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 (DOE) announces the procedures for disbursement of $52,092.73,

plus accrued interest, in refined petroleum overcharges obtained by the

DOE under the terms of a Remedial Order issued to Sunset Boulevard Car

Wash (Sunset) Case No. LEF-0112. The OHA has determined that the funds

will be distributed in accordance with the provisions of 10 CFR Part

205, Subpart V and 15 U.S.C. 4501, the Petroleum Overcharge

Distribution and Restitution Act (PODRA).

DATES AND ADDRESSES: Applications for Refund must be filed in

duplicate, addressed to Sunset Boulevard Car Wash Special Refund

Proceeding and sent to: Office of Hearings and Appeals, Department of

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

applications must reference Case Number LEF-0112 and be postmarked on

or before June 1, 1995.

FOR FURTHER INFORMATION CONTACT: Thomas L. Wieker, Deputy Director Kim

L. Hargrove, Staff Attorney Office of Hearings and Appeals 1000

Independence Avenue SW., Washington, DC 20585 (202) 586-2390

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 sets forth the procedures that the DOE has

formulated to distribute to eligible claimants $52,092.73, plus accrued

interest, obtained by the DOE under the terms of a Remedial Order that

the DOE issued to Sunset Boulevard Car Wash (Sunset) on October 22,

1980. Under the Remedial Order, Sunset was found to have violated the

Federal petroleum price and allocation regulations involving the sale

of refined petroleum products between August 1, 1979 and January 27,

1980 (the Audit period).

The OHA will distribute the Remedial Order funds in a two stage

refund proceeding. Purchasers of Sunset motor gasoline will have an

opportunity to submit refund applications in the first stage. Refunds

will be granted to applicants who satisfactorily demonstrate they were

injured by the pricing violations and who document the volume of

gasoline they purchased from Sunset during the audit period. In the

event that money remains after all first stage claims have been

disposed of, the remaining funds will be disbursed in accordance with

the provisions of 15 U.S.C. 4501, the Petroleum Overcharge Distribution

and Restitution Act of 1986 (PODRA).

Applications for Refund must be postmarked on or before June 1,

1995. Instructions for the completion of refund applications have been

set forth in Section IV of the Decision immediately following this

notice. Refund applications should be mailed 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.

Date: September 12, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Name of Firm: Sunset Boulevard Car Wash

Date of Filing: July 20, 1993

Case Number: LEF-0112

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 proceedings. 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 ERA on July 20,

1993. In that Petition, ERA specifically requests that we formulate

refund procedures to disburse funds that had been remitted to DOE by

Sunset Boulevard Car Wash (Sunset). The funds at issue in that Petition

were obtained through a Remedial Order (the Order) issued by our Office

on October 22, 1980.

Under the terms of the Order, Sunset remitted $52,092.73 to the DOE

to remedy pricing violations which Sunset committed between August 1,

1979 and January 27, 1980.1 These funds are being held in an

escrow account established with the Treasury pending a determination of

their proper distribution. The present Decision and Order sets forth

final procedures for the distribution of those funds to qualified

purchasers of Sunset's refined products.

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\1\Sunset remitted a total of $52,092.73. The PDO inadvertently

stated that Sunset remitted $52,093.73.

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I. Jurisdiction and Authority

The general guidelines that govern OHA's ability to formulate and

implement a plan to distribute refunds are set forth at 10 CFR part

205, subpart V. These procedures apply in situations where DOE cannot

readily identify the persons who were 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 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).

II. Background

The facts alleged in the Order were undisputed. Sunset was a

``retailer'' of motor gasoline as that term has been defined at 10 CFR

212.31 and was therefore subject to the provisions of 10 CFR part 210

and 10 CFR part 212, subpart F. The Order states that from August 1,

1979 to January 27, 1980 (the audit period), Sunset charged prices

higher than those permitted by 10 CFR 212.93(a)(2); levied a cents-per-

gallon fee for services associated with the sale of motor gasoline in

violation of 10 CFR 210.62(d)(1) and refused to make its records

available for inspection in violation of 10 CFR 210.92(b).

Sunset was ordered to reduce its prices for motor gasoline by

specified amounts until a sufficient volume of gasoline had been sold

at reduced prices to remedy the violations.2 After decontrol, the

Order was modified to require direct monetary restitution to the

Treasury instead. See Sunset Boulevard Car Wash, 20 FERC 62,319 at

63,537 (Sunset) (1982). Under the terms of the modified Order (the MO),

Sunset was required to disgorge and remit to DOE the violation amount

and the profits it had acquired as a result of its violation of the

aforementioned provisions of the pricing regulations.

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\2\The Order imposed no sanctions upon Sunset as a result of its

failure to make its records available in accordance with 10 CFR

210.92(b). See Remedial Order at 1 and 7.

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Sunset objected to the remedial provisions of the MO at every

available tier of administrative and judicial review. As a result, the

Federal Energy Regulatory Commission (FERC) affirmed the MO on August

12, 1982. When Sunset renewed its objections in proceedings before the

United States District Court for the Central District of California,

the District Court affirmed the MO. Finally, on March 9, 1993, the

Temporary Emergency Court of Appeals definitively disposed of Sunset's

objections. Bush v. U.S., 989 F.2d 509 (Em. App. 1993).

III. The Proposed Decision and Order

On November 24, 1993, we issued a Proposed Decision and Order (PDO)

establishing tentative procedures to distribute the funds that Sunset

had remitted to DOE pursuant to the MO. We proposed implementing a two

stage refund proceeding and we stated that purchasers of Sunset motor

gasoline would be provided an opportunity to submit refund applications

in the first stage. In the event funds remained after all first stage

claims had been considered, we stated that the remaining funds would be

disbursed in the second stage in accordance with the provisions of the

Petroleum Overcharge Distribution and Restitution Act of 1986 (15

U.S.C. 4501) (PODRA).

We provided a 30 day period for the submission of comments

concerning the proposed procedures. However, we have received no

comments since the PDO was published in the Federal Register more than

30 days ago. The proposed procedures will therefore be adopted in the

same form in which they were originally outlined. Set forth below are

the specific considerations that will guide our evaluation of refund

applications during the first stage, as well as, the provisions

governing distribution of any remaining funds in the second stage

proceeding.

IV. First Stage Refund Procedures

Refund applications submitted in the Sunset special refund

proceeding will be evaluated in exactly the same manner as applications

submitted in other refined product proceedings. In those proceedings,

we often adopt rebuttable presumptions which relate to pricing

violations and injury. Such a policy reflects our belief that adoption

of these presumptions permits applicants to participate in refund

proceedings in larger numbers by avoiding the need to incur inordinate

expense; and facilitates our consideration of first stage refund

applications. 10 CFR 205.282(e). For those reasons, we have adopted

similar presumptions in the present proceeding.

(1) Calculating the Refund

We have presumed that the pricing violations were dispersed equally

throughout Sunset's motor gasoline sales during the audit period. We

therefore proposed that each applicant's potential refund should be

calculated on a volumetric basis. Under the volumetric approach,

refunds are calculated by multiplying the gallons of refined product

each applicant purchased by the per gallon refund amount (volumetric)

established for this proceeding, plus accrued interest. Applicants

believing they were disproportionately overcharged by the pricing

violations may present documentation which supports that claim. Those

who succeed in showing they were disproportionately overcharged by

Sunset will be eligible to receive refunds calculated at a higher

volumetric.

The volumetric for this proceeding has been set at $.0868 per

gallon. This figure was obtained by dividing the remedial order funds

available for distribution by the volume of gasoline Sunset is believed

to have sold during the audit period.3

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\3\In the absence of precise figures indicating the amount of

motor gasoline Sunset sold during the audit period, we estimated

Sunset's total sales using the best available data. Based on sales

of 200,000 gallons per month for 6 months, we believe Sunset sold

1,200,000 gallons of gasoline during the audit period. This figure

will be used to calculate the volumetric refund amount unless the

refund applications submitted pursuant to this Decision and Order

indicate that our estimate is inaccurate. In the event the estimate

proves to be inaccurate, it may be necessary to reestimate the

volumetric.

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(2) Eligibility for a Refund

In order to be eligible to receive a refund in this proceeding,

each applicant must (1) document the volume of motor gasoline it

purchased during the audit period; and (2) demonstrate that it was

injured by Sunset's overcharges. The threshold requirement for any

applicant is documenting the volume of product it purchased. This

requirement is typically satisfied when the applicant successfully

demonstrates ownership of the business for which the refund is sought

and submits documentation which supports the volume claimed in its

refund application.

The injury showing, however, is a potentially more difficult

requirement for applicants to satisfy, especially those seeking smaller

refund amounts. This is true because an applicant must demonstrate that

it was forced to absorb Sunset's overcharges. Our cases have often

stated that an applicant accomplishes this by demonstrating that it

maintained a ``bank'' of unrecovered product costs and showing that

market conditions would not permit the applicant to pass through those

increased costs. See, Quintana Energy Corp., 21 DOE 85,032 at 88,117

(1991).

Unless simplified application procedures were provided, we

recognized that the cost to the applicant of gathering evidence of

injury to support a relatively small refund claim could exceed the

expected refund and thereby cause some injured parties to be denied an

opportunity to obtain a refund. Moreover, simplified procedures were

needed to minimize the burden that would be placed on this Office if we

found it necessary to analyze a detailed injury showing for large

numbers of small refund applications. In view of these difficulties, we

proposed adopting a number of injury presumptions which simplify and

streamline the refund process.

(3) Presumptions of Injury

Each presumption of injury turns on the category of applicant. Set

forth below is the presumption of injury that has been adopted for each

class of applicant likely to submit a refund application in this

proceeding.

Small-claim Presumption. We have adopted a small claim presumption

of injury for resellers, retailers and refiners whose claim is $10,000

or less, exclusive of interest. A small claim threshold of $10,000 has

been adopted, even though we established a lower threshold amount of

$5,000 in many prior proceedings. See, e.g., Gulf Oil Corporation, 16

DOE 85,381 (1987)(establishing a $5,000 threshold). The $10,000

threshold is more appropriate here because the volumetric for this

proceeding is significantly higher than the volumetric set in Gulf and

in most other proceedings. Id. If we were to adopt a lower threshold

amount for this proceeding, then the high volumetric would increase

substantially the number of very small firms that would be burdened

with the requirement to make a detailed injury showing before they

become eligible to receive their full allocable share.

The small claim presumption of injury for this proceeding, exempts

applicants whose claims are $10,000 or less, exclusive of interest,

from the requirement to prove injury. Such an applicant need only

document the volume of motor gasoline he or she purchased from Sunset

during the audit period in order to be eligible to receive a full

refund. See Enron Corporation, 21 DOE 85,323 at 88,957 (1991).

Mid-range Presumption. Mid-range applicants; that is, applicants

seeking refunds in excess of $10,000 but less than $50,000, excluding

interest, are eligible to receive 40 percent of their allocable share

without proving injury. Like small-claim applicants, these applicants

will only be required to document the volume of Sunset gasoline they

purchased during the audit period to be eligible to receive refunds.

See Shell, 17 DOE at 88,406.

End-user Presumption. We have presumed that end-users of petroleum

products whose businesses were unrelated to the petroleum industry and

were not subject to the regulations promulgated under the Emergency

Petroleum Price and Allocation Act of 1973 (EPAA), 15 U.S.C. Secs. 751-

760h, were injured by Sunset's pricing violations. Unlike regulated

firms, end-users were not subject to price controls during the audit

period. Moreover, these firms were not required to keep records that

justified selling price increases by reference to cost increases. An

analysis of the impact of the alleged overcharges on the final prices

of non-petroleum goods and services is beyond the scope of a special

refund proceeding. See American Pacific International, Inc., 14 DOE

85,158 at 88,294 (1986). End-users seeking refunds in this proceeding

will therefore be presumed to have been injured by Sunset's pricing

violations. In order to receive a refund, end-user applicants need only

document the volume of Sunset product they purchased during the audit

period. Meritorious applicants are eligible to receive their full

allocable share. See Shell, 17 DOE at 88,406.

Refunds in Excess of $50,000 and Other Applicants. Applicants

seeking refunds in excess of $50,000, excluding interest, will be

required to submit detailed evidence of injury. These applicants must

show that the overcharges were absorbed, not passed through to their

customers. They will therefore be unable to rely upon injury

presumptions utilized in many refined product refund cases. Id.

We do not anticipate that other categories of applicants, such as,

regulated firms, cooperatives, indirect purchasers or spot purchasers,

would have obtained products from Sunset. Such applicants may

nonetheless submit refund applications if they purchased motor gasoline

from Sunset during the audit period. Any such applicants must

demonstrate that they purchased products from Sunset during the audit

period and show they were injured as a result of their purchases to be

eligible to receive a refund in this proceeding. Regulated firms and

cooperatives are exempt from the requirement to show injury. They must,

however, show that they will pass through to their customers any

refunds they receive.

(4) How to Apply for a Refund

To apply for a refund from the Sunset settlement fund, an applicant

must submit an Application for Refund containing all of the following

information:

(1) The Applicant's name; the current name and address of the

business for which the refund is sought; the name and address during

the refund period of the business for which the refund is sought;

the taxpayer identification number; a statement specifying whether

the applicant 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.\4\ If the applicant operated under more than one name or

under a different name during the price control period, the

applicant should specify those names.

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\4\Under the Privacy Act of 1974, the submission of a social

security number by an individual applicant is voluntary. An

applicant who 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. It 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

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) The applicant should specify the source of its 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 indicating whether the applicant or a related

firm has filed, or has been authorized to file on its behalf, any

other application in this 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 firm, in this case Sunset Boulevard Car Wash, the

applicant should explain this affiliation, including the time period

in which it was affiliated. If not, a statement that the applicant

was not affiliated with the consenting firm.

(5) The statement listed below, provided it has been signed by

the 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 (Sunset Boulevard Car

Wash) and case number (LEF-0112). 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 this information to be publicly disclosed, the applicant 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 June 1, 1995, and sent

to: Sunset Boulevard Car Wash, LEF-0112, Office of Hearings and

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

Washington, DC 20585.

(5) Minimal Amount Requirement

Only claims for at least $15 in principal will be processed. This

minimum has been adopted in refined product refund proceedings because

the cost of processing claims for refunds of less than $15 outweighs

the benefits of restitution in those instances. See Mobil Oil

Corporation, 13 DOE 85,339 (1985). Using the volumetric methodology,

an applicant must have purchased at least 173 gallons of Sunset motor

gasoline in order for its claim to be considered in this proceeding.

(6) Additional Information

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.

(7) Refund Applications Filed by Representatives

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. Strict compliance with the filing requirement as specified in 10

CFR 205.283, particularly the requirement that applications and the

accompanying certification statement be signed by the applicant, will

be required.

(8) Filing Deadline

The deadline for filing an Application for Refund is June 1, 1995.

V. Second Stage Refund Procedures

Any funds that remain after all first stage claims have been

decided will be distributed in accordance with the provisions of 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 OHA, and any funds that 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:

Applications for Refund from the funds remitted to the Department

of Energy by Sunset Boulevard Car Wash, pursuant to the Remedial Order

finalized on October 22, 1980, may now be filed.

Dated: September 12, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 94-23127 Filed 9-16-94; 8:45 am]

BILLING CODE 6450-01-P