[Federal Register Volume 59, Number 70 (Tuesday, April 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8755]


[[Page Unknown]]

[Federal Register: April 12, 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 the procedures for disbursement of $610,000, 
plus accrued interest, in alleged crude oil overcharges obtained by the 
DOE under the terms of the Consent Order entered into with J.R. Cone, 
Case No. LEF-0118 (Cone). The OHA adopts the tentative determination 
made in the Proposed Decision and Order, 58 FR 68,903 (December 29, 
1993), that the funds obtained from Cone, plus interest accrued, will 
be distributed in accordance with the DOE's Modified Statement of 
Restitutionary Policy Concerning Crude Oil Overcharges, 51 FR 27899 
(August 4, 1986).

DATE AND ADDRESSES: 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, 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 applications will be 
deemed filed in all crude oil proceedings as the procedures are 
finalized.

FOR FURTHER INFORMATION CONTACT: Thomas L. Wieker, Deputy Director, 
Office of Hearings and Appeals, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-2390.

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 adopts the procedures set forth in the 
Proposed Decision and Order (see 58 FR 68,903 (December 29, 1993)) that 
the DOE has formulated to distribute to eligible claimants $610,000, 
plus accrued interest, obtained by the DOE under the terms of the 
Consent Order entered into with J.R. Cone on May 14, 1993. The funds 
were paid by Cone towards the settlement of alleged violations of the 
DOE price and allocation regulations involving the sale of crude oil 
during the period from November 1973 through February 1977. The DOE is 
currently holding the funds in an interest bearing account pending 
distribution.
    The OHA has determined to distribute the Cone Consent Order funds 
in accordance with the DOE's Modified Statement of Restitutionary 
Policy Concerning Crude Oil Overcharges, 51 FR 27899 (August 4, 
1986)(the MSRP). Under the MSRP, crude oil overcharge monies are 
divided between the Federal government, the states, and injured 
purchasers of refined petroleum products. Refunds to the states will be 
distributed in proportion to each state's consumption of petroleum 
products during the price control period. Refunds to eligible 
purchasers will be based on the volume of petroleum products they 
purchased.
    Applications for Refund must be postmarked no later than June 30, 
1994. As we state in the Decision, any party who has previously filed 
an Application for Refund in the crude oil refund proceedings should 
not file another Application for Refund. The previously filed crude oil 
application will be deemed filed in all crude oil proceedings as the 
procedures are finalized.

    Dated: April 5, 1994.
Thomas O. Mann,
Acting Director, Office of Hearings and Appeals.
Apr. 5, 1994.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Name of Firm: J.R. Cone
Date of Filing: November 16, 1993
Case Number: LEF-0118

    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 funds which J.R. Cone 
(Cone) remitted to the DOE pursuant to a Consent Order entered into 
by Cone and the DOE on May 14, 1993.
    On March 25, 1983, the OHA issued a Remedial Order (RO) finding 
that Cone had erroneously classified crude oil produced from two oil 
bearing properties as crude oil produced from stripper well 
properties. On May 14, 1993, Cone and the DOE entered into a Consent 
Order settling all claims arising from the RO. Pursuant to the 
Consent Order, Cone has remitted $610,000 to the DOE. These funds 
have been held in an interest-bearing escrow account maintained at 
the Department of the Treasury pending a determination regarding 
their proper distribution.
    In accordance with the procedural regulations codified at 10 
C.F.R. part 205, Subpart V (Subpart V), the ERA requested in its 
petition that the OHA establish special refund procedures to remedy 
the effects of alleged regulatory violations which were resolved by 
the Consent Order. This Decision and Order sets forth the OHA's plan 
to distribute these funds.

I. 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 
distributing 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 the Petroleum Overcharge Distribution and Restitution 
Act of 1986, 15 U.S.C. Secs. 4501-07 (1988), Office of Enforcement, 
9 DOE 82,508 (1981), and Office of Enforcement, 8 DOE 82,597 
(1981).

II. The Proposed Decision and Order

    We considered the ERA's petition that we implement a Subpart V 
proceeding with respect to the Cone Consent Order fund and 
determined that such a proceeding was appropriate. On December 20, 
1993, we issued a Proposed Decision and Order (PDO) setting forth 
the OHA's tentative plan to distribute this fund. See 58 Fed. Reg. 
68,903 (December 29, 1993). In the PDO, we stated our intent to 
adopt the DOE's standard crude oil refund procedures, as set out 
below, to distribute the funds obtained through the Cone Consent 
Order.
    The PDO provided a period of 30 days from the date of 
publication in the Federal Register for interested parties to file 
comments regarding the tentative distribution process. More than 30 
days has elapsed and the OHA has received no comments on the 
proposed distribution process for the Consent Order funds. 
Consequently, the procedures will be adopted as proposed.

III. The Refund Procedures

A. Crude Oil Refund Policy

    We adopt the tentative determination of the PDO to distribute 
the funds obtained with the Cone Consent Order in accordance with 
the DOE's Modified Statement of Restitutionary Policy in Crude Oil 
Cases, 51 Fed. Reg. 27899 (August 4, 1986)(The 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) (the 
Stripper Well Settlement Agreement). The MSRP establishes that 40% 
of the crude oil funds will be remitted to the Federal government, 
another 40% to the states, and up to 20% may be initially reserved 
for payment of claims to 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 Fed. Reg. 29689 (August 20, 1986). This Order provided a 
period of 30 days for 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 had received 
pursuant to the Order Implementing the MSRP. This notice was 
published at 52 Fed. Reg. 11737 (April 10, 1987) (the 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) show that they were injured by the 
alleged crude oil overcharges. We also specified that end-users of 
petroleum products whose businesses were unrelated to the petroleum 
industry will be presumed to have been injured by the alleged crude 
oil overcharges. End-users, therefore, need only submit 
documentation of their purchase volumes. See City of Columbus, 
Georgia, 16 DOE  85,550 (1987). Additionally, we stated that we 
would calculate crude oil refunds on a per gallon (or volumetric) 
basis. We obtained this figure by dividing the crude oil refund pool 
by the total consumption of petroleum products in the United States 
during the crude oil price control period. The OHA has adopted the 
refund procedures outlined in the April 10 Notice in numerous cases. 
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

    We adopt the PDO's proposed determination to use the DOE's 
standard crude oil refund procedures to distribute the monies in the 
Cone Consent Order fund. We have chosen to reserve 20% of the fund, 
$122,000, plus accrued interest, for direct refunds to claimants in 
order to ensure that sufficient funds will be available for injured 
parties.
    The OHA will evaluate crude oil refund claims filed in this 
proceeding in a manner consistent with our previous crude oil refund 
proceedings under Subpart V. See Mountain Fuel, 14 DOE at 88,869. 
Claimants in this proceeding will be required to document their 
purchase volumes of petroleum products and prove that they were 
injured as a result of the alleged overcharges.
    We 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. 
Secs. 751-760h (1988). Under this presumption, end-user claimants 
need not submit documentation to show injury, and may become 
eligible for a refund by simply documenting their purchase volumes. 
See Shell, 17 DOE at 88,406.
    Petroleum retailer, refiner, and reseller applicants must submit 
detailed documentation of injury. They may not rely upon the injury 
presumptions utilized in some refined products 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 Sec. 3003(b)(2), 15 U.S.C. 
Sec. 4502(b)(2) (1988). If a claimant has executed and submitted a 
valid waiver pursuant to one of the escrows established by the 
Stripper Well 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 we have stated in prior Decisions, a crude oil refund 
applicant need only submit one application for its share of all 
available crude oil overcharge funds. See, e.g., A. Tarricone, Inc., 
15 DOE  85,495 (1987). A party that has already submitted a claim 
in any other crude oil refund 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 final deadline for filing an Application for Refund 
from the crude oil funds. See 58 Fed. Reg. 26,318 (May 3, 1993). 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 the 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.
    To apply for a crude oil refund, a claimant should submit an 
Application for Refund containing all of the following information:
    (1) Identifying information including the claimant's name, 
current business address, business address during the refund period, 
taxpayer identification number or social security number, a 
statement indicating whether the claimant is a corporation, 
partnership, sole proprietorship, or other business entity, the 
name, title, and telephone number of a person to contact for any 
additional information, and the name and address of the person who 
should receive the refund check.1 If the Applicant operated 
under more than one name or under a different name during the price 
control period, the Applicant should specify these names;
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    \1\Under the Privacy Act of 1974, the submission of a social 
security number by an individual applicant is voluntary. An 
applicant that does not wish to submit a social security number must 
submit an employer identification number if one exists. This 
information will be used in processing refund applications, and is 
requested pursuant to our authority under the Petroleum Overcharge 
Distribution and Restitution Act of 1986, 15 U.S.C. Sec. 4502(b)(1) 
(1988), and the regulations codified at 10 CFR Part 205, Subpart V. 
The information may be shared with other Federal agencies for 
statistical, auditing or archiving purposes, and with law 
enforcement agencies when they are investigating a potential 
violation of civil or criminal law. Unless an Applicant claims 
confidentiality, this information will be available to the public in 
the Public Reference Room of the Office of Hearings and Appeals.
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    (2) If the Applicant's firm is owned by another company, or owns 
other companies, a list of those companies' names, addresses, and 
descriptions of their relationship to the Applicant's firm;
    (3) A brief description of the claimant's business and the 
manner in which it used the petroleum products listed on its 
Application;
    (4) A statement identifying the petroleum products which the 
Applicant purchased during the period from August 19, 1973, through 
January 27, 1981, an annual schedule displaying the total number of 
gallons of each petroleum product purchased during this refund 
period, and the total number of gallons of all petroleum products 
claimed on the refund application;
    (5) An explanation as to how the Applicant obtained the above 
mentioned purchase volumes, and, if estimates were used, a 
description of the method of estimation;
    (6) A statement that neither the claimant, its parent firm, 
affiliates, subsidiaries, successors, nor assigns has waived any 
right it may have to receive a crude oil refund (e.g. by having 
executed and submitted a valid waiver accompanying a claim to any 
escrow accounts established pursuant to the Stripper Well Settlement 
Agreement);
    (7) A statement that the Applicant has not filed any other 
refund application in the Subpart V crude oil refund proceeding;
    (8) If the Applicant is not an end-user, was covered by the DOE 
price regulations, or is related to the petroleum industry, a 
showing that the Applicant was injured by the alleged crude oil 
overcharges;
    (9) If the Applicant is a regulated utility or a cooperative, 
certification that it will pass on the entirety of any refund 
received to its customers, will notify its state utility commission, 
or other regulatory agency, or membership body of the receipt of any 
refund, and a brief description as to how the refund will be passed 
along;
    (10) The statement listed below signed by the individual 
Applicant or a responsible official of the company filing the refund 
application:
    I swear (or affirm) that the information contained in this 
application and its attachments is true to the best of my knowledge 
and belief. I understand that anyone who is convicted of providing 
false information to the Federal government may be subject to a 
fine, imprisonment, or both, pursuant to 18 U.S.C. Sec. 1001 (1988). 
I understand that the information contained in this application is 
subject to public disclosure. I have enclosed a duplicate of this 
entire application which will be placed in the OHA Public Reference 
Room.
    All applications should be either typed or printed and clearly 
labelled ``Application for Crude Oil Refund.'' Each Applicant must 
submit an original and one copy of the Application. If the Applicant 
believes that any information in its Application is confidential and 
does not wish for this information to be publicly disclosed, it must 
submit an original Application clearly marked ``confidential,'' 
containing the confidential information, and two copies of the 
Application with the confidential information deleted. All refund 
applications should be sent to: Subpart V Crude Oil Overcharge 
Refunds, Office of Hearings and Appeals, Department of Energy, 1000 
Independence Ave., S.W., Washington, DC 20585.
    The filing deadline is June 30, 1994. Even though an Applicant 
is not required to use any specific form for its crude oil refund 
application, a suggested form has been prepared by the OHA and may 
be obtained by sending a written request to the address given above.

C. Payments to the Federal Government and the States

    Under the terms of the MSRP, 40% of the alleged crude oil 
overcharge amounts subject to this Decision, $244,000, plus accrued 
interest, will be disbursed to the Federal government and the 
remaining 40%, $244,000, plus accrued interest, will be disbursed to 
the states 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 (1986). 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 funds remitted by J.R. Cone 
pursuant to the Consent Order finalized between J.R. Cone and the 
Department of Energy on May 14, 1993, may now be filed.
    (2) All Applications submitted pursuant to paragraph (1) 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 of the Department of Energy shall take all steps 
necessary to transfer $610,000 and all interest accrued from the 
Cone subaccount (Account No. 676C00208Z) pursuant to Paragraphs (4), 
(5), and (6) of this Decision.
    (4) The Director of Special Accounts and Payroll shall transfer 
$244,000 (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 
$244,000 (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 
$122,000 (plus interest) of the funds obtained pursuant to Paragraph 
(3) above into the subaccount denominated ``Crude Tracking- 
Claimants 4,'' Number 999DOE010Z.

    Dated: April 5, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 94-8755 Filed 4-11-94; 8:45 am]
BILLING CODE 6450-01-P