[Federal Register Volume 62, Number 32 (Tuesday, February 18, 1997)]
[Notices]
[Pages 7227-7229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3874]


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DEPARTMENT OF ENERGY

Office of Hearings and Appeals


Implementation of Special Refund Procedures

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

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

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SUMMARY: The Office of Hearings and Appeals of the Department of Energy 
announces procedures 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: Applications for Refund should be addressed to the 
Office of Hearings and Appeals, Department of Energy, 1000 Independence 
Avenue, SW., Washington, DC. 20585-0107. All Applications should 
conspicuously display a reference to either Case Number 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, SW., 
Washington, DC. 20585-0107, (202) 426-1575.

SUPPLEMENTARY INFORMATION: In accordance with Sec. 205.282(c) of the 
procedural regulations of the Department of Energy, 10 CFR 205.282(c), 
notice is hereby given of the issuance of the Decision and Order set 
forth below. The 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 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. A Proposed Decision and Order tentatively establishing refund 
procedures and soliciting comments from the public concerning the 
distribution of the Houma and Jedco settlement funds was issued on 
October 28, 1996. 61 FR 57868 (November 8, 1996).
    The Decision sets forth the procedures and standards that the DOE 
has formulated to distribute funds remitted by Houma and Jedco and 
being held in escrow. The DOE has decided that the funds should be 
distributed in two stages in the manner utilized with respect to 
consent order funds in similar proceedings. In the first stage, the DOE 
will consider claims for refunds made by firms and individuals that 
purchased motor gasoline from Houma and/or Jedco during the respective 
audit periods.
    The second stage of the refund process will take place only in the 
event that the meritorious first stage applicants do not deplete the 
settlement funds. Any funds that remain after all first stage claims 
have been decided will be distributed to state governments for use in 
four energy conservation programs, in accordance with the provisions of 
the Petroleum Overcharge Distribution and Restitution Act of l986.
    All first stage applications should be submitted within 90 days of 
publication of this notice. All comments and applications received in 
this proceeding will be available for public inspection between the 
hours of 1 to 5 p.m., Monday through Friday, except federal

[[Page 7228]]

holidays, in the Public Reference Room of the Office of Hearings and 
Appeals, located in Room 1E-234, 1000 Independence Avenue, SW., 
Washington, DC. 20585-0107.

    Dated: February 7, 1997.
George B. Breznay,
Director, Office of Hearings and Appeals.

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 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 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 DOE issued a Remedial Order (RO) to Jedco on October 24, 
1978. Jedco, Inc., Case No. DRW-0006. Like Houma, Jedco was a 
``reseller-retailer'' during the audit period November 1, 1973 
through March 31, 1974. 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. 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). 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. In accordance with current DOE policy, 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.
    The funds obtained from the two firms are presently in interest-
bearing escrow accounts maintained by the Department of the 
Treasury. They will be distributed in accord with the procedures 
outlined herein.

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 grant OGC's petitions 
and assume jurisdiction over distribution of the funds.
    On October 28, 1996, OHA issued a Proposed Decision and Order 
(PDO) establishing tentative procedures to distribute the Houma and 
Jedco settlement funds. The PDO was published in the Federal 
Register and a 30 day period was provided for the submission of 
comments regarding our proposed refund plan. See 61 Fed. Reg. 57868 
(November 8, l996). More than 30 days have elapsed and the OHA has 
received no comments concerning the proposed procedures for the 
distribution of the Houma or Jedco settlement funds. Consequently, 
the procedures will be adopted as 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. Secs. 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 respective settlement periods. 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 shall 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 will 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, those customers of Houma 
and Jedco who were ultimate consumers (end-users) of their motor 
gasoline shall 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.
    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 also 
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.
    In addition, any reseller 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.

[[Page 7229]]

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).
    Finally, we hereby establish a minimum amount of $15 for refund 
claims. We have found in prior refund proceedings that the cost of 
processing claims in which refunds are sought for amounts less than 
$15 outweighs the benefits of restitution in those situations. See, 
e.g., Uban Oil Co., 9 DOE para. 82,541 at 85,225 (1982). See also 10 
C.F.R. Sec. 205.286(b).

Refund Application Requirements

    To apply for a refund from either the Houma or Jedco settlement 
fund, a claimant should submit an Application for Refund containing 
all of the following information:
    (1) Identifying information including the claimant's name, 
current business address, business address during the refund period, 
taxpayer identification number, a statement indicating whether the 
claimant is an individual, corporation, partnership, sole 
proprietorship, or other business entity, the name, title, and 
telephone number of the person to contact for any additional 
information, and the name and address of the person who should 
receive any refund check.1 If the applicant operated under more 
than one name or under a different name during the price control 
period, the applicant should specify these names;
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    \1\ Under the Privacy Act of l974, the submission of a social 
security number by an individual applicant is voluntary. An 
applicant that does not wish to submit a social security number must 
submit an employer identification number if one exists. This 
information will be used in processing refund applications, and is 
requested pursuant to our authority under the Petroleum Overcharge 
Distribution and Restitution Act of 1986 and the regulations 
codified at 10 C.F.R. Part 205, Subpart V. The information may be 
shared with other Federal agencies for statistical, audition or 
archiving purposes, and with law enforcement agencies when they are 
investigating a potential violation of civil or criminal law. Unless 
an applicant claims confidentiality, this information will be 
available to the public in the Public Reference Room of the Office 
of Hearings and Appeals.
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    (2) The applicant's use of motor gasoline from Houma and/or 
Jedco during the audit period: e.g., consumer (end-user), 
cooperative, or reseller;
    (3) A statement certifying that the applicant 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;
    (4) A statement as to whether the applicant or a related firm 
has filed, or has authorized any individual to file on its behalf, 
any other application in the Houma and/or Jedco refund proceeding. 
If so, an explanation of the circumstances of the other filing or 
authorization should be submitted;
    (5) If the applicant is or was in any way affiliated with Houma 
and/or Jedco, it should explain this affiliation, including the time 
period in which the affiliation existed;
    (6) A statement as to whether the ownership of the applicant's 
firm changed during or since the respective audit periods. If an 
ownership change occurred, the applicant should list the names, 
addresses, and telephone numbers of any prior or subsequent owners. 
The applicant should also provide copies of any relevant Purchase 
and Sale Agreements, if available. If such written documents are not 
available, the applicant should submit a description of the 
ownership change, including the year of the sale and the type of 
sale, e.g., sale of corporate stock, sale of company assets;
    (7) A statement as to whether the applicant has ever been a 
party in a DOE enforcement action or a private Section 210 action. 
If so, an explanation of the case and copies of the relevant 
documents should also be provided;
    (8) The following statement signed by the individual applicant 
or a responsible official of the firm filing the refund application: 
2
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    \2\ We will not process applications signed by filing services 
or other representatives. In addition, the statement must be dated 
on or after the date of this Decision and Order. Any application 
signed and dated before the date of this Decision will be summarily 
dismissed.
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    I swear (or affirm) that the information contained in this 
application is true and correct to the best of my knowledge and 
belief. I understand that anyone who is convicted of providing false 
information to the federal government may be subject to a fine, a 
jail sentence, or both, pursuant to 18 U.S.C. Sec. 1001. I 
understand that the information contained in this application is 
subject to public disclosure. I have enclosed a duplicate of this 
entire application which will be placed in the OHA Public Reference 
Room.
    Applications should be either typed or printed and clearly 
labeled ``Houma Oil Company Special Refund Proceeding, Case No. VEF-
0023'' or ``Jedco, Inc. Special Refund Proceeding, Case No. VEF-
0024.'' Each applicant must submit an original and one copy of the 
application. If the applicant believes that any of the information 
in its application is confidential and does not wish for this 
information to be publicly disclosed, it must submit an original 
application, clearly designated ``confidential,'' containing the 
confidential information, two copies of the application with the 
confidential information deleted and an explanation of the basis for 
its confidentiality claim. All refund applications should be 
postmarked no later than 90 days from the publication of this 
Decision and Order in the Federal Register, and sent to: Houma Oil 
Company, OR, Jedco, Inc., Special Refund Proceeding, Office of 
Hearings and Appeals, Department of Energy, 1000 Independence 
Avenue, S.W., Washington, D.C. 20585-0107.
    Any representative that requests that it be a payee of a refund 
check must file with the OHA if it has not already done so a 
statement certifying that it maintains a separate escrow account at 
a bank or other financial institution for the deposit of all refunds 
received on behalf of applicants, and that its normal business 
practice is to deposit all Subpart V refund checks in that account 
within two business days of receipt and to disburse refunds to 
applicants within 30 calendar days thereafter. Unless such 
certification is received by the OHA, all refund checks approved 
will be made payable solely to the applicants. Representatives who 
have not previously submitted an escrow account certification form 
to the OHA may obtain a copy of the appropriate form by contacting: 
Marcia B. Carlson, Chief, Docket & Publications Division, Office of 
Hearings and Appeals, Department of Energy, Washington, D.C. 20585-
0107.

Distribution of Funds Remaining After First Stage

    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 all 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 OHA. Any funds in the Houma and/
or Jedco escrow accounts the OHA determines will not be needed to 
effect direct restitution to injured customers of either Houma or 
Jedco will be distributed in accordance with the provisions of 
PODRA.
    It Is Therefore Ordered That:
    (1) Applications for Refund from the funds remitted to the 
Department of Energy by the Houma Oil Company pursuant to the 
Consent Judgment that became effective on February 9, 1995, may now 
be filed.
    (2) Applications for Refund from the funds remitted to the 
Department of Energy by Jedco, Inc., pursuant to a final bankruptcy 
distribution effective July 23, l995, may now be filed.
    (3) All Applications for Refund must be postmarked no later than 
90 days after publication of this Decision and Order in the Federal 
Register.

    Dated: February 7, 1997.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 97-3874 Filed 2-14-97; 8:45 am]
BILLING CODE 6450-01-P