Occidental Petroleum Corp. declares the U.S. Department of Energy has implicitly conceded its long pending price oxy overcharge case against an Oxy subsidiary is "fatally flawed."
Gerald Stern, Oxy executive vice-president and senior general counsel, said DOE has issued a new administrative complaint on a theory that contradicts DOE's previous theory.
"We have always felt DOE has no case," Stem said.
"Indeed, a U.S. magistrate in Oklahoma upheld Occidental's position in a similar case.
"We believe DOE's decision to try a new theory-more than 11 years after the regulations expired-demonstrates DOE's belief that its previous claims were without legal basis."
NEW COMPLAINT
The new complaint alleges that Cities Service Oil & Gas Corp., which Oxy acquired in 1982, violated DOE's crude oil entitlements regulations during October 1979-December 1980. Cities is now OXY USA Inc.
Stem said, "The factual and legal theories of the two cases are in direct conflict, and both are flawed. The new case alleges that Cities bought price controlled oil at a price above the lawful price. The existing case alleges that the very same oil was not price controlled and that Cities bought it at a discount."
Stern called the new complaint "simply another effort by DOE to keep this litigation going on forever."
He also noted that, while the new claim seeks restitution of nearly $254 million principal along with close to $680 million in interest, it is made in the alternative to the existing case, which seeks a larger sum.
DOE's entitlements program and price regulations ended in January 1981.
The entitlements program regulations, issued in the wake of the 1973 Arab oil embargo, were designed to equalize crude oil costs among U.S. refiners. They required refiners to report to DOE prices, volumes, and regulatory status of crude oil they processed in their refineries.
The new complaint charges Cities with reporting controlled oil that it should have known was decontrolled oil.
Stern said, "Occidental intends to vigorously oppose DOE's new claim."
The earlier case, awaiting a decision by a Federal Energy Regulatory Commission administrative law judge, charges that Cities violated DOE price rules by buying uncontrolled crude at a discount in exchange for price controlled oil owned by Cities.
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