The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge
Littleton Gas Company ("Littleton") appeals a December 7, 2000, Decision and Order ("D&O") of the United States Department of Energy's ("DOE") Office of Hearings and Appeals ("OHA"). OHA denied Littleton's application for a full "volumetric" refund of overcharges paid to Vessels Gas Processing Company ("Vessels") during the period of price controls on petroleum products in the 1970s. Littleton and DOE have filed cross motions for summary judgment. Having carefully considered the parties' briefs and the certified administrative record, the Court finds that OHA erred as a matter of law when it rejected Littleton's application and supporting materials. Accordingly, the case is remanded to OHA for calculation of a full "volumetric" refund, with interest, on Littleton's application, except to the extent OHA determines that Littleton voluntarily reduced its profit margins.
In the early 1970s, the Organization of Petroleum Exporting Countries imposed an oil embargo on the United States, which led to an energy crisis in this country. Congress responded by passing the Emergency Petroleum Allocation Act of 1973 ("EPAA"), 15 U.S.C. § 751 et seq., to regulate the allocation and prices of petroleum products. Under that statute, DOE and its predecessors, the Federal Energy Administration and the Federal Energy Office ("FEO"), issued price control orders governing the sale and resale of natural gas liquids ("NGLs") and natural gas liquid products ("NGLPs"). See Mandatory Petroleum Price Regulations, 10 C.F.R. Part 212. DOE was also empowered to seek restitution for violations of the price control regulations, which remained in effect until January 1981.*fn1 Executive Order No. 12287, 46 Fed. Reg. 9909 (1981). DOE's authority to prosecute violations and to collect monies for restitution to affected customers was subsequently repealed, barring actions commenced after September 30, 1988, or six years after an illegal overcharge, whichever was later. 15 U.S.C. § 4504(a)(1).
In 1979, DOE promulgated the "Subpart V" regulations for the distribution of funds collected from companies by DOE under both ESA and EPAA. 10 C.F.R. § 205.80-88 (1988). In 1986, Congress enacted the Petroleum Overcharge [Distribution] and Restitution Act (PODRA), 15 U.S.C. § 4501-4507 (1988), to distribute funds "in accordance with subpart V regulations." 15 U.S.C. § 4502(b)(1)(A)-(C).
Sinclair Oil Corp. v. Abraham, 291 F.3d 822, 824 (Fed. Cir. 2002). PODRA directs OHA to establish the amount of injury incurred by any persons due to an "actual or alleged violation of the petroleum pricing and allocation regulations" and to make direct restitution to those persons. 15 U.S.C. § 4502(b). Remaining funds are to be distributed among various States and the federal government as indirect restitution for the ultimate consumers who presumably bore the largest part of the overcharges. Id. § 4503; s ee also Van Vranken v. DOE, 882 F.2d 514, 517-18 (Temp. Emer. Ct. App. 1989).
Pursuant to these authorities, DOE investigated and eventually entered into a Consent Order with Vessels whereby Vessels paid $1,564,222.74 to DOE as restitution for overcharges on NGLs and NGLPs during the period of September 1, 1973, to December 31, 1977. Vessels made its final payment to DOE on October 12, 1994. Thereafter, DOE commenced a special refund proceeding to distribute those funds to parties deemed to have been injured by the overcharges.
The Notice of Implementation of Special Refund Procedures for Vessels established that eligible claimants would be entitled to a refund derived by multiplying the purchase volume on which overcharges were paid by a "volumetric" factor. 61 Fed. Reg. 652, 653 (Jan. 9, 1996). To determine this factor, OHA divided the total amount of Vessels's payments to DOE by the approximate number of gallons Vessels sold during the applicable period.*fn2 As relevant here, the "volumetric" factor was calculated to be $0.0261.*fn3
Under DOE's special refund process, a claimant initially must show that it purchased NGLs or NGLPs from Vessels during the period in which overcharges occurred. Recognizing that firms such as Littleton purchased Vessels's product for resale, and that such firms might have had an opportunity to pass some or all of the overcharges on to their customers, OHA requires resellers seeking a full "volumetric" refund also to submit "actual proof of injury." C.A.R. at 169.
For example, [a reseller] could show that competitive market forces forced it to absorb those price increases.... To calculate the maximum allowable price that a reseller could charge for a product during a month [when the price controls were in effect], the reseller added (1) the per gallon purchase price, (2) any previously unrecovered (per gallon) product costs and (3) the per gallon margin of profit for May 15, 1973.... If the marketplace permitted a firm to realize its maximum prices and thus pass on any cost increases, including overcharges, then no injury occurred in that month and no refund would be in order.
In addition, the reseller will be required to show that it had a "bank" of unrecovered costs in order to demonstrate that it did not recover the increased costs associated with the alleged overcharges by increasing its own prices. The maintenance of a bank does not, however, automatically establish injury.
Because the period for which refunds are requested – September 1, 1973, to December 31, 1977 – is "relatively remote in time,... [OHA has] allowed firms that are attempting a full showing of injury to approximate" the data. C.A.R. at 171. Acceptable materials include purchase and sales receipts, reliable market price data for an applicant's area of operations and type of customer, documentation of a firm's margin of profit as of May 15, 1973, sales tax documentation, and reconstructions of selling prices and margins of profit "based upon contemporaneous documentation of their product cost, and volume of purchases and sales for that month. However, all of these methodologies require the applicant to furnish some type of reliable, factual documentation." Id.
In lieu of making a detailed showing of injury... a reseller claimant whose allocable share exceeds $10,000 may elect to receive a refund under the medium-range presumption of injury. Under this presumption, a claimant will receive as its refund the larger of $10,000 or 60 percent of its allocable share up to $50,000. 61 Fed. Reg. at 653-54.
B. Littleton's Refund Application
Prior to its dissolution on February 29, 1984, Littleton was engaged in the resale of propane to residences throughout Colorado.*fn4 Littleton purchased 9,276,376 gallons of NGLs and NGLPs from Vessels during the period of September 1, 1973, to December 31, 1977. On April 8, 1996, Littleton filed an application with OHA for a full "volumetric" refund of overcharges paid to Vessels, ultimately seeking $242,113, plus interest.*fn5 Littleton supplemented this filing on November 7, 1996, with its "[cost] bank of unrecouped increased costs for NGLPs, calculated on a monthly basis for the covered period[,]" and a competitive disadvantage analysis.*fn6 C.A.R. at 7.
On April 8, 1997, OHA sent Littleton a letter asking for its Employer Identification Number. From April through November 1997, the parties corresponded about ownership interests in Littleton based on OHA's suspicion that "Littleton was once affiliated with Vessels, contrary to a statement made in the Littleton refund application." Id. at 21. OHA asked Littleton ...