[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Notices]
[Pages 57868-57869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28747]


-----------------------------------------------------------------------


DEPARTMENT OF ENERGY

Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, Department of Energy.

ACTION: Notice of proposed implementation of special refund procedures 
and solicitation of comments.

-----------------------------------------------------------------------

SUMMARY: The Office of Hearings and Appeals of the Department of Energy 
announces proposed procedures and solicits comments concerning the 
refunding of $214,236.37 (plus accrued interest) in consent order 
funds. The funds are being held in escrow pursuant to a Consent 
Judgment and a Bankruptcy Distribution involving Houma Oil Company and 
Jedco, Inc., respectively.

DATE AND ADDRESS: Comments must be filed within 30 days of publication 
of this in the Federal Register and should be addressed to the Office 
of Hearings and Appeals, Department of Energy, 1000 Independence 
Avenue, S.W., Washington, D.C. 20585-0107. All comments should 
conspicuously display a reference to Case Numbers VEF-0023 (Houma Oil 
Co.) or VEF-0024 (Jedco, Inc.).

FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director, 
Office of Hearings and Appeals, 1000 Independence Avenue, S.W. 
Washington, D.C. 20585-0107, (202) 426-1575.

SUPPLEMENTARY INFORMATION: In accordance with Section 205.282(b) of the 
procedural regulations of the Department of Energy, 10 C.F.R. 
Sec. 205.282(b), notice is hereby given of the issuance of the Proposed 
Decision and Order set forth below. The Proposed Decision relates to a 
Consent Judgment entered into by the Houma Oil Company which settled 
possible pricing violations in the firm's sales of motor gasoline 
during the period May 1, 1979 through April 30, 1980. The Proposed 
Decision also relates to a Bankruptcy Distribution which settled 
pricing violations stemming from Jedco, Inc.'s sales of motor gasoline 
during the period November 1, 1973 through March 31, 1974.
    The Proposed Decision sets forth the procedures and standards that 
the DOE has tentatively formulated to distribute funds remitted by 
Houma and Jedco and being held in escrow. The DOE has tentatively 
decided that the funds should be distributed in two stages in the 
manner utilized with respect to consent order funds in similar 
proceedings.
    Applications for Refund should not be filed at this time. 
Appropriate public notice will be given when the submission of claims 
is authorized.
    Any member of the public may submit written comments regarding the 
proposed refund procedures. Commenting parties are requested to submit 
two copies of their comments. Comments should 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 1:00 to 5:00 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, D.C. 20585-0107.

    Dated: October 28, 1996.
George B. Breznay,
Director, Office of Hearings and Appeals.

Department of Energy

Washington, DC 20585

October 28, 1996

Proposed Decision and Order of the Department of Energy

Special Refund Procedures

Name of Firms: Houma Oil Company Jedco, Inc.
Date of Filing: September 1, 1995
Case Numbers: VEF-0023, VEF-0024

    In accordance with the procedural regulations of the Department 
of Energy (DOE), 10 C.F.R. Part 205, Subpart V, the Regulatory 
Litigation branch of the Office of General Counsel (OGC)(formerly 
the Economic Regulatory Administration (ERA)) filed Petitions for 
the Implementation of Special Refund Procedures with the Office of 
Hearings and Appeals (OHA) on September 1, 1995. The petitions 
request that the OHA formulate and implement procedures for the 
distribution of funds received pursuant to a Consent Judgment and a 
Bankruptcy Distribution concerning Houma Oil Co. (Houma) and Jedco, 
Inc. (Jedco), respectively.

Background

    Houma was a ``reseller-retailer'' during the period of price 
controls. The ERA audited Houma's business records and determined it 
violated DOE's regulations in its purchases and sales of motor 
gasoline during the period May 1, 1979 through April 30, 1980. On 
November 21, 1983, the ERA issued a Proposed Remedial Order (PRO) to 
Houma in which it determined the firm overcharged its customers by 
$503,810 during the audit period. On August 1, 1984, Houma and DOE 
entered into a consent order in which Houma agreed to refund the 
overcharge amount, plus interest, in installment payments to DOE 
over a two year period. Houma ultimately defaulted on its repayment 
obligation and the matter was referred to the Department of Justice 
(DOJ) for enforcement. The DOJ then obtained a Consent Judgment 
against Houma on February 9, 1995. Pursuant to this Judgment, Houma 
remitted a total of $210,414.73 to the DOE. Houma then stopped

[[Page 57869]]

making payment, and the DOE determined that further legal action 
against Houma was unlikely to result in meaningful benefits to the 
taxpayer. The residual payment obligation was therefore declared 
uncollectible. The collected monies will be distributed in accord 
with the procedures proposed herein.
    The DOE issued a Remedial Order (RO) to Jedco on October 24, 
1978. Like Houma, Jedco was a ``reseller-retailer'' during the audit 
period. The RO required the firm to implement a rollback of its 
motor gasoline prices, thereby restoring its overcharged customers 
to the position they would have been in absent the overcharges.* 
Jedco failed to comply with the directives of the DOE in this matter 
and ultimately declared bankruptcy. The DOE's claim against the firm 
led to a final distribution to the DOE of $3,821.64. Since OGC has 
been unable to identify the customers injured by the Jedco 
overcharges, it has petitioned OHA to distribute this amount 
pursuant to Subpart V along with the funds obtained from Houma.
---------------------------------------------------------------------------

    \*\ After the deregulation of petroleum prices, the RO was 
modified and this requirement was replaced by an order requiring 
payment to the U.S. Treasury. Jedco, Inc., 8 DOE para. 81,068 
(1981).
---------------------------------------------------------------------------

    The funds obtained from the two firms are presently in interest-
bearing escrow accounts maintained by the Department of the 
Treasury.

Jurisdiction

    The procedural regulations of the DOE set forth general 
guidelines by which the OHA may formulate and implement a plan of 
distribution for funds received as a result of an enforcement 
proceeding. 10 C.F.R. Part 205, Subpart V. It is DOE policy 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 obtained as part of the settlement 
agreements, see Office of Enforcement, 9 DOE para. 82,553 (1982); 
Office of Enforcement, 9 DOE para. 82,508 (1981). After reviewing 
the record in the present case, we have concluded that a Subpart V 
proceeding is an appropriate mechanism for distributing the monies 
obtained from Houma and Jedco. We therefore propose to grant OGC's 
petitions and assume jurisdiction over distribution of the funds.

Proposed Refund Procedures

    In cases where the DOE is unable to identify parties injured by 
the alleged overcharges or the specific amounts to which they may be 
entitled, we normally implement a two-stage refund procedure. In the 
first stage of the proceeding, those who bought refined petroleum 
products from the consent order firm may apply for a refund, which 
is calculated on a pro-rata or volumetric basis. In order to 
calculate the volumetric refund amount, the OHA divides the amount 
of money available for direct restitution by the number of gallons 
sold by the consent order firm during the period covered by the 
consent order. In the second stage, any funds remaining after all 
first-stage claims are decided are distributed 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.
    In the two cases covered by this Decision, however, we lack much 
of the information that we normally use to provide direct 
restitution to injured customers of the consent order firms. In 
particular, we have been unable to obtain any information on the 
volume of the relevant petroleum products sold by Houma and Jedco 
during the settlement period. Nor do we have any information 
concerning the customers of these firms. Based on the present state 
of the record in these cases, it would be difficult to implement a 
volumetric refund process. Nevertheless, we propose to accept any 
refund claims submitted by persons who purchased motor gasoline from 
Houma during the period May 1, 1979 through April 30, 1980 or from 
Jedco during the period November 1, 1973 through March 31, 1974. We 
propose to work with those claimants to develop additional 
information that would enable us to determine who should receive 
refunds and in what amounts. See Bell Fuels, Inc. 25 DOE para. 
85,020 (1995).

Injury Presumptions/Showing of Injury

    As in previous Subpart V proceedings, we propose that Houma and 
Jedco customers who were ultimate consumers (end-users) of their 
motor gasoline be presumed injured by their alleged overcharges. 
These customers will therefore not be required to make a further 
demonstration of injury in order to receive a refund.
    We propose that reseller claimants (including retailers and 
refiners) who purchased motor gasoline from either of the two firms 
on a regular (non-spot) basis and whose refund claim is $10,000 or 
less will be presumed injured and therefore need not provide further 
demonstration of injury. See E.D.G., Inc., 17 DOE para. 85,679 
(1988). We realize that the cost to an applicant of gathering 
evidence of injury to support a relatively small refund claim could 
exceed the expected refund. Consequently, in the absence of 
simplified procedures some injured parties would be denied an 
opportunity to obtain a refund.
    We further propose that any refund claimant advancing a refund 
claim in excess of $10,000 must establish that it did not pass the 
alleged Houma or Jedco overcharges along to its customers. See, 
e.g., Office of Enforcement, 8 DOE para. 82,597 (1981). While there 
are a variety of means by which a claimant could make this showing, 
a successful claimant should demonstrate that at the time it 
purchased motor gasoline from the consent order firm, market 
conditions would not permit it to increase its prices to pass 
through the additional costs associated with the alleged 
overcharges. In addition, such claimants must show that they had a 
``bank'' of unrecovered product costs sufficient to support their 
refund claim in order to demonstrate that they did not subsequently 
recover those costs by increasing their product prices. However, the 
maintenance of a cost bank does not automatically establish injury. 
See Tenneco Oil/Chevron U.S.A., 10 DOE para. 85,014 (1982); Vickers 
Energy Corp./Standard Oil Co., 10 DOE para. 85,036 (1982); Vickers 
Energy Corp./Koch Industries, Inc., 10 DOE para. 85,038 (1982), 
Motion for Modification denied, 10 DOE para. 85,062 (1983).

Conclusion

    Refund applications in this proceeding should not be filed until 
the issuance of a final Decision and Order pertaining to the instant 
OGC Implementation Petitions. Detailed procedures for filing 
applications will be provided in the final Decision and Order. 
Before disposing of any of the funds received, we intend to 
publicize the distribution process and to provide an opportunity for 
any affected party to file a claim. A copy of this Proposed Decision 
and Order will be published in the Federal Register and public 
comments will be solicited.
    Any funds that remain after all first-stage claims have been 
decided will be distributed in accordance with the provisions of 
PODRA. PODRA requires that the Secretary of Energy determine 
annually the amount of oil overcharge funds that will not be 
required to refund monies directly to injured parties in Subpart V 
proceedings and make those funds available to state governments as 
indirect restitution for use in energy conservation programs. The 
Secretary has delegated these responsibilities to OHA. Any funds in 
the Houma or Jedco escrow accounts the OHA determines will not be 
needed to effect direct restitution to injured customers of those 
firms will be distributed in accordance with the provisions of 
PODRA.
    It Is Therefore Ordered That: The refund amounts remitted to the 
Department of Energy by Houma Oil Company and Jedco, Inc., pursuant 
to a Consent Judgment and a Bankruptcy Distribution respectively, 
will be distributed in accordance with the foregoing Decision.

[FR Doc. 96-28747 Filed 11-7-96; 8:45 am]
BILLING CODE 6450-01-P