[Federal Register Volume 72, Number 160 (Monday, August 20, 2007)]
[Notices]
[Pages 46461-46462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-16299]


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DEPARTMENT OF ENERGY

Office of Hearings and Appeals


Final Procedures for Distribution of Remaining Crude Oil Refunds

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

ACTION: Notice of final procedures for the distribution of remaining 
crude oil overcharge refunds.

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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of 
Energy (DOE) is responsible for the disbursement of crude oil refund 
monies currently remaining in the DOE crude oil refund escrow account. 
The preliminary distribution of these monies, approximately 90 percent 
of the funds, was made pursuant to a January 13, 2006 Notice. This 
notice announces the procedures to be used in distributing the 
remaining crude oil refund monies.

ADDRESSES: Inquiries should be sent to the Office of Hearings and 
Appeals, Department of Energy, 1000 Independence Ave., SW., Washington, 
DC 20585-1615 or submitted electronically to 
[email protected].

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 this Notice, we announce the final 
procedures for the distribution of Subpart V crude oil refunds, and 
order payments required under a May 1, 2007 settlement agreement 
between the Department of Energy and certain claimants in the present 
proceeding (the May 1, 2007 Settlement Agreement).
    The Office of Hearings and Appeals (OHA) published a Notice of 
final procedures for final crude oil refunds in the Federal Register on 
May 21, 2004. 69 FR 29300. In the May 21 notice, we explained that we 
would be sending notice to all claimants (or their representatives of 
record) who purchased more than 280,000 gallons of eligible petroleum 
products during the relevant period. We also stated that claimants 
would be required, no later than December 31, 2004, to submit 
verification of the information in our database. Shortly after issuing 
the May 21 Notice, we sent notice to claimants and received 30,873 
timely submissions.
    In the May 21 notice, we set forth a plan to make one final round 
of refund payments, with the intent ``to distribute all of the reserved 
funds to claimants `insofar as practicable.' '' 69 FR at 29302. Since 
that time, events and proliferating litigation affecting the windup of 
this proceeding precluded the Department from proceeding with the 
calculation of the per-gallon ``volumetric'' refund amount that was 
necessary to make a single, final payment of refunds to all qualified 
applicants. Calculating the volumetric amount requires two fixed 
numbers: (1) The amount of funds available for distribution (``the 
numerator''), which is divided by (2) the number of gallons of eligible 
petroleum products purchased during the controls period by eligible 
claimants (``the denominator''). However, the ongoing litigation had 
the potential to affect both the numerator and the denominator of the 
volumetric calculation.
    As a result, in a January 13, 2006 Federal Register notice, 71 FR 
2195, we announced procedures for an interim round of refunds based 
upon a volumetric calculated using as a numerator approximately 90% of 
all available funds, and as a denominator the number of gallons of 
eligible petroleum products purchased during the controls period by 
eligible claimants plus the number of gallons claimed in an application 
denied by OHA that was then the subject of pending litigation. Finally, 
we stated that, in view of the uncertainties posed by the outstanding 
litigation, we were not in a position to commit ourselves to additional 
refunds until all pending litigation was resolved.
    The prudence of this approach was confirmed when on January 26, 
2005 the

[[Page 46462]]

U.S. District Court for the District of Columbia awarded plaintiff's 
attorneys fees in the amount of ``thirty percent (30%) of the [crude 
oil escrow] fund derived from the amount of the increase in the per 
million-gallon distribution over the $670 [per million gallons] 
initially proposed by DOE.'' Consolidated Edison v. Abraham, Civil 
Action No. 03-1991, slip op. at 12 (January 26, 2005). The amount that 
the Court awarded was approximately $13.5 million. After both sides 
appealed to the U.S. Court of Appeals for the DC Circuit, the case was 
remanded for further fact finding concerning what amount of attorneys 
fees, if any, should be awarded from the crude oil escrow fund to the 
plaintiffs. Consolidated Edison v. Bodman, 445 F.3d 438 (D.D.C. 2006).
    Given this claim and other litigation challenges against the crude 
oil escrow fund, DOE entered into negotiations to resolve all 
outstanding claims. Following negotiations facilitated by the U.S. 
Court of Appeals' mediation office, a settlement agreement was reached. 
The U.S. District Court for the District of Columbia, in the case 
remanded by the U.S. Court of Appeals, approved the May 1, 2007 
Settlement Agreement by an order issued on July 9, 2007.
    The May 1, 2007 Settlement Agreement both resolves the litigation 
between the parties to the agreement and provides for the payment of 
final refunds to all eligible claimants in this proceeding. 
Specifically, the DOE agreed to the payment of final refunds to 96 
claimants specified in the Agreement by sixty days following the entry 
of the court order approving the Agreement. The DOE further agreed to 
the payment of refunds to all other eligible claimants ``insofar as 
practicable and as soon as practicable * * * .'' Paragraph 1(b) May 1, 
2007 Settlement Agreement. Finally, the Agreement provides for the 
payment of $6,000,000.00 from available funds to Philip P. Kalodner.
    Pursuant to the May 1, 2007 Settlement Agreement, OHA will adopt 
the following final refund procedures. First, we note that the 
volumetric refund amount announced in our January 13, 2006 Federal 
Register notice was based upon the total amount of funds available for 
distribution as of December 28, 2005, $284,126,991.33. Of that total, 
we used $254,738,494.09 as the numerator of the volumetric calculation, 
thus reserving $29,388,497.24 for future payments. From December 28, 
2005 through July 31, 2007, an additional $6,618,257.27 in interest has 
accrued on these funds. Also adding to the amount available for final 
refund payments is $600,137.00 in refund claims that, for purposes of 
computing the preliminary volumetric refund amount ($0.000695389 per 
gallon) announced in January 2006, we had assumed would be eligible for 
refunds, 71 FR 2195, but which are no longer eligible for refunds. We 
will therefore use the total of these amounts less the $6,000,000.00 to 
be paid to Philip P. Kalodner, $30,606,891.51, as the numerator of the 
volumetric calculation. As the denominator, we will use 365,461,956,553 
gallons, i.e., the volume of eligible petroleum product purchases used 
in the denominator announced in our January 13, 2006 Federal Register 
notice, 365,715,107,505 gallons, minus the gallonage of the now 
ineligible claims referenced above, 253,150,952 gallons. This produces 
a per gallon final volumetric refund amount of $0.000083748502302897 
per gallon.* We will use this volumetric refund amount (by multiplying 
this amount by each eligible claimant's approved gallonage) to 
calculate the amount of each eligible claimant's refund.
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    * Pursuant to the Settlement Agreement, OHA issued an initial 
Decision granting refunds to the parties of the Settlement Agreement 
(96 claimants) at a volumetric of $0.000081939. See Crude Oil 
Supplemental Refund Distribution, Case No. RB272-10119 (July 17, 
2007). The volumetric refund amount as announced was rounded to 9 
decimal places. However, the volumetric refund amount applied in 
calculating each refund ordered in our July 17 decision was more 
precise, $0.000081939013482917 per gallon, having been rounded to 18 
decimal places. Because we have made additional adjustments to the 
final volumetric announced in this Notice including the updated July 
31, 2007 interest figure and the inclusion of additional money that 
could be added to the numerator, we will issue additional refund 
checks to the 96 claimants at the rate of $0.00000180948881998 per 
gallon so that their total refund will be paid at the final 
volumetric amount described above.
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    DOE will not attempt to locate payees of returned refund payments 
and, as set forth in the May 1, 2007 Settlement Agreement, any 
remaining undistributed funds will be divided equally between the State 
governments and the Federal Treasury as a form of indirect restitution 
in accordance with the Department of Energy's 1986 Modified Statement 
of Restitutionary Policy.

    Dated: August 14, 2007.
Fred L. Brown,
Acting Director, Office of Hearings and Appeals.
 [FR Doc. E7-16299 Filed 8-17-07; 8:45 am]
BILLING CODE 6450-01-P