[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] ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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