Case No. RF272-88895

April 14, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Application for Refund

Name of Petitioner: Hiler Brothers Company

Date of Filing: April 2, 1991

Case Number: RF272-88895

This Decision and Order considers the Application for Refund filed by Hiler Brothers Company (Hiler), a firm that resold crude oil during the period August 19, 1973, through January 27, 1981 (the crude oil price control period). Hiler requests a refund from crude oil monies available for disbursement by the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) under 10 C.F.R. Part 205, Subpart V. Because this Applicant is a reseller of the gallons for which it is claiming a refund we will deny its claim.

Pursuant to current 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 To Be Implemented 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 a number of firms that sold crude oil during the crude oil price control period. Berry Holding Co., 16 DOE ¶ 85,405 (1987); A. Tarricone, Inc., 15 DOE ¶ 85,495 (1987) (Tarricone); 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. Specifically, applicants who are resellers or retailers must demonstrate that they did not pass the overcharges through to their own customers.

In certain refined product refund proceedings, we have established injury presumptions for certain classes of resellers and retailers. See, e.g., Marathon Petroleum Co., 14 DOE ¶ 85,269 (1986); Mobil Oil Corp., 13 DOE ¶ 85,339 (1985). Because those overcharges were confined to purchasers of refined products from a specific consent order firm, these purchasers were likely to have been placed at a competitive disadvantage relative to purchasers who were not overcharged.

In contrast, no such injury presumptions are appropriate, and none have been adopted, for resellers or retailers participating in the Subpart V crude oil refund proceeding. The Entitlements Program spread crude oil overcharges evenly throughout the industry. Because crude oil overcharges equally affected all resellers and retailers, regardless of supplier, we believe that resellers' and retailers' selling prices generally increased. See Tarricone, 15 DOE at 88,896.

It would be unreasonable to presume, therefore, that any reseller or retailer applicants in Subpart V crude oil proceedings were injured. Instead, a reseller or retailer must provide a detailed demonstration that it was unable to pass through the effects of crude oil overcharges to its own customers.(1) Because the Applicant in this Decision and Order is a reseller, it must therefore make this type of injury showing in order to be eligible for a refund.

Hiler has not demonstrated that it absorbed the effects of crude oil overcharges rather than passing the overcharges through to its customers. Accordingly, we cannot find that Hiler suffered injury as a result of crude oil overcharges. See Borst Oil Corp., 17 DOE ¶ 85,232 (1988). Because it did not submit any reasoned argument or specific information showing that it was injured by crude oil overcharges, the Application for Refund must be denied.

It Is Therefore Ordered That:

(1) The Application for Refund filed by Hiler Brothers Company, Case No. RF272-88895, is hereby denied.

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

George B. Breznay

Director

Office of Hearings and Appeals

Date: April 14, 1999

(1)Resellers and retailers were permitted to participate and recover monies in the "Stripper Well" refund proceedings. The "Stripper Well" refund proceedings refer to the eight escrow accounts created by the U.S. District court for the District of Kansas to implement the terms of a Settlement Agreement approved in In Re: The Department of Energy Stripper Well Exemption Litigation, M.D. L. 378, reprinted in 6 Fed. Energy Guidelines ¶ 90,509 (D. Kan. 1986). The court's action and subsequent order of disbursement issued on August 7, 1986, established a framework to refund a portion of $1.4 billion in crude oil overcharges to eight enumerated groups of petroleum product purchasers: Refiners, Retailers, Resellers, Airlines, Agricultural Cooperatives, Surface Transporters, Rail and Water Transporters, and Utilities.