Case No. RF304-12288

May 26, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Atlantic Richfield Company/Cabot Corporation

Date of Filing: May 9, 1991

Case Number: RF304-12288

This Decision and Order considers an Application for Refund filed by Cabot Corporation (Cabot) from the monies that the Atlantic Richfield Company (ARCO) remitted to the Department of Energy. Under the terms of a June 27, 1985 Consent Order entered into between the DOE and ARCO, ARCO remitted $46,387,976, plus accrued interest to the DOE. The Consent Order settled all claims regarding ARCO's compliance with the Federal Petroleum Price and Allocation Regulations during the period January 1, 1973, through January 27, 1981 (the consent order period). On January 28, 1988, the Office of Hearings and Appeals of the DOE instituted special refund procedures for the distribution of those funds. Atlantic Richfield Co., 17 DOE ¶ 85,069 (1988) (ARCO). The special refund procedures allow purchasers of ARCO products which were regulated during the period of price controls to file Applications for Refund from the ARCO consent order fund. Refunds can be sought only for regulated products purchased between March 6, 1973, and the date that the product was decontrolled (January 27, 1981 for motor gasoline). See id. at 88,143 n.5. As set forth below, we shall deny Cabot's claim.

I. Background

Evaluating applications in this proceeding involves both an allocation of an appropriate portion of the consent order fund to each applicant and an evaluation of economic harm or injury suffered by that applicant. Id. at 88,151; see Sid Richardson Carbon & Gasoline Co., 12 DOE ¶ 85,054 (1984). To determine the portion of the fund to be allocated to each claimant, we assume that any overcharges were distributed equally over every gallon of regulated products sold by ARCO during the consent order period and allocated the consent order monies accordingly, i.e., by dividing the value of the fund by ARCO's total sales of covered products during the period. ARCO at 88,151. This calculation produces a "volumetric factor" of $0.000735 per gallon. When that factor is multiplied by an applicant's total eligible purchases, the result is a claimant's allocable share of the consent order fund. To qualify for a refund, such an applicant must submit evidence of its volume of purchases of ARCO products during the consent order period. Firms may, however, rely upon reasonable estimates.

II. Analysis

Cabot seeks a refund of over $170,000, plus interest, based upon its claim that it purchased 234 million gallons of residual fuel oil from ARCO. The firm claims to have made these ARCO purchases between March 1973 and December 1980.

As noted above, ARCO refunds will be approved only for purchases made during the period that the product purchased was subject to price controls. Residual fuel oil, the product for which Cabot seeks a refund, however, was decontrolled effective June 1, 1976. Consequently, Cabot is ineligible for any refund based upon purchases made after that date. Moreover, while Cabot has documented that it made substantial purchases from ARCO beginning in February 1977, the firm has been unable to provide any evidence of ARCO purchases during the period that residual fuel oil was subject to price controls. Instead, it asks that we assume its purchases of residual fuel oil during the refund period were comparable to its purchases between 1977 and 1980.

Although Cabot may have made substantial purchases of residual fuel oil prior to decontrol of that product, there is simply no evidence that it obtained that product from ARCO. The printout of customer purchases that ARCO provided this Office did not list Cabot as a purchaser of controlled products during the refund period, and the printout Cabot obtained from ARCO which showed large purchases beginning in 1977 also showed no purchases prior to that year. The petroleum industry is dynamic. Firms frequently change their suppliers. There is consequently no basis for assuming that because Cabot purchased residual fuel oil from ARCO between 1977 and 1980, that it also purchased the product from ARCO in prior years.

The goal of the ARCO refund proceeding is to provide restitution to claimants who demonstrate that they were injured as a result of ARCO's overcharges. Since Cabot has presented no credible evidence to demonstrate that it purchased ARCO products during the relevant period, granting a refund to the firm would not constitute restitution for ARCO's overcharges. Accordingly, Cabot's Application for Refund shall be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Cabot Corporation, Case No. RF304-12288, 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 26, 1999