96-28747. Implementation of Special Refund Procedures  

  • [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
    
    
    

Document Information

Published:
11/08/1996
Department:
Energy Department
Entry Type:
Notice
Action:
Notice of proposed implementation of special refund procedures and solicitation of comments.
Document Number:
96-28747
Pages:
57868-57869 (2 pages)
PDF File:
96-28747.pdf