[Federal Register Volume 61, Number 59 (Tuesday, March 26, 1996)]
[Notices]
[Pages 13170-13172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7270]
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DEPARTMENT OF ENERGY
Office of Hearings and Appeals
Proposed Implementation of Special Refund Procedures
AGENCY: Office of Hearings and Appeals, Department of Energy.
ACTION: Notice of Proposed Implementation of Special Refund Procedures.
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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of
Energy announces revised proposed procedures for disbursement of
$48,307.13 of crude oil overcharge funds obtained by the DOE from Texas
American Oil Corporation (Texas American), Case No. VEF-0019. The OHA
has determined that these funds, plus accrued interest, be distributed
as direct restitution to individual claimants who were injured by crude
oil overcharges.
DATES AND ADDRESSES: Comments must be filed in duplicate on or before
April 25, 1996, and should be addressed to the Office of Hearings and
Appeals, 1000 Independence Ave., SW, Washington, DC 20585-0107. All
comments should conspicuously display a reference to Case No. VEF-0019.
FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director,
Office of Hearings and Appeals, 1000 Independence Ave., SW, Washington,
DC 20585-0107, Telephone No. (202) 586-2860.
SUPPLEMENTARY INFORMATION: In accordance with 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 and Order
sets forth the procedures that the DOE has tentatively formulated to
distribute $48,307.13 (plus accrued interest) remitted to the DOE by
Texas American. The DOE is currently holding these funds in an
interest-bearing escrow account pending distribution.
This Proposed Decision revises a portion of a previous Proposed
Decision that was issued on January 16, 1996. See Brio Petroleum, Inc.,
Case Nos. VEF-0017 et al., 61 Fed. Reg. 1919 (January 24, 1996). In the
January 16 Proposed Decision, the OHA proposed to distribute the funds
obtained from Texas American and four other firms in accordance with
the DOE's Modified Statement of Restitutionary Policy in Crude Oil
Cases, 51 Fed. Reg. 27899 (August 4, 1986) (the MSRP). Under the MSRP,
crude oil overcharge monies are divided among the federal government,
the states, and injured purchasers of refined petroleum products. In
accordance with the MSRP, the January 16 Proposed Decision tentatively
reserved 20 percent of the funds received from Texas American and the
other four firms for direct restitution to injured claimants. In the
present Proposed Decision, which involves only Texas American, the OHA
has tentatively decided that all of the crude oil overcharge funds
obtained from the bankrupt estate of Texas American should be reserved
for individual claimants. This is in accordance with Texas American Oil
Corp. v. DOE, 44 F.3d 1557 (Fed. Cir. 1995) (en banc), in which the
United States Court of Appeals for the Federal Circuit held that the
DOE's claim in the Texas American bankruptcy proceeding on behalf of
individual claimants should have a higher priority than its claim on
behalf of the states and federal government. Pursuant to that decision,
the bankruptcy court distributed to the DOE an amount equivalent to
only 20 percent of its claim in the Texas American bankruptcy
proceeding.
The remainder of the Proposed Decision is unchanged from the
January 16 Proposed Decision. We propose that refunds to eligible
purchasers be based on the volume of products that they purchased
during the price control period and the extent to which they can
demonstrate injury. The proposed volumetric refund amount is $0.0016
per gallon.
Because the June 30, 1995 deadline for crude oil refund
applications has passed, we propose not to accept any new applications
for refund in this proceeding. As we state in the Proposed Decision,
the Texas American funds will be added to the general crude oil
overcharge pool for direct restitution to claimants that have filed
timely applications.
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 in the beginning of this notice. All
comments received in this proceeding will be available for public
inspection between the hours of 1:00 p.m. 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 Ave., SW, Washington, DC 20585-0107.
Dated: March 14, 1996.
Thomas O. Mann,
Acting Director, Office of Hearings and Appeals.
Proposed Decision and Order of the Department of Energy
Implementation of Special Refund Procedures
Name of Case: Texas American Oil Corporation
Date of Filing: September 1, 1995
Case Number: VEF-0019
On January 16, 1996 the Office of Hearings and Appeals (OHA) of the
Department of Energy (DOE) issued a Proposed Decision and Order (PDO)
that tentatively established refund procedures for the distribution of
crude oil overcharge funds obtained from Texas American Oil Corporation
(Texas American) and four other firms. Brio Petroleum, Inc., Case Nos.
VEF-0017 et al., 61 Fed. Reg. 1919 (January 24, 1996). In accordance
with the DOE's Modified Statement of Restitutionary Policy in Crude Oil
Cases (MSRP), 51 Fed. Reg. 27899 (August 4, 1989), the PDO proposed
that 40 percent of the funds be disbursed to the federal government,
another 40 percent be disbursed to the states, and the remaining 20
percent be reserved for applicants who file claims showing that they
were injured by crude oil overcharges. It has recently come to our
attention that the circumstances under which the DOE obtained the Texas
[[Page 13171]]
American funds require that the funds be disbursed in a manner
different than that proposed in the PDO. Accordingly, we are issuing a
new PDO with respect to the Texas American funds.
Background
On September 19, 1988, the OHA issued a Remedial Order (RO) that
found that Texas American had violated 10 C.F.R. Sec. 211.67(e)(2) by
receiving excessive small refiner bias benefits under the DOE's
Entitlements Program. Texas American Oil Corp., 17 DOE para. 83, 017
(1988). However, Texas American had filed a petition in bankruptcy on
July 2, 1987, and its bankruptcy proceeding was still pending when the
RO was issued. The trustee-in-bankruptcy approved the DOE's claim in
the amount of $241,535.67, but classified it as a non-pecuniary loss in
accordance with Section 726(a)(4) of the Bankruptcy Code and Class 9 of
the Plan of Liquidation.\1\ Since Class 9 claims were inferior to Class
7 claims, and there were insufficient assets to satisfy any Class 9
claim, or to satisfy fully the Class 7 claims, the effect of the
trustee's determination was to preclude the DOE from receiving any
compensation from Texas American's estate.
\1\ Section 726(a)(4) places non-pecuniary loss claims in the
forth priority in the distribution of a bankrupt estate:
11 U.S.C. Sec. 726. Distribution of property of the estate
* * * * *
(a)(4) forth, in payment of any allowed claim, whether secured
or unsecured, for any fine, penalty, or forfeiture, or for multiple,
exemplary, or punitive damages, arising before the earlier of the
order for relief or the appointment of trustee, to the extent that
such fine, penalty, forfeiture, or damages are not compensation for
actual pecuniary loss suffered by the holder of such claim[.]
Class 7 (Unsecured Claims) consisted of allowed claims of
unsecured creditors, while Class 9 (Non-Pecuniary Loss) consisted of
``Allowed Claims for any fine, penalty or forfeiture, or for
multiple, exemplary, or punitive damages, as further described in 11
U.S.C. Sec. 726(a)(4).'' Texas American Bankruptcy Committee Plan of
Liquidation Secs. 3.07, 3.09.
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The DOE argued before the Bankruptcy Court that the trustee's
determination was erroneous on the grounds that its claim was for
restitution and therefore was a Class 7 claim. The Bankruptcy Court,
however, rejected the DOE's position and held that Class 9 was the
proper classification since the DOE's claim was not for actual
pecuniary loss suffered by the holder of the claim. In re Texas
American Oil Corp., No. 387-33522-SAF-11 (Bankr. N.D. Tex. Mar. 5,
1992). This decision was reversed by the U.S. District Court which,
relying on a prior decision of the Temporary Emergency Court of Appeals
(TECA), held that a DOE claim under Section 209 of the Economic
Stabilization of 1970 (ESA), 12 U.S.C. Sec. 1904 note, was properly
placed in the same class and priority as the general unsecured claims
of other creditors. Texas American Oil Corp. v. DOE, No. 3:92-CV-1146-G
(N.D. Tex. Sept. 14, 1992) (citing DOE v. West Texas Marketing Corp.,
763 F.2d 1411 (Temp. Emer. Ct. App. 1985) (West Texas)). This decision
was in turn reversed by the United States Court of Appeals for the
Federal Circuit, which held that the DOE's claim in the Texas American
bankruptcy proceeding should be bifurcated, with the portion claimed on
behalf of individual persons who suffered actual injury to be
classified in Class 7 of the Plan of Liquidation and portion to be paid
to the federal and statement governments to be classified in Class 9.
Texas American Oil Corp. v. DOE, 44 F.3rd 1557 (Fed. Cir. 1995) (en
banc). On remand, the Bankruptcy Court implemented the Federal
Circuit's decision by distributing the 20 percent of DOE's liquidated
claim ($48,307.13) that fell within Class 7 to DOE and the remaining 80
percent ($193,228.53) to the other Class 7 creditors. In re Texas
American Oil Corp., NO. 387-33522-SAF-11 (Bankr. N.D. Tex. April 12,
1995). The funds that the DOE received from Texas American were
deposited in an interest-bearing escrow account maintained by the
Department of the Treasury.\2\
\2\ As of February 29, 1996, the account contained $50,596.54,
consisting of $48,307.13 principal and $2,289.41 interest.
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In accordance with 10 C.F.R. Part 205, Subpart V, on September 1,
1995, the Office of General Counsel, Regulatory Litigation (OGC)
(formerly the Economic Regulatory Administration) filed a Petition for
the Implementation of Special Refund Procedures that requested OHA to
formulate and implement procedures to distribute the Texas American
funds. In the PDO, we tentatively granted the petition, stating that we
intended to implement a Subpart V proceeding to distribute the funds to
individual claimants and state and federal governments in accordance
with the MSRP. The following section of this Proposed Decision sets
forth our revised tentative plan to distribute these funds.
Proposed Refund Procedures
We propose to distribute the funds received from Texas American
(and accrued interest on those funds) solely to individual claimants in
the DOE's crude oil refund proceeding. This sui generis proposal
results from the unique circumstances under which these funds were
obtained. While the Texas American v. DOE decision is contrary to the
position of the DOE that had been upheld in the West Texas case \3\ we
are constrained by the Federal Circuit's decision to use the funds
received from Texas American solely for direct restitutionary purposes.
Moreover, as indicated above, the Texas American Bankruptcy Court, in
accordance with the Federal Circuit's determination, distributed to the
DOE only 20 percent of its liquidated claim, an amount equivalent to
the portion of crude oil overcharge funds that we have consistently
reserved for individual claimants under the MSRP.
\3\ The Federal Circuit in Texas American v. Doe ascribed its
unwillingness to follow the West Texas decision to judicial
statutory, and related policy changes that had occurred since the
issuance of that decision. The Federal Circuit also specifically
overruled TECA's ruling that a DOE bankruptcy claim under the ESA to
be paid to the federal and state governments on behalf of their
citizen was for restitution and not for a penalty.
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Except for the manner in which the funds will be allocated, we
propose to follow the procedures set forth in the initial PDO and
adopted in prior refund proceedings involving crude oil overcharge
funds. Thus, claimants will be required to (i) document their purchase
volumes of petroleum products during the August 19, 1973--January 27,
1981 crude oil price control period, and (ii) 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 will be presumed to have been injured by Texas
American's crude oil overcharges.
In order to receive a refund, end-users will not need to submit any
further evidence of injury beyond the volume of petroleum products
purchased during the price control period. See City of Columbus,
Georgia 16 DOE Sec. 85,550 (1987). We also proposed to base refunds to
claimants on a volumetric amount that is currently $0.0016 per gallon.
See 60 Fed. Reg. 15562 (March 24, 1995).
An applicant who has executed and submitted a valid waiver pursuant
to one of the escrows established by the Final Stripper Well Settlement
Agreement will be considered to have waived its rights to apply for a
crude oil refund under Subpart V. See, e.g., Mid-America Dairymen,
Inc., v. Herrington, 878 F.2d 1448 (Temp Emer. Ct. App. 1989); see also
Hoechst Celanese Chemical, 25 DOE para.85,066 (1996). Because the June
30 1995 deadline for crude oil refund applications has
[[Page 13172]]
passed, we propose not to accept any new applications. See Western
Asphalt Service, 25 DOE para.85,047 (1995). Instead, these funds will
be added to the general crude oil overcharge pool used for direct
restitution.
Before taking the action proposed in this Proposed Decision, we
intend to publicize our proposal and solicit comments from interested
parties. Comments regarding the tentative distribution process set
forth in this Proposed Decision and Order should be filed with the OHA
within 30 days of its publication in the Federal Register.
It is therefore ordered that:
The refund amount remitted to the Department of Energy by Texas
American Oil Corporation pursuant to the Order of the United States
Bankruptcy Court for the Northern District of Texas signed on April 12,
1995, will be distributed in accordance with the foregoing Decision.
[FR Doc. 96-7270 Filed 3-25-96; 8:45 am]
BILLING CODE 6450-01-P
