[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Notices]
[Pages 3863-3865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1356]



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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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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) announces the proposed procedures for the disbursement of 
$75,638.48, plus accrued interest, in refined petroleum product 
violation amounts obtained pursuant to an April 10, 1985 Modified 
Remedial Order issued to Mockabee Gas & Fuel Co., Case No. VEF-0001 
(Mockabee). The OHA has tentatively determined that the funds obtained 
from Mockabee, plus accrued interest, will be distributed to customers 
who purchased No. 2 heating oil or kerosene from Mockabee during the 
period of November 1, 1973 through December 31, 1975.

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, 1000 Independence 
Avenue, S.W., Washington, DC 20585. All comments should be marked with 
the reference number VEF-0001.

FOR FURTHER INFORMATION CONTACT: Thomas O. Mann, Deputy Director, Roger 
Klurfeld, Assistant Director,Office of Hearings and Appeals, 1000 
Independence Avenue, S.W., Washington, DC 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 a total of 
$75,638.48, plus accrued interest, obtained by the DOE pursuant to the 
April 10, 1985 Modified Remedial Order issued to Mockabee. In the 
Modified Remedial Order, the DOE found that, during the period from 
November 1, 1973 through December 31, 1975, Mockabee sold No. 2 heating 
oil and kerosene in excess of the maximum lawful selling price.
    The OHA has proposed to distribute the funds obtained from Mockabee 
in two stages. In the first stage, we will accept claims from 
identifiable purchasers of covered products from Mockabee who may have 
been injured by the 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 


[[Page 3864]]
gallons of covered product which they purchased from Mockabee.
    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 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. 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, DC 
20585.

    Dated: January 11, 1995.
Richard W. Dugan,
Acting Director, Office of Hearings and Appeals.

    Name of Firm: Mockabee Gas & Fuel Co.
    Date of Filing: October 18, 1994.
    Case Number: VEF-0001.
    On October 18, 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 $75,638.48, plus accrued interest, 
which Mockabee Gas & Fuel Co. (Mockabee) remitted to the DOE pursuant 
to a Modified Remedial Order (MRO) issued by the OHA on April 10, 1985. 
In accordance with the provisions of the procedural regulations found 
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 the regulatory violations set forth in 
the MRO. This Proposed Decision and Order sets forth the OHA's plan to 
distribute these funds.

I. Background

    During the period relevant to this proceeding, Mockabee was a 
retailer of No. 2 heating oil, kerosene, diesel fuel, and motor 
gasoline in Upper Marlboro, Maryland. On December 18, 1974, the Federal 
Energy Administration (FEA) issued a Notice of Probable Violation to 
Mockabee. On January 28, 1975, the FEA issued a Remedial Order (RO) to 
Mockabee, finding that Mockabee had overcharged purchasers of No. 2 
heating oil and kerosene. A further investigation disclosed additional 
overcharges other than those cited in the RO, and on December 22, 1976, 
the FEA rescinded the RO and issued a Revised Remedial Order requiring 
Mockabee to roll back prices to compensate consumers who were 
overcharged by Mockabee.
    Mockabee failed to comply with the Revised Remedial Order. On April 
10, 1985, the ERA1 issued a Modified Remedial Order which 
rescinded the price rollbacks it had ordered Mockabee to make. Instead, 
the MRO required Mockabee to pay to the DOE $29,583.08 in assessed 
overcharges, and an additional $46,071.46 in interest due. On September 
30, 1985, Mockabee appealed the MRO to the OHA, which denied the Appeal 
on December 19, 1985. Mockabee Gas & Fuel Co., 13 DOE para.83,059 
(1985). Mockabee has since remitted $75,638.48 in compliance with the 
MRO, which is now available for distribution through Subpart V.

    \1\Under the DOE Organization Act, 42 U.S.C. 7151, et seq., and 
Executive Order 12009, 42 Fed. Reg. 46367 (September 25, 1977), all 
functions vested by law in the FEA were transferred to and vested in 
the DOE. Within the DOE, the ERA was delegated the authority to 
investigate violations of applicable regulations and to seek 
compliance of those regulations.
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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 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 
(PODRA), 15 U.S.C. 4501 et seq.; Office of Enforcement, 9 DOE 
para.82,508 (1981); Office of Enforcement, 8 DOE para.82,597 (1981).
    We have considered ERA's Petition that we implement a Subpart V 
proceeding with respect to the funds remitted by Mockabee 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 set forth in this 
Proposed Decision and Order. 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 monies remitted by Mockabee (the Mockabee fund) by 
which purchasers of No. 2 heating oil and kerosene from Mockabee during 
the period covered by the MRO may submit Applications for Refund in the 
initial stage. From our experience with Subpart V proceedings, we 
expect that 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.2

    \2\If a refiner, reseller, or retailer should file an 
application in this refund proceeding, however, we will utilize the 
standards and appropriate presumptions established in previous 
proceedings. See, e.g., Stark's Shell Service, 23 DOE para.85,017 
(1993); Shell Oil Co., 18 DOE para.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 No. 2 heating oil or 
kerosene from Mockabee during the period covered by the MRO--November 
1, 1973 through December 31, 1975. 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 para.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 over all of Mockabee's sales of products covered by 
the MRO during the period covered by the MRO. See Permian Corp., 23 DOE 
para.85,034 (1993). In accordance with this presumption, refunds are 
made on a pro-rata or volumetric basis.3 In the absence of 

[[Page 3865]]
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 prices.

    \3\If an individual claimant believes that it was injured by 
more than its volumetric share, it may elect to forgo this 
presumption and file a refund application based upon a claim that it 
suffered a disproportionate share of Mockabee's overcharges. See, 
e.g., Mobil Oil Corp./Atchison, Topeka and Santa Fe Railroad Co., 20 
DOE para.85,788 (1990); Mobil Oil Corp./Marine Corps Exchange 
Service, 17 DOE para.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 
para.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 Mockabee fund is equal to the number of gallons of covered product 
purchased from Mockabee during the period covered by the MRO times the 
per gallon refund amount. In the present case, the per gallon refund is 
$0.0612. We derived this figure by dividing the monies remitted by 
Mockabee ($75,638.48) by the total volume of covered products sold by 
Mockabee from November 1, 1973 through December 31, 1975 (1,236,132 
gallons). 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 accrued interest.4

    \4\As in previous cases, we propose to establish a minimum 
refund amount of $15. In this proceeding, any potential claimant 
purchasing less than 245 gallons of covered product from Mockabee 
would have an allocable share of less than $15. We have found 
through our experience that the cost of processing claims in which 
refund amounts of less than $15 are sought outweighs the benefits of 
restitution in those instances. See Exxon Corp., 17 DOE para.85,590 
(1988).
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    In addition to the volumetric presumption, we also propose to adopt 
a presumption regarding injury for end-users.
2. End Users
    In accordance with prior Subpart V proceedings, we propose to adopt 
the presumption that an end user or ultimate consumer of covered 
products purchased from Mockabee whose business is unrelated to the 
petroleum industry was injured by the overcharges resolved by the MRO. 
See, e.g., Texas Oil and Gas Corp., 12 DOE para.85,069 at 88,209 
(1984). Unlike regulated firms in the petroleum industry, members of 
this group generally 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 price of goods 
and services produced by members of this group would go beyond the 
scope of the refund proceeding. Id. We therefore propose that the end-
users of covered products purchased from Mockabee need only document 
their purchase volumes from Mockabee during the period covered by the 
MRO to make a sufficient showing that they were injured by the 
overcharges.

B. Refund Applications Filed by Representatives

    We propose to 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., Stark's Shell Service, 23 DOE para.85,017 (1993); 
Texaco, Inc., 20 DOE para.85,147 (1990); Shell Oil Co., 18 DOE 
para.85,492 (1989). We will also require strict compliance with the 
filing requirements as specified in 10 CFR 205.283, particularly the 
requirement that applications and the accompanying certification 
statement be signed by the applicant.
    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. 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 Mockabee 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 monies remitted to the Department 
of Energy by Mockabee Gas & Fuel Oil Co. pursuant to the Modified 
Remedial Order issued on April 10, 1985, will be distributed in 
accordance with the foregoing Decision.

[FR Doc. 95-1356 Filed 1-18-95; 8:45 am]
BILLING CODE 6450-01-P