Case No. RF272-94518

December 20, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Annedeen Hosiery Mills

Date of Filing: March 12, 1993

Case Number: RF272-94518

This Decision and Order will consider the Application for Refund filed by Annedeen Hosiery Mills (Annedeen). Annedeen requests a refund from the crude oil monies currently available for disbursement by the Office of Hearings and Appeals (OHA) pursuant to the OHA's authority under 10 C.F.R. Part 205, Subpart V.

Pursuant to current Department of Energy (DOE) policy, purchasers of refined petroleum products may 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 court approved settlements, remedial orders and consent orders entered into by the DOE and numerous firms that sold crude oil during the period of price controls. See, e.g., New York Petroleum, Inc., 18 DOE ¶ 85,435 (1988); Ernest A. Allerkamp, 17 DOE ¶ 85,079 (1988); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987).

Meritorious claimants are eligible to receive refunds equal to the number of gallons of petroleum products they purchased during the period of price controls multiplied by a per-gallon or volumetric refund amount. The volumetric refund amount currently available is $0.0016 per gallon. We derived this refund amount by dividing the total crude oil refund monies currently available by the total consumption of petroleum products in the United States during the period of price controls (2,020,997,335,000 gallons).

Annedeen is owned by Great American Knitting Mills, Inc. (Great American), the hosiery operating division of Cluett American Corporation (Cluett). The applicant requests that a refund be issued to Great American for purchases made by Annedeen during the period of crude oil price controls (August 1973 through January 1981). However, Great American informs us that its affiliation with Annedeen began in 1986, with Cluett’s acquisition of Annedeen.

Under OHA precedent, the right to receive a Subpart V refund generally remains with the owner of a firm during the price control period. We have determined that the right to receive a refund can be transferred to a subsequent owner of the firm if: (i) the firm is a corporation, the entire capital stock of which was purchased by the subsequent owner; or (ii) the firm's assets were sold under an agreement that indicated, either explicitly or implicitly, that potential refunds were being transferred. Mrs. M.B. Troy, 23 DOE ¶ 85,049 (1993); see also Ward Transport, Inc., 26 DOE ¶ 85,027 (1997). In order for the right to a Subpart V refund to be transferred in a sale of assets, specific language in the contract must refer to refunds as an asset being transferred or there must be language which clearly evidences the intention to transfer all rights even if unknown. See, e.g., Atlantic Richfield/Forrest Drive ARCO, 22 DOE ¶ 85,108 (1992). However, an agreement which only transfers assets of a firm, without further elaboration, generally will not be deemed to have transferred the right to a refund. Texaco/Wolfram’s Garage, 22 DOE ¶ 85,164 (1992).

Thus, we would presume that the former owners of Annedeen, rather than Great American, would be eligible for a crude oil refund for these purchases. We therefore requested that the applicant provide copies of any agreements by which, under the criteria set forth above, Great American has succeeded to the right to a Subpart V refund based on purchases made by Annedeen. The applicant has provided a copy of an “acquisition agreement” between Cluett Peabody Acquisition Corp. and West-Point Pepperell, whereby the applicant states that Great American acquired Annedeen. Letter from Bill Sheely, Executive VP Operations, Great American Knitting Mills, Inc., to Steven Goering, OHA Staff Attorney (September 23, 1999). The applicant points to a section of the agreement that it contends “transfers ownership of all assets not specifically mentioned in the proceeding sections unless specifically excluded, which this or other refunds were not excluded.” Id.

However, the language referred to by the applicant identifies as assets to be transferred “[a]ll other properties and assets (including, but not limited to, promotional materials, and books and records) owned or held by Seller that are used primarily in, or are customarily used in, the Business as of the closing, . . .” Acquisition Agreement at Subsection 1.1.11. Moreover, listed in the agreement as assets excluded from the transfer are “[a]ny property, asset or right which . . . is an asset . . . which does not relate primarily to, and is not necessary for the continued conduct or, nor otherwise customarily used in, the Business . . . .” Id. at Subsection 1.2.6.

Thus, we do not agree with the applicant that Subsection 1.1.11 of the agreement suffices to transfer to Great American the right to a refund for petroleum product purchases made by Annedeen. Rather than clearly evidence the intention to transfer all rights even if unknown, this subsection only transfers “assets or properties . . . used primarily in, or are customarily used in, the Business . . . .” Id. at Subsection 1.1.11. We have no basis for equating the right to a Subpart V crude oil refund to a property or asset used primarily or customarily in Annedeen’s business. Indeed, the acquisition agreement would for this reason appear to exclude the transfer of the right to a refund for Annedeen’s petroleum product purchases, as it specifically excludes any asset that “does not relate primarily to, and is not necessary for the continued conduct or, nor otherwise customarily used in, the Business . . . .” Id. at Subsection 1.2.6.

For the above stated reasons, we will deny the present Application for Refund.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Annedeen Hosiery Mills on March 12, 1993 (Case No. RF272-94518) is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date:December 20, 1999