Implementation of Special Refund Procedures

DEPARTMENT OF ENERGY

Office of Hearings and Appeals

Implementation of Special Refund Procedures

AGENCY: Office of Hearings and Appeals, Department of 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 announces the procedures for the disbursement of $56,149.35

(plus accrued interest) that Telum, Inc. remitted to the DOE pursuant

to a Consent Order entered into by the DOE and Telum. The OHA has

determined that the funds will be distributed in accordance with the

DOE's special refund procedures, 10 CFR Part 205, Subpart V.

DATES AND ADDRESSES: The Application for Refund must be filed in

duplicate, addressed to ``Telum Special Refund Proceeding,'' and sent

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

Independence Avenue, S.W., Washington, DC 20585.

The application should display a prominent reference to Case Number

LEF-0114 and be postmarked no later than October 31, 1994.

FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director,

Andrew W. Beckwith, Staff Analyst, Office of Hearings and Appeals, 1000

Independence Avenue, S.W., Washington, DC 20585, (202) 586-2860

(Dugan), (202) 586-4921 (Beckwith).

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(c), 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 monies that have been remitted by Telum,

Inc. to the DOE to settle possible pricing violations with respect to

its sale of middle distillates. The DOE is currently holding $56,149.35

in an interest-bearing escrow account pending distribution.

The OHA has determined to distribute these funds in a refund

process in which we will accept a refund claim from the party injured

as a result of Telum's alleged overcharges. The specific requirements

that the applicant must meet in order to receive the refund are set out

in Section III of the Decision. The claimant who meets these specific

requirements will be eligible to receive a refund of the entire consent

order amount plus any accrued interest. In the event that a valid

refund application is not filed, the funds will be used for indirect

restitution in accordance with the provisions of the Petroleum

Overcharge and Distribution Act of 1986, 15 U.S.C. Secs. 4501-4507.

The Application for Refund must be postmarked no later than 90 days

after publication of this Decision and Order in the Federal Register.

Instructions for the completion of the refund application are set forth

in the Decision that immediately follows this notice. The application

should be sent to the address listed at the beginning of this notice.

All submissions, except those containing confidential information,

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 of the Office of Hearings and Appeals, located in

Room 1E-234, 1000 Independence Avenue, S.W., Washington, D.C. 20585.

Dated: July 25, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

July 25, 1994.

Implementation of Special Refund Procedures

Name of Firm: Telum, Inc.

Date of Filing: October 7, 1993

Case Number: LEF-0114

In accordance with the procedural regulations of the Department

of Energy (DOE), 10 C.F.R. Part 205, Subpart V, the Economic

Regulatory Administration (ERA) of the DOE filed a Petition for the

Implementation of Special Refund Procedures with the Office of

Hearings and Appeals (OHA) on October 7, 1993. The petition requests

that OHA formulate and implement procedures for the distribution of

funds received pursuant to a consent order entered into by the DOE

and Telum, Inc. (Telum).

I. Background

Telum was a ``reseller-retailer'' of ``covered products'' as

those terms were defined in 6 CFR 150.352 and 10 CFR 212.31.

Therefore, Telum was required to price middle distillate fuel in

accordance with the price rule of the Mandatory Petroleum Price

Regulations set forth at 10 C.F.R. Part 212, Subpart F, and

antecedent regulations at 6 C.F.R. Part 150, Subpart L. As a result

of an audit, the ERA alleged that Telum and entities under Telum's

direction violated the price regulations in sales of middle

distillate fuel to Salt River Project (Salt River) during a five

month period from December 1, 1973, through April 30, 1974 (the

audit period).* The auditors determined that during this period

Telum made sales of middle distillates to Salt River at prices in

excess of the maximum lawful selling price (MLSP) permitted by the

regulations. Consequently, the ERA issued a Proposed Remedial Order

(PRO) to Telum on May 28, 1980, alleging pricing violations in the

sale of middle distillate fuel to Salt River. After revising its

selection of the ``nearest comparable outlet'' with regard to the

``new market'' determination under 10 CFR 212.111(b), the ERA issued

an Amended PRO on September 15, 1986, alleging that Telum had

overcharged Salt River in its sales of middle distillate fuel in the

amount of $357,587. On April 7, 1988, that Amended PRO was remanded

by OHA to the ERA for a new determination regarding Telum's nearest

comparable outlet and a recalculation of MLSPs and any overcharges

in sales to Salt River. Telum, Inc., 17 DOE 83,010 (1988).

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*Telum was incorporated as Bonus Oil Company on August 13, 1968.

Bonus Oil Company's name was changed to Telum, Inc. effective

December 3, 1974. For the purposes of this Decision, we will refer

to the firm only as Telum.

The other entities under Telum's direction, as listed in the

consent order, are: Industrial Fuels, Inc., an Arizona Corporation,

and Giraud Corporation, a Utah corporation.

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The ERA did not issue a second Amended PRO. Instead, on May 30,

1990, the DOE entered into a consent order (No. 820H00020Z) with

Telum to resolve all administrative and civil claims related to

Telum's compliance with the Federal petroleum price and allocation

regulations in its resale transactions of petroleum products during

the period December 1, 1973 through April 30, 1974. Specifically,

Telum agreed to remit $60,000, plus interest, to the DOE for deposit

in an interest-bearing escrow account. Telum has remitted $56,149.35

to the DOE, consisting of $51,626.18 toward payment of the $60,000

principal amount due and $4,523.17 toward payment of interest due on

principal. The DOE has authorized a write-off of the remainder of

the amount due for reasons of uncollectability. Telum is no longer

in business, and Earl K. Cook, the former president of Telum, has

indicated that he is unable to pay the remainder of the amount due.

As of June 30, 1994, $9,615 in interest had accrued in the DOE

escrow account on the amount paid by Telum.

On May 31, 1994, we issued a Proposed Decision and Order in

which we determined that it was appropriate to establish a special

refund proceeding with respect to the Telum consent order fund. In

that Proposed Decision, we tentatively set forth procedures to

distribute a refund to the party that was injured by Telum's alleged

pricing violations in sales of middle distillates during the consent

order period. Specifically, we proposed that Salt River, the party

injured by Telum's alleged pricing violations, be eligible for the

entire consent order fund plus accrued interest. The Proposed

Decision was published in the Federal Register on June 6, 1994 (59

Fed. Reg. 29289), and comments on the proposed refund mechanism were

to be submitted within 30 days of that date. No comments regarding

the Proposed Decision and Order were received. Accordingly, we have

determined that the proposed procedures should be adopted.

The purpose of this Decision and Order is to establish

procedures to be used for filing and processing Salt River's claim

to a refund in this matter. This Decision sets forth the information

that Salt River should submit in order to receive the entire Telum

consent order fund.

I. Jurisdiction

The procedural regulations of the DOE set forth general

guidelines by which the Office of Hearings and Appeals may formulate

and implement a plan of distribution for funds received as a result

of an enforcement proceeding. 10 C.F.R. Part 205, Subpart V. It is

the DOE policy to use the Subpart V process to distribute such

funds. For a more detailed discussion of Subpart V and the authority

of the Office of Hearings and Appeals to fashion procedures to

distribute refunds obtained as part of consent orders, see Office of

Enforcement, 9 DOE 82,553 (1982); Office of Enforcement, 9 DOE

82,508 (1981); Office of Enforcement, 8 DOE 82,597 (1981). As we

stated in the Proposed Decision, we have determined that a Subpart V

proceeding is an appropriate method for distributing the Telum

consent order fund. Therefore, we will grant the ERA's petition and

assume jurisdiction over distribution of the fund.

III. Refund Procedures

A. Refund Claimant

In the Proposed Decision, we determined that insofar as possible

the consent order fund should be distributed to the customer of

Telum who was injured by the alleged overcharges. Salt River, the

only Telum customer who made purchases during the consent order

period that were covered by the PRO and Amended PRO, is the only

Telum customer we identified as likely to have been injured by the

alleged overcharges. Although the Telum consent order covers all

sales of ``covered products'' by Telum for the period December 1,

1973 through April 30, 1974, the ERA audit files, the PRO, and the

Amended PRO are all based only on sales by Telum to Salt River. The

consent order, while lacking in specificity, was clearly arrived at

in order to settle this one outstanding enforcement issue. We are

thus able to use the information contained in the audit files for

guidance as to the identity of Telum's injured customer and the

extent of the alleged overcharges, as we have done in some prior

refund proceedings. See, e.g., Howard Oil Co., 15 DOE 85,072

(1986). Consequently, we are establishing a claims procedure in

which Salt River may apply for a refund equal to the entire consent

order fund. Limiting the universe of applicants to Salt River allows

us to fashion a refund plan that will correspond most closely to the

alleged overcharges settled by the consent order. See Consumers Oil

Co., 13 DOE 85,226 (1985); Marion Corp., 12 DOE 85,014 (1984).

In prior refund proceedings, in order to receive a full refund,

claimants whose prices for goods and services are regulated by a

governmental body, e.g., a public utility, have not been required to

provide a detailed showing of injury. See, e.g., Dorchester Gas

Corp., 14 DOE 85,240 at 88,451 (1986). Instead, regulated firms

have been required to (i) Certify that they will pass any refund

received through to their customers, (ii) provide us with a full

explanation of how they plan to accomplish the restitution, and

(iii) certify that they will notify the appropriate regulatory body

of the receipt of the refund. Id. These requirements are based on

the presumption that, with respect to a regulated firm, any

overcharges would have been routinely passed through to its

customers. Similarly, any refunds received should be passed through

to its customers.

We have been informed by Salt River that the nature of its

business is that of a municipal public power utility whose rates for

electricity are set by a publicly-elected Board of Directors (i.e.,

a governmental body). See Memorandum of April 29, 1994 Telephone

Conversation between John Egan, Spokesperson for Salt River, and

Andrew Beckwith, OHA Staff Analyst. We have determined, therefore,

that Salt River is a regulated firm as that category is defined

above. See City of Lubbock, 18 DOE 85,116 (1988). Accordingly, we

have determined that Salt River, as a regulated firm, need not make

a showing that it was injured by the alleged overcharges. However,

Salt River will be required to comply with the stipulations outlined

above that are incumbent upon regulated firms when submitting an

Application for Refund.

B. Calculation of Refund Amount

As stated above, the ERA audit files identify Salt River as the

Telum customer injured by the alleged overcharges that were the

subject of the consent order. In the Proposed Decision, we indicated

our intention to find Salt River eligible for the entire amount of

the consent order fund as restitution for the alleged overcharges.

We received no comments in opposition to this proposal and therefore

shall adopt it. In addition, Salt River will be eligible to receive

all of the interest that has accrued on the consent order fund.

C. Application for Refund Procedures

An Application for Refund may now be filed by Salt River. Salt

River's Application must be postmarked within 90 days after

publication of this Decision and Order in the Federal Register. See

10 C.F.R. Sec. 205.286. The application must be in writing, signed

by an authorized representative of Salt River, and specify that it

pertains to the Telum, Inc. consent order fund, Case No. LEF-0114.

Salt River's Application for Refund must be filed in duplicate.

A copy of the application will be available for public inspection in

the Public Reference Room of the Office of Hearings and Appeals,

Room 1E-234, 1000 Independence Avenue, S.W., Washington, DC. If Salt

River believes that its application contains confidential

information, it must so indicate on the first page of its

application and submit two additional copies of its application from

which the information that it claims is confidential has been

deleted, together with a statement specifying why any such

information is privileged or confidential.

The application must also indicate whether the applicant or any

person acting on its instructions has filed or intends to file any

other application or claim of whatever nature regarding the matters

at issue in the underlying Telum enforcement proceeding. Salt River

must also certify that it is not related to Telum, the consent order

firm. The application must include the following statement: ``I

swear (or affirm) that the information submitted is true and

accurate to the best of my knowledge and belief.'' See 10 CFR

205.283(c); 18 USC 1001. Furthermore, Salt River should furnish us

with the name, title, and telephone number of a person who may be

contacted by the OHA for additional information concerning the

application. In addition, Salt River's employer identification

number and current address must be listed in the application. The

application should be sent to: Telum, Inc. Consent Order Refund

Proceeding, Office of Hearings and Appeals, U.S. Department of

Energy, Washington, DC 20585.

As indicated above, Salt River should also: (i) Certify that it

will pass any refund received through to its customers, (ii) provide

us with a full explanation of how it plans to accomplish the

restitution, and (iii) certify that it will notify the appropriate

regulatory body of the receipt of the refund.

In the event that Salt River does not file a refund application

that meets the requirements set forth in this Decision and Order,

the funds in the Telum consent order account shall 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 refined product pool funds in

the Telum consent order escrow account that the OHA determines will

not be used to effect direct restitution to Salt River will be

distributed in accordance with the provisions of PODRA.

It Is Therefore Ordered That:

(1) An Application for Refund from the funds remitted to the

Department of Energy by Telum, Inc. pursuant to the consent order

executed on May 30, 1990, may now be filed.

(2) The application must be postmarked no later than 90 days

after publication of this Decision and Order in the Federal

Register.

Dated: July 25, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 94-18780 Filed 8-1-94; 8:45 am]

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