[Federal Register Volume 59, Number 97 (Friday, May 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12423]
[[Page Unknown]]
[Federal Register: May 20, 1994]
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DEPARTMENT OF ENERGY
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 (DOE) announces the proposed procedures for disbursement of
$18,853.02, plus accrued interest, in alleged crude oil overcharges
obtained by the DOE under the terms of a Remedial Order entered into
with Petroleum Carrier Company, Inc., Max B. Penn, and Rodney
Siegfried, Case No. LEF-0119. The OHA has tentatively determined that
the funds obtained through this Remedial Order, plus accrued interest,
will be distributed in accordance with the DOE's Modified Statement of
Restitutionary Policy Concerning Crude Oil Overcharges.
DATES AND ADDRESSES: Comments must be filed in duplicate within 30 days
of publication of this notice in the Federal Register, and should be
addressed to the Office of Hearings and Appeals, Department of Energy,
1000 Independence Avenue, SW., Washington, DC 20585. All comments
should display a reference to case number LEF-0119.
FOR FURTHER INFORMATION CONTACT: Richard T. Tedrow, Deputy Director
Office of Hearings and Appeals, 1000 Independence Avenue SW.,
Washington, DC 20585 (202) 586-8018.
SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(b), notice
is hereby given of the issuance of the Proposed Decision and Order set
out below. The Proposed Decision and Order sets forth the procedures
that the DOE has tentatively formulated to distribute to eligible
claimants $18,853.02, plus accrued interest, obtained by the DOE under
the terms of a Remedial Order entered into with Petroleum Carrier
Company, Inc., Max B. Penn, and Rodney Siegfried on June 26, 1987. The
funds were paid towards the settlement of alleged violations of the DOE
price and allocation regulations involving the sale of crude oil during
the period June 1974 through December 1977.
The OHA has proposed to distribute the Remedial Order funds in
accordance with the DOE's Modified Statement of Restitutionary Policy
Concerning Crude Oil Overcharges, 51 FR 27899 (August 4, 1986) (the
MSRP). Under the MSRP, crude oil overcharge monies are divided between
the federal government, the states, and injured purchasers of refined
petroleum products. Refunds to the states would be distributed in
proportion to each state's consumption of petroleum products during the
price control period. Refunds to eligible purchasers would be based on
the number of gallons of petroleum products which they purchased and
the degree to which they can demonstrate injury.
Any member of the public may submit written comments regarding the
proposed refund procedures. Commenting parties are requested to provide
two copies of their submissions. Comments must 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 p.m. and 5 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, SW., Washington, DC 20585.
Date: May 13, 1994.
George B. Breznay,
Director, Office of Hearings and Appeals.
Implementation of Special Refund Procedures
Names of Firms: Petroleum Carrier Company, Inc., Max B. Penn, Rodney
Siegfried
Date of Filing: December 7, 1993
Case Number: LEF-0119
Under the procedural regulations of the Department of Energy (DOE),
the Economic Regulatory Administration (ERA) may request that the
Office of Hearings and Appeals (OHA) formulate and implement special
refund procedures. 10 CFR 205.281. These procedures are used to refund
monies to those injured by actual or alleged violations of the DOE
price regulations.
In this Decision and Order, we consider a Petition for
Implementation of Special Refund Procedures filed by the ERA on
December 7, 1993, for crude oil overcharge funds. The funds at issue in
this petition were obtained from Petroleum Carrier Company, Inc., Max
B. Penn, and Rodney Siegfried (hereinafter collectively referred to as
``PCCI''). This Office issued a Remedial Order to PCCI finding
violations of the crude oil pricing regulations during the period from
June 1974 through December 1977. Petroleum Carrier Company, Inc., 16
DOE 83,009 (1987). That Order required PCCI to remit $2,569,093
($1,163,865.17 resulting from crude oil violations, plus $1,405,227.83
in interest accrued through March 31, 1984) to the DOE. The DOE
received $18,853.02 on December 6, 1993.* This Decision and Order
establishes the OHA's procedures to distribute those funds, as well as
the remainder of the settlement when it is remitted.
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\*\No additional monies are expected.
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The general guidelines which the OHA may use to formulate and
implement a plan to distribute refunds are set forth in 10 CFR part
205, subpart V. The subpart V process may be used in situations where
the DOE cannot readily identify the persons who may have been injured
as a result of actual or alleged violations of the regulations or
ascertain the amount of the refund each person should receive. For a
more detailed discussion of Subpart V and the authority of the OHA to
fashion procedures to distribute refunds, see Office of Enforcement, 9
DOE 82,508 (1981), and Office of Enforcement, 8 DOE 82,597 (1981).
We have considered the ERA's request to implement Subpart V procedures
with respect to the monies received from PCCI and have determined that
such procedures are appropriate.
I. Background
On July 28, 1986, the DOE issued a Statement of Modified
Restitutionary Policy in Crude Oil Cases, 51 FR 27899 (August 4, 1986)
(the SMRP). The SMRP, issued as a result of a court-approved Settlement
Agreement In re: The Department of Energy Stripper Well Exemption
Litigation, M.D.L. No. 378 (D. Kan. 1986), reprinted in 6 Federal
Energy Guidelines 90,501 (the Stripper Well Agreement), provides that
crude oil overcharge funds will be divided among the states, the
federal government, and injured purchasers of refined petroleum
products. Eighty percent of the funds, and any monies remaining after
all valid claims are paid, are to be disbursed equally to the states
and federal government for indirect restitution.
Shortly after the issuance of the SMRP, the OHA issued an Order
that announced its intention to apply the Modified Policy in all
Subpart V proceedings involving alleged crude oil violations. Order
Implementing the Modified Statement of Restitutionary Policy Concerning
Crude Oil Overcharges, 51 FR 29689 (August 20, 1986). In that Order,
the OHA solicited comments concerning the appropriate procedures to
follow in processing refund applications in crude oil refund
proceedings. On April 6, 1987, the OHA issued a Notice analyzing the
numerous comments and setting forth generalized procedures to assist
claimants that file refund applications for crude oil monies under the
Subpart V regulations. 52 Fed. Reg. 11737 (April 10, 1987) (the April
10 Notice).
The OHA has applied these procedures in numerous cases since the
April 10 Notice, e.g., New York Petroleum, Inc., 18 DOE 85,435 (1988)
(New York Petroleum); Shell Oil Co., 17 DOE 85,204 (1988); Ernest A.
Allerkamp, 17 DOE 85,079 (1988) (Allerkamp), and the procedures have
been approved by the United States District Court for the District of
Kansas as well as the Temporary Emergency Court of Appeals (TECA).
Various States filed a Motion with the Kansas District Court, claiming
that the OHA violated the Stripper Well Agreement by employing
presumptions of injury for end-users and by improperly calculating the
refund amount to be used in those proceedings. In re: The Department of
Energy Stripper Well Exemption Litigation, 671 F. Supp. 1318 (D. Kan.
1987), aff'd, 857 F. 2d 1481 (Temp. Emer. Ct. App. 1988). On August 17,
1987, Judge Theis issued an Opinion and Order denying the States'
Motion in its entirety. The court concluded that the Stripper Well
Agreement ``does not bar [the] OHA from permitting claimants to employ
reasonable presumptions in affirmatively demonstrating injury entitling
them to a refund.'' Id. at 1323. The court also ruled that, as
specified in the April 10 Notice, the OHA could calculate refunds based
on a portion of the M.D.L. 378 overcharges. Id. at 1323-24.
II. The Proposed Refund Procedures
A. Refund Claims
We now propose to apply the procedures discussed in the April 10
Notice to the crude oil Subpart V proceeding that is the subject of the
present determination. As noted above, $18,853.02 of an alleged crude
oil violation, plus interest, is covered by this proposed Decision. We
have decided to reserve the full twenty percent of the alleged crude
oil violation amount, or $3,770.60, plus interest, for direct refunds
to claimants, in order to ensure that sufficient funds will be
available for refunds to injured parties.
The process which the OHA will use to evaluate claims based on
alleged crude oil violations will be modeled after the process the OHA
has used in Subpart V proceedings to evaluate claims based upon alleged
overcharges involving refined products. E.g., Mountain Fuel Supply Co.,
14 DOE 85,475 (1986) (Mountain Fuel). As in non-crude oil cases,
applicants will be required to document their purchase volumes of
covered products and prove that they were injured as a result of the
alleged violations. Generally, a covered product is any product that
was either covered by the Emergency Petroleum Allocation Act of 1973,
15 U.S.C. Secs. 751-760, or if the product was purchased from a crude
oil refinery or originated in a crude oil refinery. See Great Salt Lake
Minerals & Chem. Corp., 23 DOE 88,118, at 88,305 (1993). 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 are presumed to have been injured
by any alleged crude oil overcharges. In order to receive a refund,
end-users need not submit any further evidence of injury beyond the
volume of petroleum products purchased during the period of price
controls. E.g., A. Tarricone, Inc., 15 DOE 85,495, at 88,893-96
(1987). However, the end-user presumption of injury can be rebutted by
evidence which establishes that the specific end-user in question was
not injured by the crude oil overcharges. E.g., Berry Holding Co., 16
DOE 85,405, at 88,797 (1987). If an interested party submits evidence
that is sufficient to cast serious doubt on the end-user presumption,
the applicant will be required to produce further evidence of injury.
E.g., New York Petroleum, 18 DOE at 88,701-03.
Reseller and retailer claimants must submit detailed evidence of
injury and may not rely on the presumptions of injury utilized in
refund cases involving refined petroleum products. They can, however,
use econometric evidence of the type employed in the Report by the
Office of Hearings and Appeals to the United States District Court for
the District of Kansas, In Re: The Department of Energy Stripper Well
Exemption Litigation, reprinted in 6 Fed. Energy Guidelines 90,507
(1986). Applicants who executed and submitted a valid waiver pursuant
to one of the escrows established in the Stripper Well Agreement have
waived their rights to apply for crude oil refunds under Subpart V.
Mid-America Dairyman, Inc. v. Herrington, 878 F. 2d 1448 (Temp. Emer.
Ct. App. 1989); accord Boise Cascade Corp., 18 DOE 85,970 (1989).
Refunds to eligible claimants who purchased refined products will
be calculated on the basis of a volumetric refund amount derived by
dividing the alleged crude oil violation amounts involved in this
determination ($18,853.02) by the total consumption of petroleum
products in the United States during the period of price controls
(2,020,997,335,000 gallons). Mountain Fuel, 14 DOE at 88,868 n.4.
As we stated in previous Decisions, a crude oil refund applicant
will be required to submit only one application for crude oil
overcharge funds. E.g., Allerkamp, 17 DOE at 88,176. Any party that has
previously submitted a refund application in the crude oil refund
proceedings need not file another application. That previously filed
application will be deemed to be filed in all crude oil proceedings as
the procedures are finalized. The DOE has established June 30, 1994, as
the final deadline for filing an Application for Refund from the crude
oil funds. See 58 F.R. 26,318 (May 3, 1993). It is the policy of the
DOE to pay all crude oil refund claims filed within this deadline at
the rate of $0.0008 per gallon. However, while we anticipate that
applicants that filed their claims within the original June 30, 1988
deadline will receive a supplemental refund payment, we will decide in
the future whether claimants that filed later Applications should
receive additional refunds. E.g., Seneca Oil Co., 21 DOE 85,327
(1991). Notice of any additional amounts available in the future will
be published in the Federal Register.
B. Payments to the States and Federal Government
Under the terms of the SMRP, we propose that the remaining eighty
percent of the alleged crude oil violation amounts subject to this
Decision, or $15,082.42, plus interest, should be disbursed in equal
shares to the states and federal government for indirect restitution.
The share or ratio of the funds which each state will receive is
contained in Exhibit H of the Stripper Well Agreement. When disbursed,
these funds will be subject to the same limitations and reporting
requirements as all other crude oil monies received by the states under
the Stripper Well Agreement.
It Is Therefore Ordered That:
The refund amount remitted to the Department of Energy by Petroleum
Carrier Company, Inc., Max B. Penn, and Rodney Siegfried pursuant to
the Remedial Order executed on June 26, 1987 will be distributed in
accordance with the foregoing Decision.
[FR Doc. 94-12423 Filed 5-19-94; 8:45 am]
BILLING CODE 6450-01-P
