[Federal Register Volume 59, Number 192 (Wednesday, October 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24587]


[[Page Unknown]]

[Federal Register: October 5, 1994]


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DEPARTMENT OF ENERGY
 

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 $21,764.57, 
plus accrued interest, in refined petroleum overcharges obtained by the 
DOE under the terms of a Remedial Order issued to Aptos Shell, et al. 
(Aptos) Case Nos. LEF-0092, et al. The OHA has determined that the 
funds will be distributed in accordance with the provisions of 10 
C.F.R. Part 205, Subpart V and 15 U.S.C. Sec. 4501, the Petroleum 
Overcharge Distribution and Restitution Act (PODRA).

DATES AND ADDRESSES: Applications for Refund must be filed in 
duplicate, addressed to Aptos Shell 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-0092 and be postmarked on or before June 1, 
1995.

FOR FURTHER INFORMATION CONTACT: Thomas L. Wieker, Deputy Director 
Office of Hearings and Appeals 1000 Independence Avenue, SW., 
Washington, DC 20585 (202) 586-2400

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 $21,764.57, plus accrued 
interest, obtained by the DOE under the terms of a Remedial Order that 
the DOE issued to Aptos Shell, et al. (Aptos) on December 14, 1981. 
Under the Remedial Order, Aptos was found to have violated the Federal 
petroleum price and allocation regulations involving the sale of 
refined petroleum products during the relevant audit periods.
    The OHA will distribute the Remedial Order funds in a two stage 
refund proceeding. Purchasers of Aptos 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 
refined petroleum products they purchased from Aptos during the 
relevant 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. Sec. 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 III 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 26, 1994.
George B. Breznay,
Director.
    Names of Firms: Aptos Shell, et al.
    Date of Filing: July 20, 1993.
    Case Numbers: LEF-0092, et al.
    On July 20, 1993, the Economic Regulatory Administration (ERA) of 
the Department of Energy (DOE) filed a Petition requesting that the 
Office of Hearings and Appeals (OHA) formulate and implement Subpart V 
special refund proceedings. Under the procedural regulations of the 
DOE, special refund proceedings may be implemented to refund monies to 
persons injured by violations of the DOE petroleum price regulations, 
provided DOE is unable to readily identify such persons or to ascertain 
the amount of any refund. 10 CFR 205.280. We have considered ERA's 
request to formulate refund procedures for the disbursement of monies 
remitted by Aptos Shell (Aptos) and 4 other firms pursuant to a 
Remedial Order (hereafter, the Order) issued by OHA on December 14, 
1981, and have determined that such procedures are appropriate. Each 
firm's name, case number and amount of money remitted to remedy its 
pricing violations has been set out in the Appendix immediately 
following this Decision.
    Under the terms of the Order, a total of $21,764.57 has been 
remitted to DOE to remedy pricing violations which occurred during the 
relevant audit periods. These funds are being held in an escrow account 
established with the United States Treasury pending a determination of 
their proper distribution. See Memorandum from George B. Breznay, 
Director OHA, to James T. Campbell, Comptroller, ``Transferring Funds 
to Escrow Account,'' August 30, 1993. This Decision sets forth OHA's 
plan to distribute those funds. The specific application requirements 
appear in Section III of this Decision.

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 the 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 the 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. Each Remedial Order 
firm 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 during 
the relevant audit period, they each 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 their records available for 
inspection in violation of 10 CFR 210.92(b).
    The firms were ordered to reduce their prices for motor gasoline by 
specified amounts until a sufficient volume of gasoline had been sold 
at the reduced prices to remedy the violations.1 After decontrol, 
DOE moved to require direct monetary restitution to the Treasury 
instead. See Sunset Boulevard Car Wash, 20 FERC 62,319 at 63,537 
(1982). Under the terms of DOE's motion, the firms were required to 
disgorge and remit to the Treasury any violation amounts and the 
profits they had acquired as a result of their violations of the 
aforementioned provisions of the pricing regulations. The firms 
objected to DOE's motion which has since been affirmed by the Federal 
Energy Regulatory Commission (FERC) in a Decision issued on August 13, 
1982. Id. FERC issued a final Order adopting its Proposed Order on 
September 29, 1982.
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    \1\The Order imposed no sanctions upon the firms for failing to 
provide records pursuant to 10 CFR 210.92(b). See Remedial Order at 
1 and 7.
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    On April 28, 1994, we issued a Proposed Decision and Order (PDO) 
establishing tentative procedures to distribute the funds that each 
firm remitted to DOE pursuant to the modified Order. We proposed 
implementing a two stage refund proceeding and we stated that 
applicants who purchased gasoline from any one of the retailers 
identified in the Appendix to the PDO 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. Sec. 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. Immediately set forth 
below are the specific considerations that will guide our evaluation of 
refund applications during the first stage.

III. The First Stage Refund Procedures

    Refund applications submitted in the Aptos special refund 
proceeding will be evaluated in exactly the same manner as applications 
submitted in other refined product proceedings. In those proceedings, 
we have frequently chosen to adopt a number of rebuttable presumptions 
relating to pricing violations and injury. Such a policy reflects our 
belief that adoption of certain presumptions (i) permits applicants to 
participate in refund proceedings in larger numbers by avoiding the 
need to incur inordinate expense; and (ii) facilitates our 
consideration of first stage refund applications. 10 C.F.R. 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 each firm's gasoline sales during the relevant 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). 
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 
will be eligible to receive refunds calculated at a higher volumetric.
    We have established a separate volumetric for each of the firms 
whose name appears in the Appendix accompanying this Decision. The 
precise volumetric for each firm can be found in the Appendix. Each 
volumetric was obtained by dividing the remedial order funds available 
for distribution by the volume of gasoline each firm is believed to 
have sold during the audit period. 2
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    \2\In the absence of precise figures indicating the amount of 
motor gasoline sold by each firm during the audit period, we have 
estimated their sales using the best available data. Our estimate is 
that each gasoline retailer sold 50,000 gallons of motor gasoline 
per month for each month of the audit period. This figure will be 
used to calculate each retailer's volumetric 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 consent order period; and (2) demonstrate that it 
was injured by the 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 the 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 them to pass through those increased costs. 
See, Quintana Energy Corp., 21 DOE 85,032 at 88,117 (1991).
    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 forego an 
opportunity to obtain a refund. In view of these difficulties, we 
proposed adopting a number of injury presumptions which simplify and 
streamline the refund process. The simplified procedures reduce the 
burden that would have been placed on this office had we required 
detailed injury showings for relatively small refund applications.
(3) Presumptions of Injury
    Set forth below are the presumptions of injury that have been 
adopted for each class of applicant likely to submit refund 
applications in this proceeding. These presumptions are not unlike 
injury presumptions adopted by OHA in many other refined product 
proceedings. Each presumption turns on the category of applicant.
    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 established 
for each one of the 15 retailers covered by this proceeding is higher 
than the volumetric set in Gulf and in most other Subpart V refund 
proceedings. Id. If we were to adopt a lower threshold amount for this 
proceeding, then the number of very small firms that would be burdened 
with the requirement to make a detailed injury showing would increase 
substantially.
    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 during the 
audit period from one or more of the retailers named in the Appendix 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 gasoline they purchased 
during the audit period from any one of the firms named in the Appendix 
to be eligible to receive a refund. 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 each of the firm'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. In order to 
receive a refund, end-user applicants need only document the volume of 
gasoline they purchased during the relevant audit period from any of 
the 15 retailers whose name appears in the Appendix following this 
Decision. 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 the firms covered by these 
procedures. Such applicants may nonetheless submit refund applications 
if they purchased motor gasoline from any of these firms during the 
relevant audit periods.
    Any such applicants must demonstrate that they purchased products 
from one these firms during its 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 any refund received through to their customers.
(4) How to Apply for a Refund
    To apply for a refund from one or more of the firms' settlement 
fund, an applicant should 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.\3\ 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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    \3\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 C.F.R. 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.

    (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 
Remedial Order firm, in this case any firm named in the Appendix, 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 Remedial Order 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. 
Sec. 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 (Aptos Shell) and case 
number (LEF-0092) as well as specify the name of the firm it purchased 
gasoline from during the audit period. 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: Aptos Shell LEF-0092, et al, 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 motor gasoline 
from one or more of the firms named in the Appendix accompanying this 
Decision 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.

IV. 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 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 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 any one of the firms 
named in the Appendix to this Decision, pursuant to the Remedial Order 
finalized on October 22, 1980, may now be filed.

    Dated: September 26, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals. 

                                                                        Appendix                                                                        
                                                                  [September 26, 1994]                                                                  
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      Case No.                                     Case name                                    Amount             Audit period           $ Volumetric  
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LEF-0092.............  Aptos Shell, 18 Rancho Del Mar, Aptos, CA 95003.                            $4,588.44          8/1/79-11/13/79             $.0267
LEF-0109.............  C.J. King Chevron, 403 S. Saratoga Ave., San Jose, CA 95129.                 4,786.36        12/15/79-11/06/80              .0089
LEF-0110.............  Hughes Burlingame, Shell, 1490 Burlingame Ave., Burlingame, CA               7,284.06          8/1/79-11/13/79              .0424
                        94010.                                                                                                                          
LEF-0111.............  Sandusky's Service, 1201 Terrence Street, Vallejo, CA 94590.                 2,855.71            1/79-01/31/80              .0096
LEF-0112.............  Skycrest Shell, 1600 King Drive, Daly City, CA 94015.                        2,250.00          8/1/79-11/13/79              .0131
                                                                                                                                                        
      Total..........  ..................................................................         21,764.57                                             
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[FR Doc. 94-24587 Filed 10-4-94; 8:45 am]
BILLING CODE 6450-01-P