[Federal Register Volume 59, Number 180 (Monday, September 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23127]


[[Page Unknown]]

[Federal Register: September 19, 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 (DOE) announces the procedures for disbursement of $52,092.73, 
plus accrued interest, in refined petroleum overcharges obtained by the 
DOE under the terms of a Remedial Order issued to Sunset Boulevard Car 
Wash (Sunset) Case No. LEF-0112. The OHA has determined that the funds 
will be distributed in accordance with the provisions of 10 CFR Part 
205, Subpart V and 15 U.S.C. 4501, the Petroleum Overcharge 
Distribution and Restitution Act (PODRA).

DATES AND ADDRESSES: Applications for Refund must be filed in 
duplicate, addressed to Sunset Boulevard Car Wash Special Refund 
Proceeding and sent to: Office of Hearings and Appeals, Department of 
Energy, 1000 Independence Avenue SW., Washington, DC 20585. All 
applications must reference Case Number LEF-0112 and be postmarked on 
or before June 1, 1995.

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

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 sets forth the procedures that the DOE has 
formulated to distribute to eligible claimants $52,092.73, plus accrued 
interest, obtained by the DOE under the terms of a Remedial Order that 
the DOE issued to Sunset Boulevard Car Wash (Sunset) on October 22, 
1980. Under the Remedial Order, Sunset was found to have violated the 
Federal petroleum price and allocation regulations involving the sale 
of refined petroleum products between August 1, 1979 and January 27, 
1980 (the Audit period).
    The OHA will distribute the Remedial Order funds in a two stage 
refund proceeding. Purchasers of Sunset motor gasoline will have an 
opportunity to submit refund applications in the first stage. Refunds 
will be granted to applicants who satisfactorily demonstrate they were 
injured by the pricing violations and who document the volume of 
gasoline they purchased from Sunset during the audit period. In the 
event that money remains after all first stage claims have been 
disposed of, the remaining funds will be disbursed in accordance with 
the provisions of 15 U.S.C. 4501, the Petroleum Overcharge Distribution 
and Restitution Act of 1986 (PODRA).
    Applications for Refund must be postmarked on or before June 1, 
1995. Instructions for the completion of refund applications have been 
set forth in Section IV of the Decision immediately following this 
notice. Refund applications should be mailed to the address listed at 
the beginning of this notice.
    Unless labelled as ``confidential'', all submissions must 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 SW., Washington, DC 20585.

    Date: September 12, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Name of Firm: Sunset Boulevard Car Wash
Date of Filing: July 20, 1993
Case Number: LEF-0112

    Under the procedural regulations of the Department of Energy (DOE), 
the Economic Regulatory Administration (ERA) may request that the 
Office of Hearings and Appeals (OHA) formulate and implement special 
refund proceedings. 10 CFR 205.281. These procedures are used to refund 
monies to those injured by actual or alleged violations of the DOE 
price regulations.
    In this Decision and Order, we consider a Petition for 
Implementation of Special Refund Procedures filed by ERA on July 20, 
1993. In that Petition, ERA specifically requests that we formulate 
refund procedures to disburse funds that had been remitted to DOE by 
Sunset Boulevard Car Wash (Sunset). The funds at issue in that Petition 
were obtained through a Remedial Order (the Order) issued by our Office 
on October 22, 1980.
    Under the terms of the Order, Sunset remitted $52,092.73 to the DOE 
to remedy pricing violations which Sunset committed between August 1, 
1979 and January 27, 1980.1 These funds are being held in an 
escrow account established with the Treasury pending a determination of 
their proper distribution. The present Decision and Order sets forth 
final procedures for the distribution of those funds to qualified 
purchasers of Sunset's refined products.
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    \1\Sunset remitted a total of $52,092.73. The PDO inadvertently 
stated that Sunset remitted $52,093.73.
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I. Jurisdiction and Authority

    The general guidelines that govern OHA's ability to formulate and 
implement a plan to distribute refunds are set forth at 10 CFR part 
205, subpart V. These procedures apply in situations where DOE cannot 
readily identify the persons who were injured as a result of actual or 
alleged violations of the regulations or ascertain the amount of the 
refund each person should receive. For a more detailed discussion of 
subpart V and the authority of OHA to fashion procedures to distribute 
refunds, see Office of Enforcement, 9 DOE 82,508 (1981) and Office of 
Enforcement, 8 DOE 82,597 (1981).

II. Background

    The facts alleged in the Order were undisputed. Sunset was a 
``retailer'' of motor gasoline as that term has been defined at 10 CFR 
212.31 and was therefore subject to the provisions of 10 CFR part 210 
and 10 CFR part 212, subpart F. The Order states that from August 1, 
1979 to January 27, 1980 (the audit period), Sunset charged prices 
higher than those permitted by 10 CFR 212.93(a)(2); levied a cents-per-
gallon fee for services associated with the sale of motor gasoline in 
violation of 10 CFR 210.62(d)(1) and refused to make its records 
available for inspection in violation of 10 CFR 210.92(b).
    Sunset was ordered to reduce its prices for motor gasoline by 
specified amounts until a sufficient volume of gasoline had been sold 
at reduced prices to remedy the violations.2 After decontrol, the 
Order was modified to require direct monetary restitution to the 
Treasury instead. See Sunset Boulevard Car Wash, 20 FERC 62,319 at 
63,537 (Sunset) (1982). Under the terms of the modified Order (the MO), 
Sunset was required to disgorge and remit to DOE the violation amount 
and the profits it had acquired as a result of its violation of the 
aforementioned provisions of the pricing regulations.
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    \2\The Order imposed no sanctions upon Sunset as a result of its 
failure to make its records available in accordance with 10 CFR 
210.92(b). See Remedial Order at 1 and 7.
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    Sunset objected to the remedial provisions of the MO at every 
available tier of administrative and judicial review. As a result, the 
Federal Energy Regulatory Commission (FERC) affirmed the MO on August 
12, 1982. When Sunset renewed its objections in proceedings before the 
United States District Court for the Central District of California, 
the District Court affirmed the MO. Finally, on March 9, 1993, the 
Temporary Emergency Court of Appeals definitively disposed of Sunset's 
objections. Bush v. U.S., 989 F.2d 509 (Em. App. 1993).

III. The Proposed Decision and Order

    On November 24, 1993, we issued a Proposed Decision and Order (PDO) 
establishing tentative procedures to distribute the funds that Sunset 
had remitted to DOE pursuant to the MO. We proposed implementing a two 
stage refund proceeding and we stated that purchasers of Sunset motor 
gasoline would be provided an opportunity to submit refund applications 
in the first stage. In the event funds remained after all first stage 
claims had been considered, we stated that the remaining funds would be 
disbursed in the second stage in accordance with the provisions of the 
Petroleum Overcharge Distribution and Restitution Act of 1986 (15 
U.S.C. 4501) (PODRA).
    We provided a 30 day period for the submission of comments 
concerning the proposed procedures. However, we have received no 
comments since the PDO was published in the Federal Register more than 
30 days ago. The proposed procedures will therefore be adopted in the 
same form in which they were originally outlined. Set forth below are 
the specific considerations that will guide our evaluation of refund 
applications during the first stage, as well as, the provisions 
governing distribution of any remaining funds in the second stage 
proceeding.

IV. First Stage Refund Procedures

    Refund applications submitted in the Sunset special refund 
proceeding will be evaluated in exactly the same manner as applications 
submitted in other refined product proceedings. In those proceedings, 
we often adopt rebuttable presumptions which relate to pricing 
violations and injury. Such a policy reflects our belief that adoption 
of these presumptions permits applicants to participate in refund 
proceedings in larger numbers by avoiding the need to incur inordinate 
expense; and facilitates our consideration of first stage refund 
applications. 10 CFR 205.282(e). For those reasons, we have adopted 
similar presumptions in the present proceeding.
(1) Calculating the Refund
    We have presumed that the pricing violations were dispersed equally 
throughout Sunset's motor gasoline sales during the audit period. We 
therefore proposed that each applicant's potential refund should be 
calculated on a volumetric basis. Under the volumetric approach, 
refunds are calculated by multiplying the gallons of refined product 
each applicant purchased by the per gallon refund amount (volumetric) 
established for this proceeding, plus accrued interest. Applicants 
believing they were disproportionately overcharged by the pricing 
violations may present documentation which supports that claim. Those 
who succeed in showing they were disproportionately overcharged by 
Sunset will be eligible to receive refunds calculated at a higher 
volumetric.
    The volumetric for this proceeding has been set at $.0868 per 
gallon. This figure was obtained by dividing the remedial order funds 
available for distribution by the volume of gasoline Sunset is believed 
to have sold during the audit period.3
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    \3\In the absence of precise figures indicating the amount of 
motor gasoline Sunset sold during the audit period, we estimated 
Sunset's total sales using the best available data. Based on sales 
of 200,000 gallons per month for 6 months, we believe Sunset sold 
1,200,000 gallons of gasoline during the audit period. This figure 
will be used to calculate the volumetric refund amount unless the 
refund applications submitted pursuant to this Decision and Order 
indicate that our estimate is inaccurate. In the event the estimate 
proves to be inaccurate, it may be necessary to reestimate the 
volumetric.
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(2) Eligibility for a Refund
    In order to be eligible to receive a refund in this proceeding, 
each applicant must (1) document the volume of motor gasoline it 
purchased during the audit period; and (2) demonstrate that it was 
injured by Sunset's overcharges. The threshold requirement for any 
applicant is documenting the volume of product it purchased. This 
requirement is typically satisfied when the applicant successfully 
demonstrates ownership of the business for which the refund is sought 
and submits documentation which supports the volume claimed in its 
refund application.
    The injury showing, however, is a potentially more difficult 
requirement for applicants to satisfy, especially those seeking smaller 
refund amounts. This is true because an applicant must demonstrate that 
it was forced to absorb Sunset's overcharges. Our cases have often 
stated that an applicant accomplishes this by demonstrating that it 
maintained a ``bank'' of unrecovered product costs and showing that 
market conditions would not permit the applicant to pass through those 
increased costs. See, Quintana Energy Corp., 21 DOE 85,032 at 88,117 
(1991).
    Unless simplified application procedures were provided, we 
recognized that the cost to the applicant of gathering evidence of 
injury to support a relatively small refund claim could exceed the 
expected refund and thereby cause some injured parties to be denied an 
opportunity to obtain a refund. Moreover, simplified procedures were 
needed to minimize the burden that would be placed on this Office if we 
found it necessary to analyze a detailed injury showing for large 
numbers of small refund applications. In view of these difficulties, we 
proposed adopting a number of injury presumptions which simplify and 
streamline the refund process.
(3) Presumptions of Injury
    Each presumption of injury turns on the category of applicant. Set 
forth below is the presumption of injury that has been adopted for each 
class of applicant likely to submit a refund application in this 
proceeding.
    Small-claim Presumption. We have adopted a small claim presumption 
of injury for resellers, retailers and refiners whose claim is $10,000 
or less, exclusive of interest. A small claim threshold of $10,000 has 
been adopted, even though we established a lower threshold amount of 
$5,000 in many prior proceedings. See, e.g., Gulf Oil Corporation, 16 
DOE 85,381 (1987)(establishing a $5,000 threshold). The $10,000 
threshold is more appropriate here because the volumetric for this 
proceeding is significantly higher than the volumetric set in Gulf and 
in most other proceedings. Id. If we were to adopt a lower threshold 
amount for this proceeding, then the high volumetric would increase 
substantially the number of very small firms that would be burdened 
with the requirement to make a detailed injury showing before they 
become eligible to receive their full allocable share.
    The small claim presumption of injury for this proceeding, exempts 
applicants whose claims are $10,000 or less, exclusive of interest, 
from the requirement to prove injury. Such an applicant need only 
document the volume of motor gasoline he or she purchased from Sunset 
during the audit period in order to be eligible to receive a full 
refund. See Enron Corporation, 21 DOE 85,323 at 88,957 (1991).
    Mid-range Presumption. Mid-range applicants; that is, applicants 
seeking refunds in excess of $10,000 but less than $50,000, excluding 
interest, are eligible to receive 40 percent of their allocable share 
without proving injury. Like small-claim applicants, these applicants 
will only be required to document the volume of Sunset gasoline they 
purchased during the audit period to be eligible to receive refunds. 
See Shell, 17 DOE at 88,406.
    End-user Presumption. We have presumed that end-users of petroleum 
products whose businesses were unrelated to the petroleum industry and 
were not subject to the regulations promulgated under the Emergency 
Petroleum Price and Allocation Act of 1973 (EPAA), 15 U.S.C. Secs. 751-
760h, were injured by Sunset's pricing violations. Unlike regulated 
firms, end-users were not subject to price controls during the audit 
period. Moreover, these firms were not required to keep records that 
justified selling price increases by reference to cost increases. An 
analysis of the impact of the alleged overcharges on the final prices 
of non-petroleum goods and services is beyond the scope of a special 
refund proceeding. See American Pacific International, Inc., 14 DOE 
85,158 at 88,294 (1986). End-users seeking refunds in this proceeding 
will therefore be presumed to have been injured by Sunset's pricing 
violations. In order to receive a refund, end-user applicants need only 
document the volume of Sunset product they purchased during the audit 
period. Meritorious applicants are eligible to receive their full 
allocable share. See Shell, 17 DOE at 88,406.
    Refunds in Excess of $50,000 and Other Applicants. Applicants 
seeking refunds in excess of $50,000, excluding interest, will be 
required to submit detailed evidence of injury. These applicants must 
show that the overcharges were absorbed, not passed through to their 
customers. They will therefore be unable to rely upon injury 
presumptions utilized in many refined product refund cases. Id.
    We do not anticipate that other categories of applicants, such as, 
regulated firms, cooperatives, indirect purchasers or spot purchasers, 
would have obtained products from Sunset. Such applicants may 
nonetheless submit refund applications if they purchased motor gasoline 
from Sunset during the audit period. Any such applicants must 
demonstrate that they purchased products from Sunset during the audit 
period and show they were injured as a result of their purchases to be 
eligible to receive a refund in this proceeding. Regulated firms and 
cooperatives are exempt from the requirement to show injury. They must, 
however, show that they will pass through to their customers any 
refunds they receive.
(4) How to Apply for a Refund
    To apply for a refund from the Sunset settlement fund, an applicant 
must submit an Application for Refund containing all of the following 
information:

    (1) The Applicant's name; the current name and address of the 
business for which the refund is sought; the name and address during 
the refund period of the business for which the refund is sought; 
the taxpayer identification number; a statement specifying whether 
the applicant is an individual, corporation, partnership, sole 
proprietorship or other business entity; the name, title, and 
telephone number of a person to contact for additional information; 
and the name and address of the person who should receive any refund 
check.\4\ If the applicant operated under more than one name or 
under a different name during the price control period, the 
applicant should specify those names.
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    \4\Under the Privacy Act of 1974, the submission of a social 
security number by an individual applicant is voluntary. An 
applicant who does not wish to submit a social security number must 
submit an employer identification number if one exists. This 
information will be used in processing refund applications. It is 
requested pursuant to our authority under the Petroleum Overcharge 
Distribution and Restitution Act of 1986 and the regulations 
codified at 10 CFR part 205, Subpart V. The information may be 
shared with other Federal agencies for statistical, auditing or 
archiving purposes, and with law enforcement agencies when they are 
investigating a potential violation of civil or criminal law. Unless 
an applicant claims confidentiality, this information will be 
available to the public in the Public Reference Room of the Office 
of Hearings and Appeals.
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    (2) The applicant should specify the source of its gallonage 
information. In calculating its purchase volumes, an applicant 
should use actual records from the settlement period, if available. 
If these records are not available, the applicant may submit 
estimates of its gasoline purchases, but the estimation methodology 
must be reasonable and must be explained.
    (3) A statement indicating whether the applicant or a related 
firm has filed, or has been authorized to file on its behalf, any 
other application in this refund proceeding. If so, an explanation 
of the circumstances of the other filing or authorization should be 
submitted;
    (4) If the applicant is or was in any way affiliated with the 
consenting firm, in this case Sunset Boulevard Car Wash, the 
applicant should explain this affiliation, including the time period 
in which it was affiliated. If not, a statement that the applicant 
was not affiliated with the consenting firm.
    (5) The statement listed below, provided it has been signed by 
the applicant or a responsible official of the firm filing the 
refund application:
    I swear (or affirm) that the information contained in this 
application and its attachments is true and correct to the best of 
my knowledge and belief. I understand that anyone who is convicted 
of providing false information to the Federal government may be 
subject to a fine, a jail sentence, or both, pursuant to 18 U.S.C. 
1001. I understand that the information contained in this 
application is subject to public disclosure. I have enclosed a 
duplicate of this entire application which will be placed in the OHA 
Public Reference Room.

    All applications should be either typed or printed and should 
clearly refer to the appropriate proceeding name (Sunset Boulevard Car 
Wash) and case number (LEF-0112). Each applicant must submit an 
original and one copy of the application. If the applicant believes 
that any of the information in its application is confidential and does 
not wish this information to be publicly disclosed, the applicant must 
submit an original application, clearly designated ``confidential'', 
containing the confidential information, and two copies of the 
application with the confidential information deleted. All refund 
applications should be postmarked no later than June 1, 1995, and sent 
to: Sunset Boulevard Car Wash, LEF-0112, Office of Hearings and 
Appeals, Department of Energy, 1000 Independence Avenue SW., 
Washington, DC 20585.
(5) Minimal Amount Requirement
    Only claims for at least $15 in principal will be processed. This 
minimum has been adopted in refined product refund proceedings because 
the cost of processing claims for refunds of less than $15 outweighs 
the benefits of restitution in those instances. See Mobil Oil 
Corporation, 13 DOE 85,339 (1985). Using the volumetric methodology, 
an applicant must have purchased at least 173 gallons of Sunset motor 
gasoline in order for its claim to be considered in this proceeding.
(6) Additional Information
    OHA reserves the authority to require additional information before 
granting any refund in these proceedings. Applications lacking the 
required information may be dismissed or denied.
(7) Refund Applications Filed by Representatives
    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 this final Decision and 
Order. Strict compliance with the filing requirement as specified in 10 
CFR 205.283, particularly the requirement that applications and the 
accompanying certification statement be signed by the applicant, will 
be required.
(8) Filing Deadline
    The deadline for filing an Application for Refund is June 1, 1995.

V. Second Stage Refund Procedures

    Any funds that remain after all first stage claims have been 
decided will be distributed in accordance with the provisions of 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 OHA, and any funds that OHA determines will not be 
needed to effect direct restitution to injured customers will be 
distributed in accordance with the provisions of PODRA.
    It Is Therefore Ordered That:
    Applications for Refund from the funds remitted to the Department 
of Energy by Sunset Boulevard Car Wash, pursuant to the Remedial Order 
finalized on October 22, 1980, may now be filed.

    Dated: September 12, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 94-23127 Filed 9-16-94; 8:45 am]
BILLING CODE 6450-01-P