[Federal Register Volume 59, Number 167 (Tuesday, August 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21373]
[[Page Unknown]]
[Federal Register: August 30, 1994]
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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.
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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of
Energy (DOE) announces the proposed procedures for disbursement of
$100,697.87, plus accrued interest, in refined petroleum product
violation amounts obtained by the DOE pursuant to a June 21, 1982
Remedial Order issued to Beacon Bay Enterprises, Inc. (Beacon Bay),
Case No. LEF-0074. The OHA has tentatively determined that the funds
obtained from Beacon Bay, plus accrued interest, will be distributed to
customers who purchased gasoline from Beacon Bay during the period
August 1, 1979 through March 31, 1980.
DATES AND ADDRESSES: Comments must be filed in duplicate within 30 days
of publication of this notice in the Federal Register, and should be
addressed to the Office of Hearings and Appeals, Department of Energy,
1000 Independence Avenue, SW, Washington, DC 20585. All comments should
display a reference to case number LEF-0074.
FOR FURTHER INFORMATION CONTACT: Thomas O. Mann, Deputy Director, Roger
Klurfeld, Assistant Director, Office of Hearings and Appeals, 1000
Independence Avenue, S.W. Washington, D.C. 20585, (202) 586-2094
(Mann); 586-2383 (Klurfeld).
SUPPLEMENTARY INFORMATION: In accordance with 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 to eligible
claimants $100,697.87, plus accrued interest, obtained by the DOE
pursuant to a June 21, 1982 Remedial Order. In the Remedial Order, the
DOE found that, during the period August 1, 1979 through March 31,
1980, Beacon Bay had sold motor gasoline at prices in excess of the
maximum lawful selling price, in violation of Federal petroleum price
regulations.
The OHA has tentatively determined to distribute the funds obtained
from Beacon Bay in two stages. In the first stage, we will accept
claims from identifiable purchasers of gasoline from Beacon Bay who may
have been injured by overcharges. The specific requirements which an
applicant must meet in order to receive a refund are set out in Section
IV of the Proposed Decision. Claimants who meet these specific
requirements will be eligible to receive refunds based on the number of
gallons of gasoline which they purchased from Beacon Bay.
If any funds remain after valid claims are paid in the first stage,
they may be used for indirect restitution in accordance with the
provisions of the Petroleum Overcharge Distribution and Restitution Act
of 1986 (PODRA), 15 U.S.C. 4501-07. Applications for Refund should not
be filed at this time. Appropriate public notice will be provided prior
to the acceptance of claims. 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
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 Ave., S.W., Washington, D.C. 20585.
Dated: August 19, 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: Beacon Bay Enterprises, Inc.
Date of Filing: July 20, 1993.
Case Number: LEF-0074.
On July 20, 1993, 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 the funds which Beacon Bay Enterprises, Inc.
(Beacon Bay) remitted to the DOE pursuant to a June 21, 1982 Remedial
Order. Beacon Bay has remitted $100,697.87 pursuant to the order, to
which $3,131.82 in interest has accrued as of July 31, 1994. In
accordance with the provisions of the procedural regulations at 10 CFR
part 205, subpart V (subpart V), the ERA requests in its Petition that
the OHA establish special procedures to make refunds in order to remedy
the effects of regulatory violations set forth in the Remedial Order.
This Proposed Decision and Order sets forth the OHA's plan to
distribute these funds.
I. Background
During the period relevant to this proceeding, Beacon Bay operated
11 retail service stations in Southern California. The ERA issued a
Proposed Remedial Order (PRO) to Beacon Bay on July 29, 1980. The PRO
alleged that, during the period August 1, 1979, through March 31, 1980,
Beacon Bay sold motor gasoline at prices in excess of the maximum
lawful selling price, in violation of Federal petroleum price
regulations. The DOE amended the PRO and issued a Final Remedial Order
on June 21, 1982, after considering Beacon Bay's objections to the PRO.
Beacon Bay Enterprises, 9 DOE 83,039 (1982). On August 23, 1982,
Beacon Bay appealed the DOE's Final Remedial Order to the Federal
Energy Regulatory Commission (FERC). The FERC issued a Proposed Order,
on November 15, 1982, Beacon Bay Enterprises, 21 FERC 62,295 (1982),
and an Order, on January 25, 1983, Beacon Bay Enterprises, 22 FERC
61,059 (1983) the two of which affirmed and adopted the DOE's Final
Remedial Order. Beacon Bay has since remitted $100,697.87 to the DOE,
in compliance with the Remedial Order, which is now available (the
Beacon Bay Remedial Order fund) for distribution through Subpart V.
II. Jurisdiction and Authority
The Subpart V regulations set forth general guidelines which may be
used by the OHA in formulating and implementing a plan for the
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 et seq., Office of Enforcement, 9 DOE 82,508
(1981); Office of Enforcement, 8 DOE 82,597 (1981) (Vickers).
We have considered the ERA's Petition that we implement a Subpart V
proceeding with respect to the Beacon Bay Remedial Order fund and have
determined that such a proceeding is appropriate. This Proposed
Decision and Order sets forth the OHA's tentative plan to distribute
this fund. We intend to publicize our proposal and solicit comments
from interested parties before taking the actions proposed in this
Decision. Comments regarding the tentative distribution process set
forth in this Proposed Decision and Order should be filed with the OHA
within 30 days of its publication in the Federal Register.
III. Proposed Refund Procedures
We propose to implement a two-stage refund procedure for
distribution of the Beacon Bay Remedial Order fund. In the first stage,
purchasers of gasoline from Beacon Bay during the period covered by the
Remedial Order may submit Applications for Refund. From our experience
with Subpart V proceedings, we expect that potential applicants
generally will fall into the following categories: (i) end-users; (ii)
regulated entities, such as cooperatives; and (iii) resellers and
retailers.
A. Claims Based Upon Overcharges. In order to receive a refund,
each claimant will be required to submit a schedule of its monthly
purchases of gasoline from Beacon Bay during the period covered by the
Remedial Order--August 1979 through March 1980. If the gasoline was not
purchased directly from Beacon Bay, the claimant must establish that
the gasoline originated with Beacon Bay. Additionally, a reseller or
retailer claimant, except one who chooses to utilize the injury
presumptions set forth below, will be required to make a detailed
showing that it was injured by Beacon Bay's overcharges. This showing
will generally consist of two distinct elements. First, a reseller or
retailer claimant will be required to show that it had ``banks'' of
unrecouped increased product costs in excess of the refund
claimed.1 Second, because a showing of banked costs alone is not
sufficient to establish injury, a claimant must additionally provide
evidence that market conditions precluded it from increasing its prices
to pass through the additional costs associated with the overcharges.
See Vaqueros Energy Corp./Hutches Oil Co. Inc., 11 DOE 85,070 at
88,105 (1983). Such a showing could consist of a demonstration that a
firm suffered a competitive disadvantage as a result of its purchases
from Beacon Bay. See National Helium Co./Atlantic Richfield Corp., 11
DOE 85,257 (1984), aff'd sub nom. Atlantic Richfield Co. v. DOE, 618
F. Supp. 1199 (D. Del. 1985).
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\1\Claimants who have previously relied upon their banked costs
in order to obtain refunds in other special refund proceedings
should subtract those refunds from any cost banks submitted in this
refund proceeding. See Husky Oil Co./Metro Oil Products, Inc., 16
DOE 85,090, at 88,179 (1987). Additionally, a claimant attempting
to show injury may not receive a refund for any month in which it
has a negative accumulated cost bank(for gasoline) or for any prior
month. See Standard Oil Co. (Indiana)/Suburban Propane Gas Corp., 13
DOE 85,030, at 88,082 (1985). If a claimant no longer has records
showing its banked costs, the OHA may use its discretion to permit
the claimant to approximate those cost banks. See, e.g., Gulf Oil
Corp./Sturdy Oil Co., 15 DOE 85,187 (1986).
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Our experience also indicates that the use of certain presumptions
permits claimants to participate in the refund process without
incurring inordinate expense and ensures that refund claims are
evaluated in the most efficient manner possible. See, e.g., Marathon
Petroleum Co., 14 DOE 85,269 (1986) (Marathon). Presumptions in
refund cases are specifically authorized by the applicable Subpart V
regulations at 10 C.F.R. 205.282(e). Accordingly, we propose to adopt
the presumptions set forth below.
1. Calculation of Refunds. First, we will adopt a presumption that
the overcharges were dispersed equally in all of Beacon Bay's sales of
gasoline during the period covered by the Remedial Order. In accordance
with this presumption, refunds are made on a pro-rata or volumetric
basis.2 In the absence of better information, a volumetric refund
is appropriate because the DOE price regulations generally required a
regulated firm to account for increased costs on a firm-wide basis in
determining its prices.
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\2\If an individual claimant believes that it was injured by
more than its volumetric share, it may elect to forego this
presumption and file a refund application based upon a claim that it
suffered a disproportionate share of Beacon Bay's overcharges. See,
e.g., Mobil Oil Corp./Atchison, Topeka and Santa Fe Railroad Co., 20
DOE 85,788 (1990); Mobil Oil Corp./Marine Corps Exchange Service,
17 DOE 85,714 (1988). Such a claim will be granted if the claimant
makes a persuasive showing that it was ``overcharged'' by a specific
amount, and that it absorbed those overcharges. See Panhandle
Eastern Pipeline Co./Western Petroleum Co., 19 DOE 85,705 (1989).
To the degree that a claimant makes this showing, it will receive an
above-volumetric refund.
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Under the volumetric approach, a claimant's ``allocable share'' of
the Remedial Order fund is equal to the number of gallons purchased
from Beacon Bay during the period covered by the Remedial Order times
the per gallon refund amount. In the present case, the per gallon
refund amount is $0.0690. We derived this figure by dividing the amount
of the Remedial Order fund, $100,697.87, by 1,460,321 gallons, the
volume of gasoline which Beacon Bay sold from August 1, 1979, through
March 31, 1980. A claimant that establishes its eligibility for a
refund will receive all or a portion of its allocable share plus a pro-
rata share of the accrued interest.3
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\3\As in previous cases, we propose to establish a minimum
refund amount of $15. In this proceeding, any potential claimant
purchasing less than 211 gallons of gasoline from Beacon Bay would
have an allocable share of less than $15. We have found through our
experience that the cost of processing claims in which refunds for
amounts less than $15 are sought outweighs the benefits of
restitution in those instances. See Exxon Corp., 17 DOE 85,590, at
89,150 (1988) (Exxon).
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In addition to the volumetric presumption, we also propose to adopt
a number of presumptions regarding injury for claimants in each
category listed below.
2. End-Users. In accordance with prior Subpart V proceedings, we
propose to adopt the presumption that an end-user or ultimate consumer
of gasoline purchased from Beacon Bay whose business is unrelated to
the petroleum industry was injured by the overcharges resolved by the
Remedial Order. See, e.g., Texas Oil and Gas Corp., 12 DOE 85,069 at
88,209 (1984) (TOGCO). Unlike regulated firms in the petroleum
industry, members of this group generally were not subject to price
controls during the period covered by the Remedial Order, and were not
required to keep records which justified selling price increases by
reference to cost increases. Consequently, analysis of the impact of
the overcharges on the final prices of goods and services produced by
members of this group would be beyond the scope of the refund
proceeding. Id. We therefore propose that the end-users of gasoline
purchased from Beacon Bay need only document their purchase volumes
from Beacon Bay during the period covered by the Remedial Order to make
a sufficient showing that they were injured by the overcharges.
3. Regulated Firms and Cooperatives. We further propose that, in
order to receive a full volumetric refund, a claimant whose prices for
goods and services are regulated by a governmental agency, i.e. a
public utility, or an agricultural cooperative which is required by its
charter to pass through cost savings to its member-purchasers, need
only submit documentation of purchases used by itself or, in the case
of a cooperative, sold to its members. However, a regulated firm or a
cooperative will also be required to certify that it will pass any
refund received through to its customers or member-customers, provide
us with a full explanation of how it plans to accomplish the
restitution, and certify that it will notify the appropriate regulatory
body or membership group of the receipt of the refund. See Marathon, 14
DOE at 88,514-15. This requirement is based upon 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. With respect to a
cooperative, in general, the cooperative agreement which controls its
business operations would ensure that the overcharges, and similarly
refunds, would be passed through to its member-customers. Accordingly,
these firms will not be required to make a detailed demonstration of
injury.4
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\4\A cooperative's purchases of gasoline from Beacon Bay which
were resold to non-members will be treated in a manner consistent
with purchases made by other resellers. See Total Petroleum, Inc./
Farmers Petroleum Cooperative, Inc., 19 DOE 85,215 (1989).
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4. Resellers and Retailers. a. Small Claims Presumption. We propose
to adopt a ``small claims'' presumption that a firm which resold
gasoline purchased from Beacon Bay and requests a small refund was
injured by the overcharges. Under the small claims presumption, a
reseller or retailer seeking a refund of $5,000 or less, exclusive of
interest, will not be required to submit evidence of injury beyond
documentation of the volume of gasoline it purchased from Beacon Bay
during the period covered by the Remedial Order. See TOGCO, 12 DOE at
88,210. This presumption is based on the fact that there may be
considerable expense involved in gathering the types of data necessary
to support a detailed claim of injury; for small claims the expense
might possibly exceed the potential refund. Consequently, failure to
allow simplified refund procedures for small claims could deprive
injured parties of their opportunity to obtain a refund. Furthermore,
use of the small claims presumption is desirable in that it allows the
OHA to process the large number of routine refund claims expected in an
efficient manner.5
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\5\In order to qualify for a refund under the small claims
presumption, a reseller or retailer must have purchased less than
72,471 gallons of gasoline from Beacon Bay during the settlement
agreement period.
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b. Mid-Level Claim Presumption. In addition, a reseller or retailer
claimant whose allocable share of the refund pool exceeds $5,000,
excluding interest, may elect to receive as its refund either $5,000 or
40 percent of its allocable share.6 The use of this presumption
reflects our conviction that these larger, mid-level claimants were
likely to have experienced some injury as a result of the overcharges.
See Marathon, 14 DOE at 88,515. In some prior special refund
proceedings, we have performed detailed analyses in order to determine
product-specific levels of injury. See, e.g., Getty Oil Co., 15 DOE
85,064 (1986). However, in Gulf Oil Corp., 16 DOE 85,381 at 88,737
(1987), we determined that based upon the available data, it was more
accurate and efficient to adopt a single presumptive level of injury of
40 percent for all mid-level claimants, regardless of the refined
product that they purchased, based upon the results of our analyses in
prior proceedings. We believe that approach generally to be sound, and
we therefore propose to adopt a 40 percent presumptive level of injury
for all mid-level claimants in this proceeding. Consequently, an
applicant in this group will only be required to provide documentation
of its purchase volumes of gasoline from Beacon Bay during the Remedial
Order period in order to be eligible to receive a refund of 40 percent
of its total allocable share or $5,000, whichever is greater.7
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\6\Under the mid-level presumption, a claimant which purchased
between 72,471 gallons and 181,177 gallons of gasoline from Beacon
Bay would be eligible to receive a principal refund, exclusive of
interest, of $5,000. A claimant purchasing more than 181,177 gallons
of petroleum products would be eligible for a principal refund equal
to 40 percent of its allocable share.
\7\A claimant who attempts to make a detailed showing of injury
in order to obtain 100 percent of its allocable share but, instead,
provides evidence that leads us to conclude that it passed through
all of the overcharges, or that it was injured in an amount less
than the presumed level refund, may not necessarily receive a full
presumption-based refund. Instead, such a claimant may receive a
refund which reflects the level of injury established in its
application.
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c. Spot Purchasers. We propose to adopt a rebuttable presumption
that a reseller or retailer that made only spot purchases from Beacon
Bay did not suffer injury as a result of those purchases. As we have
previously stated, spot purchasers generally had considerable
discretion as to the timing and location of their purchases, and
therefore would not have made spot market purchases from a firm at
increased prices unless they were able to pass through the full amount
of the firm's selling price to their own customers. See, e.g.,
Vaqueros, 8 DOE at 85,396-97. Accordingly, a spot purchaser claimant
must submit specific and detailed evidence to rebut the spot purchaser
presumption and to establish the extent to which it was injured as a
result of its spot purchases from Beacon Bay.8
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\8\In prior proceedings, we have stated that refunds will be
approved for spot purchasers who demonstrated that: (1) they made
the spot purchases for the purpose of ensuring a supply for their
base period customers rather than in anticipation of financial
advantage as a result of those purchases, and (2) they were forced
by market conditions to resell the product at a loss that was not
subsequently recouped through the draw down of banks. See, e.g.,
Texaco Inc., 20 DOE 85,147 at 88,321 (1990); Quaker State Oil
Refining Corp./Certified Gasoline Co., 14 DOE 85,465 (1986).
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B. Refund Applications Filed by Representatives. In addition, we
propose to adopt the following procedures relating to refund
applications filed on behalf of applicants by ``representatives,''
including refund filing services, consulting firms, accountants, and
attorneys. See Texaco Inc., 20 DOE 85,147 (1990). Each such filing
service shall, contemporaneously with its first filing in the Beacon
Bay proceeding, submit a statement indicating its qualifications for
representing refund applicants and containing a detailed description of
the solicitation practices and application procedures that it has used
and plans to use.9 This statement should contain the following
information:10
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\9\This statement should be submitted under separate cover and
reference the Beacon Bay refund proceeding, Case No. LEF-0074.
\1\0This information with regard to some filing services has
already been requested and received by this Office. Therefore, any
filing service that has had more than 10 Applications for Refund
approved before the issuance of this Proposed Decision and Order
need not submit this information if it has already done so in
another proceeding. Instead, such a filing service need only include
a copy of the previous submission(s) responsive to items (1)-(5) and
provide an update if its response to any of these questions has
changed since it first submitted its information. However, in light
of the importance of this information, it is prudent for all filing
services to review their practices and inform the OHA of any
alterations or improvements that may have been made.
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(1) A description of the procedures used to solicit refund
applications in the Beacon Bay proceeding and copies of any
solicitation materials mailed to prospective Beacon Bay applicants;
(2) A description of how the filing service obtains authorization
from its clients to act as their representative, including copies of
any type of authorization form signed by refund applicants;
(3) A description of how the filing service obtains and verifies
the information contained in refund applications;
(4) A description of the procedures used to forward refunds to its
clients;
(5) A description of the procedures used to prevent and check for
duplicate filings.
Upon receipt of this information, we may suggest alteration of a
filing service's procedures if they do not conform to the procedural
requirements of 10 C.F.R. Part 205 and this proceeding.
Second, we will require strict compliance with the filing
requirements as specified in 10 C.F.R. Sec. 205.283, particularly the
requirement that applications and the accompanying certification
statement be signed by the applicant.
Third, in any case where an application has been signed and dated
before the issuance of the final Decision and Order in this proceeding,
we will require a certification statement, signed and dated by the
applicant after the date of the issuance of the final Decision and
Order. This certification should state that the applicant has not filed
and will not file any other Application for Refund in the Beacon Bay
proceeding and that, after having been provided a copy of the final
Decision and Order, it still authorizes that filing service to
represent it.
Fourth, we will require from each representative a statement
certifying that it maintains a separate escrow account at a bank or
other financial institution for the deposit of all refunds received on
behalf of applicants, and that its normal business practice is to
deposit all Subpart V refund checks in that account within two business
days of receipt and to disburse refunds to applicants within 30
calendar days thereafter. Unless such certification is received by the
OHA, all refund checks approved will be made payable solely to the
applicant. Representatives who have not previously submitted an escrow
certification form to the OHA may obtain a copy of the appropriate form
by contacting:
Marcia B. Carlson, HG-13, Chief, Docket & Publications Branch, Office
of Hearings and Appeals, Department of Energy, Washington, D.C. 20585.
Finally, the OHA reiterates its policy to closely scrutinize
applications filed by filing services. Applications submitted by a
filing service should contain all of the information indicated in the
final Decision and Order in this proceeding.
C. Distribution of Funds Remaining After First Stage. We propose
that any funds that remain after all first stage claims have been
decided be distributed in accordance with the provisions of the
Petroleum Overcharge Distribution and Restitution Act of 1986 (PODRA),
15 U.S.C. Secs. 4501-07. The 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 funds in the Beacon Bay Remedial
Order fund that the OHA determines will not be needed to effect direct
restitution to injured customers will be distributed in accordance with
the provisions of the PODRA.
It Is Therefore Ordered That:
The refund amount remitted to the Department of Energy by Beacon
Bay Enterprises, Inc. pursuant to the Remedial Order issued on June 21,
1982, will be distributed in accordance with the foregoing Decision.
[FR Doc. 94-21373 Filed 8-28-94; 8:45 am]
BILLING CODE 6450-01-P