Case No. RF272-93809

May 7, 1997

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner:Central Nebraska Cooperative

Date of Filing: August 17, 1992

Case Numbers: RF272-93809

This Decision and Order will consider an Application for Refund filed on behalf of Central Nebraska Cooperative, an agricultural cooperative that purchased refined petroleum products during the period August 19, 1973 through January 27, 1981. The refund is requested from crude oil monies available for disbursement by the Office of Hearings and Appeals of the Department of Energy pursuant to the Statement of Modified Restitutionary Policy in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986).

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). An applicant's refund share is calculated using the current refund amount of $0.0016 per gallon.

In Subpart V refund proceedings, we have always regarded refund applications filed by cooperatives as claims filed on behalf of their members. See, e.g., Exxon Corp., 17 DOE ¶ 85,590 at 89,150 (1988). Thus, to the extent that a cooperative's members are end-users, the end-user presumption of injury is applicable to claims filed by a cooperative. Accordingly, we will grant refunds to a cooperative based on volumes resold to its members, on the condition that the cooperative certify that it will pass through the refund to those members. Conversely, we have treated a cooperative's sales to non-members in the same manner as sales by other resellers. Id. at n.8. Consequently, a cooperative is not eligible to receive a refund for gallons sold to non- members without providing a detailed demonstration of injury. See A. Tarricone, Inc., 15 DOE ¶ 85,495 at 88,896 (1987) (no presumption of injury for resellers in crude oil refund proceeding).

This case presents the issue of the proper recipient of the refunds that are attributable to petroleum product purchases made by Central Nebraska Cooperative. The refund application was filed by the Cooperative Finance Association (CFA) and requests that any refund check be made payable to CFA. The agricultural cooperative has ceased operation and had previously entered into a security agreement with CFA. CFA claims that it is the successor in interest to the cooperative. As successor in interest, CFA argues that direct payment to it is equivalent to paying the refund directly to the owner/customers of the cooperative and then the owner/customers paying CFA an equal amount. CFA has also submitted in this application an "Assignment Of Accounts Receivable" to demonstrate its right to receive the cooperative's refund.

We reject CFA's claim. We have addressed identical claims submitted by CFA in other applications for refund in this proceeding. See Mid-State Coop, 24 DOE ¶ 85,092 (1994). As we discussed in that decision, under some circumstances it may be appropriate to issue a refund directly to a creditor of an applicant firm. Payment to a creditor is only appropriate, however, where the creditor has a lien upon the refund payment or where the creditor otherwise demonstrates a clear right to the refund. See, e.g., Amtel, Inc./Whitco, Inc., 19 DOE ¶ 85,319 (1989) (IRS lien); Youngstown Cartage Co., 16 DOE ¶ 85,680 (1987) (refund granted to receiver appointed by court to collect judgment).

On the other hand, in cases where there has been an application filed by a creditor on behalf of a business with only a security interest in a specific list of tangibles and intangibles which does not expressly include the right to a refund, the Office of Hearing and Appeals has generally held that the creditor is not eligible for a refund based on the purchases made by the debtor business. See Texaco Inc./General Gas & Oil Co., 22 DOE ¶ 85,130 (1992); Texaco Inc./BancFirst, 22 DOE ¶ 85,185 (1992).

In the present case, CFA has not demonstrated that it is entitled to refunds based upon the purchases made by the cooperative. The record indicates that, at or around the time of its liquidation in 1986, the cooperative assigned to CFA all of its “rights, title and interest” in its accounts receivable. In Mid-State CFA demonstrated that it held a security interest in specific tangibles and intangibles of three cooperatives including “leased properties, accounts receivable, inventories, instruments, documents, contract rights, supplies, furnishings, furniture, machinery, equipment, fixtures, motor vehicles, storage and preparation facilities and structures, buildings and appurtenances, and all capital stock, patronage refunds, dividends, equities, and rights of any nature in Farmland Industries, Inc. and other cooperative associations.” 24 DOE ¶ 85,092 at 88,302. In that case we determined that none of the terms in the security agreements could be construed to refer to oil overcharge refunds, which could not have been reasonably anticipated at the time that these agreements were signed. We found that CFA had not demonstrated a clear right to the refunds due to any of the three cooperatives. Id. With regard to the present application, CFA has produced only one portion of the evidence it produced in the earlier claims, and we find that its refund claim based on Central Nebraska Cooperative’s purchases of refined petroleum products is therefore even more tenuous.

Accordingly, the Application for Refund filed by CFA on behalf of Central Nebraska Cooperative should be denied.

It Is Therefore Ordered That:

(1) The Applications for Refund filed by the Central Nebraska Cooperative, Case No. RF272-93809, is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: May 7, 1997