[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Notices]
[Pages 57868-57869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28747]
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DEPARTMENT OF ENERGY
Implementation of Special Refund Procedures
AGENCY: Office of Hearings and Appeals, Department of Energy.
ACTION: Notice of proposed 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 proposed procedures and solicits comments 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: Comments must be filed within 30 days of publication
of this in the Federal Register and should be addressed to the Office
of Hearings and Appeals, Department of Energy, 1000 Independence
Avenue, S.W., Washington, D.C. 20585-0107. All comments should
conspicuously display a reference to Case Numbers 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, S.W.
Washington, D.C. 20585-0107, (202) 426-1575.
SUPPLEMENTARY INFORMATION: In accordance with Section 205.282(b) of the
procedural regulations of the Department of Energy, 10 C.F.R.
Sec. 205.282(b), notice is hereby given of the issuance of the Proposed
Decision and Order set forth below. The Proposed 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 Proposed
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.
The Proposed Decision sets forth the procedures and standards that
the DOE has tentatively formulated to distribute funds remitted by
Houma and Jedco and being held in escrow. The DOE has tentatively
decided that the funds should be distributed in two stages in the
manner utilized with respect to consent order funds in similar
proceedings.
Applications for Refund should not be filed at this time.
Appropriate public notice will be given when the submission of claims
is authorized.
Any member of the public may submit written comments regarding the
proposed refund procedures. Commenting parties are requested to submit
two copies of their comments. Comments should be submitted within 30
days of publication of this notice in the Federal Register, and should
be sent to the address set forth at the beginning of this notice. All
comments received in this proceeding will be available for public
inspection between the hours of 1:00 to 5:00 p.m., Monday through
Friday, except federal holidays, in the Public Reference Room of the
Office of Hearings and Appeals, located in Room 1E-234, 1000
Independence Avenue, S.W., Washington, D.C. 20585-0107.
Dated: October 28, 1996.
George B. Breznay,
Director, Office of Hearings and Appeals.
Department of Energy
Washington, DC 20585
October 28, 1996
Proposed 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 purchases and 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
[[Page 57869]]
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 collected monies will be distributed in accord
with the procedures proposed herein.
The DOE issued a Remedial Order (RO) to Jedco on October 24,
1978. Like Houma, Jedco was a ``reseller-retailer'' during the audit
period. 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.*
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. 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 along with the funds obtained from Houma.
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\*\ 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).
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The funds obtained from the two firms are presently in interest-
bearing escrow accounts maintained by the Department of the
Treasury.
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 propose to grant OGC's
petitions and assume jurisdiction over distribution of the funds.
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. 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 settlement period. 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 propose to 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
propose to 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, we propose that Houma and
Jedco customers who were ultimate consumers (end-users) of their
motor gasoline 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.
We propose that 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 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.
We further propose that any 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. 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).
Conclusion
Refund applications in this proceeding should not be filed until
the issuance of a final Decision and Order pertaining to the instant
OGC Implementation Petitions. Detailed procedures for filing
applications will be provided in the final Decision and Order.
Before disposing of any of the funds received, we intend to
publicize the distribution process and to provide an opportunity for
any affected party to file a claim. A copy of this Proposed Decision
and Order will be published in the Federal Register and public
comments will be solicited.
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 oil overcharge funds that will not be
required to refund monies directly to injured parties in Subpart V
proceedings and make those funds available to state governments as
indirect restitution for use in energy conservation programs. The
Secretary has delegated these responsibilities to OHA. Any funds in
the Houma or Jedco escrow accounts the OHA determines will not be
needed to effect direct restitution to injured customers of those
firms will be distributed in accordance with the provisions of
PODRA.
It Is Therefore Ordered That: The refund amounts remitted to the
Department of Energy by Houma Oil Company and Jedco, Inc., pursuant
to a Consent Judgment and a Bankruptcy Distribution respectively,
will be distributed in accordance with the foregoing Decision.
[FR Doc. 96-28747 Filed 11-7-96; 8:45 am]
BILLING CODE 6450-01-P