Implementation of Special Refund Procedures

DEPARTMENT OF ENERGY

Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, Energy.

ACTION: Notice of 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 procedures for disbursement of $5,784.33,

plus accrued interest, in alleged refined petroleum product violation

amounts obtained by the DOE pursuant to settlements with Buchanan

Shell, Inc. (Case No. LEF-0081), Jim Campbell Shell (Case No. LEF-

0082), Miles Union Service (Case No. LEF-0083), and Elwood Chevron

Service (Case No. LEF-0085) (the consenting firms) reached on August

25, 1982, August 2, 1982, April 11, 1982, and March 25, 1992,

respectively. The OHA has determined that the funds obtained from the

consenting firms, plus accrued interest, will be distributed to

customers who purchased gasoline from them during the following

periods: August 1, 1979, through November 13, 1979, in the Buchanan

Shell, Inc., Jim Campbell Shell, and Miles Union Service proceedings;

and August 2, 1979, through April 23, 1980, in the Elwood Chevron

Service proceeding.

DATES: Applications should display a reference to the appropriate case

number and be postmarked on or before June 30, 1994.

ADDRESSES: Applications for Refund must be filed in duplicate,

addressed to ``Buchanan Shell, Inc./Jim Campbell Shell/Miles Union

Service/OR Elwood Chevron Service Special Refund Proceeding'' and sent

to: Office of Hearings and Appeals, Department of Energy, 1000

Independence Avenue, SW., Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT: Thomas O. Mann, Deputy Director Roger

Klurfeld, Assistant Director Office of Hearings and Appeals 1000

Independence Avenue, SW. Washington, DC 20585 (202) 586-2094 (Mann);

586-2383 (Klurfeld).

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(b), notice

is hereby given of the issuance of the Decision and Order set out

below. The Decision and Order sets forth the procedures that the DOE

has formulated to distribute to eligible claimants $5,784.33 plus

accrued interest, obtained by the DOE pursuant to agreements reached on

April 11, 1982, August 2, 1982, August 25, 1982, and March 25, 1992. In

the agreements, the DOE settled allegations that, during the periods

beginning August 1, 1982, Buchanan Shell, Inc., Jim Campbell Shell,

Miles Union Service, and Elwood Chevron Service, Inc. had sold motor

gasoline at prices in excess of the maximum lawful selling price, in

violation of Federal petroleum price regulations.

The OHA has determined to distribute the funds obtained from the

consenting firms in two stages. In the first stage, we will accept

claims from identifiable purchasers of gasoline from the consenting

firms who may have been injured by alleged overcharges. The specific

requirements which an applicant must meet to receive a refund are set

out in Section III of the Decision. Claimants who meet these

requirements will be eligible to receive refunds based on the number of

gallons of gasoline which they purchased from the consenting firms.

If any funds remain after valid claims are paid in the first stage,

they may be used 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.

Applications for Refund must be postmarked on or before June 30,

1994. Instructions for the completion of refund applications are set

forth in the Decision that immediately follows this notice.

Applications should be sent to the address listed at the beginning of

this notice.

Unless labelled as ``confidential,'' all submissions must 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 of the Office of Hearings and Appeals, located in room 1E-234,

1000 Independence Avenue, SW., Washington, DC 20585.

Dated: January 13, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

January 13, 1994.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Names of Firms:

Buchanan Shell, Inc.

Jim Campbell Shell

Miles Union Service

Elwood Chevron Service

Date of Filing: July 20, 1993

Case Numbers:

LEF-0081

LEF-0082

LEF-0083

LEF-0085

Under the procedural regulations of the Department of Energy

(DOE), the Economic Regulatory Administration (ERA) of the DOE may

request that the Office of Hearings and Appeals (OHA) formulate and

implement special procedures to make refunds in order to remedy the

effects of alleged violations of DOE regulations. See 10 C.F.R. Part

205, Subpart V. The ERA filed such a petition on July 20, 1993,

requesting that the OHA implement special refund proceedings to

distribute funds received pursuant to Consent Orders or Judgments

entered into by the DOE and the following gasoline retailers:

Buchanan Shell, Inc., Jim Campbell Shell, Miles Union Service, and

Elwood Chevron Service (hereinafter collectively referred to as the

consenting firms).1

I. Background

Each of the consenting firms is a reseller-retailer of refined

petroleum products as those terms were defined in 10 CFR 212.31. ERA

audits of the consenting firms revealed possible pricing violations

of the Mandatory Petroleum Price Regulations. Subsequently, each of

these firms entered into a separate Consent Order or Judgment with

the DOE in order to settle its disputes concerning certain sales of

gasoline. Pursuant to these Consent Orders and Judgment, the firms

agreed to pay to the DOE specified amounts in settlement of their

potential liability with respect to sales to their customers during

the settlement periods. The firms' payments are currently being held

in separate interest-bearing escrow accounts pending distribution by

the DOE. The names and locations of the firms, the settlement

amounts, the products covered by the settlement agreements, the

volumes, in gallons, sold by the firms during the settlement

periods, and the dates of the settlement periods are set forth in

the Appendix to this Decision.

II. Jurisdiction and Authority

The subpart V regulations set forth general guidelines which may

be used by the OHA in formulating and implementing a plan for the

distribution of funds received as a result of an enforcement

proceeding. The DOE policy is 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, see Petroleum Overcharge Distribution and Restitution Act

of 1986, 15 U.S.C. 4501-4507; Office of Enforcement, 9 DOE 82,508

(1981); and Office of Enforcement, 8 DOE 82,597 (1981) (Vickers).

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\1\The DOE entered into Consent Orders with Buchanan Shell,

Inc., Jim Campbell Shell, and Miles Union Service. The DOE entered

into a Consent Judgment with Elwood Chevron Service filed in the

United States District Court, Central District of California.

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We have considered the ERA's petition that we implement subpart

V proceedings with respect to the four settlement funds and have

determined that such proceedings are appropriate. This Decision and

Order sets forth the OHA's plan to distribute these funds.

III. Proposed Refund Procedures

On November 24, 1993, the OHA issued a Proposed Decision and

Order (PD&O) establishing tentative procedures to distribute the

settlement funds. That PD&O was published in the Federal Register,

and a 30-day period was provided for the submission of comments

regarding our proposed refund plan. See 58 FR 63937 (December 3,

1993). More than 30 days have elapsed and the OHA has received no

substantive comments concerning the proposed procedures for the

distribution of the settlement funds. Consequently, the procedures

will be adopted as proposed.

The OHA will implement a two-stage refund procedure for

distribution of the settlement funds by which purchasers of gasoline

from the consenting firms during the periods covered by the

settlements may submit Applications for Refund in the initial stage.

From our experience with subpart V proceedings, we expect that

potential applicants generally will be limited to ultimate consumers

(``end-users''). Therefore, we do not anticipate that it will be

necessary to employ the injury presumptions that we have used in

past proceedings in evaluating applications submitted by refiners,

resellers, and retailers.2

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\2\If a refiner, reseller, or retailer should file an

application in any of these refund proceedings, however, we will

utilize the standards and appropriate presumptions established in

previous proceedings. See, e.g., Starks Shell Service, 23 DOE

85,017 (1993); Shell Oil Co., 18 DOE 85,492 (1989).

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A. First Stage Refund Procedures

In order to receive a refund, each claimant will be required to

submit a schedule of its monthly purchases of gasoline from each of

the consenting firms during each of their respective settlement

periods. Our experience indicates that the use of certain

presumptions permits claimants to participate in the refund process

without incurring inordinate expense and ensures that refund claims

are evaluated in the most efficient manner possible. See, e.g.,

Marathon Petroleum Co., 14 DOE 85,269 (1986) (Marathon).

Presumptions in refund cases are specifically authorized by the

applicable subpart V regulations at 10 CFR 205.282(e). Accordingly,

we propose to adopt the presumptions set forth below.

1. Calculation of Refunds

First, we will adopt a presumption that for each consenting firm

the overcharges were dispersed equally in all of its sales of

gasoline during the period covered by its settlement. In accordance

with this presumption, refunds are made on a pro-rata or volumetric

basis.3 In the absence of better information, a volumetric

refund is appropriate because the DOE price regulations generally

required a regulated firm to account for increased costs on a firm-

wide basis in determining its prices.

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\3\If an individual claimant believes that it was injured by

more than its volumetric share, it may elect to forego this

presumption and file a refund application based upon a claim that it

suffered a disproportionate share of the consenting firms'

overcharges. See, e.g., Mobil Oil Corp./Atchison, Topeka and Santa

Fe Railroad Co., 20 DOE  85,788 (1990); Mobil Oil Corp./Marine

Corps Exchange Service, 17 DOE  85,714 (1988). Such a claim will

only be granted if the claimant makes a persuasive showing that it

was ``overcharged'' by a specific amount, and that it absorbed those

overcharges. See Panhandle Eastern Pipeline Co./Western Petroleum

Co., 19 DOE  85,705 (1989). To the degree that a claimant makes

this showing, it will receive an above-volumetric refund.

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Under the volumetric approach, a claimant's ``allocable share''

of a settlement fund is equal to the number of gallons purchased

from the consenting firms during the periods covered by the

settlements, times the per gallon refund amount. In the present

cases, the per gallon refund amounts are as follows:

LEF-0081 Buchanan Shell, Inc.

$0.0060

LEF-0082 Jim Campbell Shell

$0.0011

LEF-0083 Miles Union Service

$0.0113

LEF-0085 Elwood Chevron Service

$0.0095

We derived these figures by dividing the dollar amount of each

settlement fund by the volume of gasoline which the corresponding

consenting firm sold during the period covered by its settlement.

See Appendix. A claimant that establishes its eligibility for a

refund will receive all or a portion of its allocable share plus a

pro-rata share of the accrued interest.4

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\4\As in previous cases, we propose to establish minimum refund

amounts of $15. In these proceedings, any potential claimant

purchasing less than a total of 2,416 gallons of gasoline from

Buchanan Shell, Inc., less than 13,177 gallons from Jim Campbell

Shell, less than 1,283 gallons from Miles Union Service, or less

than 1,526 gallons from Elwood Chevron Service would have an

allocable share of less than $15. We have found that the cost of

processing claims in which refunds for amounts less than $15 are

sought outweighs the benefits of restitution in those instances. See

Exxon Corp., 17 DOE  85,590, at 89,150 (1988) (Exxon).

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2. End-Users

In accordance with prior Subpart V proceedings, we also propose

to adopt the presumption that an end-user or ultimate consumer of

gasoline purchased from the consenting firms whose business is

unrelated to the petroleum industry was injured by the overcharges

resolved by the settlement agreements. See, e.g., Texas Oil and Gas

Corp., 12 DOE  85,069 at 88,209 (1984). Members of this group

generally were not subject to price controls during the periods

covered by the settlement agreements, and were not required to keep

records which justified selling price increases by reference to cost

increases. Consequently, analysis of the impact of the overcharges

on the final prices of goods and services produced by members of

this group would be beyond the scope of the refund proceeding. Id.

Accordingly, end-users of gasoline purchased from the consenting

firms need only document their purchase volumes from the consenting

firms during the periods covered by the settlement agreements to

make a sufficient showing that they were injured by the alleged

overcharges.

B. Refund Application Requirements

To apply for a refund from any of the settlement funds, a

claimant should submit an Application for Refund containing all of

the following information:

(1) Identifying information including the claimant's name,

current business address, business address during the refund period,

taxpayer identification number, a statement indicating whether the

claimant is an individual, corporation, partnership, sole

proprietorship, or other business entity, the name, title, and

telephone number of a person to contact for additional information,

and the name and address of the person who should receive any refund

check.5 If the applicant operated under more than one name or

under a different name during the price control period, the

applicant should specify these names;

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\5\Under the Privacy Act of 1974, the submission of a social

security number by an individual applicant is voluntary. An

applicant that does not wish to submit a social security number must

submit an employer identification number if one exists. This

information will be used in processing refund applications, and is

requested pursuant to our authority under the Petroleum Overcharge

Distribution and Restitution Act of 1986 and the regulations

codified at 10 CFR Part 205, Subpart V. The information may be

shared with other Federal agencies for statistical, auditing or

archiving purposes, and with law enforcement agencies when they are

investigation a potential violation of civil or criminal law. Unless

an applicant claims confidentiality, this information will be

available to the public in the Public Reference Room of the Office

of Hearings and Appeals.

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(2) A monthly purchase schedule covering the relevant settlement

period. See Appendix. The applicant should specify the source of

this gallonage information. In calculating its purchase volumes, an

applicant should use actual records from the settlement period, if

available. If these records are not available, the applicant may

submit estimates of its gasoline purchases, but the estimation

methodology must be reasonable and must be explained.

(3) A statement whether the applicant or a related firm has

filed, or has authorized any individual to file on its behalf, any

other application in that refund proceeding. If so, an explanation

of the circumstances of the other filing or authorization should be

submitted;

(4) If the applicant is or was in any way affiliated with the

consenting firms, it should explain this affiliation, including the

time period in which it was affiliated;6

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\6\As in other refund proceedings involving alleged refined

product violations, the DOE will presume that affiliates of the

consenting firms were not injured by the firms' overcharges. See,

e.g., Marathon Petroleum Co./EMRO Propane Co., 15 DOE  85,288

(1987). This is so because a consenting firm presumably would not

have sold petroleum products to an affiliate if such a sale would

have placed the purchaser at a competitive disadvantage. See

Marathon Petroleum Co./Pilot Oil Corp., 16 DOE  85,611 (1987),

amended claim denied, 17 DOE  85,291 (1988), reconsideration

denied, 20 DOE  85,236 (1990). Additionally, if an affiliate of one

of the consenting firms was granted a refund, the consenting firm

would be indirectly compensated from a fund remitted to settle its

own alleged violations.

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(5) The statement listed below signed by the individual

applicant or a responsible official of the firm filing the refund

application:

I swear (or affirm) that the information contained in this

application and its attachments is true and correct to the best of

my knowledge and belief. I understand that anyone who is convicted

of providing false information to the federal government may be

subject to a fine, a jail sentence, or both, pursuant to 18 U.S.C.

1001. I understand that the information contained in this

application is subject to public disclosure. I have enclosed a

duplicate of this entire application which will be placed in the OHA

Public Reference Room.

All applications should be either typed or printed and should

clearly refer to the appropriate proceeding name and case number.

See Appendix. Each applicant must submit an original and one copy of

the application. If the applicant believes that any of the

information in its application is confidential and does not wish for

this information to be publicly disclosed, it must submit an

original application, clearly designated ``confidential,''

containing the confidential information, and two copies of the

application with the confidential information deleted. All refund

applications should be postmarked no later than March 15, 1994 and

be sent to: Buchanan Shell, Inc./Jim Campbell Shell/Miles Union

Service/OR, Elwood Chevron Service Special Refund Proceeding, Office

of Hearings and Appeals, Department of Energy, 1000 Independence

Ave., SW., Washington, DC 20585.

C. Refund Applications Filed by Representatives

In addition, we propose to adopt the standard OHA procedures

relating to refund applications filed on behalf of applicants by

``representatives,'' including refund filing services, consulting

firms, accountants, and attorneys. See, e.g., Shell Oil Co., 18 DOE

 85,492 (1989); Texaco Inc., 20 DOE  85,147 (1990); Starks Shell

Service, 23 DOE  85,017 (1993). We will also require strict

compliance with the filing requirements as specified in 10 CFR

205.283, particularly the requirement that applications and the

accompanying certification statement be signed by the applicant.

The OHA reiterates its policy to closely scrutinize applications

filed by filing services. Applications submitted by a filing service

should contain all of the information indicated in this final

Decision and Order.

Finally, the OHA reserves the authority to require additional

information before granting any refund in these proceedings.

Applications lacking the required information may be dismissed or

denied.

D. Distribution of Funds Remaining After First Stage

Any funds that remain after all first stage claims have been

decided be distributed in accordance with the provisions of the

Petroleum Overcharge Distribution and Restitution Act of 1986

(PODRA), 15 U.S.C. 4501-07. PODRA requires that the Secretary of

Energy determine annually the amount of oil overcharge funds that

will not be required to refund monies to injured parties in Subpart

V proceedings and make those funds available to state governments

for use in four energy conservation programs. The Secretary has

delegated these responsibilities to the OHA, and any funds in the

consenting firms settlement funds that the OHA determines will not

be needed to effect direct restitution to injured customers will be

distributed in accordance with the provisions of PODRA.

It Is Therefore Ordered That:

(1) Applications for Refund from the funds remitted by Buchanan

Shell, Inc., Jim Campbell Shell, Miles Union Service, and Elwood

Chevron Service, pursuant to the settlements reached on August 25,

1982, August 2, 1982, April 11, 1982, and March 25, 1992,

respectively, may now be filed.

(2) Applications for Refund must be postmarked on or before June

30, 1994.

Dated: January 13, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Appendix

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Volume sold Settlement

Case No. Firm Address Settlement period Product amount Consent No.

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LEF-0081........ Buchanan Shell, Inc.. 1315 Buchanan Rd., 8/1/79-11/13/79 Gasoline............. 250,480 $1,500.87 90OZO3255

Pittsburg, CA 94565.

LEF-0082........ Jim Campbell Shell... 3201 Lakeshore Ave., 8/1/79-11/13/79 Gasoline............. 297,953 $323.13 90OZO3255

Oakland, CA 94610.

LEF-0083........ Miles Union Service.. 500 Bancroft Ave., 8/1/79-11/13/79 Gasoline............. 107,566 $1,210.33 90OZO3258

San Leandro, CA

94577.

LEF-0085........ Elwood Chevron 7952 Hollister Ave., 8/2/79-4/23/80 Gasoline............. 290,124 $2,750.00 999K90097

Service. Goleta, CA 93117.

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[FR Doc. 94-1387 Filed 1-19-94; 8:45 am]

BILLING CODE 6450-01-P