[Federal Register Volume 61, Number 6 (Tuesday, January 9, 1996)]
[Notices]
[Pages 652-655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-290]
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DEPARTMENT OF ENERGY
Office of Hearings and Appeals
Implementation of Special Refund Procedures
AGENCY: Office of Hearings and Appeals, DOE.
ACTION: Notice of Implementation of Special Refund Procedures.
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SUMMARY: The Office of Hearings and Appeals of the Department of Energy
announces procedures for the disbursement of $1,564,222.74 (plus
accrued interest) collected pursuant to a consent order with Vessels
Gas Processing Company. The funds will be distributed in accordance
with the DOE's special refund procedures, 10 CFR Part 205, Subpart V.
DATES AND ADDRESSES: Applications for Refund of a portion of the
consent order must be filed in duplicate on or before April 8, 1996,
and should be addressed to: Vessels Gas Processing Company Proceeding,
Department of Energy, Office of Hearings and Appeals, 1000 Independence
Ave., S.W., Washington, D.C. 20585-0107. All Applications should
conspicuously display reference to Case Number VEF-0007.
FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director,
1000 Independence Ave. S.W., Washington D.C. 20585-0107, (202) 586-
2860.
SUPPLEMENTARY INFORMATION: In accordance with 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 out below.
The Decision and Order relates to a consent Order entered into by the
DOE and Vessels Gas Processing Company (Vessels). The consent order
settled possible pricing violations with respect to Vessels' sales of
natural gas liquids (NGLs) and natural gas liquid products (NGLPs). The
DOE has collected $1,564,222.74 and is holding the money in an
interest-bearing escrow account pending distribution. On September 28,
1995, the Office of Hearings and Appeals issued a Proposed Decision and
Order which tentatively established refund procedures and solicited
comments from interested parties concerning the proper distribution of
the consent order fund. No comments were received.
As the Decision and Order indicates, Applications for Refund from
the Vessels' consent order fund may now be filed. Applications must be
filed no later than 90 days from the date of publication of this
Decision and Order. Applications will be accepted from customers who
purchased NGLs and NGLPs from Vessels during the period September 1,
1973 through December 31, 1977. The specific information required in
and Application for Refund is set forth in the Decision and Order.
Dated: December 21, 1995.
George B. Breznay,
Director, Office of Hearings and Appeals.
Special Refund Procedures
Name of Firm: Vessels Gas Processing Company
Date of Filing: February 27, 1995
Case Number: VEF-0007
In accordance with the procedural regulations of the Department of
Energy (DOE), 10 CFR Part 205, Subpart V, the Regulatory Litigation
branch of the Office of General Counsel (OGC) (formerly the Economic
Regulatory Administration (ERA)) filed a Petition for the
Implementation of Special Refund Procedures with the Office of Hearings
and Appeals (OHA) on February 27, 1995. The petition requests that the
OHA formulate and implement procedures for the distribution of funds
received pursuant to a Consent Order entered into by the DOE and
Vessels Gas Processing Company (Vessels) of Colorado.1
\1\ For the sake of convenience and clarity, ``Vessels'' will
refer to Vessels Gas Processing Company (VGPC) and Vessels Gas
Process, Limited (VGPL) in this Decision and Order. In addition,
``Vessels'' will refer to the operations of Halliburton Resource
Management (HRM) at the Irondale and Brighton plants on behalf of
VGPC and VGPL. Vessels operated under a contract with HRM, a
division of Halliburton Company (Halliburton). Under that agreement,
the natural gas owned by Vessels was processed and sold at three
plants owned and operated by HRM. HRM was paid or retained a service
fee from the sales proceeds. On February 25, 1983, Vessels filed, in
conjunction with a ``Preliminary Statement of Objections'' to the
Proposed Remedial Order issued to it on November 5, 1982, a ``Motion
to Join Halliburton Company and Hold it Jointly Liable for Any
Overcharges that are Proven.'' On May 25, 1983, the OHA gave leave
to amend the PRO to join Halliburton. Vessels Gas Processing Co., 11
DOE para. 82,509 (1983).
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I. Background
Vessels was a ``refiner'' of natural gas liquids (NGLs) and natural
gas liquid products (NGLPs), which were included within the definitions
of ``covered products'' in 6 CFR 150.352 and in the price regulations
promulgated pursuant to the Emergency Petroleum Allocation Act of 1973,
Public Law 93-159. Accordingly, during the period from August 19, 1973
through January 28, 1981, Vessels was subject to price rules set forth
in 10 CFR Part 212, Subpart K, and antecedent regulations at 6 CFR
150.1 et seq. An ERA audit of Vessels' business records at the Irondale
and Brighton locations revealed possible pricing violations with
respect to the firm's sales of NGLs and NGLPs at the Irondale plant
during the audit period from September 1, 1973 through December 31,
1977 and at the Brighton plant from April 1, 1975 through December 31,
1977.2 Subsequently, on October 7, 1986, the DOE issued a Remedial
Order to Vessels, finding that the firm had overcharged its customers
and requiring it to remit to the DOE $1,571,671.40, plus interest.
Vessels Gas Processing Co., 15 DOE para. 83,002 (1986). Vessels
appealed the Remedial Order to the Federal Energy Regulatory Commission
(FERC) (Case No. R087-3-000). While the Appeal was pending, Vessels and
the DOE entered into a Consent Order on December 17, 1987, in order to
settle all claims and disputes between Vessels and the DOE regarding
the firm's compliance with price regulations in sales of NGLs and NGLPs
during the audit period. In that Order, Vessels agreed to remit a total
of $1,500,000, plus installment interest, to the DOE for distribution
to the firm's customers. The Consent Order became final on February 16,
1988. Vessels has made payments totalling $1,564,222.74 to the
DOE.3 These funds, plus accrued interest, are presently in a DOE
escrow account maintained by the Department of the Treasury.
\2\ The discrepancy in dates between the two plants is due to
the fact that the Brighton plant was not fully operational until
April 1975.
\3\ Vessels' appeal to FERC was dismissed on February 26, 1988.
Vessels Gas Processing Co., 42 FERC para. 63,023 (1988). The firm's
final payment under the Consent Order was received by the DOE on
October 12, 1994.
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II. 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 CFR 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 a part of 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
[[Page 653]]
mechanism for distributing the Vessels consent order fund. We therefore
shall grant OGC's petition and assume jurisdiction over distribution of
the fund.
III. Refund Procedures
On September 28, 1995, OHA issued a Proposed Decision and Order
(PDO) establishing tentative procedures to distribute the Vessels
settlement fund. That 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 60 Fed. Reg. 53369 (October 13, 1995). More
than 30 days have elapsed and the OHA has received no comments
concerning the proposed procedures for the distribution of the Vessels
settlement fund. Consequently, the procedures will be adopted as
proposed.
A. Refund Claimants
Refund monies will be distributed to those parties which were
injured in their transactions with Vessels during the audit period that
were covered by the Consent Order.\4\ We have limited information on
Vessels' customers and the number of gallons purchased by each
customer. From company records available to this Office, we have
compiled a partial list of Vessels' customers. They are as follows:
Farmland Industries, Inc., Littleton Gas Co., California Liquid Gas
Co., Hytrans, Inc., UPG, Inc.\5\
\4\ For the reason set forth in footnote 1 this includes firms
that purchased NGLs and NGLPs from HRM that originated with Vessels.
Since ethane, an NGLP, was decontrolled effective April 1, 1974,
Vessels' customers would not have been injured by purchases of
ethane on or after that date. They are thus not eligible for refunds
for ethane purchases made after March 31, 1974.
\5\ In comments submitted in response to the Notice of the
Proposed Consent Order in the December 28, 1987 Federal Register,
Enron Corp. requested that it be specifically named as a payee in
the Consent Order. Enron contended that UPG, Inc. was the principal
customer of Vessels' NGLs, and that Enron, as UPG's successor in
interest, is therefore eligible for a refund in this proceeding. ERA
determined in its response to Enron's comments that it was OHA's
prerogative to name Enron as a payee in its Implementation Order.
The review and analysis of the written comments did not provide any
information that would support the modification or rejection of the
proposed Consent Order with Vessels and Halliburton. Therefore, the
Consent Order was issued without modification. While this Office is
aware that UPG is affiliated with Enron, we have no detailed
information regarding the exact nature of their corporate
relationship. Accordingly, we will not name Enron as a payee in this
Decision. However Enron is invited to submit to this Office an
Application for Refund, in which it provides documentation to
support its contention that it is entitled to a refund for UPG's
purchases.
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These customers, and any additional customers, will be required to
submit a monthly schedule of the number of gallons of NGLs and NGLPs
purchased from September 1, 1973 through December 31, 1977 and
documentation that these products were purchased from either the
Irondale or Brighton plants. Indirect purchasers of Vessels' products
may be eligible for a refund if the reseller from whom they purchased
the products passed through Vessels' alleged overcharges to its own
customers. Indirect purchasers must identify the reseller from whom
they made the purchases, and establish the basis for their belief the
products originated from either the Irondale or Brighton plant.
Affiliates of Vessels will be ineligible to apply for a refund in this
proceeding.\6\
\6\ As in other refund proceedings involving alleged refined
products violations, we will presume that affiliates of the Consent
Order firm were not injured by the firm's overcharges. See, e.g.,
Marathon Petroleum Co./EMRO Propane Co., 15 DOE para. 85,288 (1987).
This is because the Consent Order firm presumably would not have
sold petroleum products to an affiliate if such a sale would have
placed the purchaser at a competitive disadvantage. See Marathon
Petroleum Co./Pilot Oil Corp., 16 DOE para. 85,611 (1987), amended
claim denied, 17 DOE para. 85,291 (1988), reconsideration denied, 20
DOE para. 85,236 (1990). Furthermore, if an affiliate of the Consent
Order firm were granted a refund, that Consent Order firm would be
indirectly compensated from the Consent Order fund remitted to
settle its own alleged violations. See Propane Industrial, Inc. v.
DOE, 985 F.2d 586 (Temp. Emer. Ct. App. 1993) (refund to affiliate
would be ``unjust enrichment'').
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B. Calculation of Refund Amounts
We shall use a volumetric methodology to distribute the consent
order funds to Vessels' customers. The volumetric refund presumption
assumes that the alleged overcharges by a firm were dispersed equally
over all gallons of product marketed by that firm. In the absence of
better information, this assumption is sound because the DOE price
regulations generally required a regulated firm to account for
increased costs on a firm-wide basis in determining its prices.\7\
\7\ However this presumption is rebuttable. A claimant which
believes that it suffered a disproportionate share of the alleged
overcharges may submit evidence proving this claim in order to
receive a larger refund. See Sid Richardson Carbon and Gasoline Co./
Siouxland Propane Co., 12 DOE para. 85,054 (1984); see also Amtel,
Inc./Whitco, Inc., 19 DOE para. 85,319 (1989) (Amtel). In computing
the appropriate refund in such a case, we will prorate the alleged
overcharge amount by the ratio of the Vessels settlement amount to
the aggregate overcharge amount determined by the Vessels Remedial
Order. See Amtel.
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Under the volumetric approach we are adopting in this proceeding, a
claimant's ``allocable share'' (or ``volumetric share'') of the Vessels
fund is equal to the number of gallons of NGLs and NGLPs purchased from
Vessels from September 1, 1973 through December 31, 1977, multiplied by
a volumetric refund amount of $0.0185 per gallon.\8\
\8\ The volumetric factor was computed by dividing $1,564,222.74
by 84,689,877 (the approximate number of gallons of NGLs and NGLPs
Vessels sold to its customers during the audit period). The latter
figure was obtained from records submitted to this Office by
Vessels.
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Each successful claimant will also receive a pro rata share of the
interest accrued on the consent order funds between the date the funds
were placed in the Vessels escrow account and the date the applicant's
refund is disbursed.
C. Presumptions of Injury
In addition to the volumetric presumption, we are adopting a number
of presumptions regarding injury for claimants in each category listed
below. These presumptions will simplify the refund process and will
help ensure that refund claims are evaluated in the most efficient and
equitable manner possible.
a. End-Users
End-users of Vessels products, i.e., consumers, whose use of NGLs
or NGLPs was unrelated to the petroleum business, are presumed injured
and need only document their purchase volumes from Vessels during the
consent order period to be eligible to receive their full allocable
share.
b. Refiners, Resellers, and Retailers Seeking Refunds of $10,000 or
Less
Reseller claimants (including refiners and retailers), whose
allocable share is $10,000 or less, i.e., who purchased 540,540 gallons
or less of Vessels' products during the consent order period, will be
presumed injured and therefore need not provide a further demonstration
of injury, besides documentation of their purchase volumes, to receive
their full allocable share. 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.
c. Medium-Range Refiner, Reseller, and Retailer Claimants
In lieu of making a detailed showing of injury (see part III D,
below), a reseller claimant whose allocable share exceeds $10,000 may
elect to receive a refund under the medium-range presumption of injury.
Under this presumption, a claimant will receive as its refund the
larger of $10,000 or 60 percent of its allocable share up to
[[Page 654]]
$50,000.9 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 involving NGLs and
NGLPs, we have determined that a 60 percent presumption for the medium-
range purchasers of NGLs and NGLPs accurately reflected the amount of
their injury as a result of their purchases of those products. See
Sauvage Gas Co., 17 DOE para. 85,304 (1988); Suburban Propane Gas Co.,
16 DOE para. 85,382 (1987). Such an applicant will be required only to
provide documentation of its purchase volumes of Vessels' products
during the consent order period in order to be eligible to receive a
medium-range refund.
\9\ That is, reseller claimants who purchased in excess of
540,540 gallons of Vessels product during the consent order period
may elect to utilize this presumption.
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d. Regulated Firms and Cooperatives
We have determined that, in order to receive a full volumetric
refund, a claimant whose prices for goods and services are regulated by
a governmental agency, e.g., a public utility, or by the terms of a
cooperative agreement, needs only to submit documentation of its
purchases of products used by itself or, in the case of a cooperative,
sold to its members. However, a regulated firm or cooperative whose
allocable share is greater than $10,000 will also be required to
certify that it will pass any refund through to its customers or
member-customers, provide us with a full explanation of how it plans to
accomplish the restitution, and certify that it will notify the
appropriate regulatory body or membership group of the receipt of the
refund.10
\10\ A cooperative's sales to non-members will be treated in the
same manner as sales by other resellers. See Total Petroleum/Farmers
Petroleum Cooperative, 19 DOE para. 85,215 (1989).
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e. Spot Purchasers
As in prior Subpart V proceedings, we are adopting a rebuttable
presumption that a reseller that made only irregular or sporadic, i.e.,
spot, purchases from Vessels did not suffer injury as a result of those
purchases. 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 Vessels. In prior proceedings we have stated that
refunds will be approved for spot purchasers who demonstrate that (i)
they made the spot purchases for the purpose of ensuring a supply for
their base period customers rather than in anticipation of financial
advantage as a result of those purchases, and (ii) they were forced by
market conditions to resell the product at a loss that was not
subsequently recouped through the draw down of banks. See Quaker State
Oil Refining Corp./Certified Gasoline Co., 14 DOE para. 85,465 (1986).
D. Showing of Injury
As in prior refund proceedings, claimants who are medium-range
resellers (including retailers and refiners) will be afforded the
opportunity to prove injury in order to receive a refund equal to their
full allocable share. These claimants will be required to demonstrate
that during the audit period they would have maintained their prices
for the NGLs and NGLPs purchased from Vessels at the same level had the
alleged overcharges not occurred. While there are a variety of ways to
make this showing, a reseller generally must demonstrate that, at the
time it purchased the product from Vessels, market conditions would not
permit it to pass through to its customers the additional costs
associated with the alleged overcharges. See Atlantic Richfield Co./
Odessa L.P.G. Transport, 21 DOE para. 85,384 (1991); Gulf Oil Corp./
Anderson & Watkins, Inc., 21 DOE para. 85,380 (1991). In addition, the
reseller will be required to show that it had a ``bank'' of unrecovered
costs in order to demonstrate that it did not recover the increased
costs associated with the alleged overcharges by increasing its own
prices. The maintenance of a bank does not, however, automatically
establish injury. See Tenneco Oil Co./Chevron U.S.A., Inc., 10 DOE
para. 85,014 (1982).
E. Refund Application Requirements
To apply for a refund from the Vessels Consent Order 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.11 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;
\11\ Under the Privacy Act of 1974, 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, auditing 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 NGLs and NGLPs from Vessels: e.g.,
consumer (end-user), cooperative, or public utility;
(3) A monthly purchase schedule covering the period from September
1, 1973 through December 31, 1977. The applicant should specify the
source of this gallonage information. In calculating its purchase
volumes, an applicant should use actual records from the refund period,
if available. If these records are not available, the applicant may
submit estimates of its purchases, but the estimation method must be
reasonable, explained in detail, and supported by some documentation;
(4) If the applicant is a regulated utility or cooperative, a
certification that it will pass on the entirety of any refund received
to its customers or customer-members, will notify its state utility
commission, other regulatory agency, or membership body of the receipt
of any refund, and a brief description as to how the refund will be
passed along;
(5) 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 Vessels refund proceeding. If so, an
explanation of the circumstances of the other filing or authorization
should be submitted;
(6) If the applicant is or was in any way affiliated with Vessels,
it should explain this affiliation, including the time period in which
it was affiliated;
(7) A statement as to whether the ownership of the applicant's firm
changed during or since the refund period. 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
[[Page 655]]
type of sale (e.g., sale of corporate stock, sale of company assets);
(8) 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;
(9) The following statement signed by the individual applicant or a
responsible official of the firm filing the refund application: 12
\12\ 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 and its attachments 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.
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.
All applications should be either typed or printed and clearly
labeled ``Vessels Special Refund Proceeding, Case No. VEF-0007.'' 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, and two
copies of the application with the confidential information deleted.
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: Vessels Special Refund Proceeding, Office of Hearings and
Appeals, Department of Energy, 1000 Independence Avenue, S.W.,
Washington, D.C. 20585-0107.
In those cases where applications are filed by representatives,
e.g., filing services or attorneys, we may request information from the
representative regarding its solicitation practices and materials and
the procedures it uses. Furthermore, each 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, HG-13, Chief, Docket & Publications Division, Office of
Hearings and Appeals, Department of Energy, Washington, D.C. 20585-
0107.
F. 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 the
Petroleum Overcharge Distribution and Restitution Act of 1986 (PODRA),
15 U.S.C. 4501-07. PODRA requires that the Secretary of Energy
determine annually the amount of oil 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 Vessels escrow account the
OHA determines will not be needed to effect direct restitution to
injured Vessels customers 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 Vessels Gas Processing Company pursuant to the
Consent Order that became final on February 16, 1988 may now be filed.
(2) All Applications for Refund must be postmarked no later than 90
days after publication of this Decision and Order in the Federal
Register.
Date: December 21, 1995.
George B. Breznay,
Director, Office of Hearings and Appeals.
[FR Doc. 96-290 Filed 1-8-96; 8:45 am]
BILLING CODE 6450-01-P
