Case No. RG272-00381
February 4, 1997
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Petitioner: Pan Ocean Shipping Co., Ltd.
Date of Filing: June 26, 1995
Case Numbers: RG272-381
This Decision and Order will consider an Application for Refund that was submitted by Pan Ocean Shipping Co., Ltd. (Pan Ocean), a maritime shipping company located in Seoul, South Korea. Pan Ocean's vessels purchased refined petroleum products during their visits to ports in the United States during the period August 19, 1973, through January 27, 1981 (the crude oil price control period). Pan Ocean has requested a refund from crude oil monies available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) pursuant to the OHA's authority under 10 C.F.R. Part 205, Subpart V.
This refund proceeding was instituted to allow purchasers of refined petroleum products during the price control period to apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. Statement of Modified Restitutionary Policy 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 crude oil 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 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. However, as we discussed in City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987), applicants who were end- users of petroleum products and whose businesses were not covered by the DOE's or its predecessors' price controls are presumed to have been injured.
Generally, a claimant is eligible for a refund equal to the number of gallons it purchased multiplied by $0.0016. We derived this volumetric refund amount by dividing the total crude oil refund monies currently available by the total U.S. consumption of petroleum products during the period of crude oil price controls (2,020,997,335,000 gallons).
In its application, Pan Ocean seeks a refund based on purchases of residual fuel, diesel fuel and lubricants totaling 115,292,885 gallons. This gallonage claim is based on records of purchases of petroleum products in U.S. ports for some of the applicant's vessels, and estimates for vessels for which no such records are available.(1)
In arriving at the estimated portion of its gallonage claim, Pan Ocean determined that its purchases of U.S. petroleum products occurred on four main shipping routes: the routes extending between Los Angeles, California and Korea, between Portland, Oregon and Korea, and between Los Angeles and Korea, with a stop in Portland (the west coast routes); and the route extending from Los Angeles to Panama, to Camden, New Jersey, to New Orleans, to Tampa, to Panama, and back to Los Angeles (the Gulf route). The applicant based its estimate on the assumption that its ships purchased their fuel and lubricants at the most economically advantageous location. Accordingly, Pan Ocean assumed that its ships traversing the Gulf route purchased all of their petroleum products at U.S. ports. With regard to the west coast routes, Pan Ocean assumed that during the period from August 1973 through December 1978 its ships purchased enough fuel in Los Angeles or Portland for a one way voyage to Korea. Although fuel prices in the U.S. were lower than in Korea for most of this period, the applicant's ships purchased only enough fuel for a one way voyage because it was more profitable to utilize the ships' weight carrying capacity to transport cargo than to carry enough fuel for a round trip voyage. Pan Ocean application at 7-9. However, Pan Ocean assumed that during the period from January 1979 through January 1981, it purchased all of its fuel for ships on these routes in the U.S. This is because the difference between petroleum product prices in the U.S. and Korea was so great during that time that it was more economical for the applicant to purchase sufficient fuel for a round trip voyage. Id. Pan Ocean calculated the volumes of fuel consumed by its ships on the Gulf and west coast routes by multiplying the average daily fuel consumption for each ship by the number of days that each voyage lasted. In estimating its purchase volumes of diesel fuel and lubricants, the applicant assumed that the ratios between its purchases of residual fuel and diesel fuel and lubricants reflected in its records remained constant for all of its purchases of these products.
We have thoroughly examined Pan Ocean's actual and estimated gallonage figures and the information submitted in support of those figures. We conclude that the estimation techniques used are reasonable and that the volumes claimed reflect accurately the applicant's purchases since they are consistent with the actual figures submitted. We will therefore approve Pan Ocean's gallonage claim.
Pan Ocean purchased its refined petroleum products for use in a business that is unrelated to the petroleum industry and did not resell those products. Pan Ocean is therefore an end-user of refined petroleum products and is presumed to have been injured by the crude oil overcharges. Accordingly, the applicant is entitled to receive its full allocable share of the crude oil monies. Pan Ocean will receive a refund of $184,469 (115,292,885 gallons x $0.0016).
The final deadline for applications in the crude oil refund proceeding was June 30, 1995. 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 whether sufficient crude oil overcharge funds are available for additional refunds for this applicant and other successful applicants when we are better able to determine how much additional money will be collected from firms that have either outstanding obligations to the DOE or enforcement cases currently in litigation.
It Is Therefore Ordered That:
(1) The Application for Refund filed by Pan Ocean Shipping Co, Ltd. for all available crude oil overcharge funds is hereby approved 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 refunds totaling $184,469 from the DOE deposit fund escrow account denominated Crude Tracking - Claimants 4, Account Number 999DOE010Z, maintained at the Department of the Treasury to: Pan Ocean Shipping Co., Ltd., Attn: K.S. Ro, Daehan Fire & Marine Insurance Bldg., 51-1, Namchang-Dong, Jung-Ku, Seoul, Korea.
(3) To facilitate the payment of any future refunds, the applicant 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
(4) The determination made in this Decision and Order is based upon the presumed validity of the statements and documentary materials submitted by the applicant. This determination may be revoked or modified at any time upon a finding 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: February 4, 1997
(1) Interested parties were provided with an opportunity to submit comments regarding individual crude oil refund applications. No such comments were filed with respect to the application considered in this Decision.