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 of the Department of Energy

announces the procedures for disbursement of $14,912.58 (plus accrued

interest) obtained by the DOE under the terms of Remedial Orders issued

to Pete Aljian Chevron and Shaw & 99 Chevron. The money is being held

in escrow following the settlement of enforcement proceedings brought

by the DOE's Economic Regulatory Administration.

DATE AND ADDRESS: Applications for Refund from the remedial order funds

must be filed in duplicate and must be postmarked no later than June

13, 1994. All Applications should refer to either Case Number LEF-0089

or LEF-0090 and should be addressed to the Office of Hearings and

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

Washington, DC 20585.

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

Office of Hearings and Appeals, 1000 Independence Avenue, SW.,

Washington, DC 20585, (202) 586-2860.

SUPPLEMENTARY INFORMATION: In accordance with Sec. 205.282(c) of the

procedural regulations of the Department of Energy, 10 CFR 205.282(c),

notice is hereby given of the issuance of the Decision and Order set

forth below. The Decision relates to Remedial Orders issued to Pete

Aljian Chevron (Aljian) and Shaw & 99 Chevron (Shaw), two motor

gasoline retail outlets located in Castro Valley and Fresno,

California, respectively. The Remedial Orders found that the firms had

committed pricing violations in their sales of motor gasoline during

the periods of December 15, 1979 through May 28, 1980, and December 15,

1979 through July 7, 1980, respectively.

The Decision sets forth the procedures and standards that the

Office of Hearings and Appeals (OHA) of the DOE has formulated to

distribute funds remitted by Aljian and Shaw and being held in escrow.

The OHA has decided to accept Applications for Refund from individuals

that purchased motor gasoline from Aljian or Shaw during the respective

audit periods. Each claimant will be required to submit a listing of

its monthly purchases from Aljian and Shaw. The specific information

required in an Application for Refund is set forth in the following

Decision and Order. Applications for Refund will now be accepted

provided they are filed in duplicate and postmarked no later than 90

days after publication of this Decision and Order in the Federal

Register.

Dated: March 8, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

March 8, 1994.

Names of Firms: Pete Aljian Chevron

Shaw & 99 Chevron

Date of Filing: July 20, 1993

Case Numbers: LEF-0089, LEF-0090.

In accordance with the procedural regulations of the Department

of Energy (DOE), 10 CFR part 205, subpart V, 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

which Pete Aljian Chevron (Aljian) and Shaw & 99 Chevron (Shaw)

remitted to the DOE pursuant to a May 3, 1982 Remedial Order

Decision.

I. Background

During the periods relevant to this proceeding, Aljian and Shaw

operated Chevron-branded retail service stations located in Castro

Valley, and Fresno, California, respectively. In 1980, the ERA

audited the pricing practices of the two retailers and, as a result

of those audits, issued Proposed Remedial Orders (PROs) to the two

firms. The PROs alleged that Aljian, during the period December 15,

1979 through May 28, 1980, and Shaw, during the period December 15,

1979 through July 7, 1980, sold motor gasoline at prices in excess

of their maximum lawful selling prices, in violation of the Federal

petroleum price regulations at 10 CFR 212.93(a)(2). After

considering the firms' objections to the PROs, the DOE amended the

remedial provisions of the PROs and issued a final consolidated

Remedial Order Decision on May 3, 1982, to five retailers, including

Aljian and Shaw. Allen Union, 9 DOE  83,028 (1982). On November 22,

1982, the Federal Energy Regulatory Commission issued a consolidated

Order affirming the Aljian and Shaw Remedial Orders. Gary Pfister's

Mobil Service, 21 FERC  61,109 (1982). Aljian and Shaw have

remitted to the DOE $8,190.51 and $6,722.07, respectively, in

compliance with the Remedial Orders. The firms' payments are

currently being held in separate interest-bearing escrow accounts

pending distribution by the DOE.1

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\1\The funds were held in a non-interest bearing DOE suspense

account until September 3, 1993, when they were transferred to

separate escrow accounts.

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On December 15, 1993, we issued a Proposed Decision and Order

(PD&O) setting forth a tentative plan for the distribution of the

consent order funds. 58 FR 67403 (December 15, 1993). We stated in

the PD&O that the basic purpose of a special refund proceeding is to

make refunds in order to remedy the effects of regulatory

violations. In order to effect restitution in this proceeding, we

proposed to establish a claims procedure whereby applications for

refund would be accepted from customers who can demonstrate that

they were injured as a result of any alleged overcharges made by one

of the consent order firms during the relevant consent order period.

II. Jurisdiction and Authority

The subpart V regulations set forth general guidelines by which

the Office of Hearings and Appeals may formulate and implement 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 Office of Hearings and Appeals 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); Office of Enforcement,

8 DOE 82,597 (1981).

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

V proceedings with respect to the Aljian and Shaw Remedial Order

funds and have determined that such proceedings are appropriate.

This Decision and Order sets forth the OHA's plan to distribute

these funds.

III. Refund Procedures

The PD&O provided a 30-day period for the submission of comments

regarding our proposed refund procedures. Since more than 30 days

have elapsed and we have not received any comments regarding our

proposed refund procedures, we have determined that those procedures

should be adopted.

The distribution of refunds will take place in two stages. In

the first stage, refund monies will be refunded to those customers

who purchased motor gasoline from one of the firms during the

relevant audit period and who demonstrate that they were injured by

the overcharges of the applicable firm. Such purchasers must file

claims and document their purchases in order to be eligible for a

refund.

A. Calculation of Refunds

As in many prior special refund cases, we will adopt certain

presumptions. First, we will adopt a presumption that the

adjudicated overcharges were dispersed equally in all sales of motor

gasoline made by each firm during its audit period. The OHA has

referred to this presumption in the past as a volumetric refund

amount.

Presumptions in refund cases are specifically authorized by

applicable DOE procedural regulations. Section 205.282(e) of those

regulations states that:

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, effective and equitable manner and resolving to the

maximum extent practicable all outstanding claims. In order to do

so, the standards for evaluation of individual claims may be based

upon appropriate presumptions.

10 CFR 205.282(e). The presumptions we will adopt in this case

are used to permit claimants to participate in the refund process

without incurring disproportionate expenses, and to enable the OHA

to consider the refund applications in the most efficient way

possible in view of the limited resources available.

The volumetric refund presumption assumes that the overcharges

were spread equally over all gallons of product marketed by a

particular firm. In the absence of better information, this

assumption is sound because the DOE price regulations generally

required a regulated firm to account for increased costs on a firm-

wide basis in determining its prices. However, we also recognize

that the impact of a firm's pricing practices on an individual

purchaser could have been greater, and any purchaser is allowed to

file a refund application based on a claim that it suffered a

disproportionate share of the overcharges. See, e.g., Amtel, Inc.,

12 DOE 85,073 at 88,233-34 (1984); Sid Richardson Carbon and

Gasoline Co./Siouxland Propane Co., 12 DOE 85,054 at 88,164 (1984).

In each of the cases being considered here, the information

available in the ERA audit files is insufficient to base refunds on

the amount each individual customer was overcharged.\2\ We therefore

shall use the volumetric method to allocate the Remedial Order fund

in each case. An applicant's allocable share will be equal to the

number of gallons purchased from Aljian or Shaw during the relevant

audit period multiplied by the per gallon volumetric refund amount.

In the present case, the per gallon refund amount for Aljian

customers is $0.0340. We derived this figure by dividing the amount

of the Remedial Order funds remitted by Aljian, $8,190.51, by the

240,777 gallons which the firm sold during the period December 15,

1979 through May 28, 1980. The per gallon refund amount for Shaw

customers is $0.0202, which we derived by dividing the amount it

remitted $6,722.07, by the 333,505 gallons that it sold during the

period December 15, 1979 through July 7, 1980. Any firm 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.

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\2\The ERA audit files do not identify any customers of Aljian

or Shaw.

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The relevant information for the two proceedings is summarized

below.

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Volumetric

Firm Amount Audit period refund

amount

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Pete Aljian Chevron, $8,190.51 December 15, 1979-May $0.0340

Castro Valley, CA. 28, 1980.

Shaw & 99 Chevron, 6,722.07 December 15, 1979-July 0.0202

Fresno, CA. 7, 1980.

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B. Presumption of Injury

Since both firms were small retailers, we presume that all, or

virtually all, of their sales were to end-users. In accordance with

prior Subpart V proceedings, we shall adopt the presumption that an

end-user (ultimate consumer) of gasoline purchased from Aljian and

Shaw whose business is unrelated to the petroleum industry was

injured by the overcharges set forth in the Remedial Order Decision.

See, e.g., Texas Oil and Gas Corp., 12 DOE 85,069 at 88,209 (1984).

Unlike regulated firms in the petroleum industry, members of this

group generally were not subject to price controls during the

periods covered by the Remedial Orders, 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. Therefore, end-users of gasoline purchased from

Aljian and Shaw need only document their purchase volumes from

Aljian and Shaw during the applicable period covered by the Remedial

Orders to make a sufficient showing that they were injured by the

overcharges.3

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\3\If a reseller or retailer should file a refund application in

this proceeding, we will utilize the standards and appropriate

presumptions established in previous refined product refund

proceedings. See, e.g., Shell Oil Co., 18 DOE 85,492 at 88,799

(1989).

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C. Minimum Refund Amount

We will establish a minimum amount of $15 for refund claims. We

have found through our experience in prior refund cases that the

cost of processing claims in which refunds are sought for amounts

less than $15 outweighs the benefits of restitution in those

situations.4 See, e.g., Uban Oil Co., 9 DOE 82,541 at 85,225

(1982); see also 10 CFR Sec. 205.286(b).

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\4\In order to be eligible for the minimum refund, applicants in

the Aljian and Shaw proceedings will have to have purchased during

the relevant audit period 442 and 743 gallons, respectively.

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D. Refund Application Requirements

All Applications for Refund must be filed in duplicate and must

be postmarked no later than 90 days after publication of this

Decision and Order in the Federal Register. A copy of each

Application will be available for public inspection in the Public

Reference Room of the Office of Hearings and Appeals, Forrestal

Building, Room 1E-234, 1000 Independence Avenue, S.W., Washington,

D.C. Any applicant that believes that its Application contains

confidential information must so indicate on the first page of its

Application and submit two additional copies of its Application from

which the material alleged to be confidential has been deleted,

together with a statement specifying why the information is alleged

to be privileged or confidential. The following information should

be included in all Applications for Refund:

1. Identifying information including the claimant's name,

current business address, business address during the refund period,

taxpayer identification number,5 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 any additional

information, and the name and address of the person who should

receive any refund check;

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\5\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. The applicant's use of gasoline purchased from Pete Aljian

Chevron or Shaw & 99 Chevron: e.g., consumer (end-user), retailer,

or reseller;

3. A monthly purchase schedule covering the period December 15,

1979 through May 28, 1980, for Aljian and December 15, 1979 through

July 7, 1980 for Shaw. The applicant should specify the source of

this gallonage information;

4. A statement as to whether the applicant or a related firm has

filed, or has authorized any individual to file on its behalf, any

other application in the Aljian or Shaw refund proceedings. If so,

an explanation of the circumstances of the other filing or

authorization should be submitted;

5. If the applicant is or was in any way affiliated with Aljian

or Shaw, it should explain this affiliation, including the time

period in which it was affiliated;

6. A statement as to whether the ownership of the applicant's

firm changed during or since the refund period. If an ownership

change occurred, the applicant should list the names, addresses, and

telephone numbers of any prior or subsequent owners. The applicant

should also provide copies of any relevant Purchase and Sale

Agreements, if available. If such written documents are not

available, the applicant should submit a description of the

ownership change, including the year of the sale and the type of

sale (e.g., sale of corporate stock, or sale of company assets);

7. A statement as to whether the applicant has ever been a party

in a DOE enforcement action or a private Section 210 action. If so,

an explanation of the case and copies of relevant documents should

also be provided.

8. The statement set forth below signed by the individual

applicant or a responsible official of the firm filing the refund

application:

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

accurate 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

labelled ``Aljian Special Refund Proceeding, Case No. LEF-0089'' or

``Shaw Special Refund Proceeding, Case No. LEF-0090.'' Applications

should be sent to: Office of Hearings and Appeals, Department of

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

E. Distribution of Funds Remaining After First Stage

Any funds that remain after all first stage claims have been

decided 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 portion of the

Aljian and Shaw 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 to the

Department of Energy by Pete Aljian Chevron and Shaw & 99 Chevron

will be distributed in accordance with the foregoing Decision.

(2) All Applications must be postmarked no later than 90 days

after publication of this Decision and Order in the Federal

Register.

Dated: March 8, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 94-5990 Filed 3-14-94; 8:45 am]

BILLING CODE 6450-01-P