[Federal Register Volume 59, Number 1 (Monday, January 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 93-32043]

[[Page Unknown]]

[Federal Register: January 3, 1994]


[Docket No. RM84-6-038]


Refunds Resulting From Btu Measurement Adjustments; Commission 

December 27, 1993.
    Take notice that for the reasons set forth below, the Federal 
Energy Regulatory Commission (Commission) is ceasing further efforts to 
recover overdue Btu refunds that are due in 147 cases where the first 
seller is in bankruptcy proceedings under Chapter 7 or Chapter 11 of 
the Bankruptcy Code.1 The Commission believes that further efforts 
are not warranted because they are not likely to result in any 
additional recovery, and the Commission's resources are better utilized 
in other areas. The Commission emphasizes, however, that by this action 
it is not waiving or extinguishing the Btu refund obligation required 
to be paid by any bankruptcy court order.

    \1\The bankruptcy code is contained in Title 11 of the U.S. 
Code. The first sellers are listed on Appendix A. Since some first 
sellers owe refunds to more than one pipeline, the number of first 
sellers is less than the number of cases.


    In 1983, the United States Court of Appeals for the District of 
Columbia Circuit vacated the Commission's regulations which permitted 
first sellers to measure the Btu content of natural gas based on the 
condition of the gas as actually delivered (the ``dry rule'') and 
required maximum lawful prices under the Natural Gas Policy Act of 1978 
(NGPA) to be calculated by measuring the Btu content under the ``wet'' 
rule that had been in effect under the Natural Gas Act.2

    \2\Interstate Natural Gas Association of America v. Federal 
Energy Regulatory Commission 16 F.2d 1 (D.C. Cir. 1983), cert. 
denied, 465 U.S. 1108 (1984).

    Order No. 399, et seq.,3 which implemented the court's 
decision, required first sellers to refund all overcharges resulting 
from the use of the ``dry rule'' by November 5, 1986. In addition, 
interstate and intrastate pipelines were required to file reports 
identifying first sellers who had not paid their Btu refunds,4 and 
interstate pipelines were required to flow the Btu refunds through to 
their customers.5

    \3\Order No. 399, 49 FR 37735 (Sept. 26, 1984), FERC Stats. & 
Regs. [Regulations Preambles 1982-1985] 30,597 (Sept. 20, 1984); 
Order No. 399-A, 49 FR 46353 (Nov. 26, 1984), FERC Stats. & Regs. 
[Regulations Preambles 1982-1985] 30,612 (Nov. 20, 1984); Order No. 
399-B, 50 FR 30141 (July 24, 1985), FERC Stats. & Regs. [Regulation 
Preambles 1982-1985], 30,651 (July 18, 1985).
    \4\Pipelines were required to file the reports by December 18, 
1984, June 17, 1985, and January 5, 1987.
    \5\The Commission held that the state regulatory agency that 
regulates an intrastate pipeline may determine the disposition of 
Btu refunds received by those pipelines.

    More than $1 billion of Btu overcharges have been refunded to 
customers pursuant to Order No. 399, et seq. The pipelines' refund 
reports initially showed 5,610 cases totalling over $140 million where 
the Btu refunds had not been paid. Staff's efforts pursuing payment of 
outstanding Btu refund obligations reduced the number of pending Btu 
refund cases to 560 and the total of unpaid Btu refunds to 
approximately $9.8 million. These numbers do not include 553 cases 
where the Commission previously determined to cease further collection 
efforts because such efforts were not likely to result in payment of 
the Btu refund.6

    \6\See Notices published in the Federal Register on August 6, 
1990 (55 FR 32,028), February 14, 1991 (56 FR 6,000), and June 16, 
1992 (57 FR 26,836). These cases consisted of 467 cases where staff 
could not locate the first seller; 28 cases where the first seller 
filed for bankruptcy under Chapter 11 and the debt was less than 
$2,000; and 58 cases where the first seller's assets had been 
liquidated under Chapter 7. The notices emphasized that if the first 
sellers were subsequently located, the cases would be reactivated.


    As a result of its efforts pursuing the payment of outstanding Btu 
refund obligations, the Commission has determined that the first 
sellers in the 147 cases listed on Appendix A are in bankruptcy 
proceedings under Chapter 7 or Chapter 11 of the Bankruptcy Code. The 
refund obligation in these cases range from $112.61 to $709,463.38, and 
totals $3,533,636.05. The Commission does not know the actual 
disposition of the bankruptcy proceedings of the first sellers listed 
on Appendix A. However, such knowledge is not necessary for the action 
that the Commission is now taking. Most of the bankruptcy proceedings 
were filed more than 4 years ago, and the Btu refund obligation will 
have been treated in those proceedings in accordance with the 
applicable provisions of the Bankruptcy Code. Accordingly, the 
Commission believes that no purpose would be served by the Commission 
continuing to process these cases. Therefore, the Commission will not 
expend any further staff resources on these cases, and they will be 
considered closed. This action, however, does not waive or extinguish 
the payment of any Btu refund obligation that is required to be paid by 
any order of the bankruptcy court.
    The dollar range in these cases follows: 

                                                 No. of       Refund    
                  Dollar range                    cases     obligation  
$100,001-$710,000..............................       8    $1,761,854.11
50,001-100,000.................................       9       637,526.63
25,001-50,000..................................      13       480,179.61
2,001-25,000...................................      80       631,442.18
100-2,000......................................      37        22,633.52

    By direction of the Commission.
Lois D. Cashell,

Appendix A--First Sellers That Filed Chapter 7 or 11 Bankruptcy

A. Rex Jasper Jr.
Alan J. Antweil
Amarex Inc.
Ambra Oil & Gas Co.
Amcole Energy Corp.
American Public Energy Co.
Amquest Corp.
Arapaho Petroleum Inc.
Arrowhead Energy Co.
Bridge Oil (USA) Inc. (pred: Nucorp Energy Inc.)
Cayman Production Co.*
Clerk U.S. Bankruptcy Court of DC Reg. Bank 83-B-O
Delta Energy Resources
Eads Exploration Inc.
Earth Energy Resources 19
Earth Energy Resources Inc.
Energy Resources Oil
Enico Pipeline
Equipment Inc.
Fritz, J.F. (Payee Erin Baker, Trustee)
Frontier Exploration Inc.
G. Murrell (A/C Allied Bank of TX)
George Schurman
Great Western Resources
Herbert E. Russell
Heston Oil Co.
Ike Lovelady
Johnson Oil & Gas Corp.
L & L Operating Co.
League Minerals
Lingen Oil & Gas Inc.
Magic Circle Energy Corp.
Majestic Energy Corp.
Marine Contractors & Supply Inc.
Marion Corp.
McMurrey Petroleum Inc.
Mgf Mansfield Inc.
Mgf Oil Corp.
Milton Wessels/Constructive Trust/Uriah Exploration
Monterrey Petroleum
Morris R. Antweil
O'Connor & Young Drilling & Chapman Drilling
Ohio Partners Oil Co.
Originala Petroleum
Owen, J.P. & Co. Inc.
Partners Oil Co.
Pecos Irrigation Co.
Petromark Resources Co.
Pickard Oil Co. & J.W. Kirk Inc.
Placid Oil Co.
Pontchartrain Oil & Gas Corp. #2
Ports of Call Oil Co.
Quintex Petroleum Corp.
R. N. Hillin d/b/a Hillin Production Co.
Ramsey Property Mgmts, Inc. (Champion Reserve-CRI)
Resources Investment Corp.
Richland Resources Corp.
Robinson Brothers
Robinson Brothers Drilling Inc.
Royce Lawson*
S & J Operating Co.
Seneca Oil Co.
Smith Petroleum Co.
Stockton Oil and Gas
Taylor Operating Co.
Tex-OK Petroleum Inc.
Texas General Petroleum Corp.
Texas General Resources Inc.
Tomlinson Oil Co. Inc.
Tondu Energy Corp.*
Trans-Western Exploration Inc. (A/C MBank Dallas N)
Transcontinental Oil Corp. (C/O Paul v. Degenhart)
William W. Hamilton (Attn: Brett Martin)
Winter Hawk Ltd.

    *Filed Chapter 7 Bankruptcy.

[FR Doc. 93-32043 Filed 12-30-93; 8:45 am]