[Federal Register Volume 59, Number 245 (Thursday, December 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31498]


[[Page Unknown]]

[Federal Register: December 22, 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 
$3,657.84, plus accrued interest, in refined petroleum product 
violation amounts obtained by the DOE pursuant to a September 30, 
1981Remedial Order issued to Ed's Exxon, Case No. LEF-0078, and an 
April 27, 1982 Remedial Order issued to Ron's Shell, Case No. LEF-0084. 
The OHA has tentatively determined that the funds obtained from the 
above firms, plus accrued interest, will be distributed to customers 
who purchased gasoline from them during the following periods: August 
1, 1979 through October 31, 1979 in the Ed's Exxon proceeding and 
August 1, 1979 through November 13, 1981 in the Ron's Shell proceeding.

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 Ave., S.W., Washington, DC 20585. All comments should 
display a reference to the appropriate case number.

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 C.F.R. 205.282(b), 
notice is hereby given of the issuance of the Proposed Decision and 
Order set out below. The Proposed Decision and Order sets forth the 
procedures that the DOE has tentatively formulated to distribute to 
eligible claimants $3,657.84, plus accrued interest, obtained by the 
DOE pursuant to September 30, 1981 and April 27, 1982 Remedial Orders. 
In the Remedial Orders, the DOE found that, during periods beginning 
August 1, 1979, the firms each 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 the firms in two stages. In the first stage, we will accept claims 
from identifiable purchasers of gasoline from the firms 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 
III 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 Ed's Exxon or Ron's 
Shell.
    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 Avenue, S.W., Washington, DC 20585.

    Dated: December 14, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Names of Firms: Ed's Exxon; Ron's Shell
Date of Filing: July 20, 1993
Case Numbers: LEF-0078; LEF-0084

    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 received pursuant to Remedial Orders 
issued by the DOE to Ed's Exxon of Cotati, California, and Ron's Shell 
of Danville, California (hereinafter jointly referred to as the 
remedial order firms). In accordance with the provisions of the 
procedural regulations at 10 C.F.R. 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 Decision and Order 
sets forth the OHA's plan to distribute these funds.
I. Background
    Each of the remedial order firms was a retailer of motor gasoline 
during the periods relevant to this proceeding. The ERA issued Proposed 
Remedial Orders (PROs) to each of the firms.1 The PROs alleged 
that, during separate periods beginning on August 1, 1979, the remedial 
order firms had: charged more than the maximum lawful selling price for 
one or more grades of gasoline in violation of 10 C.F.R. 212.93; failed 
to post and maintain the maximum lawful selling price or a proper 
certification in violation of 10 C.F.R. 212.129; failed to keep and 
maintain books and records to support the lawfulness of the price for 
gasoline on the audit date in violation of 10 C.F.R. 210.92 and 212.93; 
and/or engaged in unlawful or discriminatory business practices in 
violation of 10 C.F.R. 210.62.
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    \1\Ed's Exxon was issued a PRO on January 25, 1980; Ron's Shell 
was issued a PRO on December 31, 1980.
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    After considering and dismissing the firms' objections to the PROs, 
the DOE issued final Remedial Orders. Ed's Exxon, 8 DOE 83,035 (1981); 
Alameda Chevron Service, et al., 9 DOE 83,027 (1982).2 Each of 
the firms has since remitted a specified amount in compliance with the 
Remedial Orders, to which interest has since accrued. 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.
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    \2\A Remedial Order was issued to Ed's Exxon on September 30, 
1981. A Remedial Order was issued to Ron's Shell on April 27, 1982.
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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 
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. 4501 et seq., 
Office of Enforcement, 9 DOE 82,508 (1981), and Office of Enforcement, 
8 DOE 82,597 (1981) (Vickers).
    We have considered the ERA's petition that we implement Subpart V 
proceedings with respect to the above remedial order funds and have 
determined that such proceedings are appropriate. This Proposed 
Decision and Order sets forth the OHA's tentative plan to distribute 
these funds. Before taking the actions proposed in this Decision, we 
intend to publicize our proposal and solicit comments from interested 
parties. Comments regarding the tentative distribution processes 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 remedial order funds, by which purchasers of 
gasoline from the remedial order firms during the period covered by the 
Remedial Orders may submit Applications for Refund in the initial 
stage. From our experience with Subpart V proceedings, we expect that 
potential applicants generally will be limited to ultimate consumers 
(``end-users''). Therefore, we do not anticipate that it will be 
necessary to employ the injury presumptions that we have used in past 
proceedings in evaluating applications submitted by refiners, 
resellers, and retailers.3
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    \3\If a refiner, reseller, or retailer should file an 
application in any of the refund proceedings, however, we will 
utilize the standards and appropriate presumptions established in 
previous proceedings. See, e.g., Starks Shell Service, 23 DOE 
85,017 (1993); Shell Oil Co., 18 DOE 85,492 (1989).
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    A. First Stage Refund Procedures. In order to receive a refund, 
each claimant will be required to submit a schedule of its monthly 
purchases of gasoline from the remedial order firm during the period 
covered by the Remedial Order. Our experience 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 
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. Sec. 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 the remedial order 
firms' sales of gasoline during the period covered by the Remedial 
Orders. In accordance with this presumption, refunds will be made on a 
pro-rata or volumetric basis.4 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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    \4\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 the remedial firm'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 only 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 
a Remedial Order fund is equal to the number of gallons purchased from 
the remedial order firm during the period covered by that Remedial 
Order times the per gallon refund amount.5 We derived the per 
gallon refund figures by dividing the amount of each Remedial Order 
fund by the total volume of gasoline which each remedial order firm 
sold during the period specified in that Remedial Order. An applicant 
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.6
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    \5\The per gallon refund amount is $0.0251 for claimants 
applying in the Ed's Exxon proceeding ($2,500 remitted/99,651 
gallons sold), $0.0072 in the Ron's Shell proceeding ($1,157.84 
remitted/160,777.9 gallons sold).
    \6\As in previous cases, we will establish a minimum refund 
amount of $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 will adopt a 
presumption regarding injury for end-users.
    2. End-Users. In accordance with prior Subpart V proceedings, we 
will adopt the presumption that an end-user or ultimate consumer of 
gasoline purchased from one of the remedial order firms 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). 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. End-users of gasoline purchased 
from the remedial order firms need only document their purchase volumes 
from the firm during the period covered by the Remedial Order to make a 
sufficient showing that they were injured by the overcharges.
    B. Refund Applications Filed by Representatives. We will adopt the 
standard OHA procedures relating to refund applications filed on behalf 
of applicants by ``representatives,'' including refund filing services, 
consulting firms, accountants, and attorneys. See, e.g., Starks Shell 
Service, 23 DOE 85,017 (1993); Texaco Inc., 20 DOE 85,147 (1990); 
Shell Oil Co., 18 DOE 85,492 (1989). We will also 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.
    The OHA reiterates its policy to scrutinize applications filed by 
filing services closely. Applications submitted by a filing service 
should contain all of the information indicated in the final Decision 
and Order in this proceeding.
    D. 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. 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 the OHA, and any funds in the Remedial Order funds 
that the 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:
    The payments remitted to the Department of Energy by Ed's Exxon and 
Ron's Shell pursuant to the Remedial Orders dated September 30, 1981 
and April 27, 1982 will be distributed in accordance with the foregoing 
Decision.
[FR Doc. 94-31498 Filed 12-21-94; 8:45 am]
BILLING CODE 6450-01-P