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 $10,089.18,

plus accrued interest, in refined petroleum product violation amounts

obtained by the DOE pursuant to a March 8, 1982 Remedial Order issued

to A-1 Exxon and Redhill Mobil & Towing, Case Nos. LEF-0086 and LEF-

0088 and a March 29, 1982 Remedial Order issued to Half Moon Bay Exxon,

Case No. LEF-0087 (the remedial order firms). The OHA has determined

that the funds obtained from the remedial order firms, plus accrued

interest, will be distributed to customers who purchased gasoline from

them during the following periods: August 1, 1979, through November 20,

1979, in the A-1 Exxon proceeding; August 1, 1979, through October 23,

1979 in the Half Moon Bay Exxon proceeding; and August 1, 1979 through

November 13, 1979 in the Redhill Mobil and Towing proceeding.

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).

ADDRESSES: Applications for Refund must be filed in duplicate,

addressed to ``A-1 Exxon; Half-Moon Bay Exxon/OR Redhill Mobil and

Towing Special Refund Proceeding'' and sent to: Office of Hearings and

Appeals, Department of Energy, 1000 Independence Avenue, SW.,

Washington, DC 20585.

DATES: Applications should display a prominent reference to the

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

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 $10,089.18, plus

accrued interest, obtained by the DOE pursuant to March 8, 1982 and

March 29, 1982. In the Remedial Orders, the DOE found that, during the

relevant periods beginning August 1, 1979, the firms each 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 in order to receive a refund

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

specific 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 Appeal.

January 13, 1994.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Names of Firms:

A-1 Exxon

Half Moon Bay Exxon

Redhill Mobil & Towing

Date of Filing: July 20, 1993

Case Numbers:

LEF-0086

LEF-0087

LEF-0088

On July 20, 1993, the Economic Regulatory Administration (ERA)

of the Department of Energy (DOE) filed a Petition for the

Implementation of Special Refund Procedures with the Office of

Hearings and Appeals (OHA), to distribute the funds received

pursuant to Remedial Orders issued by the DOE to the following

parties: A-1 Exxon of Capitola, California, Half Moon Bay Exxon of

Half Moon Bay, California, and Redhill Mobil & Towing of San

Anselmo, California (hereinafter collectively referred to as the

remedial order firms). In accordance with the provisions of the

procedural regulations at 10 CFR part 205, Subpart V (Subpart V),

the ERA requests in its Petition that the OHA establish special

procedures to make refunds in order to remedy the effects of

regulatory violations set forth in the Remedial Order. This Decision

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

I. Background

Each of the remedial order firms was a retailer of motor

gasoline during the periods relevant to this proceeding. The ERA

issued Proposed Remedial Orders (PROs) to each of the firms.1

The PROs alleged that, during separate periods beginning on August

1, 1979, the remedial order firms had: charged more than the maximum

lawful selling price for one or more grades of gasoline in violation

of 10 CFR 212.93; failed to post and maintain the maximum lawful

selling price or a proper certification in violation of 10 CFR

212.129; failed to keep and maintain books and records to support

the lawfulness of the price for gasoline on the audit date in

violation of 10 CFR 210.92 and 212.93; and/or engaged in unlawful or

discriminatory business practices in violation of 10 CFR 210.62.

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\1\ A-1 Exxon was issued a PRO on January 22, 1981; Half Moon

Bay Exxon was issued a PRO on May 7, 1981, and Redhill Mobil &

Towing was issued a PRO on February 25, 1981.

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After considering and dismissing the firms' objections to the

PROs, the DOE issued final Remedial Orders. A-1 Exxon, et al., 9 DOE

83,020 (1982); Chip's Chevron Service, et al., 9 DOE 83,046

(1982).2 Each of the retailers, represented by the same

counsel, appealed the remedial orders to the Federal Energy

Regulatory Commission (FERC). On September 19, 1982, FERC affirmed

each of the contested remedial orders in every respect. A-1 Exxon,

et al., 20 FERC 61,387 (1982). Each of the firms has since remitted

a specified amount in compliance with the Remedial Orders, to which

interest has since accrued. These funds are being held in an

interest-bearing escrow account maintained at the Department of the

Treasury pending a determination regarding their proper

distribution.

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 of

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 OHA to fashion procedures to distribute

refunds, see Petroleum Overcharge Distribution and Restitution Act

of 1986, 15 U.S.C. 4501 et seq., Office of Enforcement, 9 DOE

82,508 (1981), and Office of Enforcement, 8 DOE 82,597 (1981)

(Vickers).

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\2\ A Remedial Order was issued to A-1 Exxon and Redhill Mobil &

Towing on March 8, 1982. A Remedial Order was issued to Half Moon

Bay Exxon on March 29, 1982.

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

Subpart V proceeding with respect to the above remedial order funds

and have determined that such proceedings are appropriate. This

Proposed Decision and Order sets forth the OHA's tentative plan to

distribute these funds. Before taking the actions proposed in this

Decision, we intend to publicize our proposal and solicit comments

from interested parties. Comments regarding the tentative

distribution processes set forth in this Proposed Decision and Order

should be filed with the OHA within 30 days of its publication in

the Federal Register.

III. Proposed Refund Procedures

On December 2, 1993, the OHA issued a Proposed Decision and

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

Remedial Order 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 Fed. Reg. 64758

(December 9, 1993). More than 30 days have elapsed and the OHA has

received no comments concerning the proposed procedures for the

distribution of the Remedial Order funds. Consequently, the

procedures will be adopted as proposed. We will implement a two-

stage refund procedure for distribution of the remedial order funds

by which purchasers of gasoline from the remedial order firms during

the period covered by the Remedial Orders 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.3

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\3\ If a refiner, reseller, or retailer should file an

application in any of the 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 the

remedial order firm during the period covered by the Remedial Order.

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 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 will adopt the

presumptions set forth below.

1. Calculation of Refunds

First, we will adopt a presumption that the overcharges were

dispersed equally in all of the remedial order firms' sales of

gasoline during the period covered by the Remedial Orders. In

accordance with this presumption, refunds are to be made on a pro-

rata or volumetric basis.4 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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\4\ 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 remedial firm's

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 Remedial Order fund is equal to the number of gallons purchased

from the remedial order firm during the period covered by that

Remedial Order times the per gallon refund amount.5 We derived

the per gallon refund figures by dividing the amount of each

Remedial Order fund by the total volume of gasoline which each

remedial order firm sold during the period specified in that

Remedial Order. An applicant 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.6

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\5\ The per gallon refund amount is $.0465 for claimants

applying in the A-1 Exxon proceeding ($3,000 remitted/64,456.4

gallons sold), $.0173 in the Half-Moon Bay Exxon proceeding ($2,500

remitted/144,331 gallons sold), and $.0314 in the Redhill Mobil &

Towing proceeding ($4,589.18 remitted/146,145.7 gallons sold).

\6\ As in previous cases, we will establish a minimum refund

amount of $15. We have found through our experience 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).

In addition to the volumetric presumption, we will also adopt a

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presumption regarding injury for end-users.

2. End-Users

In accordance with prior Subpart V proceedings, we will adopt

the presumption that an end-user or ultimate consumer of gasoline

purchased from one of the remedial order firms whose business is

unrelated to the petroleum industry was injured by the overcharges

resolved by the Remedial Order. See, e.g., Texas Oil and Gas Corp.,

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

generally were not subject to price controls during the period

covered by the Remedial Order, 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.

End-users of gasoline purchased from the remedial order firms need

only document their purchase volumes from the firm during the period

covered by the Remedial Order to make a sufficient showing that they

were injured by the overcharges.

B. Refund Application Requirements

To apply for a refund from any of the Remedial Order 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.7 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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\7\ 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 C.F.R. 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

investigating 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 Remedial

Order period.8 The applicant should specify the source of this

gallonage information. In calculating its purchase volumes, an

applicant should use actual records from the refund 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.

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\8\The Remedial Orders cover the following periods: August 1,

1979 through November 20, 1979 in the A-1 Exxon proceeding; August

1, 1979 through October 23, 1979 in the Half-Moon Bay Exxon

proceeding; and August 1, 1979 through November 13, 1979 in the

Redhill Mobil and Towing proceeding.

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(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 by

submitted;

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

remedial order firm, it should explain this affiliation, including

the time period in which it was affiliated;9

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\9\As in other refund proceedings involving alleged refined

product violations, the DOE will presume that affiliates of the

remedial order firm were not injured by the firm's overcharges. See,

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

(1987). This is so because the remedial order 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 the remedial

order firm was granted a refund, the remedial order firm would be

indirectly compensated from a Remedial Order 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 clearly

labeled A-1 Exxon (Case No. LEF-0086)/Half Moon Bay Exxon (Case No.

LEF-0087)/OR Redhill Mobil and Towing (Case No. LEF-0088) Special

Refund Proceeding.'' 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 on or before June 30, 1994 and

sent to: A-1 Exxon/Half Moon Bay Exxon/OR Redhill Mobil & Towing

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 will 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., Starks Shell Service,

23 DOE 85,017 (1993); Texaco Inc., 20 DOE 85,147 (1990); Shell Oil

Co., 18 DOE 85,492 (1989). 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 the final

Decision and Order in this proceeding.

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 will 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

Remedial Order 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 A-1

Exxon, Half Moon Bay Exxon, and Redhill Mobil & Towing pursuant to

the Remedial Orders dated March 8, 1982 and March 29, 1982 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.

[FR Doc. 94-1395 Filed 1-19-94; 8:45 am]

BILLING CODE 6450-01-P