[Federal Register Volume 59, Number 45 (Tuesday, March 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5311]


[[Page Unknown]]

[Federal Register: March 8, 1994]



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DEPARTMENT OF ENERGY
 

Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, Department of Energy.


ACTION: Notice of implementation of special refund procedures.

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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) announces procedures for the disbursement of $17,816.72, 
plus accrued interest, in crude oil price violation amounts obtained by 
the DOE pursuant to a Remedial Order issued on April 3, 1980, to 
Warwick Oil Corporation (Case No. LEF-0117). The OHA has determined 
that the funds obtained from the remedial order firm, plus accrued 
interest, will be distributed in accordance with the DOE's Modified 
Statement of Restitutionary Policy in Crude Oil Cases. Accordingly, 40 
percent of the funds will be remitted to the federal government, 
another 40 percent to the states, and 20 percent will be initially 
reserved for the payment of claims by injured parties.

DATE AND ADDRESS: Applications for Refund from the crude oil funds 
should be clearly labeled ``Application for Crude Oil Refunds'' and 
should be mailed to subpart V Crude Oil Overcharge Refunds, Office of 
Hearings and Appeals, Department of Energy, 1000 Independence Avenue, 
SW., Washington, DC 20585. Applications for Refund must be filed in 
duplicate no later than June 30, 1994. Any party who has previously 
filed an Application for Refund should not file another Application for 
Refund from the present crude oil funds. The previously filed crude oil 
application will be deemed filed in all crude oil proceedings as the 
procedures are finalized.

FOR FURTHER INFORMATION CONTACT: Thomas O. Mann, Deputy Director, Roger 
Klurfeld, Assistant Director, Office of Hearings and Appeals, 1000 
Independence Avenue, SW., Washington, DC 20585, (202) 586-2094 (Mann); 
586-2383 (Klurfeld).

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(c), notice 
is hereby given of the issuance of the Decision and Order set out 
below. The Decision and Order sets forth the procedures that the DOE 
has formulated to distribute $17,816.72, plus accrued interest, 
obtained by the DOE pursuant to a Remedial Order issued to Warwick Oil 
Corporation (Warwick) on April 3, 1980. In the Remedial Order, the DOE 
found that, during the period January 1976 through November 1977 
Warwick charged prices for crude oil which exceeded the maximum prices 
that the firm was permitted to charge under Federal petroleum price 
regulations.
    The OHA has determined to distribute the funds obtained from 
Warwick in accordance with the DOE's Modified Statement of 
Restitutionary Policy in Crude Oil Cases, 51 FR 27899 (August 4, 1986) 
(MSRP). The MSRP was issued as a result of a court-approved Settlement 
Agreement. In re: The Department of Energy Stripper Well Exemption 
Litigation, 653 F. Supp. 108 (D. Kan.), 6 Fed. Energy Guidelines  
90,509 (1986) (Stripper Well Settlement Agreement). In accordance with 
the MSRP, the OHA has determined that 80 percent of the Warwick crude 
oil overcharge amounts, plus accrued interest, will be disbursed in 
equal shares to the states and the federal government for indirect 
restitution. Refunds to the states will be in proportion to the 
consumption of petroleum products in each state during the period of 
price controls. When disbursed, these funds will be subject to the same 
limitations and reporting requirements as all other crude oil monies 
received by the states under the Stripper Well Settlement Agreement.
    Also under the terms of the MSRP, the DOE has determined that the 
remaining 20 percent of the Warwick crude oil overcharge funds will be 
initially reserved for the payment of claims by injured parties. The 
specific requirements which an injured party must meet in order to 
receive a refund are set out in section III of the Decision. Claimants 
who meet these specific requirements will be eligible to receive their 
share of all available crude oil overcharge funds based on the number 
of gallons of covered petroleum products which they purchased during 
the price control period.
    Applications for Refund must be postmarked no later than June 30, 
1994. As stated in the Decision, any party who has previously submitted 
a refund application in the crude oil refund proceedings should not 
file another application for refund in the crude oil proceedings. The 
previously filed crude oil application will be deemed filed in all 
crude oil proceedings as the procedures are finalized.

    Dated: March 1, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

March 1, 1994.
    Name of Firm: Warwick Oil Corp.
    Date of Filing: November 16, 1993.
    Case Number: LEF-0117.
    On November 16, 1993, the Economic Regulatory Administration (ERA) 
of the Department of Energy (DOE) filed a Petition for the 
Implementation of Special Refund Procedures with the Office of Hearings 
and Appeals (OHA) to distribute the funds received pursuant to a 
Remedial Order issued by the DOE to Warwick Oil Corporation (Warwick), 
a crude oil producer. In accordance with the provisions of the 
procedural regulations at 10 CFR part 205, subpart V (subpart V), the 
ERA requests in its Petition that the OHA establish special procedures 
to make refunds in order to remedy the effects of regulatory violations 
described in the Remedial Order. This Decision and Order sets forth the 
OHA's plan to distribute these remedial order funds.

I. Background

    The DOE issued a Remedial Order to Warwick on April 3, 1980, 
concluding that the firm had violated the Federal petroleum price 
regulations in its sales of crude oil from the Hanks Company lease at 
prices that exceeded maximum lawful prices. Warwick has since remitted 
$17,816.72 in compliance with the Remedial Order, to which interest has 
subsequently accrued. These funds continue to be held in an interest-
bearing escrow account maintained at the Department of the Treasury.

II. Jurisdiction and Authority

    The subpart V regulations set forth general guidelines which may be 
used by the OHA in formulating and implementing a plan for the 
distribution of funds received as a result of an enforcement 
proceeding. The DOE policy is to use the subpart V process to 
distribute such funds. For a more detailed discussion of subpart V and 
the authority of the OHA to fashion procedures to distribute refunds. 
See Petroleum Overcharge Distribution and Restitution Act of 1986, 15 
U.S.C. 4501-4507, Office of Enforcement, 9 DOE 82,508 (1981), and 
Office of Enforcement, 8 DOE 82,597 (1981) (Vickers).
    We have considered the ERA's petition that we implement subpart V 
proceedings with respect to the Warwick remedial order funds and have 
determined that such proceedings are appropriate. This Decision and 
Order sets forth the OHA's plan to distribute those funds.

III. Refund Procedures

    On December 15, 1993, the OHA issued a Proposed Decision and Order 
(PD&O) establishing tentative procedures to distribute the remedial 
order funds. That PD&O was published in the Federal Register, and a 30-
day period was provided for the submission of comments regarding our 
proposed refund plan. See 58 FR 67405 (December 21, 1993). More than 30 
days have elapsed and the OHA has received no substantive comments 
concerning the proposed procedures for the distribution of the remedial 
order funds. Consequently, the procedures will be adopted as proposed.

A. Crude Oil Refund Policy

    The funds obtained pursuant to the Warwick Remedial Order should 
therefore be distributed in accordance with the DOE's Modified 
Statement of Restitutionary Policy in Crude Oil Cases, 51 FR 27899 
(August 4, 1986) (MSRP). The MSRP was issued as a result of a court-
approved Settlement Agreement In re: The Department of Energy Stripper 
Well Exemption Litigation, 653 F. Supp. 108 (D. Kan.), 6 Fed. Energy 
Guidelines 90,509 (1986) (Stripper Well Settlement Agreement). The 
MSRP establishes that 40 percent of the crude oil overcharge funds will 
be remitted to the federal government, another 40 percent to the 
states, and up to 20 percent may be initially reserved for the payment 
of claims by injured parties. The MSRP also specifies that any monies 
remaining after all valid claims by injured purchasers are paid be 
disbursed to the federal government and the states in equal amounts.
    The OHA has utilized the MSRP in all subpart V proceedings 
involving alleged crude oil violations. See Order Implementing the 
MSRP, 51 FR 29689 (August 20, 1986). This Order provided a period of 30 
days for the filing of comments or objections to our proposed use of 
the MSRP as the groundwork for evaluating claims in crude oil refund 
proceedings. Following this period, the OHA issued a notice evaluating 
the numerous comments which it received pursuant to the Order 
Implementing the MSRP. This notice was published at 52 FR 11737 (April 
10, 1987) (April 10 Notice).
    The April 10 notice contained guidance to assist potential 
claimants wishing to file refund applications for crude oil monies 
under the subpart V regulations. Generally, all claimants would be 
required to (1) document their purchase volumes of petroleum products 
during the August 19, 1973, through January 27, 1981, crude oil price 
control period, and (2) prove that they were injured by the alleged 
crude oil overcharges. We also specified that end-users of petroleum 
products whose businesses are unrelated to the petroleum industry will 
be presumed to have been injured by the alleged crude oil overcharges 
and need not submit any additional proof of injury beyond documentation 
of their purchase volumes. See, e.g., Shell Oil Co., 17 DOE 85,204 
(1988) (Shell); Mountain Fuel Supply Co., 14 DOE 85,475 (1986) 
(Mountain Fuel).

B. Refund Claims

    These standard crude oil refund procedures will be used to 
distribute the monies in the Warwick Remedial Order fund. We have 
chosen to initially reserve 20 percent of the fund, plus accrued 
interest, for direct refunds to claimants in order to ensure that 
sufficient funds will be available for injured parties. This reserve 
figure may later be reduced if circumstances warrant.
    The OHA will evaluate crude oil refunds in a manner similar to that 
used in subpart V proceedings to evaluate claims based on alleged 
refined product overcharges. See Mountain Fuel, 14 DOE at 88,869. Under 
these procedures, claimants will be required to document their purchase 
volumes of petroleum products and prove that they were injured as a 
result of the violations.
    We will adopt a presumption that the crude oil overcharges were 
absorbed, rather than passed on, by applicants which were (1) end-users 
of petroleum products, (2) unrelated to the petroleum industry, and (3) 
not subject to the regulations promulgated under the Emergency 
Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. 751-760h. In order 
to receive a refund, end-user claimants need not submit any evidence of 
injury beyond documentation of their purchase volumes. See Shell, 17 
DOE at 88,406.
    Petroleum retailer, reseller, and refiner applicants must submit 
detailed evidence of injury, and they may not rely upon the injury 
presumptions utilized in some refined product refund cases. Id. These 
applicants may, however, use econometric evidence of the type found in 
the OHA Report on Stripper Well Overcharges, 6 Fed. Energy Guidelines 
90,507 (1985). See also Petroleum Overcharge Distribution and 
Restitution Act 3003(b)(2), 15 U.S.C. Sec. 4502(b)(2). If a claimant 
has executed and submitted a valid waiver pursuant to one of the 
escrows established by the Stripper Well Settlement Agreement, it has 
waived its rights to file an application for subpart V crude oil refund 
monies. See Mid-America Dairymen v. Herrington, 878 F.2d 1448 (Temp. 
Emer. Ct. App.), 3 Fed. Energy Guidelines 26,617 (1989); In re: 
Department of Energy Stripper Well Exemption Litigation, 707 F. Supp. 
1267 (D. Kan.), 3 Fed. Energy Guidelines 26,613 (1987).
    As has been stated in prior Decisions, a crude oil refund applicant 
will only be required to submit one application for its share of all 
available crude oil overcharge funds. See, e.g., A. Tarricone, Inc., 15 
DOE 85495 (1987). A party that has already submitted a claim in any 
other crude oil refund proceeding implemented by the DOE need not file 
another claim. The prior application will be deemed to be filed in all 
crude oil refund proceedings finalized to date. The DOE has established 
June 30, 1994, as the current deadline for filing an Application for 
Refund from the crude oil funds. Quintana Energy Corp., 21 DOE 85,032 
(1991). It is the policy of the DOE to pay all crude oil refund claims 
at the rate of $.0008 per gallon. While we anticipate that applicants 
that filed their claims before June 30, 1988, will receive a 
supplemental refund payment, we will decide in the future whether 
claimants that filed later applications should receive additional 
refunds. See, e.g., Seneca Oil Co., 21 DOE 85,327 (1991). Notice of 
any additional amounts available in the future will be published in the 
Federal Register.

C. Payments to the Federal Government and the States

    Under the terms of the MSRP, we have determined that the remaining 
80 percent of the crude oil overcharge amounts subject to this 
Decision, plus accrued interest, should be disbursed in equal shares to 
the states and federal government for indirect restitution. Refunds to 
the states will be in proportion to the consumption of petroleum 
products in each state during the period of price controls. The share 
or ratio of the funds which each state will receive is contained in 
exhibit H of the Stripper Well Settlement Agreement, 6 Fed. Energy 
Guidelines 90,509 at 90,687. When disbursed, these funds will be 
subject to the same limitations and reporting requirements as all other 
crude oil monies received by the states under the Stripper Well 
Settlement Agreement.
    It Is Therefore Ordered That:
    (1) Applications for Refund from the crude oil overcharge funds 
remitted by Warwick Oil Corporation may now be filed.
    (2) All Applications submitted pursuant to Paragraph (1) above must 
be filed in duplicate and postmarked no later than June 30, 1994.
    (3) The Director of Special Accounts and Payroll, Office of 
Departmental Accounting and Financial Systems Development, Office of 
the Controller, Department of Energy, shall take all steps necessary to 
transfer $17,816.72 (plus interest) from the Warwick Oil Corporation 
subaccount (Account Number 640C00375Z), pursuant to Paragraphs (4), 
(5), and (6) of this Decision.
    (4) The Director of Special Accounts and Payroll shall transfer 
$7,126.69 (plus interest) of the funds obtained pursuant to Paragraph 
(3) above, into the subaccount denominated ``Crude Tracking-States,'' 
Number 999DOE003W.
    (5) The Director of Special Accounts and Payroll shall transfer 
$7,126.69 (plus interest) of the funds obtained pursuant to Paragraph 
(3) above, into the subaccount denominated ``Crude Tracking-Federal,'' 
Number 999DOE002W.
    (6) The Director of Special Accounts and Payroll shall transfer 
$3,563.34 (plus interest) of the funds obtained pursuant to Paragraph 
(3) above, into the subaccount denominated ``Crude Tracking-Claimants 
4,'' Number 999DOE010Z.


    Dated: March 1, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 94-5311 Filed 3-7-94; 8:45 am]
BILLING CODE 6450-01-P