[Federal Register Volume 59, Number 242 (Monday, December 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31132]


[[Page Unknown]]

[Federal Register: December 19, 1994]


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DEPARTMENT OF ENERGY
 

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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DEPARTMENT OF ENERGY
SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) announces the proposed procedures for disbursement of a 
total of $10,700,000, plus accrued interest, in alleged crude oil 
overcharges obtained pursuant to a Consent Order entered into with 
Murphy Oil Corp., Murphy Oil USA, Inc., and Murphy Exploration and 
Production Co., Case No. VEF-0003 (Murphy). The OHA has tentatively 
determined that the funds obtained from Murphy, plus interest accrued, 
will be distributed in accordance with the DOE's Modified Statement of 
Restitutionary Policy in Crude Oil Cases.

DATES AND ADDRESSES: Comments must be filed in duplicate on or before 
January 18, 1995, 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 number VEF-0003.

FOR FURTHER INFORMATION CONTACT: Thomas O. Mann, Deputy Director, 
Office of Hearings and Appeals, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-2094.

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 a total of 
$10,700,000, plus accrued interest, obtained by the DOE under the terms 
of the Consent Order entered into with Murphy on July 15, 1994. These 
funds were paid towards the settlement of alleged violations of the DOE 
petroleum price and allocation regulations that were in effect from 
August 19, 1973, through January 28, 1981.
    The OHA has proposed to distribute these funds in accordance with 
the DOE's Modified Statement of Restitutionary Policy in Crude Oil 
Cases, 51 FR 27,899 (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.
    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: December 12, 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: Murphy Oil Corp. / Murphy Oil USA, Inc.
Date of Filing: October 25, 1994
Case Number: VEF-0003

December 12, 1994.
    On October 25, 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 $10,700,000 remitted by Murphy Oil Corp., Murphy 
Oil USA, Inc., and Murphy Exploration & Production Co. (collectively 
referred to as ``Murphy''), pursuant to the Consent Order entered into 
between Murphy and the DOE on July 15, 1994. In accordance with the 
procedural regulations codified 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 alleged 
regulatory violations which were resolved by the present Consent Order. 
This Proposed Decision and Order sets forth the OHA's plan to 
distribute these funds.

I. Background

    Murphy is a major integrated refiner which produced and sold crude 
oil and a full range of refined petroleum products during the period of 
federal price controls. As such, it was subject to the federal 
petroleum price and allocation regulations. During that time, the ERA 
conducted an extensive audit of Murphy and issued an issue letter to 
Murphy on September 29, 1976. ERA issued a Notice of Probable Violation 
to Murphy on January 28, 1981. ERA issued a Proposed Remedial Order 
(PRO) to Murphy on December 15, 1986, which Murphy contested before the 
OHA.
    On February 9, 1987, Murphy and the DOE entered into a Consent 
Order which resolved disputes regarding Murphy's refined petroleum 
product operations during the period the petroleum price and allocation 
regulations were in effect. See Murphy Oil Corp., 17 DOE 85,782 (1987) 
(the first Consent Order). The first Consent Order left the issue of 
Murphy's alleged violations as a producer of crude oil unresolved. 
Those issues were decided by the OHA on June 17, 1992 when the OHA 
issued a modified version of ERA's PRO as a Remedial Order (RO). See 
Murphy Oil Corp., 22 DOE 83,005 (1992). Murphy subsequently appealed 
the OHA's determination to the Federal Energy Regulatory Commission 
(FERC). On January 24, 1994 a FERC Administrative Law Judge issued a 
Decision and Proposed Order (D&PO) which modified the RO. See Ocean 
Drilling & Exploration Co., et al., 66 FERC 63,002 (1994).
    On July 15, 1994, Murphy and the DOE entered into the present 
Consent Order, the second between Murphy and the DOE. This second 
Consent Order, which does not modify or affect the terms of the first 
Consent Order, resolves all existing or potential civil and 
administrative claims against Murphy for alleged violations of the 
federal petroleum price and allocation regulations left unresolved by 
the first Consent Order. Under the terms of this second Consent Order, 
Murphy has remitted $10,700,000 to the DOE, and all outstanding or 
potential claims by the DOE against Murphy have been extinguished. 
These funds are being held in an interest-bearing escrow account 
maintained at the Department of the Treasury pending a determination 
regarding their proper distribution.

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 of distribution 
for 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 The Petroleum Overcharge 
Distribution and Restitution Act of 1986 (PODRA), 15 U.S.C. 4501-07; 
Office of Enforcement, 9 DOE 82,508 (1981); 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 second Murphy Consent 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.

III. Proposed Refund Procedures

A. Crude Oil Refund Policy

    We propose to distribute the Murphy funds in accordance with the 
DOE's Modified Statement of Restitutionary Policy in Crude Oil Cases, 
51 FR 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 overcharge funds will be remitted to the federal government, 
another 40 percent to the states, and up to 20 percent may be initially 
reserved for the payment of claims by 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 FR 29689 (August 20, 1986). This Order provided a period of 30 
days for the 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 received pursuant to the Order 
Implementing the MSRP. This Notice was published at 52 FR 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) prove that they were injured by the alleged 
crude oil overcharges. We also specified that end-users of petroleum 
products whose businesses are unrelated to the petroleum industry will 
be presumed to have been injured by the alleged crude oil overcharges 
and need not submit any additional proof of injury beyond documentation 
of their purchase volumes. See City of Columbus, Georgia, 16 DOE 
85,550 (1987). Additionally, we stated that crude oil refunds would be 
calculated on the basis of a per gallon (or ``volumetric'') refund 
amount, which is obtained by dividing the 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., Texaco, Inc, 19 DOE 85,200 (1989); Shell Oil Co., 17 DOE 85,204 
(1988) (Shell); Mountain Fuel Supply Co., 14 DOE 85,475 (1986) 
(Mountain Fuel).

B. Refund Claims

    We propose to adopt the DOE's standard crude oil refund procedures 
to distribute the monies remitted by Murphy. We have chosen initially 
to reserve 20 percent of the fund, plus accrued interest, for direct 
refunds to claimants in order to ensure that sufficient funds will be 
available for injured parties. This reserve figure may later be reduced 
if circumstances warrant.
    The OHA will evaluate crude oil refund claims in a manner similar 
to that used in Subpart V proceedings to evaluate claims based on 
alleged refined product overcharges. See Mountain Fuel, 14 DOE at 
88,869. Under these procedures, claimants will be required to document 
their purchase volumes of petroleum products and prove they were 
injured as a result of the alleged violations.
    We will adopt a presumption that the alleged crude oil overcharges 
were absorbed, rather than passed on, by applicants which were (1) end-
users of petroleum products, (2) unrelated to the petroleum industry, 
and (3) not subject to the regulations promulgated under the Emergency 
Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. 751-760h. In order 
to receive a refund, end-user claimants need not submit any evidence of 
injury beyond documentation of their purchase volumes. See Shell, 17 
DOE at 88,406.
    Petroleum retailer, reseller, and refiner applicants must submit 
detailed evidence of injury, and they may not rely upon the injury 
presumptions utilized in refined product cases. Id. These applicants, 
however, may use econometric evidence of the type found in the OHA 
Report on Stripper Well Overcharges, 6 Fed. Energy Guidelines 90,507 
(1985). See also PODRA Sec. 3003(b)(2), 15 U.S.C. 4502(b)(2). If a 
claimant has executed and submitted a valid waiver pursuant to one of 
the escrows established by the Stripper Well Settlement Agreement, it 
has waived its rights to file an application for Subpart V crude oil 
refund monies. See Mid-America Dairymen v. Herrington, 878 F.2d 1448 
(Temp. Emer. Ct. App.), 3 Fed. Energy Guidelines 26,617 (1989); In re: 
Department of Energy Stripper Well Exemption Litigation, 707 F. Supp. 
1267 (D. Kan.), 3 Fed Energy Guidelines 26,613 (1987).
    As has been stated in prior Decisions, a crude oil refund applicant 
will only be required to submit one application for its share of all 
available crude oil overcharge funds. See, e.g., A. Tarricone, Inc., 15 
DOE 85,495 (1987). A party that has already submitted a claim to any 
other crude oil refund proceeding implemented by the DOE need not file 
another claim. The prior application will be deemed to be filed in all 
crude oil refund proceedings finalized to date.
    The DOE had previously established June 30, 1994 as the final 
deadline for filing an Application for Refund from the crude oil funds. 
See 58 FR 26318 (May 3, 1993). Although that date has passed, it has 
been decided to re-open the crude proceeding. See 59 Fed. Reg. 55656 
(November 8, 1994). The new closing date for this proceeding has been 
tentatively set for June 3, 1996. Id. It is the policy of the DOE to 
pay all crude oil refund claims at the rate of $.0008 per gallon. While 
we anticipate that applicants that filed their claims before June 30, 
1988 will receive a supplemental refund payment, we will decide in the 
future whether claimants that filed later applications should receive 
additional refunds. See, e.g., Seneca Oil Co., 21 DOE 85,327 (1991). 
Notice of any additional amounts available in the future will be 
published in the Federal Register.

C. Payments to the Federal Government and the States

    Under the terms of the MSRP, we propose that the remaining eighty 
percent 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 the 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 funds remitted by Murphy Oil Corp., Murphy Oil USA, Inc., and 
Murphy Exploration & Production Co. pursuant to the Consent Order 
entered into with the DOE on July 15, 1994 will be distributed in 
accordance with the foregoing Decision.

[FR Doc. 94-31132 Filed 12-16-94; 8:45 am]
BILLING CODE 6450-01-P