Case No. RG272-00613
January 27, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Applicant:Oivind Lorentzen Shipping AS
Date of Filing: July 3, 1995
Case Number: RG272-613
This Decision and Order will consider an Application for Refund submitted for Oivind Lorentzen Shipping AS (Oivind) by Chris Edwards of Wilson, Keller and Associates. Oivind is a shipping company based in Norway which did business in United States ports during the refund period (August 1973 to January 1981). In its Application, Oivind requests a refund from crude oil overcharge funds. These funds are available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) under the provisions of 10 C.F.R. Part 205, Subpart V. As explained below, we will deny the application.
On June 24, 1996, we received a supplement to the original application. The original application contained a tentative gallonage estimate of 129,500,000 gallons. The submission of June 24 contained a new gallonage estimate of 58,638,483 gallons. The new estimate was calculated by Mr. Edwards using data from The Journal of Commerce and Commercial and Lloyd's Register of Ships 1973 - 1980. Using these sources, Mr. Edwards identified the names of the ships owned by Oivind during the refund period, each ship's bunker capacity, and the dates each ship arrived at a port in the United States. Mr. Edwards also listed the port from which each ship departed on each route to the United States. Mr. Edwards arrived at a gallonage claim by asserting that each ship refilled seventy percent of its bunker capacity each time it arrived at a United States port.
In response to this submission, we sent Mr. Edwards a letter on June 28, 1996. We requested that he submit information to support the calculation of his estimate of gallons purchased by Oivind. We received a response from Mr. Edwards on August 9, 1996. Mr. Edwards submitted copies of documents which substantiated the names and bunker capacities of the ships Oivind owned and the arrivals made in the United States. There was no information, however, to indicate that each ship refilled, on average, seventy percent of its bunker capacity each time it arrived in the United States. We sent Mr. Edwards a letter on August 15, 1996 requesting that he
send us records from Oivind which would substantiate his seventy percent bunkering estimate.
On September 17, 1996, we received a letter from Mr. Edwards stating that no records are available. He stated that Oivind no longer services the same routes or owns the same ships that it did during the refund period. On October 21, 1996, we received a letter from Erik F. Lorentzen who was president of Oivind during the refund period but is not currently affiliated with the company. He stated that Oivind purchased nearly all of its fuel in the United States for several reasons, such as price and quality of fuel. He also stated that ships had large enough bunker capacities to only bunker in the United States on most round trip voyages.
Since no actual purchase records are available, we examined the information in the application to see if there was a more accurate way to determine the amount of fuel Oivind purchased in the United States. We found that, for most of Oivind's ships, the following data was listed in the documents submitted by Mr. Edwards: bunker capacity, average cruising speed in knots (nautical miles per hour), and average daily fuel consumption at cruising speed. By looking up the distances between the port of departure and the port of arrival for each voyage, the following calculation can be made: distance in nautical miles divided by nautical miles per day times gallons per day equals gallons per voyage. We sent Mr. Edwards a letter on November 12, 1996 requesting that he make this calculation for Oivind's ships.
On December 23, 1996, we received a letter from Mr. Edwards explaining that he had obtained a source listing distances of shipping routes, and that he would be sending us the revised estimate calculation. On December 27, 1996, we received a submission from Mr. Edwards in which he states that the calculation we requested "is inaccurate, and erroneously reduces the volume" of Oivind. In that submission, he argues that the claim should be granted based on the assumption that each ship refilled sixty percent of its bunker capacity each time it arrived at a United States port.
Mr. Edwards believes the estimation method we suggested would be inaccurate for two reasons. The first is that a large number of United States port calls were not included in the application because Oivind's ships tramped from port to port in the United States. We find this argument unconvincing. Each voyage listed in the Journal of Commerce and Commercial indicates all of the major stops on the voyage, including multiple stops in the United States. For example, Mr. Edwards submitted a listing for the ship Nopal Alkimos which began its voyage in Buenos Aires. It was scheduled to make several stops in South America and was expected to arrive in New Orleans on September 25, 1973. It was scheduled to complete its voyage in Houston on September 28, 1973. The calculation we requested would allow Mr. Edwards to use the distance between Buenos Aires and New Orleans as well as the distance between New Orleans and Houston. In fact, the statements made by Mr. Lorentzen indicate the mileage for round trips would be a reasonable basis for the calculation.
Mr. Edwards' second argument is that not all of Oivind's arrivals were necessarily found in the Journal of Commerce and Commercial. Mr. Edwards used only the first publication of each month because he felt that checking every publication would be too time consuming. Therefore, he believes we should allow for the possibility that Oivind had more arrivals in the United States than he was able to document. We find this argument unpersuasive. We require gallonage estimates to be conservative. By conservative, we mean that an applicant's estimation method must produce a result that is reasonably likely to be less than or equal to its actual purchases. Continental Steel Corporation, 25 DOE ¶ 85,103 (1996). There is no evidence that Oivind's ships made more trips to the United States than those documented in the application. The first publication of each month lists all arrivals expected for the month. Therefore, without further documentation, we cannot accept Mr. Edwards' assertion that there were additional arrivals made by Oivind's ships.
We find that Mr. Edwards has not shown any reason why the calculation we requested is not reasonable. We also find Mr. Edwards' method of claiming either sixty or seventy percent of the bunker capacity to be unsupported. Mr. Edwards first chose seventy percent because we granted refunds to two other shipping companies based on the seventy percent figure in 1992. Mr. Edwards believed that by accepting the seventy percent estimate in two cases, we set a precedent that every shipping company applicant could claim it refilled seventy percent of its capacity whenever it arrived in the United States. We disagree. In each of the cases granted with the seventy percent method, we found the estimate was made by a company official who had specific knowledge about the fuel consumption of his particular company. After we carefully considered the routes which were traveled by the applicants' ships, we agreed that seventy percent was a conservative gallonage estimate for those two applicants. We did not, however, accept seventy percent as the percentage every applicant would be able to claim.
After we requested that documents be submitted to support the seventy percent assertion, Mr. Edwards revised his estimate to sixty percent of bunker capacity for each arrival. He came to this figure by doing an analysis of purchase records submitted in a stripper well case which was granted in 1987. The percentage of bunker capacity filled upon arriving at a United States port by other companies, absent a reasoned argument, has no bearing on Oivind's claim. There is no evidence that all ships in the world refilled the same percentage of their bunker capacities when they arrived in the United States. In fact, there is evidence to the contrary in the three cases Mr. Edwards cites. Two companies refilled seventy percent on average and another refilled sixty percent. We see no reason why we should assume Oivind refilled at the same rate as any of these companies. Our goal is not to set a standard rate at which all of the world's ships refueled, but to make a reasonable estimate based on the information available for each applicant and its ships.
Mr. Edwards has filed more than thirty other claims on behalf of shipping companies using the same gallonage estimation technique. In these cases, we believe copies of actual company purchase records from the refund period are the most accurate means of determining a reasonable gallonage claim. If such records do not exist we will also consider whether current purchase records would provide a reasonable estimate. If, as in the case of Oivind, current records would be unhelpful, we believe the calculation we set forth in this decision is a practical and reasonable gallonage estimation technique.
Since Mr. Edwards has failed to submit a reasonable gallonage estimation technique in this case, we will deny the application he filed on behalf of Oivind.
It Is Therefore Ordered That:
(1) The Application for Refund filed by Oivind Lorentzen Shipping AS (Case No. RG272-613) is hereby denied.
(2) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: January 27, 1997