Proposed Consent Order With Occidental Petroleum Corporation

DEPARTMENT OF ENERGY

Office of General Counsel

Proposed Consent Order With Occidental Petroleum Corporation

AGENCY: Department of Energy.

ACTION: Notice of proposed consent order and opportunity for public

comment.

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SUMMARY: The Department of Energy (DOE) announces a proposed Consent

Order between the DOE and Occidental Petroleum Corporation

(Occidental), including its wholly owned subsidiary OXY USA Inc. (OXY)

which was formerly Cities Service Oil and Gas Corporation, successor in

interest to Cities Service Company (Cities).

The agreement proposes to resolve matters relating to Occidental's

compliance with the federal petroleum price and allocation regulations

for the period October 1, 1979 through January 27, 1981. If this

Consent Order is made final, Occidental will pay to the DOE two hundred

seventy five million dollars ($275,000,000). Within thirty (30) days of

the effective date of the Consent Order, Occidental shall make an

initial payment to the DOE of one hundred million dollars

($100,000,000),

[[Page 35187]]

and thereafter five (5) equal annual payments of thirty-five million

dollars ($35,000,000), plus interest at the rate of seven and six-

tenths percent (7.6%), compounded quarterly, on the unpaid balance.

This Consent Order would not affect the Consent Order between Cities

and DOE dated October 31, 1979, which, except as otherwise provided

therein, covered the period August 19, 1973 through September 30, 1979.

To distribute the moneys collected under the Consent Order, DOE's

Office of Hearings and Appeals (OHA) will be petitioned to implement

Special Refund Procedures pursuant to 10 CFR Part 205, Subpart V, in

which proceedings any persons who claim to have suffered injury from

the alleged overcharges would have the opportunity to submit claims for

payment.

Pursuant to 10 CFR 205.199J, DOE will receive written comments on

the proposed Consent Order for thirty (30) days following publication

of this Notice and will consider all comments received from the public

in determining whether to accept the settlement and issue a final

Order, renegotiate the agreement and issue a modified agreement as a

final Order, or reject the settlement. DOE's final decision will be

published in the Federal Register, along with an analysis of

significant written comments in response to this Notice, as well as any

other considerations that were relevant to the final decision.

DATES: Comments must be received by August 7, 1995.

ADDRESSES: Interested parties are invited to submit written comments

concerning this proposed Consent Order to: Occidental Consent Order

Comments, U.S. Department of Energy, Office of General Counsel, GC-43,

1000 Independence Avenue, SW, Washington, DC 20585. Any information or

data considered confidential by the person submitting it must be

identified as such in accordance with the provisions of 10 CFR

205.9(f).

FOR FURTHER INFORMATION CONTACT: Betty L. Dingle-Brown, Department of

Energy, GC-43, 1000 Independence Avenue, SW, Washington, DC 20585,

(202) 523-3011.

SUPPLEMENTARY INFORMATION:

I. Resolution of Regulatory Issues

II. Determination of Reasonable Settlement Amount

III. Terms and Conditions of the Consent Order

I. Resolution of Regulatory Issues

Occidental is a successor in interest to Cities, which was a

refiner, producer and reseller subject to the DOE's audit jurisdiction

to determine compliance with the Federal Petroleum Price and Allocation

Regulations. During the period covered by this proposed Order (October

1, 1979 through January 27, 1981),1 Cities engaged in, among other

things, the production, importation, purchase, sale, exchange and

refining of crude oil, and the purchase and sale of refined product. As

a result of its audit, the DOE raised certain issues with respect to 91

reciprocal purchases and sales of crude oil in which Cities sold price-

controlled crude oil to resellers and concurrently purchased price

exempt-certified crude oil at a discount from the market price. These

transactions and OXY's potential liability arising therefrom constitute

the central issue which would be resolved by the proposed Order.

\1\ In a previous Consent Order dated October 31, 1979, and

generally covering the period August 19, 1973 through September 30,

1979, Cities agreed to price rollback, refund and bank reduction

remedies totaling $177 million.

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In a Proposed Remedial Order issued in March 1985, DOE sought to

hold OXY liable for overcharges in these transactions, seeking $263.8

million plus prejudgment interest, on the ground that Cities violated

DOE's crude oil resale price rule applicable to refiners. DOE prevailed

at the initial stage before the OHA. Cities Service Oil and Gas Corp.,

17 DOE para. 83,021 (1988). Five years later, the OHA decision was

vacated by the Federal Energy Regulatory Commission (FERC), to which

Cities had appealed. Cities Service Oil and Gas Corp., 65 FERC para.

61,403 (1993), reconsideration denied, 66 FERC para. 61,222 (1994). The

relevant statute, 42 U.S.C. 7193, provides that FERC's decision in such

a case is a final action by DOE.2

\2\ Two groups of intervenors, however, attempted to appeal

FERC's decision. Alabama v. FERC, CA No. 94-0347 (D.D.C.), and

Consolidated Edison Co. of New York, Inc. v. O'Leary, CA No. 94-0352

(D.D.C.). On June 8, 1995, the court dismissed both suits based on

the plaintiffs' lack of standing. Plaintiffs in the second case have

noticed their appeal.

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On February 21, 1992, pursuant to OHA's remand in the 1988 Remedial

Order and while Cities' appeal to FERC was pending, DOE issued a

Revised Proposed Remedial Order (RPRO) to OXY under an alternative

theory of liability. The RPRO charged that in 82 reciprocal crude oil

transactions between October 1979 and December 1980, Cities violated

DOE's Entitlements Program reporting regulations: (1) That the

transactions served no legitmate business or economic purpose and were

therefore legally ineffective in transforming Cities' controlled crude

oil into entitlements purchase-exempt crude; and (2) that Cities had no

plausible basis for its professed belief that entitlements-exempt uses,

rather than miscertification, explained the deep discounts Cities

obtained on the exempt-certified crude. OXY USA Inc., OHA Case No. LRO-

0003. In the remand proceeding, DOE is seeking $253.767 million in

refunds, plus prejudgment interest which would currently total $915.533

million.

A tentative settlement reached between DOE and Occidental in 1989

was rejected by the DOE in 1991 upon consideration of the comments and

testimony submitted in the course of the public process.3 Attempts

to renegotiate or modify the proposed Order were unavailing, and later

efforts conducted pursuant to the FERC's settlement procedures also led

to an impasse. More recently, in January 1995, DOE and Occidental,

along with intervenor parties, agreed to attempt a structured

mediation. The settlement proposed today represents the product of that

mediation process.

\3\ 54 FR. 22469 (May 24, 1989); 54 FR. 35371 (Aug. 25, 1989);

56 FR. 21361 (May 8, 1991).

II. Determination of Reasonable Settlement Amount

DOE has preliminarily agreed to the settlement terms after

considering the factual and legal issues in dispute in the litigation,

assessing the litigation risks associated with establishing the alleged

violations, and considering the benefit to the public from prompt

receipt of the benefits from settlement of the extensive number of

legal and factual issues that would require intensive additional

litigation to resolve. DOE also considered the litigation risk factors

generally present in all regulatory disputes in this program based on

its current legal framework. The total amount of OXY's potential

liability resulting from the subject transactions could only be

recovered by the government if, in litigation, all issues were resolved

in the DOE's favor. The risks inherent in such litigation make such an

outcome uncertain.

Based on consideration of all of these factors, DOE's preliminary

determination is that Occidental's agreement to the terms of the

proposed Consent Order constitutes a settlement which is in the public

interest.

III. Terms and Conditions of the Consent Order

If the Consent Order is made final, Occidental Petroleum and OXY

will be jointly and severally liable for the following payments: $100

million within 30 days of the Consent Order

[[Page 35188]]

becoming effective, and five subsequent annual installments of $35

million plus interest on the unpaid balances at 7.6% per annum,

compounded quarterly. In all, the principal payments will be $275

million, and the interest will total approximately $41 million.

Payments which are more than fifteen days late will accrue interest at

the rate of 15.2% per annum. The DOE's Office of Hearings and Appeals

will be petitioned to implement Special Refund Procedures for

distribution of the settlement funds pursuant to 10 CFR part 205,

subpart V.

Upon becoming effective, DOE and Occidental would file appropriate

pleadings to withdraw all claims and dismiss with prejudice all

proceedings covered by the Consent Order, including the case pending

before the OHA.

The agreement does not affect any rights Occidental may have in

connection with the funds at issue in a specific refund proceeding

pending before the DOE's Office of Hearings and Appeals, Enron Corp./

OXY USA Inc., OHA Case No. RF340-00112, or in the exception proceeding

originally styled The 341 Tract Unit of the Citronelle Field/OXY USA

Inc., OHA Case No. RF345-00021 and now under review in Amoco Oil Co.,

et al. v. DOE, CA No. H-94-2423 (S.D. Tex.) and in R. H. Stechman, et

al. v. DOE, CA No. 94-0887-A-M (S.D. Ala.).

If the agreement is made final, Occidental will withdraw certain

requests and portions of other requests made by its attorneys under the

Freedom of Information Act. Occidental and DOE mutually release each

other from claims and actions arising under the subject matters covered

by the proposed Consent Order. Also, the proposed Order does not affect

the right of any other party to take action against Occidental, or of

Occidental or the DOE to take action against any other party. Finally,

Occidental may withdraw from the agreement if the settlement is not

made final by the one hundred twentieth (120th) day following

execution.

Submission of Written Comments

The proposed Consent Order cannot be made effective until the

conclusion of the public review process, of which this Notice is a

part.

All comments received by the thirtieth (30th) day following

publication of this Notice in the Federal Register will be considered

before determining whether to adopt the proposed Consent Order as a

final Order. Any modifications of the proposed Consent Order which

significantly alter its terms or impact will be published for

additional comments. If, after considering the comments it has

received, DOE determines to issue the proposed Consent Order as a final

Order, the proposed Order will be made final and effective by

publication of a Notice in the Federal Register.

Issued in Washington, DC, on June 29, 1995.

Eric J. Fygi,

Deputy General Counsel.

I. Introduction

101. This Consent Order is entered into between Occidental

Petroleum Corporation (``Occidental''), including its wholly owned

subsidiary OXY USA Inc. (``OXY'') (formerly Cities Service Oil and Gas

Corporation, successor in interest to Cities Service Company (``Cities

Service'')), and the United States Department of Energy (``DOE'').

Except as otherwise provided herein, this Consent Order settles and

finally resolves all civil and administrative claims and disputes,

whether or not heretofore asserted, between the DOE, as hereinafter

defined, and Occidental, as hereinafter defined, relating to

Occidental's compliance with the federal petroleum price and allocation

regulations, as hereinafter defined, during the period October 1, 1979,

through January 27, 1981 (all the matters settled and resolved by this

Consent Order are referred to hereinafter as ``the matters covered by

this Consent Order''). This Consent Order does not affect the Consent

Order between Cities Service and DOE dated October 31, 1979, which,

except as otherwise provided therein, covered the period August 19,

1973, through September 30, 1979.

II. Jurisdiction, Regulatory Authority and Definitions

201. This Consent Order is entered into by the DOE pursuant to the

authority conferred upon it by Sections 301 and 503 of the Department

of Energy Organization Act (``DOE Act''), 42 U.S.C. 7151 and 7193,

Executive Order No. 12009, 42 FR 46267 (1977); Executive Order No.

12038, 43 FR 4957 (1978); and 10 CFR 205.l99J.

202. For purposes of this Consent Order, the phrase ``federal

petroleum price and allocation regulations'' means all statutory

requirements and administrative regulations and orders regarding the

pricing and allocation of crude oil, refined petroleum products,

natural gas liquids, and natural gas liquid products, including the

entitlements and mandatory oil import programs, administered by the

DOE. The federal petroleum price and allocation regulations include

(without limitation) the pricing, allocation, reporting, certification,

and recordkeeping requirements imposed by or under the Economic

Stabilization Act of 1970, the Emergency Petroleum Allocation Act of

1973, the Federal Energy Administration Act of 1974, the DOE Act, any

and all amendments to said acts, Presidential Proclamation 3279, all

applicable DOE regulations codified in 6 CFR parts 130 and 150 and 10

CFR parts 205, 210, 211, 212, and 213, and all rules, rulings,

guidelines, interpretations, clarifications, manuals, decisions,

orders, notices, forms, and subpoenas relating to the pricing and

allocation of petroleum products. The provisions of 10 CFR 205.l99J and

the definitions under the federal petroleum price and allocation

regulations shall apply to this Consent Order except to the extent

inconsistent herewith. Reference herein to ``DOE'' includes, besides

the Department of Energy, the Cost of Living Council, the Federal

Energy Office, the Federal Energy Administration, the Office of Special

Counsel, the Economic Regulatory Administration and all agencies

succeeding to the DOE's authority to administer or enforce the federal

petroleum price and allocation regulations. References in this Consent

Order to ``Occidental'' shall include: (1) Occidental Petroleum

Corporation, its subsidiaries and affiliates, and its and their

predecessors, including Cities Service Company and Cities Service Oil

and Gas Corporation, and their subsidiaries and affiliates, (2) all of

Occidental's petroleum-related activities, whether as a refiner,

producer, operator, working interest or royalty interest owner,

reseller, retailer, natural gas processor, or otherwise, and (3)

Occidental's present and former directors, officers and employees.

III. Facts

The stipulated facts upon which this Consent Order is based are as

follows:

301. During the period covered by this Consent Order, Occidental

was a ``refiner'', ``producer'' and ``reseller'' as those terms are

defined in the federal petroleum price and allocation regulations and

was subject to the jurisdiction of the DOE.

302. On October 31, 1979, Cities Service and the DOE entered into a

Consent Order which settled all claims and disputes against Cities

Service by the DOE, except as otherwise provided therein, for the

period August 19, 1973, through September 30, 1979, with respect to the

statutory and regulatory petroleum programs administered and

[[Page 35189]]

enforced by the DOE and its predecessor agencies.

303. Following the 1979 Consent Order, the DOE audited Cities

Service's compliance with the federal petroleum price and allocation

regulations for the period after September 30, 1979. As a result, the

DOE raised certain issues with respect to certain related purchases and

sales of crude oil in which Cities Service sold price-controlled crude

oil to resellers and purchased exempt-certified crude oil from those

resellers. The DOE initiated formal enforcement action alleging that

these transactions violated certain provisions of the federal petroleum

price and allocation regulations. Occidental maintains, however, that

Cities Service's conduct with respect to these transactions was in all

respects lawful and in accordance with the federal petroleum price and

allocation regulations. The DOE and Occidental have each asserted its

belief that its respective legal and factual positions regarding such

transactions are meritorious. These positions were emphasized in the

intensive review and exchange of information conducted during the

audit, during litigation of those issues, and during the settlement

negotiation process. Neither DOE nor Occidental disavows any position

taken with respect to such matters. However, in order to avoid the

expense of further protracted and complex litigation and the disruption

of its orderly business functions, Occidental has agreed to enter into

this Consent Order, which, among other things, resolves both the

principal and interest component of the claims that the DOE has

asserted against Cities Service and/or Occidental in connection with

the above-described transactions. The DOE believes this Consent Order

constitutes a satisfactory resolution of the matters covered herein and

is in the public interest.

IV. Remedial Provisions

401. In full and final settlement of all matters covered by this

Consent Order and in lieu of all other remedies which have been or

might be sought by the DOE against Occidental for such matters under 10

CFR 205.1991 or otherwise, Occidental and OXY shall be jointly and

severally liable to pay to the DOE two hundred seventy-five million

dollars ($275,000,000.00), plus interest, in the manner specified in

paragraphs 402, 403, 404, and 405.

402. On or before the thirtieth (30th) day following the Effective

Date of this Consent Order, either Occidental or OXY shall make an

initial payment to the DOE of one hundred million dollars

($100,000,000.00). The date of such payment is designated, for purposes

of this Consent Order, as the Initial Payment Date.

403. On or before each of the first five anniversaries of the

Initial Payment Date, either Occidental or OXY shall pay to DOE an

amount equal to thirty-five million dollars ($35,000,000.00), plus

interest at the rate of seven and six-tenths percent (7.6%), compounded

quarterly, accrued on such payment from the Initial Payment Date to the

date of such payment. If any anniversary of the Initial Payment Date is

not a business day, the payment shall be due on the first business day

following such anniversary.

404. Payments received after the due date shall include additional

interest, calculated at the rate of 7.6 percent per annum for the first

fifteen (15) days after the due date and 15.2 percent per annum

thereafter.

405. The payments pursuant to paragraphs 402 through 404 shall be

made by wire transfer in accordance with instructions furnished to

Occidental and OXY by the DOE in a timely manner.

406. Inasmuch as this Consent Order settles both the principal and

interest portions of all claims made by the DOE against Occidental, the

principal portion of the payments made pursuant to paragraphs 402

through 404 shall be deemed to be a payment of principal and interest

in the same ratio that the principal portion of the DOE's claim in the

proceeding styled In the Matter of OXY USA Inc., Case No. LRO-0003,

currently pending before the Office of Hearings and Appeals (``OHA''),

bears to the interest portion of the DOE's claim in that case as of the

Effective Date.

407. Payments made pursuant to this Consent Order shall be

distributed by the DOE pursuant to the special refund procedures

prescribed by 10 CFR Part 205, subpart V.

V. Issues Resolved

501. All pending and potential civil and administrative claims,

whether or not known, demands, liabilities, causes of action or other

proceedings by the DOE against Occidental regarding Occidental's

compliance with and obligations under the federal petroleum price and

allocation regulations during the period covered by this Consent Order,

whether or not heretofore raised by an issue letter, Notice of Probable

Violation, Notice of Proposed Disallowance, Proposed Remedial Order,

Remedial Order, actions in court or otherwise, are resolved,

extinguished and released as to Occidental by this Consent Order. This

Consent Order, however, does not resolve, extinguish, release or

otherwise affect DOE's claims against any other party.

502. (a) Except as otherwise provided herein, compliance by

Occidental with this Consent Order shall be deemed by the DOE to

constitute full compliance for administrative and civil purposes with

all federal petroleum price and allocation regulations for matters

covered by this Consent Order. In consideration for performance as

required under this Consent Order by Occidental, the DOE hereby

releases Occidental completely and for all purposes from all

administrative and civil judicial claims, demands, liabilities or

causes of action, including, without limitation, claims for civil

penalties that the DOE has asserted or might otherwise be able to

assert against Occidental before or after the date of this Consent

Order for alleged violations of the federal petroleum price and

allocation regulations with respect to matters covered by this Consent

Order. The DOE will not initiate or prosecute any such administrative

or civil judicial matter against Occidental or cause or refer any such

matter to be initiated or prosecuted, nor will the DOE or its

successors directly or indirectly aid in the initiation of any such

administrative or civil judicial matter against Occidental or

participate voluntarily in the prosecution of such actions. The DOE

will not assert voluntarily in any administrative or civil judicial

proceeding that Occidental has violated the federal petroleum price and

allocation regulations with respect to the matters covered by this

Consent Order or otherwise take any action with respect to Occidental

in derogation of this Consent Order. However, nothing contained herein

shall preclude the DOE from defending the validity of the federal

petroleum price and allocation regulations.

(b) This Consent Order settles and finally resolves all aspects of

Occidental's potential liability to the DOE under the federal petroleum

price and allocation regulations, including but not limited to its

capacity as an operator or working interest or royalty interest owner

of a crude oil producing property. In addition, if Occidental was the

operator of a property that produced crude oil for all or part of the

period covered by this Consent Order, the DOE shall not initiate or

prosecute any enforcement action against any person for noncompliance

with the federal petroleum price and allocation regulations during such

period relative to such property. Otherwise, the DOE reserves the right

to initiate and prosecute enforcement actions against any person other

than Occidental for

[[Page 35190]]

noncompliance with the federal petroleum price and allocation

regulations, including suits against operators for overcharges for

crude oil when Occidental is a working interest or royalty interest

owner in such crude oil production. In that connection, Occidental and

the DOE agree that the amount paid to the DOE pursuant to this Consent

Order is not attributable to Occidental's activities as a working

interest or royalty interest owner on properties on which it is not the

operator. Furthermore, Occidental and the DOE agree that the Consent

Order and the payments hereunder do not resolve, reduce or release the

liability of any other person for violations on properties of which

(but only for the times during which) Occidental is or was a working

interest or royalty interest owner (and not the operator) or affect any

rights or obligations between Occidental and the operator or any other

working interest or royalty interest owner.

(c) The DOE will not seek or recommend any criminal fines or

penalties based on information or evidence presently in its possession

for the matters covered by this Consent Order, provided, however, that

nothing in this Consent Order precludes the DOE from (1) seeking or

recommending such criminal fines or penalties if information

subsequently coming to its attention indicates, either by itself or in

combination with information or evidence presently known to DOE, that a

criminal violation may have occurred, or (2) otherwise complying with

its obligations under law with regard to forwarding information of

possible criminal violations of law to appropriate authorities. Nothing

contained herein may be construed as a bar, estoppel or defense against

any criminal or civil action brought by an agency of the United States

other than the DOE under (i) Section 210 of the Economic Stabilization

Act of 1970 or (ii) any statute or regulation other than the federal

petroleum price and allocation regulations. Finally, this Consent Order

does not prejudice the rights of any third party or Occidental in any

private action, including an action for contribution by or against

Occidental.

(d) Occidental releases the DOE completely and for all purposes

from all administrative and civil judicial claims, liabilities or

causes of action that Occidental has asserted or may otherwise be able

to assert against the DOE relating to the DOE's administration of the

federal petroleum price and allocation regulations, except that nothing

herein is intended to affect in any way any rights Occidental may have

to receive a portion of the funds at issue in (1) the proceeding

originally styled The 341 Tract Unit of the Citronelle Field/OXY USA

Inc., OHA Case No. RF345-00021, and now under review in Amoco Oil Co.,

et al. v. DOE, Civil Action No. H-94-2423 (S.D. Tex., filed July 15,

1994), and R.H. Stechmann, et al. v. DOE, Civil Action No. 94-0887-A-M

(S.D. Ala., filed Nov. 17, 1994), and (2) the proceeding pending before

OHA styled Enron Corp./OXY USA Inc., OHA Case No. RF340-00112. However,

neither this release nor any other provision of this Consent Order

precludes Occidental from asserting any factual or legal position or

argument as a defense to any action, claim, or proceeding brought by

the DOE, the United States, or any agency of the United States. Nor

does it preclude Occidental from asserting a defense, counterclaim or

offset to any action, claim or proceeding brought by any other person.

(e) Nothing in this Consent Order shall affect any rights

Occidental may have to challenge the DOE's failure or refusal to

produce documents in response to requests therefor that have been or

may in the future be made by Occidental or its attorneys pursuant to

the Freedom of Information Act, 5 U.S.C. 502, et seq. (``FOIA''),

except that Occidental hereby withdraws and waives its rights to have

documents produced in response to the following requests: (1) The June

20, 1988 request submitted by Phillips, Nizer, Benjamin, Krim & Ballon

(Request No. 8872206R); (2) paragraph 2 of the March 22, 1993 request

submitted by Skadden, Arps, Slate, Meagher & Flom (``Skadden'')

(Request No. 93032402R); (3) paragraphs 1, 3-8, 13-15 and 17-18 of the

June 3, 1993 request submitted by Skadden (Request No. 93060803RG); (4)

the October 29, 1993 request submitted by Skadden (Request No.

93110217R); (5) the January 21, 1994 request submitted by Skadden

(Request No. 94012510X); and (6) the two September 19, 1994 requests

submitted by Skadden (both designated Request No. 94092001GC).

503. (a) Within five (5) days after the execution of the Consent

Order by both parties, the DOE and Occidental shall jointly file

written notification of the fact of such execution to the OHA. In

addition, if, by September 8, 1995, this Consent Order has neither

become effective nor has been withdrawn pursuant to Article IX of this

Consent Order, DOE and Occidental shall jointly file with the OHA a

request that OHA stay or otherwise defer consideration of all further

action in the proceeding styled In the Matter of OXY USA Inc., Case No.

LRO-0003, until such time as the Consent Order has become effective or

been withdrawn pursuant to Article IX. In addition, in the event that

the plaintiffs in the actions in the United States District Court for

the District of the District of Columbia styled State of Alabama, et

al. v. Federal Energy Regulatory Commission, et al., Civil Action No.

94-0347-HHG, and Consolidated Edison Co. of New York, Inc., et al. v.

Hazel R. O'Leary, et al., Civil Action No. 94-0352-HHG, take an appeal

prior to the Effective Date of this Consent Order from the decision

filed by that court on June 8, 1995 dismissing their complaints, the

DOE and Occidental shall, within fifteen (15) days after the filing of

such appeal or by July 7, 1995, whichever is later, jointly file with

the appellate court or courts written notification that this Consent

Order has been executed, which notice shall request that further

proceedings on the appeal be suspended until such time as this Consent

Order has become effective or has been withdrawn pursuant to Article IX

of this Consent Order.

(b) Within fifteen (15) days after the Effective Date of this

Consent Order, Occidental and the DOE shall file or cause to be filed

appropriate pleadings and will take all other steps necessary to

withdraw all claims and dismiss with prejudice all proceedings covered

by this Consent Order then pending before OHA or any other

administrative tribunal, and to dismiss with prejudice any court

proceeding then pending involving an appeal from or seeking review of a

decision by the OHA, the Federal Energy Regulatory Commission

(``FERC''), a federal district court or a federal court of appeals in

any such proceedings. With respect to the court cases referred to in

subparagraph (a) above, the requests to dismiss shall, in addition to

other grounds for dismissal that might be applicable, recite that the

underlying claim that was the subject of the FERC orders under review

in those cases has been fully compromised and released by this Consent

Order.

504. Execution of this Consent Order constitutes neither an

admission by Occidental nor a finding by the DOE of any violation by

Occidental of any statute or regulation. The DOE has determined that it

is not appropriate to seek to impose civil penalties for the matters

covered by this Consent Order, and the DOE will not seek any such civil

penalties. None of the payments or expenditures made by Occidental or

OXY pursuant to this Consent Order are to be considered for any purpose

as penalties, fines, or forfeitures or as settlement of any potential

liability for penalties, fines or forfeitures.

[[Page 35191]]

505. Notwithstanding any other provision herein, with respect to

the matters covered by this Consent Order, the DOE reserves the right

to initiate an enforcement proceeding or to seek appropriate penalties

for any newly discovered regulatory violations committed by Occidental,

but only if Occidental has knowingly concealed material facts relating

to such violations. The DOE also reserves the right to seek appropriate

judicial remedies, other than full rescission of this Consent Order,

for any knowing misrepresentation of fact material to this Consent

Order made by Occidental during the course of the audit or the

negotiations that preceded this Consent Order.

VI. Recordkeeping, Reporting and Confidentiality

601. Occidental shall maintain such records as are necessary to

demonstrate compliance with the terms of this Consent Order. Except for

such records, Occidental is relieved of its obligation to comply with

the recordkeeping requirements of the federal petroleum price and

allocation regulations relating to the matters settled by this Consent

Order.

602. Occidental will not be subject to any audit requests, report

orders, subpoenas, or other administrative discovery by DOE relating to

Occidental's activities subject to such regulations relating to the

matters settled by this Consent Order.

603. The DOE shall treat all information provided to it by

Occidental pursuant to negotiations which were conducted with respect

to this Consent Order as confidential. Nothing herein shall alter or

modify in any way the parties' obligations regarding confidentiality

set forth in that Mediation Agreement between the DOE, Occidental and

other parties entered into by the DOE and Occidental on or about

January 13, 1995. Nor shall anything herein be deemed to waive or

prejudice any right Occidental may have independent of this Consent

Order or such Mediation Agreement regarding the disclosure of

confidential information.

VII. Contractual Undertaking

701. It is the understanding and express intention of Occidental

and the DOE that this Consent Order constitutes a legally enforceable

contractual undertaking that is binding on the parties and their

successors and assigns. Notwithstanding any other provision herein,

Occidental (and its successors and assigns) and the DOE agree that the

sole and exclusive remedy for a breach of this Consent Order shall be

the filing of a civil action in an appropriate United States district

court, and the DOE also reserves the right to seek appropriate

penalties and interest for any failure to comply with the terms of this

Consent Order. The DOE will undertake the defense of the Consent Order,

as made effective, in response to any litigation challenging the

Consent Order's validity in which the DOE, the FERC or any of their

officials or employees is named as a party. Occidental agrees to

cooperate with the DOE in the defense of any such challenge. Nothing in

this Consent Order shall be construed as preventing Occidental from

also participating as a party in such defense.

VIII. Final Order

801. Upon becoming effective, this Consent Order shall be a final

order of the DOE having the same force and effect as a remedial order

issued pursuant to Section 503 of the DOE Act, 42 U.S.C. 7193, and 10

CFR 2O5.l99B. Occidental hereby waives its right to administrative or

judicial review of this Order, but Occidental reserves the right to

participate in any such review initiated by a third party.

IX. Effective Date

901. This Consent Order shall become effective as a final order of

the DOE on the date that notice to that effect is published in the

Federal Register (the ``Effective Date''). Prior to that date, the DOE

will publish notice in the Federal Register that it proposes to make

this Consent Order final and, in that notice, will provide not less

than thirty (30) days for members of the public to submit written

comments. The DOE will consider all written comments in deciding

whether to adopt the Consent Order as a final order, to withdraw

agreement to the Consent Order, or to attempt to renegotiate the terms

of the Consent Order.

902. Until the Effective Date, the DOE reserves the right to

withdraw consent to this Consent Order by written notice to Occidental,

in which event this Consent Order shall be null and void. If this

Consent Order is not made effective on or before the one hundred

twentieth (120th) day following execution by Occidental, Occidental

may, at any time thereafter until the Effective Date, withdraw its

agreement to this Consent Order by written notice to the DOE, in which

event this Consent Order shall be null and void.

I, the undersigned, a duly authorized representative of

Occidental Petroleum Corporation and OXY USA Inc., hereby agree to

and accept on behalf of Occidental Petroleum Corporation and OXY USA

Inc. the foregoing Consent Order.

Dated: June 27, 1995.

Donald P. de Brier,

Executive Vice President and General Counsel, Occidental Petroleum

Corporation.

I, the undersigned, a duly authorized representative of the

United States Department of Energy, hereby agree to and accept on

behalf of the Department of Energy the foregoing Consent Order.

Dated: June 27, 1995.

Eric J. Fygi,

Deputy General Counsel, U.S. Department of Energy.

[FR Doc. 95-16608 Filed 7-5-95; 8:45 am]

BILLING CODE 6450-01-P