[Federal Register Volume 59, Number 156 (Monday, August 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19921]


[[Page Unknown]]

[Federal Register: August 15, 1994]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY
Office of Hearings and Appeals

 

Proposed Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, Department of Energy.

ACTION: Notice of Proposed Implementation of Special Refund Procedures.

-----------------------------------------------------------------------

SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) announces the proposed procedures for disbursement of a 
total of $338,267.85, plus accrued interest, in alleged crude oil 
overcharges obtained by the DOE under the terms of the Consent Orders 
entered into with King Petroleum, Inc., et al., Case No. LEF-0125 
(King), and Billy Bridewell, William J. Cobb, et al., Case No. LEF-0126 
(Bridewell). The OHA has tentatively determined that the funds obtained 
from King and Bridewell, plus interest accrued, will be distributed in 
accordance with the DOE's Modified Statement of Restitutionary Policy 
Concerning Crude Oil Overcharges. Since the June 30, 1994, deadline for 
filing crude oil refund applications has passed, no new applications 
will be accepted for these funds.

DATE AND ADDRESSES: Comments must be filed in duplicate by September 
14, 1994, and should be addressed to the Office of Hearings and 
Appeals, 1000 Independence Avenue, SW., Washington, DC 20585. All 
comments should be marked with the reference numbers LEF-0125 and LEF-
0126.

FOR FURTHER INFORMATION CONTACT: Thomas L. Wieker, Deputy Director, 
Office of Hearings and Appeals, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-2390.

SUPPLEMENTARY INFORMATION

    In accordance with 10 C.F.R. 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 a total of $338,267.85, plus 
accrued interest, obtained by the DOE under the terms of Consent Orders 
entered into with King Petroleum, Inc., et al., and Billy Bridewell, 
William J. Cobb, et al. These 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 of price controls.
    The OHA has proposed to distribute these funds in accordance with 
the DOE's Modified Statement of Restitutionary Policy Concerning Crude 
Oil Overcharges, 51 Fed. Reg. 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 volume of 
petroleum products they purchased and the degree to which they can 
demonstrate injury. Because the June 30, 1994, deadline for crude oil 
refund applications has passed, no new applications from purchasers of 
refined petroleum products will be accepted for these funds. Instead, 
the share allocated to these purchasers will be added to the general 
crude oil overcharge pool used for direct restitution.
    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 3 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: August 8, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

August 8, 1994.

Proposed Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

    Names of Firms: King Petroleum, Inc., et al. Billy Bridewell, 
William J. Cobb, et al.
    Date of Filing: May 26, 1994.
    Case Numbers: LEF-0125, LEF-0126.
    On May 26, 1994, the Economic Regulatory Administration (ERA) of 
the Department of Energy (DOE) filed a Petition for the 
Implementation of Special Refund Procedures with the Office of 
Hearings and Appeals (OHA), to distribute funds which King 
Petroleum, Inc., et al. (King) and Billy Bridewell, William J. Cobb, 
et al. (Bridewell) remitted to the DOE pursuant to Consent Orders 
entered into by the parties and the DOE. King has remitted a total 
of $1,245.04, while Bridewell has remitted a total of $337,022.85.
    In accordance with the procedural regulations codified at 10 
C.F.R. part 205, Subpart V (Subpart V), the ERA requests in its 
petition that the OHA establish special refund procedures to remedy 
the effects of alleged regulatory violations which were resolved by 
these Consent Orders. This Proposed Decision and Order sets forth 
the OHA's tentative plan to distribute these funds.

I. Jurisdiction and Authority

    The Subpart V regulations set forth general guidelines which may 
be used by the OHA in formulating and implementing a plan of 
distribution of funds received as a result of an enforcement 
proceeding. The DOE policy is to use the Subpart V process to 
distribute such funds. For a more detailed discussion of Subpart V 
and the authority of the OHA to fashion procedures to distribute 
refunds, see Petroleum Overcharge Distribution and Restitution Act 
of 1986, 15 U.S.C. Secs. 4501-07 (1988), Office of Enforcement, 9 
DOE 82,508 (1981), and Office of Enforcement, 8 DOE 82,597 (1981).
    We have considered the ERA's petition that we implement a 
Subpart V proceeding with respect to the King and Bridewell Consent 
Orders and have determined that such a proceeding is appropriate. 
This Proposed Decision and Order sets forth the OHA's tentative plan 
to distribute these funds.

II. Proposed Refund Procedures

A. Crude Oil Refund Policy

    We propose to distribute the funds obtained from King and 
Bridewell in accordance with the DOE's Modified Statement of 
Restitutionary Policy in Crude Oil Cases, 51 Fed. Reg. 27899 (August 
4, 1986) (the MSRP). The MSRP was issued as a result of a court-
approved Settlement Agreement. In re: The Department of Energy 
Stripper Well Exemption Litigation, 653 F Supp. 108 (D. Kan.), 6 
Fed. Energy Guidelines 90,509 (1986) (the Stripper Well Settlement 
Agreement). The MSRP establishes that 40 percent of the crude oil 
funds will be remitted to the Federal government, another 40 percent 
to the states, and up to 20 percent may initially be reserved for 
payment of claims to injured parties. The MSRP also specifies that 
any monies remaining after all valid claims by injured purchasers 
are paid be disbursed to the Federal government and the states in 
equal amounts.
    The OHA has utilized the MSRP in all Subpart V proceedings 
involving alleged crude oil violations. See Order Implementing the 
MSRP, 51 Fed. Reg. 29689 (August 20, 1986). This Order provided a 
period of 30 days for filing of comments or objections to our 
proposed use of the MSRP as the groundwork for evaluating claims in 
crude oil refund proceedings. Following this period, the OHA issued 
a Notice evaluating the numerous comments which it had received 
pursuant to the Order Implementing the MSRP. This Notice was 
published at 52 Fed. Reg. 11737 (April 10, 1987) (the April 10 
Notice).
    The April 10 Notice contained guidance to assist potential 
claimants wishing to file refund applications for crude oil monies 
under the Subpart V regulations. Generally, all claimants would be 
required to (1) document their purchase volumes of petroleum 
products during the August 19, 1973 through January 27, 1981, crude 
oil price control period, and (2) show that they were injured by the 
alleged crude oil overcharges. We also specified that end-users of 
petroleum products whose businesses were unrelated to the petroleum 
industry will be presumed to have been injured by the alleged crude 
oil overcharges. End-users, therefore, need only submit 
documentation of their purchase volumes. See City of Columbus, 
Georgia, 16 DOE 85,550 (1987).
    Additionally, we stated that we would evaluate crude oil refunds 
on a per gallon (or volumetric) basis. We obtained the volumetric 
figure by dividing the estimated crude oil refund pool by the total 
consumption of petroleum products in the United States during the 
crude oil price control period. The OHA has adopted the refund 
procedures outlined in the April 10 Notice in numerous cases. See, 
e.g., Shell Oil Co., 17 DOE 85,204 (1988); Mountain Fuel Supply 
Co., 14 DOE 85,475 (1986). The volumetric payment rate is $.0008 
per gallon of eligible refined petroleum product purchased during 
the price control period.

B. Refund Claims

    On May 3, 1993, the OHA issued a Notice which established June 
30, 1994, as the final deadline for filing an Application for Refund 
from all crude oil funds. See 58 Fed. Reg. 26,318 (May 3, 1993) (the 
May 3 Notice). We noted at that time that the crude oil refund 
proceeding was over seven years old, and that many crude oil 
Implementation Orders inviting Applications for Refund had been 
published in the Federal Register. Id. In fact, since August 1986, 
there have been approximately 51 announcements published in the 
Federal Register inviting applicants to file claims for crude oil 
overcharge refunds.
    We further stated in the May 3 Notice that we had, at that time, 
received nearly 96,000 crude oil refund applications for the crude 
oil overcharge funds. In view of these facts, we concluded that 
``this refund proceeding has been well publicized and that those 
firms, individuals, and organizations that have an interest in 
filing for this type of refund have had a reasonable opportunity to 
do so.'' Id. Therefore, for reasons of administrative efficiency and 
in fairness to those Applicants who are awaiting the final 
disbursement of crude oil funds, we determined that we would not 
accept crude oil refund applications postmarked later than June 30, 
1994. Id.

C. King and Bridewell

    Subpart V regulations provide a 30 day period for submission of 
comments after the issuance of a Proposed Decision and Order 
implementing special refund proceedings. 10 C.F.R. Sec. 205.282(b). 
Further, these regulations indicate that after the issuance of the 
final Decision and Order implementing refund procedures, there 
should be a period of 90 days in which refund applications may be 
filed. 10 C.F.R. Sec. 205.283(b). Obviously, since the instant 
Proposed Decision and Order will issue after the June 30, 1994, 
filing deadline referred to above, we cannot both maintain that 
deadline and adhere to the provisions of Section 205.282 and Section 
205.283.
    After reviewing the status of the crude oil overcharge refund 
proceeding as a whole, the intent of the Subpart V regulations and 
overall administrative considerations, we have decided that a 
separate filing deadline beyond our June 30 deadline is not 
advisable or appropriate in this case. As discussed below, we 
tentatively decide that the funds remitted by King and Bridewell 
should be included in the general crude oil refund proceeding for 
which notice has been given for the last eight years. No separate 
application may be made for these funds. Instead, we propose that 
these funds become part of the larger pool of funds available for 
disbursement in the crude oil proceeding. See, e.g., Seneca Oil Co., 
21 DOE 85,327 (1991).
    It was never intended that this proceeding should continue 
indefinitely. Over the course of the eight years this proceeding has 
been in effect, we have received approximately 100,000 Applications 
for Refund. As we noted in the May 3 Notice, the need for 
administrative efficiency and finality require that we set a final 
deadline.
    We believe this decision is consistent with our regulations and 
past practices. The Subpart V regulations state: ``In establishing 
standards and procedures for implementing refund distributions, the 
Office of Hearings and Appeals shall take into account the 
desirability of distributing the refunds in an efficient and 
equitable manner and resolving to the maximum extent practicable all 
outstanding claims.'' 10 C.F.R. Sec. 205.282(e). As discussed above, 
the crude oil refund proceeding has been well publicized and all 
interested parties have had ample opportunity to apply. In addition, 
it would impose an undue burden on those applicants who applied in a 
timely fashion if we held this proceeding open until all outstanding 
crude oil enforcement actions were resolved.
    Our practice over the last several years has been to treat all 
crude oil overcharge funds as part of one crude oil proceeding, 
rather than as a multitude of separate small refund proceedings. We 
have for many years refunded all crude oil claims at a rate of 
$.0008 per gallon. This rate was established in 1989 by estimating 
the funds likely to become available for injured persons during the 
crude oil proceeding. Crude Oil Supplemental Refund Distribution, 18 
DOE 85,878 (1989). We have also long maintained that an applicant 
need only submit one application for its share of all available 
crude oil overcharge funds. See, e.g., A. Tarricone, Inc., 15 DOE 
85,495 (1987).
    In reaching our determination in this case, we have given some 
consideration to whether there are potential applicants who will now 
be precluded from making refund claims from these funds and the 
degree of harm they might experience if they were denied the right 
to apply for a King and Bridewell refund.
    As we pointed out above, we have received approximately 100,000 
crude oil overcharge refund applications. Those who have previously 
filed a crude oil overcharge refund application need not file 
another claim in order to receive a portion of the Bridewell and 
King fund. We think that most of those eligible to participate in 
this refund program and who wish to do so have already filed 
applications. Given that the crude oil overcharge refund proceeding 
has been ongoing for approximately eight years, we tend to believe 
that the number of potential applicants genuinely interested in 
filing a claim, but who have not yet done so, is relatively small.
    We also believe that the financial interests of these potential 
applicants are very minimal, when compared with the overall interest 
in bringing the crude oil overcharge refund proceeding to a close. 
The total King and Bridewell funds of $338,268 results in a refund 
of $.00000017 per gallon, or 17 cents per million gallons 
consumed.1
---------------------------------------------------------------------------

    \1\This amount is derived by dividing the total alleged crude 
oil violation amounts involved in this proceeding ($338,268) 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 Supply Co., 14 DOE 85,475 (1986).
---------------------------------------------------------------------------

    At this rate, even a very large applicant, one that consumed 100 
million gallons, but which applied only in the King and Bridewell 
proceeding, would receive a refund of merely $17. Yet, an applicant 
of this size is extremely unusual. For example, of the 100,000 crude 
oil overcharge claims that have been filed, only 552, or .5 percent, 
are based on purchases of 100 million gallons or more. We would thus 
expect that virtually no claimants would be interested in applying 
for a refund in this King and Bridewell proceeding.
    Furthermore, pursuant to the MSRP, we disburse 40 percent of the 
funds available to the States and 40 percent to the Federal 
Government. The funds made available to these governmental entitites 
for indirect restitution are unaffected by our decision to accept no 
new claims from injured parties. Thus, only 20 percent of the 
$338,268 total King and Bridewell fund, or $67,654, is actually 
available for payment to individual claimants by the OHA. Most of 
that $67,654 would go to those that have already filed claims, since 
refunds are disbursed on a pro rata basis. The funds actually 
available for disbursement to any new King and Bridewell claimants 
would be minimal indeed.
    As indicated by the above discussion, we have concluded that due 
to the small amount of the potential refund available, and the 
limited number of potential additional claimants for these funds, it 
would not be useful to provide for another application period.
    We therefore tentatively conclude that the interests of equity 
and efficiency underlying 10 C.F.R. Sec. 205.282(e) justify our 
including the funds remitted by King and Bridewell in the general 
crude oil refund proceeding instead of holding a separate refund 
proceeding for these funds or extending the deadline for filing 
crude oil refund applications indefinitely. Consequently, we 
tentatively decide that 20% of the funds remitted by King and 
Bridewell (plus appropriate accrued interest) should be added to the 
general crude oil overcharge pool for direct restitution to those 
applicants who applied before the June 30, 1994, crude oil refund 
deadline.

D. Payments to the Federal Government and the States

    Under the terms of the MSRP, we propose that the remaining 80% 
of the alleged crude oil overcharge amounts subject to this Proposed 
Decision, plus accrued interest, should be disbursed in equal shares 
to the states and Federal government for indirect restitution. 
Refunds to the states will be in proportion to the consumption of 
petroleum products in each state during the period of price 
controls. The share or ratio of the funds which each state will 
receive is contained in Exhibit H of the Stripper Well Settlement 
Agreement, 6 Fed. Energy Guidelines 90,509 at 90,687. 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 Settlement Agreement.
    It Is Therefore Ordered That:
    The refund amounts remitted to the Department of Energy by King 
Petroleum, Inc., et al., Case No. LEF-0125, and Billy Bridewell, 
William J. Cobb, et al., Case No. LEF-0126, will be distributed in 
accordance with the foregoing Decision.

[FR Doc. 94-19921 Filed 8-12-94; 8:45 am]
BILLING CODE 6450-01-P