# Proposed Implementation of Special Refund Procedures > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-19921 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** August 15, 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 a total of $338,267.85, plus accrued interest, in alleged crude oil overcharges obtained by the DOE under the terms of the Consent Orders entered into with King Petroleum, Inc., et al., Case No. LEF-0125 (King), and Billy Bridewell, William J. Cobb, et al., Case No. LEF-0126 (Bridewell). The OHA has tentatively determined that the funds obtained from King and Bridewell, plus interest accrued, will be distributed in accordance with the DOE's Modified Statement of Restitutionary Policy Concerning Crude Oil Overcharges. Since the June 30, 1994, deadline for filing crude oil refund applications has passed, no new applications will be accepted for these funds. DATE AND ADDRESSES: Comments must be filed in duplicate by September 14, 1994, and should be addressed to the Office of Hearings and Appeals, 1000 Independence Avenue, SW., Washington, DC 20585. All comments should be marked with the reference numbers LEF-0125 and LEF- 0126. FOR FURTHER INFORMATION CONTACT: Thomas L. Wieker, Deputy Director, Office of Hearings and Appeals, 1000 Independence Avenue SW., Washington, DC 20585, (202) 586-2390. SUPPLEMENTARY INFORMATION In accordance with 10 C.F.R. 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 a total of $338,267.85, plus accrued interest, obtained by the DOE under the terms of Consent Orders entered into with King Petroleum, Inc., et al., and Billy Bridewell, William J. Cobb, et al. These 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 of price controls. The OHA has proposed to distribute these funds in accordance with the DOE's Modified Statement of Restitutionary Policy Concerning Crude Oil Overcharges, 51 Fed. Reg. 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 volume of petroleum products they purchased and the degree to which they can demonstrate injury. Because the June 30, 1994, deadline for crude oil refund applications has passed, no new applications from purchasers of refined petroleum products will be accepted for these funds. Instead, the share allocated to these purchasers will be added to the general crude oil overcharge pool used for direct restitution. 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 3 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: August 8, 1994. George B. Breznay, Director, Office of Hearings and Appeals. August 8, 1994. Proposed Decision and Order of the Department of Energy Implementation of Special Refund Procedures Names of Firms: King Petroleum, Inc., et al. Billy Bridewell, William J. Cobb, et al. Date of Filing: May 26, 1994. Case Numbers: LEF-0125, LEF-0126. On May 26, 1994, 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 funds which King Petroleum, Inc., et al. (King) and Billy Bridewell, William J. Cobb, et al. (Bridewell) remitted to the DOE pursuant to Consent Orders entered into by the parties and the DOE. King has remitted a total of $1,245.04, while Bridewell has remitted a total of $337,022.85. In accordance with the procedural regulations codified at 10 C.F.R. part 205, Subpart V (Subpart V), the ERA requests in its petition that the OHA establish special refund procedures to remedy the effects of alleged regulatory violations which were resolved by these Consent Orders. This Proposed Decision and Order sets forth the OHA's tentative plan to distribute these funds. I. 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 the OHA to fashion procedures to distribute refunds, see Petroleum Overcharge Distribution and Restitution Act of 1986, 15 U.S.C. Secs. 4501-07 (1988), Office of Enforcement, 9 DOE 82,508 (1981), and Office of Enforcement, 8 DOE 82,597 (1981). We have considered the ERA's petition that we implement a Subpart V proceeding with respect to the King and Bridewell Consent Orders and have determined that such a proceeding is appropriate. This Proposed Decision and Order sets forth the OHA's tentative plan to distribute these funds. II. Proposed Refund Procedures A. Crude Oil Refund Policy We propose to distribute the funds obtained from King and Bridewell in accordance with the DOE's Modified Statement of Restitutionary Policy in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986) (the MSRP). The MSRP was issued as a result of a court- approved Settlement Agreement. In re: The Department of Energy Stripper Well Exemption Litigation, 653 F Supp. 108 (D. Kan.), 6 Fed. Energy Guidelines 90,509 (1986) (the Stripper Well Settlement Agreement). The MSRP establishes that 40 percent of the crude oil funds will be remitted to the Federal government, another 40 percent to the states, and up to 20 percent may initially be reserved for payment of claims to injured parties. The MSRP also specifies that any monies remaining after all valid claims by injured purchasers are paid be disbursed to the Federal government and the states in equal amounts. The OHA has utilized the MSRP in all Subpart V proceedings involving alleged crude oil violations. See Order Implementing the MSRP, 51 Fed. Reg. 29689 (August 20, 1986). This Order provided a period of 30 days for filing of comments or objections to our proposed use of the MSRP as the groundwork for evaluating claims in crude oil refund proceedings. Following this period, the OHA issued a Notice evaluating the numerous comments which it had received pursuant to the Order Implementing the MSRP. This Notice was published at 52 Fed. Reg. 11737 (April 10, 1987) (the April 10 Notice). The April 10 Notice contained guidance to assist potential claimants wishing to file refund applications for crude oil monies under the Subpart V regulations. Generally, all claimants would be required to (1) document their purchase volumes of petroleum products during the August 19, 1973 through January 27, 1981, crude oil price control period, and (2) show that they were injured by the alleged crude oil overcharges. We also specified that end-users of petroleum products whose businesses were unrelated to the petroleum industry will be presumed to have been injured by the alleged crude oil overcharges. End-users, therefore, need only submit documentation of their purchase volumes. See City of Columbus, Georgia, 16 DOE 85,550 (1987). Additionally, we stated that we would evaluate crude oil refunds on a per gallon (or volumetric) basis. We obtained the volumetric figure by dividing the estimated crude oil refund pool by the total consumption of petroleum products in the United States during the crude oil price control period. The OHA has adopted the refund procedures outlined in the April 10 Notice in numerous cases. See, e.g., Shell Oil Co., 17 DOE 85,204 (1988); Mountain Fuel Supply Co., 14 DOE 85,475 (1986). The volumetric payment rate is $.0008 per gallon of eligible refined petroleum product purchased during the price control period. B. Refund Claims On May 3, 1993, the OHA issued a Notice which established June 30, 1994, as the final deadline for filing an Application for Refund from all crude oil funds. See 58 Fed. Reg. 26,318 (May 3, 1993) (the May 3 Notice). We noted at that time that the crude oil refund proceeding was over seven years old, and that many crude oil Implementation Orders inviting Applications for Refund had been published in the Federal Register. Id. In fact, since August 1986, there have been approximately 51 announcements published in the Federal Register inviting applicants to file claims for crude oil overcharge refunds. We further stated in the May 3 Notice that we had, at that time, received nearly 96,000 crude oil refund applications for the crude oil overcharge funds. In view of these facts, we concluded that ``this refund proceeding has been well publicized and that those firms, individuals, and organizations that have an interest in filing for this type of refund have had a reasonable opportunity to do so.'' Id. Therefore, for reasons of administrative efficiency and in fairness to those Applicants who are awaiting the final disbursement of crude oil funds, we determined that we would not accept crude oil refund applications postmarked later than June 30, 1994. Id. C. King and Bridewell Subpart V regulations provide a 30 day period for submission of comments after the issuance of a Proposed Decision and Order implementing special refund proceedings. 10 C.F.R. Sec. 205.282(b). Further, these regulations indicate that after the issuance of the final Decision and Order implementing refund procedures, there should be a period of 90 days in which refund applications may be filed. 10 C.F.R. Sec. 205.283(b). Obviously, since the instant Proposed Decision and Order will issue after the June 30, 1994, filing deadline referred to above, we cannot both maintain that deadline and adhere to the provisions of Section 205.282 and Section 205.283. After reviewing the status of the crude oil overcharge refund proceeding as a whole, the intent of the Subpart V regulations and overall administrative considerations, we have decided that a separate filing deadline beyond our June 30 deadline is not advisable or appropriate in this case. As discussed below, we tentatively decide that the funds remitted by King and Bridewell should be included in the general crude oil refund proceeding for which notice has been given for the last eight years. No separate application may be made for these funds. Instead, we propose that these funds become part of the larger pool of funds available for disbursement in the crude oil proceeding. See, e.g., Seneca Oil Co., 21 DOE 85,327 (1991). It was never intended that this proceeding should continue indefinitely. Over the course of the eight years this proceeding has been in effect, we have received approximately 100,000 Applications for Refund. As we noted in the May 3 Notice, the need for administrative efficiency and finality require that we set a final deadline. We believe this decision is consistent with our regulations and past practices. The Subpart V regulations state: ``In establishing standards and procedures for implementing refund distributions, the Office of Hearings and Appeals shall take into account the desirability of distributing the refunds in an efficient and equitable manner and resolving to the maximum extent practicable all outstanding claims.'' 10 C.F.R. Sec. 205.282(e). As discussed above, the crude oil refund proceeding has been well publicized and all interested parties have had ample opportunity to apply. In addition, it would impose an undue burden on those applicants who applied in a timely fashion if we held this proceeding open until all outstanding crude oil enforcement actions were resolved. Our practice over the last several years has been to treat all crude oil overcharge funds as part of one crude oil proceeding, rather than as a multitude of separate small refund proceedings. We have for many years refunded all crude oil claims at a rate of $.0008 per gallon. This rate was established in 1989 by estimating the funds likely to become available for injured persons during the crude oil proceeding. Crude Oil Supplemental Refund Distribution, 18 DOE 85,878 (1989). We have also long maintained that an applicant need only submit one application for its share of all available crude oil overcharge funds. See, e.g., A. Tarricone, Inc., 15 DOE 85,495 (1987). In reaching our determination in this case, we have given some consideration to whether there are potential applicants who will now be precluded from making refund claims from these funds and the degree of harm they might experience if they were denied the right to apply for a King and Bridewell refund. As we pointed out above, we have received approximately 100,000 crude oil overcharge refund applications. Those who have previously filed a crude oil overcharge refund application need not file another claim in order to receive a portion of the Bridewell and King fund. We think that most of those eligible to participate in this refund program and who wish to do so have already filed applications. Given that the crude oil overcharge refund proceeding has been ongoing for approximately eight years, we tend to believe that the number of potential applicants genuinely interested in filing a claim, but who have not yet done so, is relatively small. We also believe that the financial interests of these potential applicants are very minimal, when compared with the overall interest in bringing the crude oil overcharge refund proceeding to a close. The total King and Bridewell funds of $338,268 results in a refund of $.00000017 per gallon, or 17 cents per million gallons consumed.1 --------------------------------------------------------------------------- \1\This amount is derived by dividing the total alleged crude oil violation amounts involved in this proceeding ($338,268) 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 Supply Co., 14 DOE 85,475 (1986). --------------------------------------------------------------------------- At this rate, even a very large applicant, one that consumed 100 million gallons, but which applied only in the King and Bridewell proceeding, would receive a refund of merely $17. Yet, an applicant of this size is extremely unusual. For example, of the 100,000 crude oil overcharge claims that have been filed, only 552, or .5 percent, are based on purchases of 100 million gallons or more. We would thus expect that virtually no claimants would be interested in applying for a refund in this King and Bridewell proceeding. Furthermore, pursuant to the MSRP, we disburse 40 percent of the funds available to the States and 40 percent to the Federal Government. The funds made available to these governmental entitites for indirect restitution are unaffected by our decision to accept no new claims from injured parties. Thus, only 20 percent of the $338,268 total King and Bridewell fund, or $67,654, is actually available for payment to individual claimants by the OHA. Most of that $67,654 would go to those that have already filed claims, since refunds are disbursed on a pro rata basis. The funds actually available for disbursement to any new King and Bridewell claimants would be minimal indeed. As indicated by the above discussion, we have concluded that due to the small amount of the potential refund available, and the limited number of potential additional claimants for these funds, it would not be useful to provide for another application period. We therefore tentatively conclude that the interests of equity and efficiency underlying 10 C.F.R. Sec. 205.282(e) justify our including the funds remitted by King and Bridewell in the general crude oil refund proceeding instead of holding a separate refund proceeding for these funds or extending the deadline for filing crude oil refund applications indefinitely. Consequently, we tentatively decide that 20% of the funds remitted by King and Bridewell (plus appropriate accrued interest) should be added to the general crude oil overcharge pool for direct restitution to those applicants who applied before the June 30, 1994, crude oil refund deadline. D. Payments to the Federal Government and the States Under the terms of the MSRP, we propose that the remaining 80% of the alleged crude oil overcharge amounts subject to this Proposed Decision, plus accrued interest, should be disbursed in equal shares to the states and Federal government for indirect restitution. Refunds to the states will be in proportion to the consumption of petroleum products in each state during the period of price controls. The share or ratio of the funds which each state will receive is contained in Exhibit H of the Stripper Well Settlement Agreement, 6 Fed. Energy Guidelines 90,509 at 90,687. 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 Settlement Agreement. It Is Therefore Ordered That: The refund amounts remitted to the Department of Energy by King Petroleum, Inc., et al., Case No. LEF-0125, and Billy Bridewell, William J. Cobb, et al., Case No. LEF-0126, will be distributed in accordance with the foregoing Decision. [FR Doc. 94-19921 Filed 8-12-94; 8:45 am] BILLING CODE 6450-01-P --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-19921. Public record. Not legal advice.