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 (OHA) of the Department of

Energy announces the procedures for disbursement of $2,451,396 (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 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).

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(c), notice

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

below. The Decision and Order sets forth procedures that the DOE will

use to distribute a total of $2,451,396, 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 will 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.

Dated: October 29, 1997.

George B. Breznay,

Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Implementation of Special Refund Procedures

Names of Firms: Crude Oil Purchasing, Incorporation; 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). In the

petitions, ERA asks 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 $2,451,396, plus interest, is available for restitution. All

of these funds are now being held in interest-bearing escrow accounts

pending a determination regarding their proper disposition.

In accordance with the procedural regulations codified at 10 C.F.R.

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

Decision and Order sets forth the OHA's final 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. 4501-07, and Office of Enforcement, 9 DOE para.82,508

(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

[[Page 60709]]

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 EAR 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 U.S.

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 $2,166,974. This amount, plus

interest, is available for restitution.

II. The Proposed Refund Procedures

On April 22, 1997, we issued a proposed Decision and Order (PDO)

that tentatively concluded that ERA's Petitions for the Implementation

of Special Refund Procedures with respect to the funds collected from

these four firms should be approved. Notice of Proposed Implementation

of Special Refund Procedures, 62 Fed. Reg. 23444 (April 30, 1997). In

each case, we proposed to distribute these funds 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 has been the

basis for the distribution in these Subpart V proceedings of all crude

oil funds DOE has obtained. See Order Implementing the MSRP, 51 Fed.

Reg. 29689 (August 20, 1986); Notice regarding the Order Implementing

the MSRP, 52 Fed. Reg. 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.

OHA did not receive any comments on the PDO, and we adopt its

tentative determination to distribute the funds remitted by COP,

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

Accordingly, we will reserve 20 percent of these funds for direct

refunds to claimants.\2\ 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, as set

forth 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 additional

refunds will be made 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:

(1) 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 the full balances from the following accounts:

approximately $93,750, plus all accrued interest, from the Crude Oil

Purchasing, Incorporated subaccount (Account No. 6A0X00269T),

approximately $64,500 plus all accrued interest from the Jaguar

Petroleum, Incorporated subaccount (Account No. 640X00444T),

approximately $126,172, plus all accrued interest from the Westport

Energy Corporation & Westport Petroleum Corporation subaccount (Account

No. 6C0X00292Z), approximately $2,166,974 plus all accrued interest

from the Gratex Corporation/Compton Corporation subaccount (Account No.

6A0X00340W), for a total of approximately $2,451,396, plus all accrued

interest, pursuant to Paragraphs (2), (3), and (4) of this Decision.

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

$980,558 (plus interest) of the funds obtained pursuant to Paragraph

(1) above into the subaccount denominated ``Crude Tracking--States,''

Number 999DOE003W.

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

$980,558 (plus interest) of the funds obtained pursuant to Paragraph

(1) above into the subaccount denominated ``Crude Tracking--Federal,''

Number 999DOE002W.

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

$490,280 (plus interest) of the funds obtained pursuant to Paragraph

(1) above into the subaccount denominated ``Crude Tracking--Claimants

4,'' Number 999DOE010Z.

(5) This is a final Order of the Department of Energy.

Dated: October 29, 1997.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 97-29737 Filed 11-10-97; 8:45 am]

BILLING CODE 6550-01-M