# Proposed Implementation of Special Refund Procedures > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-13693 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** June 6, 1994 ## Text 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 $870,000, plus accrued interest, in alleged crude oil overcharges obtained by the DOE under the terms of a Consent Order entered into with Dane Energy Company, Case No. LEF-0122. The OHA has tentatively determined that the funds obtained through this Consent 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 on or before July 6, 1994, 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-0122. 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 $870,000, plus accrued interest, obtained by the DOE under the terms of a Consent Order entered into with Dane Energy Company on December 16, 1993. 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 December 1978 through December 1980. The OHA has proposed to distribute the Consent 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. Dated: May 31, 1994. George B. Breznay, Director, Office of Hearings and Appeals. Proposed Decision and Order of the Department of Energy Implementation of Special Refund Procedures Name of Firm: Dane Energy Company Date of Filing: April 8, 1994 Case Number: LEF-0122 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 April 8, 1994, for crude oil overcharge funds. The funds at issue in this petition were obtained from Dane Energy Company (Dane). This Office issued a Remedial Order to Dane finding violations of the crude oil pricing regulations during the period December 1978 through December 1980. Dane Energy Co., 22 DOE 83,007 (1992). That Order required Dane to remit $8,361,227.88 to the DOE. Believing that it serves the public interest for DOE to compromise its claims against Dane on an ability- to-pay basis where, as here, the financial status of the covered party can be satisfactorily determined, DOE agreed to enter into a Consent Order, whereby Dane agreed to remit $870,000. The DOE received $870,000 on April 8, 1993. This Decision and Order establishes the OHA's procedures to distribute those funds. 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 Dane 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 Fed. 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. The OHA then 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 FR 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. 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, $870,000 of an alleged crude oil violation is covered by this proposed Decision. We have decided to reserve the full twenty percent of the alleged crude oil violation amount, or $174,000, 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 ($870,000) 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 $696,000, 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 Dane Energy Company pursuant to the Consent Order executed on April 8, 1993 will be distributed in accordance with the foregoing Decision. [FR Doc. 94-13693 Filed 6-3-94; 8:45 am] BILLING CODE 6450-01-P --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-13693. Public record. Not legal advice.