[Federal Register Volume 59, Number 147 (Tuesday, August 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18780]


[[Page Unknown]]

[Federal Register: August 2, 1994]


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DEPARTMENT OF ENERGY
Office of Hearings and Appeals

 

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 announces the 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 
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: The Application for Refund must be filed in 
duplicate, addressed to ``Telum Special Refund Proceeding,'' and sent 
to: Office of Hearings and Appeals, Department of Energy, 1000 
Independence Avenue, S.W., Washington, DC 20585.
    The application should display a prominent reference to Case Number 
LEF-0114 and be postmarked no later than October 31, 1994.
FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director, 
Andrew W. Beckwith, Staff Analyst, Office of Hearings and Appeals, 1000 
Independence Avenue, S.W., Washington, DC 20585, (202) 586-2860 
(Dugan), (202) 586-4921 (Beckwith).

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 sets forth the procedures that the DOE 
has 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.
    The OHA has determined to distribute these funds in a refund 
process in which we will accept a refund claim from the party injured 
as a result of Telum's alleged overcharges. The specific requirements 
that the applicant must meet in order to receive the refund are set out 
in Section III of the Decision. The claimant who meets these specific 
requirements will be eligible to receive a refund of the entire consent 
order amount plus any accrued interest. In the event that a valid 
refund application is not filed, the funds will be used for indirect 
restitution in accordance with the provisions of the Petroleum 
Overcharge and Distribution Act of 1986, 15 U.S.C. Secs. 4501-4507.
    The Application for Refund must be postmarked no later than 90 days 
after publication of this Decision and Order in the Federal Register. 
Instructions for the completion of the refund application are set forth 
in the Decision that immediately follows this notice. The application 
should be sent to the address listed at the beginning of this notice.
    All submissions, except those containing confidential information, 
will be made 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, S.W., Washington, D.C. 20585.

    Dated: July 25, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

July 25, 1994.

Implementation of Special Refund Procedures

Name of Firm: Telum, Inc.
Date of Filing: October 7, 1993
Case Number: LEF-0114

    In accordance with the procedural regulations of the Department 
of Energy (DOE), 10 C.F.R. 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 C.F.R. Part 212, Subpart F, and 
antecedent regulations at 6 C.F.R. 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).* 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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    *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 June 30, 1994, $9,615 in interest had accrued in the DOE 
escrow account on the amount paid by Telum.
    On May 31, 1994, we issued a Proposed Decision and Order in 
which we determined that it was appropriate to establish a special 
refund proceeding with respect to the Telum consent order fund. In 
that Proposed Decision, we tentatively set forth procedures to 
distribute a refund to the party that was injured by Telum's alleged 
pricing violations in sales of middle distillates during the consent 
order period. Specifically, we proposed that Salt River, the party 
injured by Telum's alleged pricing violations, be eligible for the 
entire consent order fund plus accrued interest. The Proposed 
Decision was published in the Federal Register on June 6, 1994 (59 
Fed. Reg. 29289), and comments on the proposed refund mechanism were 
to be submitted within 30 days of that date. No comments regarding 
the Proposed Decision and Order were received. Accordingly, we have 
determined that the proposed procedures should be adopted.
    The purpose of this Decision and Order is to establish 
procedures to be used for filing and processing Salt River's claim 
to a refund in this matter. This Decision sets forth the information 
that Salt River should submit in order to receive the entire Telum 
consent order fund.

I. 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 C.F.R. 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). As we 
stated in the Proposed Decision, we have determined that a Subpart V 
proceeding is an appropriate method for distributing the Telum 
consent order fund. Therefore, we will grant the ERA's petition and 
assume jurisdiction over distribution of the fund.

III. Refund Procedures

A. Refund Claimant

    In the Proposed Decision, we determined that insofar as possible 
the consent order fund should be distributed to the customer of 
Telum who was 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 identified as likely to have been injured by the 
alleged overcharges. Although 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 are establishing a claims procedure in 
which Salt River may apply for a refund equal to 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. These requirements are 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 
have determined 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. In the Proposed Decision, we indicated 
our intention to find Salt River eligible for the entire amount of 
the consent order fund as restitution for the alleged overcharges. 
We received no comments in opposition to this proposal and therefore 
shall adopt it. In addition, Salt River will be eligible to receive 
all of the interest that has accrued on the consent order fund.

C. Application for Refund Procedures

    An Application for Refund may now be filed by Salt River. Salt 
River's Application must be postmarked within 90 days after 
publication of this Decision and Order in the Federal Register. See 
10 C.F.R. Sec. 205.286. The application must be in writing, signed 
by an authorized representative of Salt River, and specify that it 
pertains to the Telum, Inc. consent order fund, Case No. LEF-0114.
    Salt River's Application for Refund must be filed in duplicate. 
A copy of the application will be available for public inspection in 
the Public Reference Room of the Office of Hearings and Appeals, 
Room 1E-234, 1000 Independence Avenue, S.W., Washington, DC. If Salt 
River believes that its application contains confidential 
information, it must so indicate on the first page of its 
application and submit two additional copies of its application from 
which the information that it claims is confidential has been 
deleted, together with a statement specifying why any such 
information is privileged or confidential.
    The application must also indicate whether the applicant or any 
person acting on its instructions has filed or intends to file any 
other application or claim of whatever nature regarding the matters 
at issue in the underlying Telum enforcement proceeding. Salt River 
must also certify that it is not related to Telum, the consent order 
firm. The application must include the following statement: ``I 
swear (or affirm) that the information submitted is true and 
accurate to the best of my knowledge and belief.'' See 10 CFR 
205.283(c); 18 USC 1001. Furthermore, Salt River should furnish us 
with the name, title, and telephone number of a person who may be 
contacted by the OHA for additional information concerning the 
application. In addition, Salt River's employer identification 
number and current address must be listed in the application. The 
application should be sent to: Telum, Inc. Consent Order Refund 
Proceeding, Office of Hearings and Appeals, U.S. Department of 
Energy, Washington, DC 20585.
    As indicated above, Salt River should also: (i) Certify that it 
will pass any refund received through to its customers, (ii) provide 
us with a full explanation of how it plans to accomplish the 
restitution, and (iii) certify that it will notify the appropriate 
regulatory body of the receipt of the refund.
    In the event that Salt River does not file a refund application 
that meets the requirements set forth in this Decision and Order, 
the funds in the Telum consent order account shall be distributed in 
accordance with the provisions of the Petroleum Overcharge 
Distribution and Restitution Act of 1986 (PODRA), 15 U.S.C. 4501-07. 
PODRA requires that the Secretary of Energy determine annually the 
amount of oil overcharge funds that will not be required to refund 
monies to injured parties in Subpart V proceedings and make those 
funds available to state governments for use in four energy 
conservation programs. The Secretary has delegated these 
responsibilities to the OHA, and any refined product pool funds in 
the Telum consent order escrow account that the OHA determines will 
not be used to effect direct restitution to Salt River will be 
distributed in accordance with the provisions of PODRA.

    It Is Therefore Ordered That:

    (1) An Application for Refund from the funds remitted to the 
Department of Energy by Telum, Inc. pursuant to the consent order 
executed on May 30, 1990, may now be filed.
    (2) The application must be postmarked no later than 90 days 
after publication of this Decision and Order in the Federal 
Register.

    Dated: July 25, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 94-18780 Filed 8-1-94; 8:45 am]
BILLING CODE 6450-01-P