[Federal Register Volume 59, Number 107 (Monday, June 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13690]


[[Page Unknown]]

[Federal Register: June 6, 1994]


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DEPARTMENT OF ENERGY
 

Proposed Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, DOE.

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 announces proposed procedures for the disbursement of $56,149.35 
(plus accrued interest) that Telum, Inc. remitted to the DOE pursuant 
to a Consent Order entered into by the DOE and Telum. The OHA has 
tentatively determined that the funds will be distributed in accordance 
with the DOE's special refund procedures, 10 CFR part 205, subpart V.

DATES AND ADDRESSES: Comments must be filed in duplicate on or before 
July 6, 1994 and should be addressed to: Office of Hearings and 
Appeals, Department of Energy, 1000 Independence Avenue, S.W., 
Washington, DC 20585. All comments should conspicuously display a 
reference to Case Number LEF-0114.

FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director, 
Andrew W. Beckwith, Staff Analyst, Office of Hearings and Appeals, 1000 
Independence Avenue, SW., Washington, DC 20585, (202) 586-2860 (Dugan), 
(202) 586-4921 (Beckwith).

SUPPLEMENTARY INFORMATION: In accordance with Sec. 205.282(b) of the 
procedural regulations of the Department of Energy (DOE), 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 monies that have been remitted by Telum, Inc. to the DOE to 
settle possible pricing violations with respect to its sale of middle 
distillates. The DOE is currently holding $56,149.35 in an interest-
bearing escrow account pending distribution.
    Applications for Refund should not be filed at this time. 
Appropriate public notice will be given when the submission of claims 
is authorized. Any member of the public may submit written comments 
regarding the proposed refund procedures. Commenting parties are 
requested to submit two copies of their comments. Comments should be 
submitted within 30 days of the 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 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.

    Dated: May 31, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy, 
Implementation of Special Refund Procedures

    Name of Firm: Telum, Inc.
    Date of Filing: October 7, 1993.
    Case Number: LEF-0114.
May 31, 1994.
    In accordance with the procedural regulations of the Department of 
Energy (DOE), 10 CFR part 205, subpart V, the Economic Regulatory 
Administration (ERA) of the DOE filed a Petition for the Implementation 
of Special Refund Procedures with the Office of Hearings and Appeals 
(OHA) on October 7, 1993. The petition requests that OHA formulate and 
implement procedures for the distribution of funds received pursuant to 
a consent order entered into by the DOE and Telum, Inc. (Telum).

I. Background

    Telum was a ``reseller-retailer'' of ``covered products'' as those 
terms were defined in 6 CFR 150.352 and 10 CFR 212.31. Therefore, Telum 
was required to price middle distillate fuel in accordance with the 
price rule of the Mandatory Petroleum Price Regulations set forth at 10 
CFR part 212, subpart F, and antecedent regulations at 6 CFR part 150, 
subpart L. As a result of an audit, the ERA alleged that Telum and 
entities under Telum's direction violated the price regulations in 
sales of middle distillate fuel to Salt River Project (Salt River) 
during a five month period from December 1, 1973, through April 30, 
1974 (the audit period).\1\ The auditors determined that during this 
period Telum made sales of middle distillates to Salt River at prices 
in excess of the maximum lawful selling price (MLSP) permitted by the 
regulations. Consequently, the ERA issued a Proposed Remedial Order 
(PRO) to Telum on May 28, 1980, alleging pricing violations in the sale 
of middle distillate fuel to Salt River. After revising its selection 
of the ``nearest comparable outlet'' with regard to the ``new market'' 
determination under 10 CFR 212.111(b), the ERA issued an Amended PRO on 
September 15, 1986, alleging that Telum had overcharged Salt River in 
its sales of middle distillate fuel in the amount of $357,587. On April 
7, 1988, that Amended PRO was remanded by OHA to the ERA, for a new 
determination regarding Telum's nearest comparable outlet and a 
recalculation of MLSPs and any overcharges in sales to Salt River. 
Telum, Inc., 17 DOE 83,010 (1988).
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    \1\Telum was incorporated as Bonus Oil Company on August 13, 
1968. Bonus Oil Company's name was changed to Telum, Inc. effective 
December 3, 1974. For the purposes of this Decision, we will refer 
to the firm only as Telum.
    The other entities under Telum's direction, as listed in the 
consent order, are: Industrial Fuels, Inc., an Arizona Corporation, 
and Giraud Corporation, a Utah corporation.
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    The ERA did not issue a second Amended PRO. Instead, on May 30, 
1990, the DOE entered into a consent order (No. 820H00020Z) with Telum 
to resolve all administrative and civil claims related to Telum's 
compliance with the Federal petroleum price and allocation regulations 
in its resale transactions of petroleum products during the period 
December 1, 1973 through April 30, 1974. Specifically, Telum agreed to 
remit $60,000, plus interest, to the DOE for deposit in an interest-
bearing escrow account. Telum has remitted $56,149.35 to the DOE, 
consisting of $51,626.18 toward payment of the $60,000 principal amount 
due and $4,523.17 toward payment of interest due on principal. The DOE 
has authorized a write-off of the remainder of the amount due for 
reasons of uncollectability. Telum is no longer in business, and Earl 
K. Cook, the former president of Telum, has indicated that he is unable 
to pay the remainder of the amount due. As of March 31, 1994, $9,028.85 
in interest had accrued in the DOE escrow account on the amount paid by 
Telum.

II. Jurisdiction

    The procedural regulations of the DOE set forth general guidelines 
by which the Office of Hearings and Appeals may formulate and implement 
a plan of distribution for funds received as a result of an enforcement 
proceeding. 10 CFR part 205, subpart V. It is the DOE policy to use the 
subpart V process to distribute such funds. For a more detailed 
discussion of subpart V and the authority of the Office of Hearings and 
Appeals to fashion procedures to distribute refunds obtained as part of 
consent orders, see Office of Enforcement, 9 DOE 82,553 (1982); Office 
of Enforcement, 9 DOE 82,508 (1981); Office of Enforcement, 8 DOE 
82,597 (1981). After reviewing the record in the present case, we have 
concluded that a subpart V proceeding is an appropriate mechanism for 
distributing the Telum consent order fund. We therefore propose to 
grant the ERA's petition and assume jurisdiction over distribution of 
the fund.

III. Proposed Refund Procedures

A. Refund Claimant

    Insofar as possible, the consent order fund should be distributed 
to customers of Telum who were injured by the alleged overcharges. Salt 
River, the only Telum customer who made purchases during the consent 
order period that were covered by the PRO and Amended PRO, is the only 
Telum customer we have identified as likely to have been injured by the 
alleged overcharges. Although we recognize that the Telum consent order 
covers all sales of ``covered products'' by Telum for the period 
December 1, 1973 through April 30, 1974, the ERA audit files, the PRO, 
and the Amended PRO are all based only on sales by Telum to Salt River. 
The consent order, while lacking in specificity, was clearly arrived at 
in order to settle this one outstanding enforcement issue. We are thus 
able to use the information contained in the audit files for guidance 
as to the identity of Telum's injured customer and the extent of the 
alleged overcharges, as we have done in some prior refund proceedings. 
See, e.g., Howard Oil Co., 15 DOE 85,072 (1986). Consequently, we 
propose to establish a claims procedure in which Salt River may apply 
for a refund of the entire consent order fund. Limiting the universe of 
applicants to Salt River allows us to fashion a refund plan that will 
correspond most closely to the alleged overcharges settled by the 
consent order. See Consumers Oil Co., 13 DOE 85,226 (1985); Marion 
Corp., 12 DOE 85,014 (1984).
    In prior refund proceedings, in order to receive a full refund, 
claimants whose prices for goods and services are regulated by a 
governmental body, e.g., a public utility, have not been required to 
provide a detailed showing of injury. See, e.g., Dorchester Gas Corp., 
14 DOE 85,240 at 88,451 (1986). Instead, regulated firms have been 
required to (i) certify that they will pass any refund received through 
to their customers, (ii) provide us with a full explanation of how they 
plan to accomplish the restitution, and (iii) certify that they will 
notify the appropriate regulatory body of the receipt of the refund. 
Id. This requirement is based on the presumption that, with respect to 
a regulated firm, any overcharges would have been routinely passed 
through to its customers. Similarly, any refunds received should be 
passed through to its customers.
    We have been informed by Salt River that the nature of its business 
is that of a municipal public power utility whose rates for electricity 
are set by a publicly-elected Board of Directors (i.e., a governmental 
body). See Memorandum of April 29, 1994 Telephone Conversation between 
John Egan, Spokesperson for Salt River, and Andrew Beckwith, OHA Staff 
Analyst. We have determined, therefore, that Salt River is a regulated 
firm as that category is defined above. See City of Lubbock, 18 DOE 
85,116 (1988). Accordingly, we propose that Salt River, as a regulated 
firm, need not make a showing that it was injured by the alleged 
overcharges. However, Salt River will be required to comply with the 
stipulations outlined above that are incumbent upon regulated firms 
when submitting an Application for Refund.

B. Calculation of Refund Amount

    As stated above, the ERA audit files identify Salt River as the 
Telum customer injured by the alleged overcharges that were the subject 
of the consent order. We propose to pay the entire amount of the 
consent order fund to Salt River as a refund for the alleged 
overcharges. In addition, Salt River will receive all of the interest 
that has accrued on the consent order fund.

IV. Conclusion

    Salt River should not file a refund application in this proceeding 
until the issuance of a final Decision and Order. Detailed procedures 
for filing an application will be provided in the final Decision and 
Order. Before disposing of any of the funds received as a result of the 
Telum consent order, we intend to publicize the distribution process 
and to provide an opportunity for any affected party to submit 
comments. All comments must be filed within 30 days of the publication 
of this Proposed Decision in the Federal Register. In addition to 
publishing copies of the proposed and final Decisions in the Federal 
Register, copies of both will be provided to Salt River.
    It is therefore ordered that:
    The refund amount remitted to the Department of Energy by Telum, 
Inc. pursuant to Consent Order No. 820H00020Z, finalized on May 30, 
1990, will be distributed in accordance with the foregoing Decision.

[FR Doc. 94-13690 Filed 6-3-94; 8:45 am]
BILLING CODE 6450-01-P