed further contends that its case is consistent with OHA precedent in Acme Truck Line, Inc., 16 DOE ¶ 85,464 (1987) (Acme), and Kingsway Transports Limited, 21 DOE ¶ 85,274 (1991) (Kingsway), but CertainTeed’s reliance on those cases is misplaced. In Acme, OHA dismissed ST claims and indicated that the applicants could file Subpart V applications because the ST applications failed to demonstrate whether the applicants were eligible to receive refunds in the Stripper Well proceeding. Kingsway relied on an earlier case involving a waiver signed by the ATA without authorization. In a number of recent Decisions, we have made it clear that the holdings in Acme and Kingsway do not support the approval of a Subpart V crude oil refund where (i) the applicant firm (or an affiliate) signed or authorized the signing of an ST Waiver and (ii) the applicant was eligible for an ST refund because it purchased more than 250,000 gallons of refined petroleum products during the refund period. See Ellsworth Freight Lines, Inc., 25 DOE ¶ 85,077 (1995); Tajon, Inc., 26 DOE ¶ 85,018 (1996) (denying reconsideration of 25 DOE ¶ 85,084 (1995)). Despite the firm’s arguments to the contrary, CertainTeed clearly meets both of those conditions. The fact that the firm’s gallonage was not established until after the dismissal of the ST application does not change this result. See A.C.B. Trucking, Inc., 26 DOE ¶ 85,001 (1996).

D. Equitable Estoppel

We are also not persuaded by CertainTeed’s argument that the OHA is barred by the doctrine of equitable estoppel from rescinding its crude oil refund. We have previously rejected a similar argument of equitable estoppel in Dairymen, and we are not convinced by CertainTeed’s attempt to distinguish its situation from the facts in that case. As we stated in that Decision, which was ultimately affirmed by the Temporary Emergency Court of Appeals in Mid-America, “as a general principle, the doctrine of equitable estoppel does not apply to the federal government.” 17 DOE at 89,070 (citations omitted). Furthermore, as in Dairymen, CertainTeed does not satisfy the principal requirements for the successful application of the doctrine of equitable estoppel as set forth in Heckler v. Community Health Services of Crawford, 467 U.S. 56 (1984). In the Heckler case, the Supreme Court stated that “the party claiming the estoppel must have relied on its adversary’s conduct ?in such a manner as to change [its] position for the worse,’ and that reliance must have been reasonable . . . .” Id. at 59 (footnote omitted), quoted in 17 DOE at 89,070. CertainTeed has failed to demonstrate how it was harmed by OHA’s acceptance of its application and adjudication of its claim. We therefore find that the crude oil refund granted to CertainTeed must be rescinded and that the firm is not entitled to a supplemental refund.

Nevertheless, we do not believe it would be appropriate to require repayment of a refund that was approved more than seven years ago. See, e.g., 28 U.S.C. § 2415(a) (providing that United States must bring action for money damages based on contract within six years after right of action accrues or within one year after final decisions have been rendered in applicable administrative proceedings). See also 15 U.S.C. § 4504(a) (providing that civil enforcement actions under the Economic Stabilization Act of 1970 and Emergency Petroleum Allocation Act of 1973 must be commenced by the later of September 30, 1988 or six years after the violation upon which the action is based). In our view, directing the repayment of the funds paid to CertainTeed more than seven years ago, and more than six years before the firm first had any notice that the refund was invalid, would be inconsistent with these statutory provisions, particularly given Congress’ directive in the Petroleum Overcharge Distribution and Restitution Act of 1986, see 15 U.S.C. § 4504(c), (f), that the DOE promptly undertake to resolve matters under the expired petroleum regulatory program, including Subpart V cases. (4)

III. Conclusion

None of the arguments presented by CertainTeed demonstrate that it was not bound by the ST Waiver signed by P&PG, an affiliated division. Since CertainTeed was affiliated with P&PG, the waiver clearly precluded CertainTeed’s eligibility to be considered for a Subpart V crude oil refund. In view of these circumstances, we have determined that the refund granted to CertainTeed should be rescinded. A fortiori, the firm is not entitled to a supplemental refund. In addition, the duplicate Subpart V refund granted to CertainTeed’s Berlin, New Jersey plant also should be rescinded. See supra n. 3. However, under the circumstances presented here, we will require repayment of only the latter refund.

It Is Therefore Ordered That:

(1) The Decision and Order issued by the DOE on June 11, 1990, CertainTeed Corporation, Case No. RF272-00456, redesignated as RC272-353, is hereby rescinded.

(2) The Decision and Order issued by the DOE on June 7, 1989, City of Bridgeport, Case Nos. RF272-10645 et al., is hereby rescinded as to CertainTeed Corporation, Case No. RF272-25405, redesignated as RC272-345

(3) The Office of Hearings and Appeals shall reduce the approved volume claim for CertainTeed Corporation, Case No. RF272-00456, from 1,041,159,455 gallons to zero gallons.

(4) The Office of Hearings and Appeals shall reduce the approved volume claim for CertainTeed Corporation, Case No. RF272-25405, from 13,647,679 gallons to zero gallons.

(5) CertainTeed Corporation is hereby directed to remit $10,918 granted under Case No. RF272- 25405 to the Department of Energy. Payment shall be mailed to the following address:

U.S. Department of Energy

Office of the Controller

P.O. Box 500

Germantown, MD 20874-0500

Payment should be made by check payable to the U.S. Department of Energy and should refer to Case No. RC272-345. In the event that payment is not made within 30 days of the date of this Decision and Order, interest shall accrue on the amount due at the rate generally assessed by the Department of Energy on overdue receivables. Other charges generally assessed on overdue DOE receivables shall also apply.

(6) Upon receipt of the payment specified in paragraph (4) above, the Director of Special Accounts and Payroll, Office of Chief Financial Officer, shall take appropriate action to deposit these funds into the DOE deposit fund escrow account denominated Crude Tracking-Claimants 4, Account No. 999DOE010Z, maintained at the Department of the Treasury.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: October 20, 1997

(1)Eight escrow accounts were created by the U.S. District Court for the District of Kansas to implement the terms of the Final Settlement Agreement that resolved the DOE Stripper Well Exemption Litigation. See In Re DOE Stripper Well Exemption Litigation, 653 F. Supp. 108 (D. Kan. 1986). The escrow accounts were created to refund a portion of 1.4 billion dollars in crude oil overcharges to eight enumerated groups of petroleum purchasers: 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.”

(2)While CertainTeed’s 1987 Subpart V application did reveal that the firm had filed an ST claim and waiver, three years later when OHA was about to approve the Subpart V claim, CertainTeed’s attorney informed an OHA Analyst that the firm had certified to him that neither it nor any of its subsidiaries had applied for a refund from a Stripper Well escrow. See Record of May 24, 1990 Telephone Conversation between Betsy Rogers, OHA Analyst, and Bruce Deming, Attorney for CertainTeed (Case No. RF272-456).

(3)The firm did not contest our earlier, tentative determination to reduce its supplemental refund by $10,918, the amount of a duplicate refund granted under Case No. RF272-25405 to its Berlin, New Jersey plant in City of Bridgeport, 19 DOE ¶ 85,018 (1989). See Letter Brief at n. 1 (citing May 3, 1995 Letter from Richard W. Dugan, OHA, to Marva Haye, CertainTeed).

(4)The statutes referred to above exclude from the computation of the 6-year limitation period any period of time in which facts material to the right of action were not and could not have been known. See 28 U.S.C. § 2416(c); 15 U.S.C. § 4504(b)(1)(B). Since CertainTeed informed OHA of its ST Waiver at the time the firm filed its Subpart V application in Case No. RF272-456, this exclusion is not applicable to that case. In contrast, in Case No. RF272- 25405 (see supra n. 3), the CertainTeed official who signed the refund application certified in writing, erroneously, that CertainTeed’s right to a crude oil refund had not been waived by the parent firm or any of its affiliates.