Proposed Implementation of Special Refund Procedures

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.

-----------------------------------------------------------------------

SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of

Energy (DOE) announces the proposed procedures for disbursement of

$21,764.57, plus accrued interest, in refined petroleum overcharges

obtained by the DOE under the terms of a Remedial Order issued to Aptos

Shell, et al. (Aptos) Case Nos. LEF-0092, et al. The OHA has

tentatively determined that the funds will be distributed in accordance

with the provisions of 10 CFR part 205, subpart V and 15 U.S.C. 4501,

the Petroleum Overcharge distribution and Restitution Act (PODRA).

DATE AND ADDRESS: 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-0092, et al.

FOR FURTHER INFORMATION CONTACT: Kim L. Hargrove, Staff Attorney,

Office of Hearings and Appeals, 1000 Independence Avenue SW.,

Washington, DC 20585, (202) 586-2400.

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 sets forth the procedures that the DOE

has tentatively formulated to distribute to eligible claimants

$21,764.57, plus accrued interest, obtained by the DOE under the terms

of a Remedial Order that the DOE issued to Aptos Shell, et al. (Aptos)

on December 14, 1981. Under the Remedial Order, Aptos was found to have

violated the Federal petroleum price and allocation regulations

involving the sale of refined petroleum products during the relevant

audit periods.

The OHA has proposed to distribute the Remedial Order funds in a

two stage refund proceeding. Purchasers of motor gasoline from any one

of the gasoline retailers considered in the Aptos proceeding will have

an opportunity to submit refund applications in the first stage.

Refunds will be granted to applicants who satisfactorily demonstrate

they were injured by the pricing violations and who document the volume

of refined petroleum products they purchased from one of the gasoline

retailers during the relevant audit periods. In the event that money

remains after all first stage claims have been disposed of, the

remaining funds will be disbursed in accordance with the provisions of

15 U.S.C. 4501, the Petroleum Overcharge Distribution and Restitution

Act of 1986 (PODRA).

Any member of the public may submit written comments regarding the

proposed refund procedures. Commenting parties are requested to forward

two copies of their submissions, within 30 days of publication of this

notice in the Federal Register, to the address set forth at the

beginning of this notice. Comments so received will be made 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

1E-234, 1000 Independence Avenue SW., Washington, DC 20585.

Dated: April 28, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Date: April 28, 1994.

Names of Firms: Aptos Shell, et al.

Date of Filing: July 20, 1993.

Case Numbers: LEF-0092, et al.

On July 20, 1993, the Economic Regulatory Administration of the

Department of Energy (ERA) filed a Petition requesting that the Office

of Hearings and Appeals (OHA) formulate and implement subpart V special

refund proceedings. Under the procedural regulations of the DOE,

special refund proceedings may be implemented to refund monies to

persons injured by violations of the DOE petroleum price regulations,

provided DOE is unable to readily identify such persons or to ascertain

the amount of any refund. 10 CFR 205.280. We have considered the ERA's

request to formulate refund procedures for the disbursement of monies

remitted by Aptos Shell and 4 other firms pursuant to a Remedial Order

(hereafter, the Order) issued by OHA on December 14, 1981, and have

determined that such procedures are appropriate. Each firm's name, case

number and amount of money it remitted under the Order has been set out

in the appendix immediately following this Decision.

The firms remitted a total of $21,764.57 to the DOE to remedy

pricing violations which occurred during the period covered by the

ERA's audit. These funds are being held in an escrow account

established with the Treasury pending a determination of their proper

distribution. See Memorandum from George B. Breznay, Director OHA, to

James T. Campbell, Comptroller, ``Transferring Funds to Escrow

Account,'' August 30, 1993. OHA's tentative plan to distribute those

funds is set forth in this Decision. Specific application requirements

appear in Section III. Because these procedures are set forth in

proposed form, refund applications should not be filed at this time.

Comments are solicited.

I. Jurisdiction and Authority

The general guidelines that govern OHA's ability to formulate and

implement a plan to distribute refunds are set forth at 10 CFR part

205, subpart V. These procedures apply in situations where the DOE

cannot readily identify the persons who were injured as a result of

actual or alleged violations of the regulations or ascertain the refund

amount each person should receive. For a more detailed discussion of

subpart V and OHA's authority to fashion procedures to distribute

refunds, see Office of Enforcement, 9 DOE 82,508 (1981) and Office of

Enforcement, 8 DOE 82,597 (1981).

II. Background

The facts alleged in the Order were undisputed. Aptos and each of

the 4 firms identified in the Appendix to this Decision were

``retailers'' of motor gasoline as that term has been defined at 10 CFR

212.31 and were therefore subject to the provisions of 10 CFR part 210

and 10 CFR part 212, subpart F. The Order states that, during the

period covered by the ERA's audit, each retailer charged prices higher

than those permitted by 10 CFR 212.93(a)(2); levied a cents-per-gallon

fee for services associated with the sale of motor gasoline in

violation of 10 CFR 210.62(d)(1) and refused to make its records

available for inspection in violation of 10 CFR 210.92(b).

The retailers were ordered to reduce their prices for motor

gasoline by specified amounts until sufficient volumes of gasoline

could be sold at the reduced prices to remedy the violations.1

After decontrol, the Order was modified to require direct monetary

restitution to the Treasury instead. See Sunset Boulevard Car Wash, 20

FERC 62,319 at 63,537 (1982). The retailers objected. The Order has

since been affirmed by the Federal Energy Regulatory Commission (FERC)

in a Proposed Order issued on August 13, 1982. Id. FERC issued a final

Order adopting its Proposed Order on September 29, 1982.

---------------------------------------------------------------------------

\1\The Order imposed no sanctions upon the firms for failing to

provide records pursuant to 10 CFR 210.92(b). See Remedial Order.

---------------------------------------------------------------------------

III. The Proposed Refined Product Refund Procedures

This section sets forth the considerations that will be used to

evaluate refund applications payable from the monies remitted by the

retailers. We propose implementing a two stage refund proceeding.

Purchasers of motor gasoline from any one of the gasoline retailers

considered in this proceeding will have an opportunity to submit refund

applications in the first stage. In the event that money remains after

all first stage claims have been disposed of, the remaining funds will

be disbursed in accordance with the provisions of the Petroleum

Overcharge Distribution and Restitution Act of 1986 (15 U.S.C. 4501)

(PODRA).

Refund applications submitted in this special refund proceeding

will be evaluated in exactly the same manner as applications submitted

in other refined product proceedings. Refunds will be granted to

applicants who satisfactorily demonstrate they were injured by the

pricing violations and who document the volume of motor gasoline they

purchased from one or more of the retailers during the relevant audit

period. In order to permit applicants to participate in the refund

proceeding without incurring inordinate expense and to facilitate OHA's

consideration of refund applications, we plan to adopt certain

presumptions regarding the nature and extent of the pricing violations

and the requirement that applicants demonstrate injury. Our authority

to adopt presumptions in refund cases is set forth at 10 CFR

205.282(e).

With regard to the pricing violations, we propose adopting a

rebuttable presumption that such violations were dispersed equally

throughout each retailer's sales of motor gasoline during the

appropriate audit period and that refunds should therefore be made on a

pro rata or volumetric basis. Under this volumetric refund approach,

applicants will be eligible to receive refunds that are equal to the

gallons of gasoline they purchased multiplied by the per gallon refund

amount (volumetric), plus accrued interest.

We propose that a separate volumetric be set for each retailer. The

volumetrics for each retailer appear in the Appendix. Each was obtained

by dividing the funds the retailer remitted to the DOE by the total

gallons of motor gasoline we believe that retailer sold during the

period covered by the ERA's audit.2 A higher volumetric may be

used to calculate an applicant's refund provided he satisfactorily

demonstrates that he was disproportionately overcharged by one or more

of the retailers, during a relevant audit period.

---------------------------------------------------------------------------

\2\In the absence of accurate figures indicating the amount of

motor gasoline sold by each firm during the audit period, we have

estimated the volume of their sales using the best available data.

Our estimate is that each gasoline retailer sold 50,000 gallons of

motor gasoline per month for each month of its audit period. This

figure was used to calculate each retailer's volumetric. Should the

claims submitted pursuant to this Order indicate that our sales

volume estimate was inaccurate, it may be necessary to reestimate

the volumetric.

---------------------------------------------------------------------------

The potential applicants in this proceeding are likely to fall into

just two categories since each of the Remedial Order firms was a

retailer of motor gasoline. We will provide a presumption of injury for

both categories of applicants; that is, end-users of petroleum products

whose businesses were unrelated to the petroleum industry and were

therefore not subject to the regulations promulgated under the

Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. 751-760h,

and retailers or resellers.

End-user applicants whose businesses were unrelated to the

petroleum industry were presumed injured by the motor gasoline

overcharges covered by the Remedial Order. These applicants need only

document the volume of motor gasoline they purchased from one of the

gasoline retailers in this proceeding in order to be eligible to

receive a refund.

We are proposing to adopt a small claim presumption of injury for

reseller and retailer applicants seeking refunds of $5,000 or less,

exclusive of interest. These applicants will not be required to prove

injury. In order to be eligible to receive a refund in this proceeding,

a small claim applicant need only document the volume of motor gasoline

he purchased from one of the gasoline retailers listed in the appendix.

Only claims for at least $15 in principal will be processed. We

have adopted this minimum in refined product refund proceedings because

the cost of processing claims for refunds of less than $15 outweighs

the benefits of restitution in those instances. See Mobil Oil Corp., 13

DOE 85,339 (1985).

The deadline for filing an Application for Refund is June 1, 1995.

It Is Therefore Ordered That:

The refund amount remitted to the Department of Energy by Aptos

Shell and the 4 other firms listed in the Appendix, pursuant to the

Remedial Order finalized on December 14, 1981, be distributed in

accordance with the foregoing Decision.

Dated: April 28, 1994.

Appendix

----------------------------------------------------------------------------------------------------------------

Amount Volumetric

Case No. Case name (dollars) Audit period (dollars)

----------------------------------------------------------------------------------------------------------------

LEF-0092............ Aptos Shell, 18 Rancho Del Mar, Aptos, CA $4,588.44 8/1/79-11/13/79 $.0267

95003.

LEF-0109............ C.J. King Chevron, 403 S. Saratoga Ave., San 4,786.36 12/15/79-11/6/80 .0089

Jose, CA 95129.

LEF-0110............ Hughes Burlingame Shell, 1490 Burlingame 7,284.06 8/1/79-11/13/79 .0424

Ave., Burlingame, CA 94010.

LEF-0111............ Sandusky's Service, 1201 Terrence Street, 2,855.71 1/79-1/31/80 .0096

Vallejo, CA 94590.

LEF-0112............ Skycrest Shell, 1600 King Drive, Daly City, 2,250.00 8/1/79-11/13/79 .0131

CA 94015.

-------------

Total........... ............................................. 21,764.57

----------------------------------------------------------------------------------------------------------------

[FR Doc. 94-10650 Filed 5-4-94; 8:45 am]

BILLING CODE 6450-01-P