[Federal Register Volume 59, Number 143 (Wednesday, July 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18291]


[[Page Unknown]]

[Federal Register: July 27, 1994]


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DEPARTMENT OF ENERGY
Economic Regulatory Administration

 

Proposed Consent Order with Murphy Oil Corporation, Murphy Oil 
USA, Inc. and Murphy Exploration & Production Company

AGENCY: Economic Regulatory Administration, DOE.

ACTION: Notice of proposed consent order and opportunity for public 
comment.

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SUMMARY: The Economic Regulatory Administration (ERA) announces a 
proposed Consent Order between the Department of Energy (DOE) and 
Murphy Oil Corporation, Murphy Oil USA, Inc. and Murphy Exploration & 
Production Company (Murphy). The agreement proposes to resolve matters 
relating to Murphy's compliance with the federal petroleum price and 
allocation regulations for the period January 1, 1973 through January 
28, 1981. If this Consent Order is approved, Murphy will pay 
$10,700,000.00 to DOE. To distribute these monies, DOE's Office of 
Hearings and Appeals will be petitioned to implement Special Refund 
Procedures pursuant to 10 CFR Part 205, Subpart V, in which proceedings 
any persons who claim to have suffered injury from the alleged 
overcharges would have the opportunity to submit claims for payment.
    Pursuant to 10 CFR Sec. 205.199J, ERA will receive written comments 
on the proposed Consent Order and will consider all comments received 
from the public in determining whether to accept the settlement and 
issue a final Order, renegotiate the agreement and issue a modified 
agreement as a final Order, or reject the settlement. DOE's final 
decision will be published in the Federal Register, along with an 
analysis of significant written comments in response to this notice, as 
well as any other considerations that were relevant to the final 
decision.

DATES: Comments must be received by August 26, 1994.

ADDRESSES: Interested parties are invited to submit written comments 
concerning this proposed Consent Order to: Murphy Consent Order 
Comments, U.S. Department of Energy, Economic Regulatory 
Administration, GC-44, 820 First Street, N.E., Suite 810, Washington, 
D.C. 20585. Any information or data considered confidential by the 
person submitting it must be identified as such in accordance with the 
provisions of 10 CFR Sec. 205.9(f).

FOR FURTHER INFORMATION CONTACT: Dorothy Hamid, Economic Regulatory 
Administration, Department of Energy, 820 First Street, N.E., Suite 
810, Washington, D.C. 20585, (202) 523-3045.

SUPPLEMENTARY INFORMATION: Murphy is a petroleum refiner and a producer 
subject to the audit jurisdiction of ERA to determine compliance with 
the federal petroleum price and allocation regulations. During the 
period covered by the proposed Consent Order, January 1, 1973 through 
January 28, 1981, Murphy engaged in, among other things, the 
production, sale and refining of crude oil. On February 9, 1987, Murphy 
and DOE entered into a Consent Order (hereinafter the 1987 Consent 
Order) that settled, with certain specific exceptions, all claims and 
disputes against Murphy by DOE for the period January 1, 1973 through 
January 28, 1981. The 1987 Consent Order specifically excepted, among 
other things, issues or claims then pending or arising out of first 
sales of crude oil produced and sold from properties operated by 
Murphy.
    As a result of DOE's investigation of Murphy's compliance with the 
federal petroleum price and allocation regulations during the period 
covered by the proposed Consent Order, ERA issued a Proposed Remedial 
Order (PRO) to Murphy on December 15, 1986. On June 17, 1992, DOE's 
Office of Hearings and Appeals (OHA) modified the PRO and issued it as 
a Remedial Order (RO) to Murphy. Murphy Oil Corp., 22 DOE  83,005 
(1992). The RO finds Murphy liable to make restitution of 
$13,366,664.60, plus interest to the date of restitution, for 
violations of the regulations applicable to first sales of domestic 
crude oil (10 CFR Secs. 212.72-212.74), the regulations exempting from 
the price rules the sale of crude oil produced from ``stripper well'' 
properties (10 CFR Secs. 210.32 and 212.54), and the normal business 
practices rule (10 CFR Sec. 210.62(c)) in connection with Murphy's 
first sales of crude oil during the period September 1973 through 
December 1979. With interest, Murphy's current liability under the RO 
would total $67.6 million through June 1994. Murphy appealed that RO to 
the Federal Energy Regulatory Commission (FERC).
    The RO also remands for further proceedings claims against Murphy 
pertaining to Murphy's operation of properties for which the PRO found 
violations during the year 1979, as well as certain crude oil 
properties not included within ERA's investigation of Murphy or within 
the PRO.
    On January 24, 1994, a FERC Administrative Law Judge issued a 
decision and proposed order (D&PO) that modified the RO and directed 
recalculation of the amount of restitution. Ocean Drilling & 
Exploration Co., et al., 66 FERC 63,002 (1994). The D&PO is now 
pending before the Commission in Docket No. RO92-5-000. With interest, 
Murphy's current liability under the D&PO (including ERA's estimate of 
Murphy's liability for previously unaudited properties and unaudited 
time periods (yet to be adjudicated by OHA or FERC)) totals 
approximately $5.2 million.
    ERA has preliminarily agreed to the proposed $10,700,000 settlement 
as resolution of Murphy's liability for DOE regulatory violations for 
the period covered by the proposed Consent Order. ERA has made this 
tentative determination after an assessment of the risks of the current 
matters in litigation. Among other things, ERA has considered the risk 
pertaining to the following issues that Murphy has raised in its 
defense: whether Murphy properly applied the definition of ``property'' 
to certain of its offshore and onshore producing premises in the period 
September 1973 through August 1976; whether the largest of Murphy's 
offshore producing premises qualified as multiple DOE ``properties'' 
under DOE Rulings 1977-1 and 1977-2; whether Murphy charged prices in 
excess of the appropriate ceiling prices for crude oil produced from 
offshore and onshore properties that it operated; whether Murphy should 
be liable for 100% of the overcharges associated with sales of crude 
oil that had been taken ``in kind'' from Murphy-operated properties and 
sold by working interest owners; and whether Murphy should be liable 
for 100% of the overcharges associated with certain sales of crude oil 
from Murphy-operated properties as to which the federal government 
received a royalty interest. ERA has also considered the time and 
expense that would be required for the government to litigate every 
issue fully. Based on these factors, ERA has tentatively concluded that 
the resolution of its claims against Murphy for $10,700,000 is an 
appropriate settlement and in the public interest. Except as 
specifically excluded, all pending and potential civil and 
administrative disputes, claims and causes of action, whether or not 
heretofore asserted, between the DOE and Murphy relating to Murphy's 
compliance with the federal petroleum price and allocation regulations 
are resolved and extinguished by this Consent Order. Murphy and DOE 
mutually release each other from the claims arising under the subject 
matter covered by the proposed Consent Order.
    Under the terms of the proposed Consent Order, Murphy is required 
to pay the sum of $10,700,000 within thirty (30) days of the effective 
date of the Consent Order and shall maintain records as are necessary 
to demonstrate compliance with the terms of this Consent Order.
    If the settlement is not made final by the one hundred fiftieth 
(150th) day following execution, Murphy may withdraw from the proposed 
agreement.

Submission of Written Comments:

    The proposed Consent Order cannot be made effective until the 
conclusion of the public review process, of which this Notice is a 
part.
    All comments received by the thirtieth (30th) day following 
publication of this Notice in the Federal Register will be considered 
before determining whether to adopt the proposed Consent Order as a 
final Order. Any modifications of the proposed Consent Order which 
significantly alter its terms or impact will be published for 
additional comments. If, after considering the comments it has 
received, ERA determines to issue the proposed Consent Order as a final 
Order, the proposed Order will be made final and effective by 
publication of a Notice in the Federal Register.

    Issued in Washington, D.C., on July 21, 1994.
Robert R. Nordhaus,
Acting Administrator, Economic Regulatory Administration, General 
Counsel.
[FR Doc. 94-18291 Filed 7-26-94; 8:45 am]
BILLING CODE 6450-01-P