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FLORIDA ROCK INDUS. v. HERRINGTON

December 8, 1988

Florida Rock Industries, Inc., Plaintiff,
v.
John S. Herrington, et al., Defendants



The opinion of the court was delivered by: RICHEY

 CHARLES R. RICHEY, UNITED STATES DISTRICT JUDGE.

 Plaintiff, Florida Rock Industries, Inc. filed this suit because it claims that the Office of Hearing and Appeals ("OHA") of the Department of Energy ("DOE") acted arbitrarily and capriciously and abused its discretion when it held that Florida Rock and Tank Lines ("Tank Lines"), a former subsidiary of plaintiff, waived plaintiff's right to recover restitutionary relief for crude oil overcharges it paid. *fn1" Plaintiff is asking the Court to set aside the OHA's decision and order denying it recovery and to direct the OHA to consider plaintiff's application for restitutionary relief on the merits.

 There are no factual disputes in this case. The only bone of contention is whether Tank Lines effectively waived plaintiff's rights to restitution. As such, the parties filed cross-motions for summary judgment. Upon careful consideration of both parties' motions and the supporting and opposing legal memoranda, oral argument by counsel on these motions, and the underlying law, the Court will grant plaintiff's motion for summary judgment and will deny defendant's motion for summary judgment.

 BACKGROUND

 There are two kinds of restitutionary programs that are at issue in this case. The first is commonly known as "Subpart V" programs. Subpart V programs were established by regulations which were promulgated in 1979 and are codified at 10 C.F.R. Part 205, Subpart V. Under these Subpart V programs, the OHA administers escrow funds collected from crude oil producers as the result of litigation or settlements of pending litigation.

 The other type of restitutionary program at issue is referred to as the "Surface Transporters Stripper Well Escrow Fund ("ST Program")." The ST program was established pursuant to a settlement agreement in The Department of Energy Stripper Well Litigation, 653 F. Supp. 108 (D. Kan. 1986). The ST program is governed by the terms of that settlement agreement. Unlike the Subpart V programs, the ST program is only available to certain end users. To be considered for the ST program, an applicant must have consumed petroleum products in surface transportation activities. Joint Stipulation at para. 6.

 Tank Lines was a surface transporter so was eligible to apply for restitution under either the Subpart V or ST programs. As part of the application process for the ST program, an applicant must sign a standard Settlement Claim Form and Waiver ("Waiver Form"). From reading the Waiver Form, plaintiff could not discern whether it would be precluded from Subpart V relief if Tank Lines, its former subsidiary, applied for relief pursuant to the ST program. Complaint at para. 15. Because there was no written guidance from OHA on this question and the deadline for ST program applications was near, plaintiff's representatives contacted the OHA's staff attorney. Complaint at para. 18. The OHA's staff attorney advised plaintiff that OHA was uncertain as to what its interpretation of the Waiver Form would be and that applicants would be advised to file their applications in the alternative. Complaint at para. 18. *fn3"

 On December 5, 1986, Tank Lines filed with the OHA the Waiver Form that was a prerequisite to its being considered for restitutionary relief under the ST program. Stapled to Tank Line's Waiver Form was a letter stating "we have concluded that Tank Lines is eligible for Surface Transportation refunds even though its former parent (which made extensive non-transportation use of petroleum) will file under Subpart V. If OHA disagrees, we respectfully request that this application be withdrawn and deemed, instead, an additional Subpart V application." Joint Stipulation, Exhibit 2.

 Plaintiff is seeking relief based on two alternative theories of recovery. The first is that defendants have acted "unlawfully, arbitrarily and capriciously" in construing the Waiver Forms's language as precluding plaintiff from applying for relief under the Subpart V program. The other theory is that defendants acted "unlawfully, arbitrarily, and capriciously" by concluding that Tank Lines' submission of the Waiver Form was an irrevocable waiver of plaintiff's right to apply for restitution under the Subpart V program because of Tank Lines' attachment of a letter to the Waiver Form qualifying its application. The Court will base its ruling only on plaintiff's latter theory of recovery. *fn4"

 DEFENDANTS ARE EXALTING FORM OVER SUBSTANCE

 The most telling paragraph of the Joint Stipulation is paragraph 20. This paragraph provides that "the OHA has dismissed ST applications in which Claim Forms themselves included any alterations or qualifications of the Waiver and Release provision or the Binding Agreement set forth in the ST claim Form." Joint Stipulation at para. 20. In other words, there would have been no waiver and both plaintiff and Tank Lines would have been eligible to apply for restitution for petroleum overcharges under the Subpart V program had Tank Lines qualified its application to the ST program ...


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