[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Notices]
[Pages 48947-48949]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-16555]


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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.

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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) announces the procedures for the disbursement of 
$1,585,576.76, plus accrued interest, in crude oil overcharges obtained 
by the DOE concerning BPM Ltd., Case No. TEF-0001, Honeymon Drilling 
Co., Case No. TEF-0002, Intercontinental Oil, Case No. TEF-0003, Knox 
Oil, Case No. TEF-0004, Pescar Trading, Case No. TEF-0005, Shepherd 
Oil, Inc., Case No. TEF-0007, Sierra Petroleum Co., Case No. TEF-0008, 
Thriftway Co., Case No. TEF-0010, and Western Refining Co. (Robert J. 
Martin), Case No. TEF-0011.

FOR FURTHER INFORMATION CONTACT: Richard A. Cronin, Jr., Assistant 
Director, Office of Hearings and Appeals, 1000 Independence Ave., SW., 
Washington, DC 20585-1615, (202) 287-1589, [email protected].

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(b), notice 
is hereby given of the issuance of the Decision and Order set out 
below. The Decision sets forth the procedures that the DOE has 
formulated to distribute to eligible claimants $1,585,576.76, plus 
accrued interest, obtained by the DOE from BPM Ltd., Honeymon Drilling 
Co., Intercontinental Oil, Knox Oil, Pescar Trading, Shepherd Oil, 
Inc., Sierra Petroleum Co., Thriftway Co., and Western Refining Co. 
(Robert J. Martin).
    The OHA will distribute these funds in the currently-existing crude 
oil refund proceeding described in the Decision and Order. Because the 
deadline for filing crude oil refund applications has passed, no new 
applications for refund for the alleged (or established) crude oil 
pricing violations of the listed firms will be accepted for these 
funds.

    Dated: August 16, 2005.
George B. Breznay,
Director, Office of Hearings and Appeals.

Decision and Order

Department of Energy

Implementation of Special Refund Procedures

    Names of Firms: BPM Ltd., Honeymon Drilling Co., Intercontinental 
Oil, Knox Oil, Pescar Trading, Shepherd Oil, Inc., Sierra Petroleum 
Co., Thriftway Co., Western Refining Co. (Robert J. Martin).
    Date of Filing: June 21, 2005.
    Case Numbers: TEF-0001, TEF-0002, TEF-0003, TEF-0004, TEF-0005, 
TEF-0007, TEF-0008, TEF-0010, TEF-0011.

I. Background

    The Office of General Counsel (OGC) of the Department of Energy 
(DOE) filed a Petition requesting that the Office of Hearings and 
Appeals (OHA) formulate and implement Subpart V special refund 
proceedings. Under the procedural regulations of the DOE, special 
refund proceedings may be implemented to refund monies to persons 
injured by violations of the DOE petroleum price regulations, provided 
DOE is unable to readily identify such persons or to ascertain the 
amount of any refund. 10 CFR 205.280. We have considered OGC's request 
to formulate refund procedures for the disbursement of monies remitted 
by the following firms pursuant to administrative or judicial decisions 
or in settlement of the DOE allegations that the firms had violated the 
DOE petroleum price control and allocation regulations: BPM Ltd., 
Honeymon Drilling Co., Intercontinental Oil, Knox Oil, Pescar Trading, 
Shepherd Oil, Inc., Sierra Petroleum Co., Thriftway Co., Western 
Refining Co. (Robert J. Martin).
    In its Petition, OGC states that is has been unable to reasonably 
identify persons harmed as a result of these firms' alleged violations, 
or to reasonably ascertain the amount of the refund to any person that 
might have been harmed. We therefore have determined that the refund 
procedures requested by OGC are appropriate.
    A total of $1,585,576.76 has been remitted to DOE by these firms to 
remedy violations that occurred during the relevant audit periods. 
These funds are being held in an escrow account established with the 
United States Treasury pending a determination of their proper 
distribution. This Decision sets forth OHA's plan to distribute those 
funds.

II. Jurisdiction and Authority

    The general guidelines that govern OHA's ability to formulate and 
implement a plan to distribute refunds are set forth at 10 CFR part 
205, subpart V. These procedures apply in situations where the DOE 
cannot readily identify the persons who were injured as a result of 
actual or alleged violations of the regulations or ascertain the amount 
of the refund each person should receive. For a more detailed 
discussion of subpart V and the authority of the OHA to fashion 
procedures to distribute refunds, see Office of Enforcement, 9 DOE ] 
82,508 (1981) and Office of Enforcement, 8 DOE ] 82,597 (1981).
    On June 28, 2005, the OHA issued a Proposed Decision and Order 
(PD&O) establishing tentative procedures to distribute the funds 
remitted. That PD&O was published in the Federal Register, and a 30-day 
period was provided for the submission of comments regarding our 
proposed refund plan. See 70 FR 38901 (July 6, 2005). More than 30 days 
have elapsed and OHA has received no comments concerning these proposed 
refund procedures. Consequently, the procedures will be adopted as 
proposed.

III. Refund Procedures

A. Allocation of Remitted Funds

    The alleged violations by the above-named firms all concerned the 
sale of crude oil. Under these circumstances, all of the funds remitted 
will be allocated for restitution for parties injured by the firms' 
alleged violations of the crude oil regulations.

B. Refund Procedures for Crude Oil Violations

    The funds will be distributed in accordance with the DOE's Modified 
Statement of Restitutionary Policy in Crude Oil Cases, (MSRP), see 51 
FR 27899 (August 4, 1986). Pursuant to the MSRP, OHA may reserve up to 
20 percent of those funds for direct refunds to applicants who claim 
that they were injured by the crude oil violations. The

[[Page 48948]]

remaining funds are distributed to the States and Federal government 
for indirect restitution. We will distribute the funds remitted in 
accordance with the MSRP, which was issued as a result of the 
Settlement Agreement approved by the court in The Department of Energy 
Stripper Well Exemption Litigation, 653 F. Supp. 108 (D. Kan. 1986). 
Shortly after the issuance of the MSRP, the OHA issued an Order that 
announced that this policy would be applied in all subpart V 
proceedings involving alleged crude oil violations. See Order 
Implementing the MSRP, 51 FR 29,689 (August 20, 1986) (the August 1986 
Order).
    Under the MSRP, 40 percent of crude oil overcharge funds will be 
disbursed to the Federal government, another 40 percent to the states, 
and up to 20 percent may initially be reserved for the payment of 
claims to injured parties. The MSRP also specified that any funds 
remaining after all valid claims by injured purchasers are paid will be 
disbursed to the Federal government and the States in equal amounts.
    In April 1987, the OHA issued a Notice analyzing the numerous 
comments received in response to the August 1986 Order. 52 FR 11,737 
(April 10, 1987) (April 10 Notice). This Notice provided guidance to 
claimants that anticipated filing refund applications for crude oil 
monies under the subpart V regulations. In general, we stated that all 
claimants would be required to (1) document their purchase volumes of 
petroleum products during the August 19, 1973 through January 27, 1981 
crude oil price control period, and (2) prove that they were injured by 
the alleged crude oil overcharges. Applicants who were end-users or 
ultimate consumers of petroleum products, whose businesses are 
unrelated to the petroleum industry, and who were not subject to the 
DOE price regulations would be presumed to have been injured by any 
alleged crude oil overcharges. In order to receive a refund, end-users 
would not need to submit any further evidence of injury beyond the 
volume of petroleum products purchased during the period of price 
controls. See City of Columbus Georgia, 16 DOE ] 85,550 (1987).
1. Individual Refund Claims
    The amount of money obtained from the listed firms intended for 
restitution of crude oil violations is $1,585,576.76 plus accrued 
interest. In accordance with the MSRP, we shall initially reserve 20 
percent of those funds ($317,115.36 plus accrued interest) for direct 
refunds to applicants who claim that they were injured by crude oil 
overcharges. We shall base refunds on a volumetric amount which has 
been calculated in accordance with the methodology described in the 
April 10 Notice. That volumetric refund amount is currently $0.0016 per 
gallon. See 57 FR 15562 (March 24, 1995). On May 13, 2004, we announced 
final procedures for the distribution of the remaining crude oil 
overcharge funds held by DOE, and estimated that all remaining funds 
would result in an additional volumetric refund amount of $0.00072 per 
gallon. See 69 FR 29300 (May 21, 2004).
    The filing deadline for refund applications in the crude oil refund 
proceeding was June 30, 1994. This was subsequently changed to June 30, 
1995. See Filing Deadline Notice, 60 FR 19914 (April 20, 1995); see 
also DMLP PDO, 60 FR 32004, 32007 (June 19, 1995). Because the June 30, 
1995, deadline for crude oil refund applications has passed, no new 
applications for restitution from purchasers of refined petroleum 
products based on the alleged (or established) crude oil pricing 
violations will be accepted for these funds. Instead, these funds will 
be added to the general crude oil overcharge pool used for direct 
restitution.
2. Payments to the States and Federal Government
    Under the terms of the MSRP, the remaining 80 percent of the crude 
oil violation amounts subject to this Decision, or $1,268,461.40 plus 
accrued interest, should be disbursed in equal shares to the States and 
Federal Government, for indirect restitution. Refunds to the states 
will be in proportion to the consumption of petroleum products in each 
state during the period of price controls. The share or ratio of the 
funds which each state will receive is contained in Exhibit H of the 
Stripper Well Settlement Agreement. When disbursed, these funds will be 
subject to the same limitations and reporting requirements as all other 
crude oil monies received by the states under the Stripper Well 
Agreement.
    Accordingly, we will direct the DOE's Office of the Controller to 
transfer one-half of that amount, or $634,230.70 plus interest, into an 
interest bearing subaccount for the states, and one-half or $634,230.70 
plus interest, into an interest bearing subaccount for the Federal 
government.
    It Is Therefore Ordered That:
    (1) The Director of Special Accounts and Payroll, Office of 
Departmental Accounting and Financial Systems Development, Controller's 
Office, Department of Energy, shall take all steps necessary to 
transfer the funds remitted by the 9 firms listed in the Appendix to 
this determination, plus accrued interest, pursuant to Paragraphs (2), 
(3), and (4) below.
    (2) The Director of Special Accounts and Payroll shall transfer 
$634,230.70, plus 40 percent of all accrued interest on the funds 
referenced in Paragraph (1) above, into the subaccount denominated 
``Crude Tracking-States,'' Account No. 999DOE003W.
    (3) The Director of Special Accounts and Payroll shall transfer 
$634,230.70, plus 40 percent of all accrued interest on the funds 
referenced in Paragraph (1) above, into the subaccount denominated 
``Crude Tracking-Federal,'' Account No. 999DOE002W.
    (4) The Director of Special Accounts and Payroll shall transfer 
$317,115.36, plus 20 percent of all accrued interest on the funds 
referenced in Paragraph (1) above, into the subaccount denominated 
``Crude Tracking-Claimants 4,'' Account No. 999DOE010Z.

Dated: August 16, 2005.

George B. Breznay,
Director, Office of Hearings and Appeals.

APPENDIX

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                                                                       Consent order tracking
             Name of firm                       OHA case no.             system (COTS) no.         Principal
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BPM, Ltd.............................  TEF-0001.....................  6C0X00230W.............        $621,220.04
Honeymon Drilling Co., Ltd...........  TEF-0002.....................  BWBBBBBBBB.............             359.00
Intercontinental Oil Co., Inc........  TEF-0003.....................  650X00282W.............          48,750.28
Knox Oil.............................  TEF-0004.....................  BLBBBBBBBB.............           2,989.00
Pescar International Trading Corp....  TEF-0005.....................  650X000345W............          28,044.49
Shephard Oil, Inc....................  TEF-0007.....................  640X00439W.............         150,000.00
Sierra Petroleum Co..................  TEF-0008.....................  740C01128Z.............          21,939.89
Thriftway Company....................  TEF-0010.....................  BCBBBBBBBB.............          97,380.14
Western Refining Co..................  TEF-0011.....................  N00S90458W.............         614,893.92
                                                                                              ------------------

[[Page 48949]]

 
    Total............................  .............................  .......................       1,585,576.76
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[FR Doc. 05-16555 Filed 8-19-05; 8:45 am]
BILLING CODE 6450-01-P