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 a

total of $7,280,202, plus accrued interest, in crude oil overcharges

obtained by the DOE from MAPCO, Inc. and MAPCO International, Inc.,

Case No. VEF-0004 (MAPCO). The OHA has determined that the funds

obtained from MAPCO, plus accrued interest, will be distributed in

accordance with the DOE's Modified Statement of Restitutionary Policy

in Crude Oil Cases, 51 Fed. Reg. 27899 (August 4, 1986).

DATES AND ADDRESSES: Comments must be filed on or before May 15, 1995,

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 Case No. VEF-0004.

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

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

Independence Avenue, S.W., Washington, DC 20585, (202) 586-2094 (Mann);

586-2383 (Klurfeld).

SUPPLEMENTARY INFORMATION: In accordance with 10 C.F.R. 205.282(c),

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 a

total of $7,280,202, plus accrued interest, remitted to the DOE by

MAPCO, Inc. and MAPCO International, Inc. to the DOE. The DOE is

currently holding these funds in an interest bearing account pending

distribution.

The OHA proposes to distribute these funds in accordance with the

DOE's Modified Statement of Restitutionary Policy in Crude Oil Cases,

51 FR 27899 (August 4, 1986) (the MSRP). Under the MSRP, crude oil

overcharge monies are divided among 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 that they

purchased and the extent to which they can demonstrate injury.

The tentative deadline for filing Applications for Refund is June

3, 1996. As we state in the Proposed Decision, any party who has

previously submitted a refund application in the crude oil 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 proceedings are finalized.

Dated: April 4, 1995.

George B. Breznay,

Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Name of Firm: MAPCO International, Inc.

Date of Filing: February 23, 1995

Case Number: VEF-0004

[[Page 18812]]

Dated: April 4, 1995.

On February 23, 1995, 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 crude oil overcharge funds

received from MAPCO, Inc. (MAPCO) pursuant to a June 23, 1994

Settlement Agreement. The Settlement Agreement resolved claims and

litigation arising from an April 21, 1986 Remedial Order originally

issued to MAPCO Inc.'s subsidiary MAPCO International, Inc. (MAPCO

International) (Case No. HRO-0193). 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 alleged regulatory violations set forth in the Remedial

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

distribute these funds.

I. Background

During the period relevant to this proceeding, MAPCO

International, Inc. was a reseller of crude oil. On June 30, 1983,

the ERA issued a Proposed Remedial Order (PRO) to the firm. The PRO

alleged that during the period from August 1978 through November

1980 (the audit period), MAPCO International sold crude oil at

prices in excess of those permitted by 10 C.F.R. Part 212, Subpart

L. After considering and dismissing MAPCO International's objections

to the PRO, the DOE issued a final Remedial Order. 14 DOE para.

83,019 (1986). MAPCO International appealed the Remedial Order to

the Federal Energy Regulatory Commission, which affirmed the

Remedial Order. 43 FERC para. 63,041 (1988); 56 FERC para. 61,063

(1991). Three years of litigation ensued. MAPCO, MAPCO International

and the DOE finally resolved all their disputes arising from the

Remedial Order with the June 23, 1994 Settlement Agreement. Pursuant

to the Settlement Agreement, MAPCO remitted to the DOE the sum of

$7,280,202, 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.

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 para.

82,508 (1981), and Office of Enforcement, 8 DOE para. 82,597 (1981)

(Vickers).

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

V proceedings with respect to the MAPCO 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

A. Crude Oil Refund Policy

We propose to distribute the monies remitted by MAPCO in

accordance with DOE's Modified Statement of Restitutionary Policy in

Crude Oil Cases (MSRP). See 51 FR 27899 (August 4, 1986). This

policy has been applied in all Subpart V proceedings involving

alleged crude oil violations. See Order Implementing the MSRP, 51

Fed. Reg. 29689 (August 20, 1986) (the August 1986 Order).

Under the MSRP, 40 percent of crude oil overcharge funds will be

refunded to the federal government, another 40 percent to the

states, and up to 20 percent may initially be reserved for the

payment of claims to injured parties. The MSRP also specifies that

any funds remaining after all valid claims by injured purchasers are

paid will be disbursed to the federal government and the states in

equal amounts. See In re: The Department of Energy Stripper Well

Exemption Litigation, 653 F. Supp. 108 (D. Kan.), 6 Fed. Energy

Guidelines para. 90,509 (1986) (the Stripper Well Settlement

Agreement) for a more detailed discussion of the MSRP.

On April 10, 1987, the OHA issued a Notice analyzing the

numerous comments received in response to the August 1986 Order. 52

Fed. Reg. 11737 (April 10, 1987) (the April 10 Notice). This Notice

provided guidance to claimants that anticipated filing refund

applications for crude oil monies under the subpart V regulations.

In general, we stated that 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) prove that they were injured by the alleged crude

oil overcharges. End-users of petroleum products whose businesses

were unrelated to the petroleum industry would be presumed to have

been injured by the alleged crude oil overcharges and would not be

required to submit proof of injury. See City of Columbus, Georgia,

16 DOE para. 85,550 (1987).

B. Refund Claims

The amount of money covered by this Proposed Decision is

$7,280,202, plus accrued interest. In accordance with the MSRP, we

propose initially to reserve 20 percent of those funds ($1,456,040

in principal, plus accrued interest) for direct refunds to

applicants who claim that they were injured by crude oil

overcharges.

We propose to evaluate claims in the MAPCO crude oil refund

proceeding in exactly the same manner as in other crude oil

proceedings. As we stated in the April 10 Notice, claimants will

generally be required to document their purchase volumes of

petroleum products and prove that they were injured as a result of

the alleged violations. We propose to base the refunds on a

volumetric amount which has been calculated in accordance with the

description in the April 10 Notice. We will also presume that the

alleged crude oil overcharges were absorbed, rather than passed on,

by applicants who 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 Price and

Allocation Act of 1973, 15 U.S.C. 751-760h. In order to receive a

refund, such claimants need not submit any evidence of injury beyond

documentation of their purchase volumes.

As has been stated in earlier Decisions, a crude oil refund

applicant will only be required to submit one application for its

share of all available crude oil overcharge funds. See, e.g.,

A.Tarricone Inc., 15 DOE para.85,475 (1987). A party that has

already submitted a claim in any other crude oil refund proceeding

implemented by the DOE need not file another claim. The tentative

deadline for filing an Application for Refund is June 3, 1996. Any

claimant that has executed a valid waiver pursuant to one of the

escrow accounts established by the Stripper Well Agreement, however,

has waived its right to file an application for a Subpart V crude

oil refund. See Mid-American Dairymen v. Herrington, 878 F. 2d 1448

(Temp. Emer. Ct. App.), 3 Fed. Energy Guidelines para.26,617 (1989);

In re: Department of Energy Stripper Well Exemption Litigation, 707

F. Supp. 11267 (D. Kan.), 3 Fed. Energy Guidelines para.26,613

(1987).

C. Payments to the States and Federal Government

Under the terms of the MSRP, we propose that the remaining 80

percent of the amount remitted by MAPCO, or $5,824,162 in principal,

plus accrued interest, be disbursed in equal shares to the states

and federal government for indirect restitution. Refunds to the

states will be in proportion to the consumption of petroleum

products in each state during the crude oil price control period.

The share of the funds allocated to each state is contained in

Exhibit H of the Stripper Well Agreement. When disbursed, these

funds will be subject to the same limitations and reporting

requirements that apply to any other crude oil overcharge funds

received by the states in accordance with the Stripper Well

Agreement.

It Is Therefore Ordered That:

The payment remitted to the Department of Energy by MAPCO, Inc.

pursuant to the Settlement Agreement dated June 23, 1994 will be

distributed in accordance with the foregoing Decision.

[FR Doc. 95-9171 Filed 4-12-95; 8:45 am]

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