Case No. RR272-00281

March 26, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Motion for Reconsideration

Name of Applicant:Oivind Lorentzen Shipping AS

Date of Filing: February 3, 1997

Case Number: RR272-281

On February 3, 1997, Oivind Lorentzen Shipping AS (Oivind), filed a Motion for Reconsideration with the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE). If the Motion were granted, the OHA would reconsider the Application for Refund filed by Oivind in the Subpart V crude oil refund proceeding (Case No. RG272-613) that was denied on January 27, 1997.

The Application for Refund at issue was submitted by Chris Edwards of Wilson, Keller & Associates on behalf of Oivind. This Application was based upon Oivind's purchases of refined petroleum products in the United States during the crude oil price control period, August 19, 1973 through January 27, 1981. Mr. Edwards estimated Oivind's gallonage claim by locating newspaper records of each arrival Oivind's ships made at a port in the United States. He asserted that each of Oivind's ships filled, on average, seventy percent of its bunker capacity each time it arrived at a United States port. We found this estimation method to be unreasonable and, in a letter dated November 12, 1996, requested that Mr. Edwards recalculate the gallonage claim. We requested that he calculate the gallonage based on the distance of each route and the fuel consumption rate of each ship.

On December 27, 1996, we received a letter from Mr. Edwards stating that he believed our suggested method is inaccurate. Since Oivind's gallonage claim was determined using an unreasonable method and Mr. Edwards would not honor our request for a recalculation, we denied Oivind's application.

In its February 3, 1997 Motion for Reconsideration, Oivind asks us to reconsider our denial. With the Motion, Mr. Edwards submitted the recalculation of Oivind's gallonage claim we requested in our November 12, 1996 letter. Since Oivind's gallonage claim has now been determined using a reasonable estimation method, we believe that a denial would unfairly penalize Oivind, and we have decided

to grant its Motion for Reconsideration. We will therefore analyze the Application.

In the past, purchasers of refined petroleum products have been allowed to apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been made available through consent orders between the DOE and numerous firms that sold crude oil during the price control period. E.g., Berry Holding Co., 16 DOE ¶ 85,405 (1987); A. Tarricone, Inc., 15 DOE ¶ 85, 495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986).

The refund procedures 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. Applicants who were end-users of petroleum products, however, and whose businesses were unrelated to the petroleum industry are presumed to have absorbed the crude oil overcharges. These Applicants need not submit proof of injury to receive a refund in the Subpart V proceeding. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987).

In general, an Applicant is eligible for a refund equal to the number of gallons it purchased multiplied by the volumetric refund amount. Currently, the volumetric refund amount is $.0016 per gallon.

We have carefully reviewed the information submitted by Oivind. Oivind estimated its gallonage claim by determining the number of gallons its ships used on their voyages to the United States. This estimate was made using the following calculation for each ship and voyage. Average nautical miles per hour times 24 hours equals distance traveled per day. Double the distance between ports divided by distance traveled per day equals number of days of voyage.(1) Number of days of voyage times average daily fuel consumption equals tons of bunker fuel consumed per voyage. Tons of bunker fuel times 281 U.S. gallons per metric ton equals number of U.S. gallons of bunker fuel. Based on the information in the Motion, we believe the estimated gallonage claim submitted by Oivind is reasonable.

We find that Oivind was an end-user of refined petroleum products. It used 35,775,228 gallons of bunker fuel in its ships. Accordingly, it is presumed injured by the crude oil overcharges and is entitled to receive its full allocable share of the crude oil funds. The total volume approved in this Decision is 35,775,228 gallons, and the refund granted is $57,240.

The final deadline for the crude oil proceeding was June 30, 1995. It is the current policy of the DOE to pay eligible crude oil refund Applicants 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 Oivind Lorentzen Shipping AS, Case No. RR272-281, is hereby 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 $57,240 from the DOE deposit fund escrow account denominated Crude Tracking-Applicants 4, Account Number 999DOE010Z, maintained at the Department of Treasury to Oivind Lorentzen Shipping AS.

(3) The refund check should be sent to "Oivind Lorentzen Shipping AS or Wilson, Keller & Associates, P.O. Box 221145, Memphis, TN, 38122."

(4) To facilitate the payment of future refunds, Oivind 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

1000 Independence Avenue, S.W.

Washington, D.C. 20585-0107

(5) The determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary materials submitted by Oivind. Any of these determinations may be revoked or modified at any time upon a finding that the basis underlying any Application for Refund is incorrect.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: March 26, 1997

(1)Erik F. Lorentzen, the president of Oivind during the refund period, stated that Oivind purchased nearly all of its fuel in the United States. He also stated that Oivind's ships had large enough bunker capacities to only bunker in the United States on most round trip voyages. Therefore, Oivind doubles the distance between ports in its gallonage calculation to account for round trip voyages. Based on the statements of Mr. Lorentzen and the information contained in Oivind's Application for Refund, we believe using the round trip distance in the calculation is reasonable in this case.