[Federal Register Volume 59, Number 97 (Friday, May 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12423]


[[Page Unknown]]

[Federal Register: May 20, 1994]


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DEPARTMENT OF ENERGY
 

Proposed Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals Department of Energy.

ACTION: Notice of proposed 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 proposed procedures for disbursement of 
$18,853.02, plus accrued interest, in alleged crude oil overcharges 
obtained by the DOE under the terms of a Remedial Order entered into 
with Petroleum Carrier Company, Inc., Max B. Penn, and Rodney 
Siegfried, Case No. LEF-0119. The OHA has tentatively determined that 
the funds obtained through this Remedial Order, plus accrued interest, 
will be distributed in accordance with the DOE's Modified Statement of 
Restitutionary Policy Concerning Crude Oil Overcharges.

DATES AND ADDRESSES: Comments must be filed in duplicate within 30 days 
of publication of this notice in the Federal Register, and should be 
addressed to the Office of Hearings and Appeals, Department of Energy, 
1000 Independence Avenue, SW., Washington, DC 20585. All comments 
should display a reference to case number LEF-0119.

FOR FURTHER INFORMATION CONTACT: Richard T. Tedrow, Deputy Director 
Office of Hearings and Appeals, 1000 Independence Avenue SW., 
Washington, DC 20585 (202) 586-8018.

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(b), notice 
is hereby given of the issuance of the Proposed Decision and Order set 
out below. The Proposed Decision and Order sets forth the procedures 
that the DOE has tentatively formulated to distribute to eligible 
claimants $18,853.02, plus accrued interest, obtained by the DOE under 
the terms of a Remedial Order entered into with Petroleum Carrier 
Company, Inc., Max B. Penn, and Rodney Siegfried on June 26, 1987. The 
funds were paid towards the settlement of alleged violations of the DOE 
price and allocation regulations involving the sale of crude oil during 
the period June 1974 through December 1977.
    The OHA has proposed to distribute the Remedial 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 would be distributed in 
proportion to each state's consumption of petroleum products during the 
price control period. Refunds to eligible purchasers would be based on 
the number of gallons of petroleum products which they purchased and 
the degree to which they can demonstrate injury.
    Any member of the public may submit written comments regarding the 
proposed refund procedures. Commenting parties are requested to provide 
two copies of their submissions. Comments must be submitted within 30 
days of publication of this notice in the Federal Register and should 
be sent to the address set forth at the beginning of this notice. All 
comments received in this proceeding will be available for public 
inspection between the hours of 1 p.m. and 5 p.m., Monday through 
Friday, except federal holidays, in the Public Reference Room of the 
Office of Hearings and Appeals, located in Room 1E-234, 1000 
Independence Avenue, SW., Washington, DC 20585.

    Date: May 13, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Implementation of Special Refund Procedures

Names of Firms: Petroleum Carrier Company, Inc., Max B. Penn, Rodney 
Siegfried
Date of Filing: December 7, 1993
Case Number: LEF-0119

    Under the procedural regulations of the Department of Energy (DOE), 
the Economic Regulatory Administration (ERA) may request that the 
Office of Hearings and Appeals (OHA) formulate and implement special 
refund procedures. 10 CFR 205.281. These procedures are used to refund 
monies to those injured by actual or alleged violations of the DOE 
price regulations.
    In this Decision and Order, we consider a Petition for 
Implementation of Special Refund Procedures filed by the ERA on 
December 7, 1993, for crude oil overcharge funds. The funds at issue in 
this petition were obtained from Petroleum Carrier Company, Inc., Max 
B. Penn, and Rodney Siegfried (hereinafter collectively referred to as 
``PCCI''). This Office issued a Remedial Order to PCCI finding 
violations of the crude oil pricing regulations during the period from 
June 1974 through December 1977. Petroleum Carrier Company, Inc., 16 
DOE  83,009 (1987). That Order required PCCI to remit $2,569,093 
($1,163,865.17 resulting from crude oil violations, plus $1,405,227.83 
in interest accrued through March 31, 1984) to the DOE. The DOE 
received $18,853.02 on December 6, 1993.* This Decision and Order 
establishes the OHA's procedures to distribute those funds, as well as 
the remainder of the settlement when it is remitted.
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    \*\No additional monies are expected.
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    The general guidelines which the OHA may use to formulate and 
implement a plan to distribute refunds are set forth in 10 CFR part 
205, subpart V. The subpart V process may be used in situations where 
the DOE cannot readily identify the persons who may have been injured 
as a result of actual or alleged violations of the regulations or 
ascertain the amount of the refund each person should receive. For a 
more detailed discussion of Subpart V and the authority of the OHA to 
fashion procedures to distribute refunds, see Office of Enforcement, 9 
DOE  82,508 (1981), and Office of Enforcement, 8 DOE  82,597 (1981). 
We have considered the ERA's request to implement Subpart V procedures 
with respect to the monies received from PCCI and have determined that 
such procedures are appropriate.

I. Background

    On July 28, 1986, the DOE issued a Statement of Modified 
Restitutionary Policy in Crude Oil Cases, 51 FR 27899 (August 4, 1986) 
(the SMRP). The SMRP, issued as a result of a court-approved Settlement 
Agreement In re: The Department of Energy Stripper Well Exemption 
Litigation, M.D.L. No. 378 (D. Kan. 1986), reprinted in 6 Federal 
Energy Guidelines  90,501 (the Stripper Well Agreement), provides that 
crude oil overcharge funds will be divided among the states, the 
federal government, and injured purchasers of refined petroleum 
products. Eighty percent of the funds, and any monies remaining after 
all valid claims are paid, are to be disbursed equally to the states 
and federal government for indirect restitution.
    Shortly after the issuance of the SMRP, the OHA issued an Order 
that announced its intention to apply the Modified Policy in all 
Subpart V proceedings involving alleged crude oil violations. Order 
Implementing the Modified Statement of Restitutionary Policy Concerning 
Crude Oil Overcharges, 51 FR 29689 (August 20, 1986). In that Order, 
the OHA solicited comments concerning the appropriate procedures to 
follow in processing refund applications in crude oil refund 
proceedings. On April 6, 1987, the OHA issued a Notice analyzing the 
numerous comments and setting forth generalized procedures to assist 
claimants that file refund applications for crude oil monies under the 
Subpart V regulations. 52 Fed. Reg. 11737 (April 10, 1987) (the April 
10 Notice).
    The OHA has applied these procedures in numerous cases since the 
April 10 Notice, e.g., New York Petroleum, Inc., 18 DOE  85,435 (1988) 
(New York Petroleum); Shell Oil Co., 17 DOE  85,204 (1988); Ernest A. 
Allerkamp, 17 DOE  85,079 (1988) (Allerkamp), and the procedures have 
been approved by the United States District Court for the District of 
Kansas as well as the Temporary Emergency Court of Appeals (TECA). 
Various States filed a Motion with the Kansas District Court, claiming 
that the OHA violated the Stripper Well Agreement by employing 
presumptions of injury for end-users and by improperly calculating the 
refund amount to be used in those proceedings. In re: The Department of 
Energy Stripper Well Exemption Litigation, 671 F. Supp. 1318 (D. Kan. 
1987), aff'd, 857 F. 2d 1481 (Temp. Emer. Ct. App. 1988). On August 17, 
1987, Judge Theis issued an Opinion and Order denying the States' 
Motion in its entirety. The court concluded that the Stripper Well 
Agreement ``does not bar [the] OHA from permitting claimants to employ 
reasonable presumptions in affirmatively demonstrating injury entitling 
them to a refund.'' Id. at 1323. The court also ruled that, as 
specified in the April 10 Notice, the OHA could calculate refunds based 
on a portion of the M.D.L. 378 overcharges. Id. at 1323-24.

II. The Proposed Refund Procedures

A. Refund Claims
    We now propose to apply the procedures discussed in the April 10 
Notice to the crude oil Subpart V proceeding that is the subject of the 
present determination. As noted above, $18,853.02 of an alleged crude 
oil violation, plus interest, is covered by this proposed Decision. We 
have decided to reserve the full twenty percent of the alleged crude 
oil violation amount, or $3,770.60, plus interest, for direct refunds 
to claimants, in order to ensure that sufficient funds will be 
available for refunds to injured parties.
    The process which the OHA will use to evaluate claims based on 
alleged crude oil violations will be modeled after the process the OHA 
has used in Subpart V proceedings to evaluate claims based upon alleged 
overcharges involving refined products. E.g., Mountain Fuel Supply Co., 
14 DOE  85,475 (1986) (Mountain Fuel). As in non-crude oil cases, 
applicants will be required to document their purchase volumes of 
covered products and prove that they were injured as a result of the 
alleged violations. Generally, a covered product is any product that 
was either covered by the Emergency Petroleum Allocation Act of 1973, 
15 U.S.C. Secs. 751-760, or if the product was purchased from a crude 
oil refinery or originated in a crude oil refinery. See Great Salt Lake 
Minerals & Chem. Corp., 23 DOE  88,118, at 88,305 (1993). Applicants 
who were end-users or ultimate consumers of petroleum products, whose 
businesses are unrelated to the petroleum industry, and who were not 
subject to the DOE price regulations are presumed to have been injured 
by any alleged crude oil overcharges. In order to receive a refund, 
end-users need not submit any further evidence of injury beyond the 
volume of petroleum products purchased during the period of price 
controls. E.g., A. Tarricone, Inc., 15 DOE  85,495, at 88,893-96 
(1987). However, the end-user presumption of injury can be rebutted by 
evidence which establishes that the specific end-user in question was 
not injured by the crude oil overcharges. E.g., Berry Holding Co., 16 
DOE  85,405, at 88,797 (1987). If an interested party submits evidence 
that is sufficient to cast serious doubt on the end-user presumption, 
the applicant will be required to produce further evidence of injury. 
E.g., New York Petroleum, 18 DOE at 88,701-03.
    Reseller and retailer claimants must submit detailed evidence of 
injury and may not rely on the presumptions of injury utilized in 
refund cases involving refined petroleum products. They can, however, 
use econometric evidence of the type employed in the Report by the 
Office of Hearings and Appeals to the United States District Court for 
the District of Kansas, In Re: The Department of Energy Stripper Well 
Exemption Litigation, reprinted in 6 Fed. Energy Guidelines  90,507 
(1986). Applicants who executed and submitted a valid waiver pursuant 
to one of the escrows established in the Stripper Well Agreement have 
waived their rights to apply for crude oil refunds under Subpart V. 
Mid-America Dairyman, Inc. v. Herrington, 878 F. 2d 1448 (Temp. Emer. 
Ct. App. 1989); accord Boise Cascade Corp., 18 DOE  85,970 (1989).
    Refunds to eligible claimants who purchased refined products will 
be calculated on the basis of a volumetric refund amount derived by 
dividing the alleged crude oil violation amounts involved in this 
determination ($18,853.02) by the total consumption of petroleum 
products in the United States during the period of price controls 
(2,020,997,335,000 gallons). Mountain Fuel, 14 DOE at 88,868 n.4.
    As we stated in previous Decisions, a crude oil refund applicant 
will be required to submit only one application for crude oil 
overcharge funds. E.g., Allerkamp, 17 DOE at 88,176. Any party that has 
previously submitted a refund application in the crude oil refund 
proceedings need not file another application. That previously filed 
application will be deemed to be filed in all crude oil proceedings as 
the procedures are finalized. The DOE has established June 30, 1994, as 
the final deadline for filing an Application for Refund from the crude 
oil funds. See 58 F.R. 26,318 (May 3, 1993). It is the policy of the 
DOE to pay all crude oil refund claims filed within this deadline at 
the rate of $0.0008 per gallon. However, while we anticipate that 
applicants that filed their claims within the original June 30, 1988 
deadline will receive a supplemental refund payment, we will decide in 
the future whether claimants that filed later Applications should 
receive additional refunds. 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.
B. Payments to the States and Federal Government
    Under the terms of the SMRP, we propose that the remaining eighty 
percent of the alleged crude oil violation amounts subject to this 
Decision, or $15,082.42, plus interest, should be disbursed in equal 
shares to the states and federal government for indirect restitution. 
The share or ratio of the funds which each state will receive is 
contained in Exhibit H of the Stripper Well Agreement. 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 Agreement.
    It Is Therefore Ordered That:
    The refund amount remitted to the Department of Energy by Petroleum 
Carrier Company, Inc., Max B. Penn, and Rodney Siegfried pursuant to 
the Remedial Order executed on June 26, 1987 will be distributed in 
accordance with the foregoing Decision.

[FR Doc. 94-12423 Filed 5-19-94; 8:45 am]
BILLING CODE 6450-01-P