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 announces proposed procedures for disbursement of $2,380,290

(plus accrued interest) in alleged or adjudicated crude oil overcharges

obtained by the DOE from Crude Oil Purchasing, Incorporated (Case No.

LEF-0058), Jaguar Petroleum, Incorporated (Case No. LEF-0059), Westport

Energy Corporation/Westport Petroleum Corporation (Case No. LEF-0113),

and Gratex Corporation/Compton Corporation (Case No. VEF-0012). The OHA

has tentatively determined that the funds obtained from these firms,

plus accrued interest, will be distributed in accordance with the DOE's

Modified Statement of Restitutionary Policy in Crude Oil Cases, 51 FR

27899 (August 4, 1986).

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

of the date of publication in the Federal Register and should be

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

1000 Independence Avenue, SW, Washington, DC 20585-0107. All comments

shall refer to the case number or numbers referred to above.

FOR FURTHER INFORMATION CONTACT: Bryan F. MacPherson, Assistant

Director, Office of Hearings and Appeals, Washington, DC 20585-0107,

(202) 426-1571.

SUPPLEMENTARY INFORMATION: In accordance with 10 CFR 205.282(b), notice

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

forth below. The Proposed Decision and Order sets forth procedures that

the DOE has proposed to use to distribute a total of $2,380,290, plus

accrued interest, remitted to the DOE by (1) Crude Oil Purchasing,

Incorporated, (2) Jaguar Petroleum, Incorporated, (3) Westport Energy

Corporation & Westport Petroleum Corporation, and (4) Gratex

Corporation/Compton Corporation. The DOE is currently holding these

funds in interest bearing escrow accounts 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 moneys 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. Because

the June 30, 1995, deadline for the crude oil refund applications has

passed, no new applications from purchasers of refined petroleum

products will be accepted.

Any member of the public may submit written comments regarding the

proposed refund procedures. Commenting parties are requested to submit

two copies of their comments. Comments should be submitted within 30

days of the publication of this notice in the Federal Register and

should be sent to the address provided at the beginning of the notice.

All comments received will be available for public inspection between

the hours of 1 pm and 5 pm, 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, SW.,

Washington, DC 20585-0107.

Dated: April 22, 1997.

George B. Breznay,

Director, Office of Hearings and Appeals.

Proposed Decision and Order of the Department of Energy

April 22, 1997.

Implementation of Special Refund Procedures

Names of Firms: Crude Oil Purchasing, Incorporated; Jaguar

Petroleum, Incorporated; Westport Energy Corporation & Westport

Petroleum Corporation; Gratex Corporation/Compton Corporation.

Dates of Filings: July 20, 1993; July 20, 1993; September 9,

1993; March 23, 1995.

Case Numbers: LEF-0058; LEF-0059; LEF-0113; VEF-0012.

The Economic Regulatory Administration (ERA) of the Department

of Energy filed four Petitions for the Implementation of Special

Refund Procedures with the Office of Hearings and Appeals (OHA) to

distribute funds remitted to the DOE pursuant to settlements between

Crude Oil Purchasing, Incorporated (COP), Jaguar Petroleum,

Incorporated (Jaguar), Westport Energy Corporation & Westport

Petroleum Corporation (Westport), Gratex Corporation and its parent,

Compton Corporation (Gratex/Compton). A total of $2,380,290, plus

interest, is available for restitution. All of these funds are now

being held in interest-bearing escrow accounts pending a

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determination regarding their proper disposition.

In accordance with the procedural regulations codified at 10 CFR

Part 205, Subpart V, the ERA requests in its Petitions that the OHA

establish special refund procedures to remedy the effects of any

regulatory violations which were resolved by these settlements. This

Proposed Decision and Order sets forth the OHA's proposed plan to

distribute these funds.1

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\1\ 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. Secs. 4501-07, Office of Enforcement, 9 DOE para. 82,508

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

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I. Background

On September 21, 1982, DOE and COP entered into a Consent Order

which resolved all pending or potential claims that DOE had or may

have against COP relating to COP's compliance with the federal

petroleum price and allocation regulations during the period from

January 1, 1973 to January 27, 1981. There is a total of $93,750,

plus interest, available from COP for restitution.

On May 31, 1983, DOE and Jaguar entered into a Consent Order

which resolved all pending or potential claims that DOE had or may

have against Jaguar relating to Jaguar's compliance with the federal

petroleum price and allocation regulations during the period from

November 14, 1979 to January 27, 1981. There is a total of $64,500,

plus interest, available from Jaguar for restitution.

On May 11, 1983, the ERA issued a Proposed Remedial Order (PRO)

to Westport alleging overcharges in the resale of crude oil during

the period from June 1980 to November 1980. OHA dismissed this PRO

after Westport was discharged in bankruptcy and DOE was entitled to

receive payments under the bankruptcy reorganization plan. Under

Westport's Second Amended Liquidating Plan of Reorganization,

approved by the US Bankruptcy Court for the District of Colorado on

July 30, 1986, Westport was required to make payments to DOE, and

OHA was directed to distribute to the Westport escrow account 35% of

any refunds that it granted to Westport in other refund proceedings.

Thus far, DOE has collected a total of $126,172 from Westport. That

amount, plus interest, is available for restitution.

ERA filed claims in the bankruptcy cases of Gratex and Compton

alleging overcharges in the resale of crude oil during the period

from December 1978 to December 1980. On April 27, 1984, ERA issued a

PRO to Gratex and Compton based on these same facts. On October 18,

1988, the United States Bankruptcy Court for the Northern District

of Texas approved a Compromise Agreement in the Gratex proceeding

which obligated Gratex to pay DOE a lump sum plus a percentage of

future distributions made to unsecured creditors. In 1992, the

United States Bankruptcy Court for the Northern District of Texas

approved a compromise agreement in the Compton proceeding. Thus far,

Gratex and Compton have paid to the DOE the sum of $2,095,868. This

amount, plus interest, is available for restitution.

II. The Proposed Refund Procedure

As each of these petitions concern only violations of the

regulations governing the sale of crude oil, we propose 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). The MSRP has been used as the basis for

the distribution of all crude oil funds in Subpart V proceedings.

See Order Implementing the MSRP, 51 FR 29689 (August 20, 1986);

Notice regarding the Order Implementing the MSRP, 52 FR 11737 (April

10, 1987).

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. 1986) (the Stripper Well

Settlement Agreement). The MSRP establishes that 40 percent of the

crude oil funds will be remitted to the federal government, another

40 percent to the states, and up to 20 percent 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.

We propose to distribute the funds remitted by COP, Jaguar,

Westport, and Gratex/Compton in accordance with the MSRP.

Accordingly, we propose to initially reserve 20 percent of these

funds for direct refunds to claimants.2 We propose that

the remaining 80 percent of the funds collected from these firms

shall be disbursed in equal shares to the states and the federal

government 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 para.

90,509 at 90,687. 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. If additional funds are subsequently collected from these

firms after the issuance of this Decision and Order, such funds

shall be distributed in the same manner.

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\2\ It is no longer possible to file an Application for Refund

from the crude oil funds as the final deadline for such Applications

was June 30, 1995. See 60 FR 19914 (April 21, 1995). A party that

submitted a timely claim in the crude oil refund proceeding need not

file another claim in order to share in the funds at issue in this

Decision. OHA is currently paying crude oil refund claims at the

rate of $0.0016 per gallon. We will decide whether sufficient crude

oil overcharge funds are available for additional refunds when we

are better able to determine how much additional money will be

collected from firms that have either outstanding obligations to the

DOE or enforcement cases currently in litigation.

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It is therefore ordered that: The refund amounts remitted to the

Department of Energy by (1) Crude Oil Purchasing, Incorporated,

pursuant to the Consent Order which became effective on September

21, 1982, (2) Jaguar Petroleum, Incorporated, pursuant to the

Consent Order which became effective on May 31, 1983, (3) Westport

Petroleum Corporation & Westport Energy Corporation, pursuant to the

Second Amended Plan of Reorganization confirmed on July 30, 1986, by

the U.S. Bankruptcy Court for the District of Colorado, and (4)

Gratex Corporation and its parent, Compton Corporation, pursuant to

the compromise agreements in the Gratex and Compton bankruptcy

[FR Doc. 97-11145 Filed 4-29-97; 8:45 am]

BILLING CODE 6450-01-P