[Federal Register Volume 60, Number 160 (Friday, August 18, 1995)]
[Notices]
[Pages 43130-43131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20555]



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DEPARTMENT OF ENERGY

Office of General Counsel


Final Consent Order With Occidental Petroleum Corporation

AGENCY: Department of Energy.

ACTION: Final action on proposed consent order.

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SUMMARY: The Department of Energy (DOE) has determined that a proposed 
Consent Order between the DOE and Occidental Petroleum Corporation, 
including its wholly owned subsidiary OXY USA Inc. which was formerly 
Cities Service Oil and Gas Corporation, successor in interest to Cities 
Service Company (collectively, Occidental), shall be made a final order 
of the DOE as proposed. The Consent Order resolves matters relating to 
Occidental's compliance with the federal petroleum price and allocation 
regulations administered and enforced by DOE during the period October 
1, 1979 through January 27, 1981. The Consent Order requires Occidental 
to pay $100,000,000 to the DOE within thirty (30) days of the effective 
date of the Consent Order, and five annual payments of $35,000,000 plus 
interest on the installment balances of 7.6% per annum. Persons 
claiming to have been harmed by Occidental's overcharges will be able 
to present their claims for refunds in an administrative claims 
proceeding before the Office of Hearings and Appeals (OHA). The 
decision to make the Occidental Consent Order final was made after a 
full review of written comments from the public.

FOR FURTHER INFORMATION CONTACT: Diana D. Clark, Office of General 
Counsel, Mail Code GC-33, 1000 Independence Avenue, S.W., Washington, 
D.C. 20585, (202) 523-3045.

SUPPLEMENTARY INFORMATION:

I. Introduction

    On July 6, 1995, DOE issued a Notice announcing a proposed Consent 
Order between DOE and Occidental which would resolve matters relating 
to Occidental's compliance with the federal petroleum price and 
allocation regulations during the period October 1, 1979 through 
January 27, 1981. 60 FR 35186. That Notice summarized the proposed 
Consent Order, which requires Occidental to pay a total principal 
amount of $275,000,000, plus interest on five annual installment 
payments.
    The July 6 Notice supplied information regarding Occidental's 
potential liability for violations of the Crude Oil Entitlements 
Program 

[[Page 43131]]
reporting regulations. These issues are pending before the OHA in Case 
No. LRO-0003, in which the DOE is seeking nearly $254 million plus 
prejudgment interest of $915 million.
    The Notice also enumerated the considerations which underlay DOE's 
preliminary view that the settlement is favorable to the government and 
in the public interest. The Notice solicited written comments from the 
public relating to the terms and conditions of the settlement and 
whether the settlement should be made final.

II. Comments Received

    Seven written comments were received, three of which, by the terms 
of their submission, were not considered.1 The California Attorney 
General and the Governor of Oklahoma both expressed the view that the 
proposed settlement was in the public interest and urged DOE to effect 
the Consent Order as proposed. The American Petroleum Institute 
provided no specific comment on the proposed Consent Order with 
Occidental, but generally endorsed the resolution by such agreeable 
means as settlement of the cases arising out of the price and 
allocation regulatory controls.

    \1\ A group of utilities, transporters and manufacturers (UTM) 
commented upon the prospective settlement in a July 17, 1995 letter 
sent to DOE, and that letter was treated as a comment responsive to 
the July 6 Notice seeking comment on the proposed settlement with 
Occidental. Occidental thereafter submitted a reply addressing the 
points raised by UTM. UTM then requested that its correspondence be 
``withdrawn from the Consent Order file.'' Although UTM's letter, 
along with a copy of Occidental's reply to UTM, will remain 
available to the public, consistent with UTM's request DOE has not 
considered it in determining whether to make the Consent Order 
final. As Occidental requested that DOE consider its reply to UTM 
only if UTM's letter was considered in determining final action on 
the proposed Consent Order, neither has DOE considered Occidental's 
reply to UTM.
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    The fourth comment, submitted by various states, expressed no view 
on the bases of the proposed settlement or the adequacy of the 
settlement amount. Rather, those particular states pointed out that the 
settlement would principally resolve alleged violations related to 
crude oil transactions and therefore, under the Final Settlement 
Agreement in the Stripper Well Exemption Litigation, M.D.L. No. 378 (D. 
Kan.), 40% of the moneys received from Occidental must be paid to the 
56 states, territories and insular possessions pursuant to that 1986 
agreement.
    The Consent Order requires that the Office of General Counsel 
petition the OHA to implement a proceeding under 10 CFR Part 205, 
Subpart V, with regard to all the funds received from Occidental 
pursuant to the settlement. That disposition is consistent with the 
Final Settlement Agreement, under which DOE issued a Modified 
Restitutionary Policy Statement. 51 FR 27899 (August 4, 1986). The 
settlement with Occidental contemplates application of the 1986 policy 
statement inasmuch as the Consent Order calls for a Subpart V 
proceeding for the disposition of the funds, which are recognized by 
DOE to be crude oil-related.2 Accordingly, it appears the 
expressed concern is appropriately addressed by the Consent Order.

    \2\ Moreover, since the 1986 Final Settlement Agreement, all 
moneys recovered by DOE in connection with resolution of alleged 
petroleum overcharges have been subject to the Subpart V process, 
and in every instance of crude oil-related recoveries the states 
have received 40% of the recovered moneys.
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    The written comments did not afford any information that would 
warrant consideration of modification or rejection of the proposed 
Consent Order with Occidental.
    Accordingly, DOE concludes that the Consent Order is in the public 
interest and should be made final.

IV. Decision

    By this Notice, and pursuant to 10 CFR 205.199J, the proposed 
Consent Order between Occidental and DOE, executed on June 27, 1995, is 
made a final order of the Department of Energy, effective the date of 
publication of this Notice in the Federal Register.

    Issued in Washington, D.C., on August 14, 1995.
Eric J. Fygi,
Deputy General Counsel.
[FR Doc. 95-20555 Filed 8-17-95; 8:45 am]
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