Case No. RF272-98801
September 30, 1999
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Application for Refund
Name of Applicant:General Agencies of the United Methodist Church
Date of Filing:July 5, 1995
Case Number:RF272-98801
This Decision and Order grants in part an Application for Refund filed by the General Agencies of the United Methodist Church (the UMC). The applicant seeks a refund on behalf of all its 38,669 churches (an average number for the refund period) from the crude oil overcharge 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 the past, purchasers of refined products were able to apply to the OHA for a refund from crude oil overcharge funds collected by the DOE. 51 Fed. Reg. 27899 (August 4, 1986). We have established refund procedures for these funds, which have been obtained by DOE through consent orders between the DOE and numerous firms that sold crude oil during the price control period. E.g., Berry Holding Co., 16 DOE ¶ 85,405 (1987) (Berry); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987); Mountain Fuel Supply Co., 14 DOE ¶ 85,475 (1986).
To receive a refund for crude oil overcharges, an Applicant generally must (1) document its purchase volumes and (2) show that it was injured by the overcharges. However, applicants that were end users of petroleum products and whose business was unrelated to the petroleum industry are presumed to have been injured. As such, they need not submit proof of injury to receive a refund in the Subpart V proceeding. City of Columbus, Georgia, 16 DOE ¶ 85,550 (1987). In addition, applicants may rely upon reasonable estimates of their purchase volumes.
The UMC seeks a refund based upon purchases of 2.5 billion gallons of petroleum products. The UMC does not have actual records of its purchases at each of its 38,669 churches during the refund period. It has attempted to estimate it total purchase volume. To make this estimate, it first surveyed a sample of its churches to determine the percentage that heated their buildings with heating oil or propane. Surveys conducted in 1995 and 1999 indicate that 46.7% of its churches were heated with petroleum products. Multiplying this factor by the total number of churches gives 18,058 as the number of churches that were heated by petroleum products. The
UMC multiplied this number by the average purchase volume of approved claims filed by churches in the crude oil refund proceeding to arrive at its nationwide purchase volume.(1)
We are generally reluctant to accept refund claims by single entities that are based upon averages of claims filed by similar entities in the crude oil refund proceeding. Instead, we require documentation to support the claim. Thus, we have not accepted purchase volume estimates submitted by individual cities or counties that are based upon averages of claims approved by other cities or counties. This is because wide variations may occur between similar entities. For example, cities provide widely different services to their citizens. Moreover, a system which infers eligibility for a refund is susceptible to abuse. In the present case, however, we do not have an application from a single church, but from an aggregation of 38,669 churches. There is nothing inherently unreasonable in the assertion that the average purchase volume of these churches would be approximated by the average purchase volume of another large group of churches, such as those which have filed claims in this proceeding.
The UMC's estimation method, however, suffers from two serious flaws. First, a disproportionately large number of the church applicants in the crude oil proceeding that the UMC relied on included schools, convents, or other institutions in their individual claims. Purchase volumes were higher as a result. Such associated entities are much less common in the UMC. Second, the universe of church refund applicants does not reflect a random sample of all churches. Small churches were less likely to apply because the size of their potential refund would not be worth the effort. Consequently, an estimate based solely upon the purchase volume of other refund claimants would be skewed toward larger claims. In view of these difficulties, the UMC attempted to survey a random sample of its churches to determine their average yearly purchase of petroleum products. This survey was only partially successful. For churches heated by fuel oil and propane, this survey gave an average purchase volume of 18,700 gallons. However, the return rate was small, and the church has submitted evidence that nearly all responses it received were from its smaller churches with relatively small purchase volumes. It contends that this survey does not accurately reflect the UMC's overall purchase volumes.
We agree that the survey UMC conducted does not reflect the purchases by its larger churches.(2) Under these circumstances, we have estimated the UMC purchase volume as follows. For its relatively small churches, we have used the 18,700 gallon figure derived from its survey.(3) For its relatively "large" churches, we shall use the average claim filed by other churches in this proceeding (92,940 gallons after excluding claims which include a school, convent, or other institution in addition to the church). We shall take a relatively conservative approach and shall assume that a "large" church is one with over 300 members.(4) In addition, the UMC survey indicated that its churches consumed an average of 4,088 gallons during the refund period for purposes other than heating. The UMC's refund shall include a refund for the churches that are not heated by fuel oil or propane based on this amount. In addition we shall use this amount for UMC's 300 camps. Our estimation of the UMC's purchase volume during the refund period is summarized in the table below:
Number of Churches
Average Volume
Total Volume
Oil Heat > 300 members
4,316
92,940
401,129,040
Oil Heat < 300 members
13,742
18,700
256,975,400
Used for camps and for other than heating in churches that do not use fuel oil
20,911
4,088
85,484,168
Claims previously granted that were filed by individual Methodist churches & camps
11
-929,598
Total Volume
742,659,010
As indicated above, we estimate that the UMC's 38,669 churches and 300 camps purchased 742,659,010 gallons of refined petroleum products during the refund period. It is the current policy of the DOE to pay eligible crude oil refund claimants at the rate of $0.0016 per gallon. This results in a refund of $1,188,254. We will decide after the resolution of a few outstanding enforcement proceedings whether sufficient funds are available for additional refunds.
It Is Therefore Ordered That:
(1) The Application for Refund filed by the General Agencies of the United Methodist Church (Case No. RF272-98801) for a refund from 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 $1,188,254 from the DOE deposit fund escrow account maintained at the Department of the Treasury denominated Crude Tracking-Claimants 4, Account No. 999DOE010Z, to General Agencies of the United Methodist Church.
(3) To facilitate the payment of future refunds, the Applicants shall notify the Office of Hearings and Appeals in the event that there is a change in its 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 determinations made in this Decision and Order are based upon the presumed validity of the statements and documentary material submitted by the Applicants. This Decision and Order may be revoked or modified at any time upon a determination that the basis underlying a 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:September 30, 1999
(1)The UMC's claim also includes 731 million gallons of asphalt content in bituminous concrete that it purchased for paving purposes. This level of purchases has not been documented. Moreover, we have previously determined that while purchases of liquid asphalt are eligible for refunds in the crude oil refund proceeding, purchases of bituminous concrete are not eligible for such refunds, except under circumstances where the purchase contract contains a fuel escalation clause or other provision passing any asphalt price increases through to the customer. Kaplan & Sons Construction, Case No. RF272-78324 (June 21, 1994) (unpublished decision); City of Annapolis, 17 DOE ¶ 85,774 at 89,459 (1988). We have found in these cases that the firm that mixes liquid asphalt with aggregate to produce bituminous concrete substantially changes the form of the liquid asphalt and is therefore the end user that is entitled to a crude oil refund based upon those liquid asphalt purchases. Bituminous concrete is therefore not an eligible product and purchasers of it are not considered end-users of the liquid asphalt content of the bituminous concrete. The portion of UMC's claim that is based upon purchases of bituminous concrete shall be denied.
(2)Nine UMC churches previously had filed their own crude oil refund claims. These claims averaged 103,000 gallons. However, only four of the churches 225 churches that were heated by fuel oil that responded to the survey had purchases over 50,000 gallons, with the maximum being 73,000 gallons. Consequently, it appears that the survey did not include UMC's larger churches.
(3)This includes an average of 14,612 gallons used for heating and 4,088 gallons used for other purposes.
(4)The record indicates that about 41% of Methodist churches have fewer than 100 members and 65% fewer than 200 members.