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M. SPIEGEL & SONS v. O'LEARY

May 16, 1996

M. SPIEGEL & SONS, INC., Plaintiff,
v.
HAZEL O'LEARY, Secretary, United States Department of Energy, et al., Defendants.


Harold H. Greene, United States District Judge


The opinion of the court was delivered by: GREENE

Plaintiff, M. Spiegel & Sons, Inc., brings this case to appeal from a final decision and order issued by the Department of Energy's ("DOE") Office of Hearings and Appeals ("OHA") denying, in part, plaintiff's application for restitution in a proceeding initiated pursuant to the Petroleum Overcharge Distribution and Restitution Act, 15 U.S.C. § 4501-07 (1995)("PODRA"). Currently before the Court for consideration are the parties' cross motions for summary judgment. As there are no genuine issues of material fact, these motions are ripe for decision. *fn1"

 I

 A. Regulatory Background

 DOE is responsible for enforcing the Mandatory Petroleum Price and Allocation Regulations, promulgated pursuant to the Economic Stabilization Act of 1970 ("ESA"), 12 U.S.C. § 1904 note (1976) and the Emergency Petroleum Allocation Act of 1973 ("EPAA"), 15 U.S.C. § 751, et seq. (1982). These regulations, in effect from August 19, 1973 through January 27, 1981, established price ceilings for crude oil and most other petroleum products, as well as a mandatory system of supply between historical suppliers and purchasers throughout the United States.

 The federal petroleum price regulations required gasoline suppliers to place each customer in a "class of purchaser" that reflected "customary price differentials" among the supplier's customers. See 10 C.F.R. §§ 212.31, 212.93 (1978). Essentially, the regulations required a supplier to charge the same price to all customers in the same class of purchaser. See 10 C.F.R. Subchapter A, App., Ruling 1975-2 at 178 (1995).

 The federal petroleum allocation regulations required that a supplier offer gasoline to any customer that it had supplied during the designated base period, see 10 C.F.R. § 211.9 (1978), as well as to any customer assigned to it by DOE's predecessor, the Federal Energy Administration ("FEA"). See 10 C.F.R. § 211.12(e) and (f) (1978). The regulations required suppliers to supply gasoline in accordance with "normal business practices," and prohibited "any form of discrimination among purchasers of any allocated product." 10 C.F.R. § 210.62 (1978).

 In 1986, Congress promulgated PODRA, 15 U.S.C. § 4501-07, and thereby imposed an affirmative duty on DOE, through OHA, to identify persons injured by violations of the petroleum pricing and allocation regulations, to establish the amount of such injury, and to make restitution to such persons using funds recovered in DOE public enforcement proceedings from companies found to have violated the petroleum price and allocation regulations. 15 U.S.C. § 4502(b).

  B. SOS's *fn2" Refund Claim

 In 1974, SOS opened two new service stations, one in Centereach, New York and one in Elmont, New York. SOS applied to the FEA for assignment of a supplier. See 10 C.F.R. § 211.12. In response, FEA issued two allocation orders requiring Getty Oil Company ("Getty") to make a total of 3,164,015 gallons of motor gasoline available to the Centereach station each year and a total of 1,592,711 gallons of motor gasoline available to the Elmont station each year. Getty placed SOS in its branded retailer class of purchaser, *fn3" and charged SOS its branded retailer price.

 In 1979, DOE and Getty entered into a consent agreement in a public enforcement proceeding. Pursuant to the agreement, Getty paid $ 25 million in settlement of certain claims against it for violations of the ESA, the EPAA, and the regulations issued thereunder. Believing that many claimants would no longer have records available to substantiate their claims of injury from Getty's violations, OHA established a number of presumptions to aid claimants in establishing their claims. Getty Oil Co., 15 DOE P 85,064, 88,123 (1986). However, claimants seeking to recover for injuries alleged to total more than the presumptive injury amount were to be required to provide evidence of their specific injury. Id.

 On June 31, 1987, SOS filed an application for a refund from the Getty consent order fund, seeking to recover in excess of the presumptive injury amount for injury caused by alleged price and allocation regulation violations by Getty from 1975 to 1978. SOS alleged that Getty violated the pricing regulations by improperly placing SOS in Getty's branded retailer class of purchaser, and by refusing to deal with SOS in accordance with normal business practices. Specifically, SOS claimed that it should not have been placed in Getty's branded retailer class of purchaser because, inter alia, unlike Getty's branded retailers, SOS: (1) purchased gasoline in bulk, (2) provided its own transportation for the gasoline, and (3) was not given the benefits associated with being a branded retailer, i.e. the use of the Getty name, Getty credit cards. SOS claimed that Getty violated federal petroleum allocation regulations in that Getty's pricing and other practices precluded SOS from purchasing its full allocation of gasoline for the two outlets from Getty. *fn4"

 Upon consideration of SOS's claims, OHA determined that SOS had failed to show that Getty placed SOS in the wrong class of purchaser. OHA stated that there was no evidence in the record on which it could resolve the class of purchaser dispute. A.R. 512. Based on its finding with respect to the class of purchaser issue, OHA rejected SOS's pricing and allocation violation claims, and granted only the presumptive volumetric refund to SOS.

 SOS brings this action challenging DOE's denial of its claims. Specifically, SOS asserts that DOE erred in rejecting its class of purchaser argument, and therefore erred in rejecting ...


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