[Federal Register Volume 65, Number 30 (Monday, February 14, 2000)]
[Notices]
[Pages 7386-7390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3347]
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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
$1,368,143.60, plus accrued interest, in refined petroleum overcharges
obtained by the DOE under the terms of remedial and consent orders with
respect to Bi-Petro Refining Company, Inc., et al., Case Nos. VEF-0035,
et al. The OHA has tentatively determined that the funds will be
distributed in accordance with the provisions of 10 CFR part 205,
Subpart V and 15 U.S.C. Sec. 4501, the Petroleum Overcharge
Distribution and Restitution Act (PODRA).
DATE AND ADDRESS:
Comments must be filed in duplicate on or before March 15, 2000 and
should be addressed to the Office of Hearings and Appeals, Department
of Energy, 1000 Independence Ave., SW, Washington, DC 20585-0107. All
comments should display a reference to Case Nos. VEF-0035, et al.
FOR FURTHER INFORMATION CONTACT: Dawn L. Goldstein, Staff Attorney,
Office of Hearings and Appeals, 1000 Independence Ave. SW, Washington,
DC 20585-0107; (202) 426-1527, [email protected].
SUPPLEMENTARY INFORMATION: In accordance with 10 CFR Sec. 205.282(b),
notice is hereby given of the issuance of the Proposed Decision and
Order set out below. The Proposed Decision sets forth the procedures
that the DOE has tentatively formulated to distribute to eligible
claimants $1,368,143.60, plus accrued interest, obtained by the DOE
under the terms of Remedial Orders and Consent Orders regarding Bi-
Petro Refining Company, Inc., et al. Under the Remedial Orders,
companies were found to have violated the Federal petroleum price and
allocation regulations involving the sale of refined petroleum products
during the relevant audit periods. The Consent Orders resolved alleged
violations of these regulations.
The OHA has proposed to distribute the funds in a two-stage refund
proceeding. Purchasers of certain covered petroleum products from any
one of the firms considered in the
[[Page 7387]]
proceeding will have an opportunity to submit refund applications in
the first stage. Refunds will be granted to applicants who
satisfactorily demonstrate they were injured by the pricing violations
and who document the volume of certain refined petroleum products they
purchased from one of the firms during the relevant audit periods. In
the event that money remains after all first-stage claims have been
disposed of, the remaining funds will be disbursed in accordance with
the provisions of 15 U.S.C. Sec. 4501, the Petroleum Overcharge
Distribution and Restitution Act of 1986 (PODRA).
Any member of the public may submit written comments regarding the
proposed refund procedures. Commenting parties are requested to forward
two copies of their submissions, within 30 days of publication of this
notice in the Federal Register, to the address set forth at the
beginning of this notice. Comments so received, will be made available
for public inspection between the hours of 9 a.m. and 5 p.m., Monday
through Friday, except Federal Holidays, in the Public Reference Room
of the Office of Hearings and Appeals, 950 L'Enfant Plaza, Washington,
D.C.
Dated: Date: January 21, 2000
George B. Breznay,
Director, Office of Hearings and Appeals.
PROPOSED DECISION AND ORDER
January 21, 2000.
Department of Energy; Washington, DC 20585.
Implementation of Special Refund Procedures
Names of Firms: Bi-Petro Refining Co., Inc., et al.
Dates of Filing: October 19, 1999, et al.
Case Numbers: VEF-0035, et al.
On October 19, 1999, the Office of General Counsel (OGC) of the
Department of Energy (DOE) filed a petition with the Office of
Hearings and Appeals (OHA), requesting that the OHA formulate and
implement procedures for distributing funds obtained through the
payments resulting from Remedial Orders and Consent Orders (Remedial
Order and Consent Order funds) regarding nine covered petroleum
product refiners, retailers and resellers, pursuant to 10 CFR Part
205, Subpart V. This Proposed Decision sets forth the OHA's
tentative plan for distributing these funds to qualified refund
applicants. Since the procedures set forth in this Decision are in
proposed form, no refund applications should be filed at this time.
A final determination will be issued at a later date announcing that
the filing of refund applications is authorized.
I. Proposed Refund Procedures
A. Eligibility for Refunds
To the extent possible, the amounts collected, plus accrued
interest, will be distributed to purchasers of certain covered
refined products described in the Appendix who can show that they
were injured by these nine firms' pricing practices during the
periods also described in the Appendix.
B. Calculation of Refund Amount
We propose adopting a volumetric method to apportion these
funds. Under this volumetric refund approach, a claimant's allocable
share of the Remedial Order and Consent Order funds is equal to the
number of gallons of certain covered petroleum products purchased
during the time period specified in the Appendix, multiplied by a
per gallon refund amount. In the interest of the expeditious
distribution of the collected funds, as it is near the end of our
Subpart V refund proceedings, and based upon our previous experience
in these refined product Subpart V proceedings, we have set the per
gallon refund amount at $.0004 per gallon.\1\ This figure will be
reduced by the collection percentage, to obtain the volumetric. If
the collection percentage is 100 percent or greater, the volumetric
will not be reduced. \\
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\1\ Nevertheless, we realize that the impact on an individual
claimant may have been greater than the volumetric amount. We
therefore propose that the volumetric presumption will be
rebuttable, and we will allow a claimant to submit evidence
detailing the specific overcharges that it incurred in order to be
eligible for a larger refund. E.g., Standard Oil Co./Army and Air
Force Exchange Service, 12 DOE para. 85,015 (1984). In addition, we
note that we may need to lower the volumetric for a particular
proceeding, if the volume claimed by applicants multiplied by the
volumetric indicates that if all volume were claimed, the fund would
be exhausted or insufficient to satisfy all claims. We may also need
to lower a particular volumetric if it appears inappropriate, based
on our experience in these cases.
\2\ The collection percentage will be calculated by dividing the
amount collected (with interest accrued by the DOE up to roughly the
issuance of the final Implementation Order) by the amount the firm
was either ordered to pay in a Remedial Order or agreed to pay in a
Consent Order.
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Thus, under the volumetric approach and using the information
listed in the Appendix, an eligible claimant will receive a refund
equal to the number of gallons of certain covered petroleum products
that it purchased from one of the nine firms during the relevant
period, multiplied by the volumetric for each firm.
As in previous cases, we will establish a minimum amount of $15
for refund claims. E.g., Uban Oil Co., 9 DOE para. 82,541 at 85,225
(1982). Because we are nearing the end of our Subpart V proceedings,
we will also set a deadline to submit applications of six months
from the publication date of our final Implementation Order in the
Federal Register.
C. Showing of Injury
We propose that each claimant will be required to document its
purchases of the relevant covered petroleum products from the firms
at issue during the relevant period. In addition, we propose that in
order to receive a refund, an applicant generally must demonstrate
through the submission of detailed evidence that it did not pass on
the alleged overcharges to its customers. See, e.g., Office of
Enforcement, 8 DOE para. 82,597 at 85,396-97 (1981).
However, as we have done in many prior refund cases, we propose
to adopt specific injury presumptions that will simplify and
streamline the refund process for some categories of customers:
small claims, end-users, consignees, regulated firms and
cooperatives. These presumptions will excuse members of certain
applicant categories from proving that they were injured by the
firms' alleged overcharges, and are discussed below.
D. Reseller Applicants Seeking Refunds of $10,000 or Less
We propose to adopt a presumption, as we have in many previous
cases, that resellers seeking small refunds were injured by these
firms' pricing practices. See, e.g., E.D.G., Inc., 17 DOE para.
85,679 (1988). We recognize that the cost to the applicant of
gathering evidence of injury to support a small refund claim could
exceed the expected refund. Consequently, without simplified
procedures, some injured parties would be denied an opportunity to
obtain a refund. Therefore, we are proposing a small claims
threshold of $10,000. See Enron Corp., 21 DOE para. 85,323 at 88,957
(1991).
Accordingly, under the proposed small claims presumption in this
proceeding, a claimant who claims a refund of $10,000 or less will
not be required to submit any evidence of injury beyond establishing
that it is one of the eligible customers that purchased covered
petroleum products from one of the nine firms. We propose that a
reseller applicant must follow the procedures that are outlined
below if the applicant is seeking a refund in excess of $10,000.
E. Medium-Range Presumption
We propose that in lieu of making a detailed showing of injury,
a reseller, retailer or refiner claimant whose allocable share of
the collected funds for purchases of covered petroleum products from
one of the nine firms exceeds $10,000 may elect to receive as its
refund the larger of $10,000 or 40 percent of its allocable share up
to $50,000. The use of this presumption reflects our conviction that
these claimants were likely to have experienced some injury as a
result of the alleged overcharges. In other proceedings, we have
determined that a 40 percent presumption for the medium-range
purchasers reflected the amount of their injury as a result of their
purchases of those products. Gulf Oil Corp., 16 DOE para. 85,381
(1987). Accordingly, a claimant in this group will only be required
to provide documentation of its purchase volumes of covered
petroleum products from these firms in order to be eligible to
receive a refund of 40 percent of its total allocable share up to
$50,000.
F. Reseller Applicants Seeking Larger Refunds
We propose that if a retailer, reseller or refiner claims an
amount in excess of $10,000, and declines to accept the medium-range
presumption, it will be required to provide a detailed demonstration
of its injury. We propose that it will be required to demonstrate
that it maintained a ``bank'' of
[[Page 7388]]
unrecovered product costs in order to show that it did not pass
along the alleged overcharges to its own customers. In addition, we
propose that a claimant must show that market conditions would not
permit it to pass through those increased costs. See, e.g., Quintana
Energy Corp., 21 DOE para. 85,032 at 88,117 (1991). If a reseller
that is eligible for a refund in excess of $10,000 elects not to
submit the cost bank and purchase price information described above,
it may still apply either for the small claims refund of $10,000 or
the medium-range presumption, whichever amount is more beneficial
for the applicant.
G. End-Users
We propose to adopt a presumption that end-users or ultimate
consumers whose businesses are unrelated to the petroleum industry,
were injured by these firms' alleged overcharges and are entitled to
their full share of the monies collected from these firms. Unlike
regulated firms in the petroleum industry, end-users were not
subject to price controls during the relevant periods. Moreover,
these unregulated firms were not required to keep records that
justified selling price increases by reference to cost increases.
Therefore, an analysis of the impact of the alleged overcharges on
the final prices of non-petroleum goods and services would be beyond
the scope of a special refund proceeding. See, e.g., American
Pacific International, Inc., 14 DOE para. 85,158 at 88,294 (1986).
We propose, therefore, that any applicant claiming to be an end-
user, need only establish that it was a customer of one of these
firms or a successor thereto and that the nature of its business
made it an ultimate consumer of the covered petroleum products that
it purchased. If an applicant establishes those two facts, it will
receive its full pro-rata share as its refund without making a
detailed demonstration of injury.
H. Regulated Firms and Cooperatives
We propose that regulated firms (such as public utilities) and
agricultural cooperatives, which are required to pass on to their
customers the benefit of any refund received, will be exempted from
the requirement that they make a detailed showing of injury.
Marathon Petroleum Co., 14 DOE para. 85,269 at 88,515 (1986); see
also Office of Special Counsel, 9 DOE para. 82,538 at 85,203 (1982).
We will require a regulated firm or cooperative to establish that it
was a customer of one of the firms or a successor thereto. In
addition, we will require each such claimant to certify that it will
pass any refund received through to its customers, to provide us
with a full explanation of the manner in which it plans to
accomplish this restitution to its customers and to notify the
appropriate regulatory or membership body of the receipt of the
refund money. If a regulated firm or cooperative meets these
requirements, it will receive a refund equal to its full pro-rata
share. However, any public utility claiming a refund of $10,000 or
less, or accepting the medium-range presumption of injury, will not
be required to submit the above referenced certifications and
explanation. A cooperative's sales of covered petroleum products to
non-members will be treated in the same manner as sales by other
resellers or retailers.
I. Indirect Purchasers
We propose that firms which made indirect purchases of covered
petroleum products from one of the firms during the relevant period
may also apply for refunds. If an applicant did not purchase
directly from one of the firms, but believes that the covered
petroleum products it purchased from another firm were originally
purchased from one of the firms at issue, the applicant must
establish the basis for its belief and identify the reseller from
whom the covered petroleum products were purchased. Indirect
purchasers who either fall within a class of applicant whose injury
is presumed, or who can prove injury, may be eligible for a refund
if the reseller of one of the nine firms' products passed through
these firms' alleged overcharges to its own customers. E.g.,
Dorchester Gas Corp., 14 DOE para. 85,240 at 88,451-52 (1986).
J. Spot Purchasers
We propose to adopt the rebuttable presumption that a claimant
who made only spot purchases from one of the firms was not injured
as a result of those purchases. A claimant is a spot purchaser if it
made only sporadic purchases of significant volumes of covered
petroleum products from one of the firms. Accordingly, a spot
purchaser claimant must submit specific and detailed evidence to
rebut the spot purchaser presumption and to establish the extent to
which it was injured as a result of its spot purchases from one of
these firms. E.g., Office of Enforcement, 8 DOE para. 82,597 at
85,396-97 (1981).
K. Applicants Seeking Refunds Based on Allocation Claims
We also recognize that we may receive claims alleging these
firms' failure to furnish petroleum products that they were obliged
to supply under the DOE allocation regulations that became effective
in January 1974. See 10 CFR Part 211. Any such application will be
evaluated with reference to the standards we set forth in Subpart V
implementation decisions such as Office of Special Counsel, 10 DOE
para. 85,048 at 88,220 (1982), and refund application cases such as
Mobil Oil Corp./Reynolds Industries, Inc., 17 DOE para. 85,608
(1988). These standards generally require an allocation claimant to
demonstrate the existence of a supplier/purchaser relationship with
the firm at issue and the likelihood that the firm at issue failed
to furnish petroleum products that it was obliged to supply to the
claimant under 10 CFR Part 211. In addition, the claimant should
provide evidence that it sought redress from the alleged allocation
violation. Finally, the claimant must establish that it was injured
and document the extent of the injury.
In our evaluation of whether allocation claims meet these
standards, we will consider various factors. For example, we will
seek to obtain as much information as possible about the DOE's (or
its predecessor's) treatment of complaints made to it by the
claimant. We will also look at any affirmative defenses that the
firm may have had to the alleged allocation violation. In assessing
an allocation claimant's injury, we will evaluate the effect of the
alleged allocation violation on its entire business operations with
particular reference to the amount of product that it received from
suppliers other than the firm at issue. In determining the amount of
an allocation refund, we will utilize any information that may be
available regarding the amount of the firm's allocation violations
in general and regarding the specific allocation violation alleged
by the claimants. We will also pro rate any allocation refunds that
would otherwise be disproportionately large in relation to the funds
collected. Cf. Amtel, Inc./Whitco, Inc., 19 DOE para. 85,319 (1989).
L. Consignees
We will adopt a rebuttable level of injury presumption of 10
percent for all consignees of the instant firms during the relevant
periods. See Gulf Oil Corp., 16 DOE para. 85,381 (1987).
Accordingly, a consignee may elect to receive a refund based on 10
percent of its total allocable share. Any consignee applicant will
be free to rebut this presumption and prove a greater injury in
order to receive a larger refund.
II. Distribution of the Remainder of the Firms' Consent Order Funds
In the event that money remains after all refund claims from the
collected monies have been analyzed, those funds in those accounts
will be disbursed as indirect restitution in accordance with the
provisions of the Petroleum Overcharge Distribution and Restitution
Act of 1986 (PODRA), 15 U.S.C. 4501-4507 (1988). Pursuant to the
PODRA, the excess funds will be distributed to state governments for
use in energy conservation programs.
III. Conclusion
Applications for Refund should not be filed at this time.
Detailed procedures for filing Applications for Refund will be
provided in a final Decision and Order. Before distributing any
portion of the collected funds, we will publicize the distribution
process, and provide an opportunity for any potential claimants to
file a claim. Comments regarding the tentative distribution process
set forth in this Proposed Order should be filed with the Office of
Hearings and Appeals within 30 days of the publication of this
Proposed Order in the Federal Register.
It Is Therefore Ordered That:
The refund amounts remitted to the Department of Energy by the
nine firms listed in the Appendix will be distributed in accordance
with the foregoing decision.
[[Page 7389]]
Appendix
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Amounts
Consent --------------------------------------------------------------------
Name of firm, primary operating OHA case order With
location or headquarters location No. tracking Type of business Covered products Applicable dates* Agreed to or Actual interest Tentative Tentative
system No. ordered payment through 11/ collection volumetric
(COTS) principal 30/99 percentage
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South Central Terminal Co., Inc.,
f/k/a Bi-Petro Refining Co.,
Inc.
P.O. Box 3245, Springfield, VEF-0035 720S00565W refiner............. gasoline........... July 1978-Dec. 1979 $236,242.00 $167,287.26 $215,743.30 91 0.00036
IL 62708.
Don Rettig/Don's Shell
1097 W. Tennyson Rd., VEF-0037 999K90058W retailer............ gasoline........... Aug. 1979-April 4,208.40 1,800.00 3,910.64 93 0.00037
Hayward, CA 94544. 1980.
Gugino's Exxon
25th and Pine St., Niagara VEF-0040 999K90074W retailer............ gasoline........... Aug.-Sept. 1979.... 1,772.00 530.00 1,103.7 62 0.00025
Falls, NY 14301.
J.D. Streett & Company, Inc.
144 Weldon Parkway, M.D. VEF-0042 720H00555W reseller-retailer... all covered Aug. 1973-Jan. 1981 400,000.00 532,362.00 710,840.11 178 **** 0.0004
Heights, MO 63043. products. 0
McWhirter Distributing Co., Inc.
6633 Valjean Ave., Van Nuys, VEF-0045 930H00291W reseller-retailer... gasoline........... April-Sept. 1979... 128,171.06 26,840.00 29,227.86 23 0.00009
CA 91406.
Charles B. Luna, formerly d/b/a/
Ozark County Gas Co.
P.O. Box 1339, Branson, MO VEF-0046 720H00606W reseller-retailer... all covered July 1977-Jan. 1981 *** 154,128.74 26,397.43 43,568.52 28 0.00011
65616. products.
Sherer Oil Company/Ringer Tri-
State Oil Co.
608 Central Ave., Johnstown, VEF-0052 340H00496W reseller-retailer... gasoline........... April-Sept. 1979... 387,465.05 96,921.55 149,547.63 39 0.00016
PA 15902.
Swann Oil Company **
111 Presidential Blvd., Bala- VEF-0053 320H00222W reseller-retailer... heating oil, Nov.-Dec. 1973..... 6,874,342.08 362,811.45 493,323.21 7 0.00003
Cynwyd, PA 19004. residual fuel oil.
Vantage Petroleum Co.
515 Johnson Ave., Bohemia, NY VEF-0056 200H00026W reseller-retailer... gasoline........... April-Aug. 1979.... 2,049,481.61 153,193.91 207,375.84 10 0.00004
11716.
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Totals:.................. .......... ............ .................... ................... ................... 10,235,810.94 1,368,143.60 1,854,640.85 .......... ...........
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* Or until relevant decontrol date.
** Subsidiaries include: Swann Oil Co. of Allentown; Swann Oil of Georgia; L.A. Swann Oil Co. and Swann Oil Co. of Philadelphia.
*** The amount the applicant was originally ordered to pay was increased form $125,000.00 to $154,128.74.
**** As explained in the Decision since the collection percentage in this case is greater than 100 percent, the volumetric will not be reduced.
[[Page 7390]]
[FR Doc. 00-3347 Filed 2-11-00; 8:45 am]
BILLING CODE 6450-01-P