Implementation of Special Refund Procedures

DEPARTMENT OF ENERGY

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 $610,000,

plus accrued interest, in alleged crude oil overcharges obtained by the

DOE under the terms of the Consent Order entered into with J.R. Cone,

Case No. LEF-0118 (Cone). The OHA adopts the tentative determination

made in the Proposed Decision and Order, 58 FR 68,903 (December 29,

1993), that the funds obtained from Cone, plus interest accrued, will

be distributed in accordance with the DOE's Modified Statement of

Restitutionary Policy Concerning Crude Oil Overcharges, 51 FR 27899

(August 4, 1986).

DATE AND ADDRESSES: Applications for Refund from the crude oil funds

should be clearly labeled ``Application for Crude Oil Refunds'' and

should be mailed to Subpart V Crude Oil Overcharge Refunds, Office of

Hearings and Appeals, 1000 Independence Avenue SW., Washington, DC

20585. Applications for Refund must be filed in duplicate no later than

June 30, 1994. Any party who has previously filed an Application for

Refund should not file another Application for Refund from the present

crude oil funds. The previously filed crude oil applications will be

deemed filed in all crude oil proceedings as the procedures are

finalized.

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 CFR 205.282(c), notice

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

below. The Decision and Order adopts the procedures set forth in the

Proposed Decision and Order (see 58 FR 68,903 (December 29, 1993)) that

the DOE has formulated to distribute to eligible claimants $610,000,

plus accrued interest, obtained by the DOE under the terms of the

Consent Order entered into with J.R. Cone on May 14, 1993. The funds

were paid by Cone towards the settlement of alleged violations of the

DOE price and allocation regulations involving the sale of crude oil

during the period from November 1973 through February 1977. The DOE is

currently holding the funds in an interest bearing account pending

distribution.

The OHA has determined to distribute the Cone Consent Order funds

in accordance with the DOE's Modified Statement of Restitutionary

Policy Concerning Crude Oil Overcharges, 51 FR 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 will be

distributed in proportion to each state's consumption of petroleum

products during the price control period. Refunds to eligible

purchasers will be based on the volume of petroleum products they

purchased.

Applications for Refund must be postmarked no later than June 30,

1994. As we state in the Decision, any party who has previously filed

an Application for Refund in the crude oil refund proceedings should

not file another Application for Refund. The previously filed crude oil

application will be deemed filed in all crude oil proceedings as the

procedures are finalized.

Dated: April 5, 1994.

Thomas O. Mann,

Acting Director, Office of Hearings and Appeals.

Apr. 5, 1994.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Name of Firm: J.R. Cone

Date of Filing: November 16, 1993

Case Number: LEF-0118

On November 16, 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 funds which J.R. Cone

(Cone) remitted to the DOE pursuant to a Consent Order entered into

by Cone and the DOE on May 14, 1993.

On March 25, 1983, the OHA issued a Remedial Order (RO) finding

that Cone had erroneously classified crude oil produced from two oil

bearing properties as crude oil produced from stripper well

properties. On May 14, 1993, Cone and the DOE entered into a Consent

Order settling all claims arising from the RO. Pursuant to the

Consent Order, Cone has remitted $610,000 to the DOE. These funds

have been held in an interest-bearing escrow account maintained at

the Department of the Treasury pending a determination regarding

their proper distribution.

In accordance with the procedural regulations codified at 10

C.F.R. part 205, Subpart V (Subpart V), the ERA requested in its

petition that the OHA establish special refund procedures to remedy

the effects of alleged regulatory violations which were resolved by

the Consent Order. This Decision and Order sets forth the OHA's 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 for

distributing 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 the 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).

II. The Proposed Decision and Order

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

proceeding with respect to the Cone Consent Order fund and

determined that such a proceeding was appropriate. On December 20,

1993, we issued a Proposed Decision and Order (PDO) setting forth

the OHA's tentative plan to distribute this fund. See 58 Fed. Reg.

68,903 (December 29, 1993). In the PDO, we stated our intent to

adopt the DOE's standard crude oil refund procedures, as set out

below, to distribute the funds obtained through the Cone Consent

Order.

The PDO provided a period of 30 days from the date of

publication in the Federal Register for interested parties to file

comments regarding the tentative distribution process. More than 30

days has elapsed and the OHA has received no comments on the

proposed distribution process for the Consent Order funds.

Consequently, the procedures will be adopted as proposed.

III. The Refund Procedures

A. Crude Oil Refund Policy

We adopt the tentative determination of the PDO to distribute

the funds obtained with the Cone Consent Order 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%

of the crude oil funds will be remitted to the Federal government,

another 40% to the states, and up to 20% may be initially 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 calculate crude oil refunds on a per gallon (or volumetric)

basis. We obtained this figure by dividing the 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) (Shell); Mountain

Fuel Supply Co., 14 DOE  85,475 (1986) (Mountain Fuel).

B. Refund Claims

We adopt the PDO's proposed determination to use the DOE's

standard crude oil refund procedures to distribute the monies in the

Cone Consent Order fund. We have chosen to reserve 20% of the fund,

$122,000, plus accrued interest, for direct refunds to claimants in

order to ensure that sufficient funds will be available for injured

parties.

The OHA will evaluate crude oil refund claims filed in this

proceeding in a manner consistent with our previous crude oil refund

proceedings under Subpart V. See Mountain Fuel, 14 DOE at 88,869.

Claimants in this proceeding will be required to document their

purchase volumes of petroleum products and prove that they were

injured as a result of the alleged overcharges.

We adopt a presumption that the crude oil overcharges were

absorbed, rather than passed on, by applicants which were (1) end-

users of petroleum products, (2) unrelated to the petroleum

industry, and (3) not subject to the regulations promulgated under

the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C.

Secs. 751-760h (1988). Under this presumption, end-user claimants

need not submit documentation to show injury, and may become

eligible for a refund by simply documenting their purchase volumes.

See Shell, 17 DOE at 88,406.

Petroleum retailer, refiner, and reseller applicants must submit

detailed documentation of injury. They may not rely upon the injury

presumptions utilized in some refined products refund cases. Id.

These applicants may, however, use econometric evidence of the type

found in the OHA Report on Stripper Well Overcharges, 6 Fed. Energy

Guidelines  90,507 (1985). See also Petroleum Overcharge

Distribution and Restitution Act Sec. 3003(b)(2), 15 U.S.C.

Sec. 4502(b)(2) (1988). If a claimant has executed and submitted a

valid waiver pursuant to one of the escrows established by the

Stripper Well Agreement, it has waived its rights to file an

application for Subpart V crude oil refund monies. See Mid-America

Dairymen v. Herrington, 878 F.2d 1448 (Temp. Emer. Ct. App.), 3 Fed.

Energy Guidelines  26,617 (1989); In re: Department of Energy

Stripper Well Exemption Litigation, 707 F. Supp. 1267 (D. Kan.), 3

Fed. Energy Guidelines  26,613 (1987).

As we have stated in prior Decisions, a crude oil refund

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). A party that has already submitted a claim

in any other crude oil refund need not file another claim. The prior

application will be deemed to be filed in all crude oil refund

proceedings finalized to date. The DOE has established June 30,

1994, as the final deadline for filing an Application for Refund

from the crude oil funds. See 58 Fed. Reg. 26,318 (May 3, 1993). It

is the policy of the DOE to pay all crude oil refund claims at the

rate of $.0008 per gallon. While we anticipate that the applicants

that filed their claims before June 30, 1988, will receive a

supplemental refund payment, we will decide in the future whether

claimants that filed later applications should receive additional

refunds. See, e.g., Seneca Oil Co., 21 DOE  85,327 (1991). Notice

of any additional amounts available in the future will be published

in the Federal Register.

To apply for a crude oil refund, a claimant should submit an

Application for Refund containing all of the following information:

(1) Identifying information including the claimant's name,

current business address, business address during the refund period,

taxpayer identification number or social security number, a

statement indicating whether the claimant is a 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 the refund check.1 If the Applicant operated

under more than one name or under a different name during the price

control period, the Applicant should specify these names;

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\1\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, 15 U.S.C. Sec. 4502(b)(1)

(1988), 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) If the Applicant's firm is owned by another company, or owns

other companies, a list of those companies' names, addresses, and

descriptions of their relationship to the Applicant's firm;

(3) A brief description of the claimant's business and the

manner in which it used the petroleum products listed on its

Application;

(4) A statement identifying the petroleum products which the

Applicant purchased during the period from August 19, 1973, through

January 27, 1981, an annual schedule displaying the total number of

gallons of each petroleum product purchased during this refund

period, and the total number of gallons of all petroleum products

claimed on the refund application;

(5) An explanation as to how the Applicant obtained the above

mentioned purchase volumes, and, if estimates were used, a

description of the method of estimation;

(6) A statement that neither the claimant, its parent firm,

affiliates, subsidiaries, successors, nor assigns has waived any

right it may have to receive a crude oil refund (e.g. by having

executed and submitted a valid waiver accompanying a claim to any

escrow accounts established pursuant to the Stripper Well Settlement

Agreement);

(7) A statement that the Applicant has not filed any other

refund application in the Subpart V crude oil refund proceeding;

(8) If the Applicant is not an end-user, was covered by the DOE

price regulations, or is related to the petroleum industry, a

showing that the Applicant was injured by the alleged crude oil

overcharges;

(9) If the Applicant is a regulated utility or a cooperative,

certification that it will pass on the entirety of any refund

received to its customers, will notify its state utility commission,

or other regulatory agency, or membership body of the receipt of any

refund, and a brief description as to how the refund will be passed

along;

(10) The statement listed below signed by the individual

Applicant or a responsible official of the company filing the refund

application:

I swear (or affirm) that the information contained in this

application and its attachments is true 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, imprisonment, or both, pursuant to 18 U.S.C. Sec. 1001 (1988).

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 ``Application for Crude Oil Refund.'' Each Applicant must

submit an original and one copy of the Application. If the Applicant

believes that any information in its Application is confidential and

does not wish for this information to be publicly disclosed, it must

submit an original Application clearly marked ``confidential,''

containing the confidential information, and two copies of the

Application with the confidential information deleted. All refund

applications should be sent to: Subpart V Crude Oil Overcharge

Refunds, Office of Hearings and Appeals, Department of Energy, 1000

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

The filing deadline is June 30, 1994. Even though an Applicant

is not required to use any specific form for its crude oil refund

application, a suggested form has been prepared by the OHA and may

be obtained by sending a written request to the address given above.

C. Payments to the Federal Government and the States

Under the terms of the MSRP, 40% of the alleged crude oil

overcharge amounts subject to this Decision, $244,000, plus accrued

interest, will be disbursed to the Federal government and the

remaining 40%, $244,000, plus accrued interest, will be disbursed to

the states 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 (1986). 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:

(1) Applications for Refund from the funds remitted by J.R. Cone

pursuant to the Consent Order finalized between J.R. Cone and the

Department of Energy on May 14, 1993, may now be filed.

(2) All Applications submitted pursuant to paragraph (1) must be

filed in duplicate and postmarked no later than June 30, 1994.

(3) The Director of Special Accounts and Payroll, Office of

Departmental Accounting and Financial Systems Development, Office of

the Controller of the Department of Energy shall take all steps

necessary to transfer $610,000 and all interest accrued from the

Cone subaccount (Account No. 676C00208Z) pursuant to Paragraphs (4),

(5), and (6) of this Decision.

(4) The Director of Special Accounts and Payroll shall transfer

$244,000 (plus interest) of the funds obtained pursuant to Paragraph

(3) above into the subaccount denominated ``Crude Tracking-

States,'' Number 999DOE003W.

(5) The Director of Special Accounts and Payroll shall transfer

$244,000 (plus interest) of the funds obtained pursuant to Paragraph

(3) above into the subaccount denominated ``Crude Tracking-

Federal,'' Number 999DOE002W.

(6) The Director of Special Accounts and Payroll shall transfer

$122,000 (plus interest) of the funds obtained pursuant to Paragraph

(3) above into the subaccount denominated ``Crude Tracking-

Claimants 4,'' Number 999DOE010Z.

Dated: April 5, 1994.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 94-8755 Filed 4-11-94; 8:45 am]

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