Reconstruction Finance Corp. v. Leonard Refineries, Inc. (96 F. Supp. 813, 1951)

LEVIN, District Judge.

Plaintiff, Reconstruction Finance Corporation, a wholly owned United States Government corporation, as successor to Defense Supplies Corporation brings this action for the return of an alleged excess subsidy payment to the defendant in the sum of Nine Thousand Sixty-Two Dollars ($9,062).

The facts have been stipulated. Certain refineries in Michigan, including defendant’s refinery at Alma, Michigan, and in other midwestern states, have not at all times utilized their full productive capacities because the absence of facilities for shipping crude oil from the southern oil fields by pipe line or barge makes it impossible for them to meet the competition of refineries located along pipe-line or barge routes. The critical need, for petroleum products during World War II prompted the Defense Supplies Corporation, pursuant to authority vested in it, to grant subsidies to refiners like the defendant, to encourage the transporting of crude petroleum from distant sources to oil refineries located in the Midwest. The terms and conditions governing the payment of these subsidies are found in Regulation No. 5, issued April 20, 1944, by the Defense Supplies Corporation and published in the Federal Register. The amount of the subsidy was measured by the excess of the cost of transporting the oil by rail or barge over the cost of moving the oil by pipe line between the points of origin and destination, and the per barrel rates of subsidy for oil movements between specific points of origin and destination were listed in Schedule A of such Regulation.

The pertinent part of Schedule A reads : “The rates contained in this Schedule are based in part upon tank car tariff rates between the points listed which were in effect on April 10, 1944. In the event of any change in such tariff rates, Defense Supplies Corporation reserves the right to make corresponding adjustments in the rates listed above, effective from the date of tariff change.”

The rate of subsidy for rail movements between Midland, Texas, and defendant’s plant at Alma, Michigan, was established by this schedule at $1:059 per barrel. This rate of subsidy was based upon a published tariff as of April 10, 1944, of fifty cents (50^) per hundred weight for rail shipments of crude petroleum between these points. Agent Peel’s Southwestern Lines Tariff No. 133-