Proposed Implementation of Special Refund Procedures

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.

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SUMMARY: The Office of Hearings and Appeals (OHA) of the Department of

Energy (DOE) announces the proposed procedures for disbursement of

$3,657.84, plus accrued interest, in refined petroleum product

violation amounts obtained by the DOE pursuant to a September 30,

1981Remedial Order issued to Ed's Exxon, Case No. LEF-0078, and an

April 27, 1982 Remedial Order issued to Ron's Shell, Case No. LEF-0084.

The OHA has tentatively determined that the funds obtained from the

above firms, plus accrued interest, will be distributed to customers

who purchased gasoline from them during the following periods: August

1, 1979 through October 31, 1979 in the Ed's Exxon proceeding and

August 1, 1979 through November 13, 1981 in the Ron's Shell proceeding.

DATES AND ADDRESSES: Comments must be filed in duplicate within 30 days

of publication of this notice in the Federal Register, and should be

addressed to the Office of Hearings and Appeals, Department of Energy,

1000 Independence Ave., S.W., Washington, DC 20585. All comments should

display a reference to the appropriate case number.

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

Klurfeld, Assistant Director, Office of Hearings and Appeals, 1000

Independence Avenue, S.W., Washington, D.C. 20585,(202) 586-2094

(Mann); 586-2383 (Klurfeld).

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 to

eligible claimants $3,657.84, plus accrued interest, obtained by the

DOE pursuant to September 30, 1981 and April 27, 1982 Remedial Orders.

In the Remedial Orders, the DOE found that, during 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 tentatively determined to distribute the funds obtained

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

from identifiable purchasers of gasoline from the firms who may have

been injured by overcharges. The specific requirements which an

applicant must meet in order to receive a refund are set out in Section

III of the Proposed 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 Ed's Exxon or Ron's

Shell.

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 should not

be filed at this time. Appropriate public notice will be provided prior

to the acceptance of claims. 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

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, DC 20585.

Dated: December 14, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Names of Firms: Ed's Exxon; Ron's Shell

Date of Filing: July 20, 1993

Case Numbers: LEF-0078; LEF-0084

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 Ed's Exxon of Cotati, California, and Ron's Shell

of Danville, California (hereinafter jointly referred to as the

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

procedural regulations at 10 C.F.R. 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 C.F.R. 212.93; failed

to post and maintain the maximum lawful selling price or a proper

certification in violation of 10 C.F.R. 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 C.F.R. 210.92 and 212.93;

and/or engaged in unlawful or discriminatory business practices in

violation of 10 C.F.R. 210.62.

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\1\Ed's Exxon was issued a PRO on January 25, 1980; Ron's Shell

was issued a PRO on December 31, 1980.

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After considering and dismissing the firms' objections to the PROs,

the DOE issued final Remedial Orders. Ed's Exxon, 8 DOE 83,035 (1981);

Alameda Chevron Service, et al., 9 DOE 83,027 (1982).2 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.

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\2\A Remedial Order was issued to Ed's Exxon on September 30,

1981. A Remedial Order was issued to Ron's Shell on April 27, 1982.

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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 the 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).

We have considered the ERA's petition that we implement Subpart V

proceedings 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

We propose to 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 C.F.R. Sec. 205.282(e).

Accordingly, we propose to 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 will 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 $0.0251 for claimants

applying in the Ed's Exxon proceeding ($2,500 remitted/99,651

gallons sold), $0.0072 in the Ron's Shell proceeding ($1,157.84

remitted/160,777.9 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).

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In addition to the volumetric presumption, we will adopt a

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 Applications Filed by Representatives. 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 C.F.R.

Sec. 205.283, particularly the requirement that applications and the

accompanying certification statement be signed by the applicant.

The OHA reiterates its policy to scrutinize applications filed by

filing services closely. Applications submitted by a filing service

should contain all of the information indicated in the final Decision

and Order in this proceeding.

D. Distribution of Funds Remaining After First Stage. We propose

that 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 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:

The payments remitted to the Department of Energy by Ed's Exxon and

Ron's Shell pursuant to the Remedial Orders dated September 30, 1981

and April 27, 1982 will be distributed in accordance with the foregoing

Decision.

[FR Doc. 94-31498 Filed 12-21-94; 8:45 am]

BILLING CODE 6450-01-P