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 and

solicitation of comments.

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SUMMARY: The Office of Hearings and Appeals of the Department of Energy

announces procedures concerning the refunding of $214,236.37 (plus

accrued interest) in consent order funds. The funds are being held in

escrow pursuant to a Consent Judgment and a Bankruptcy Distribution

involving Houma Oil Company and Jedco, Inc., respectively.

DATE AND ADDRESS: Applications for Refund should be addressed to the

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

Avenue, SW., Washington, DC. 20585-0107. All Applications should

conspicuously display a reference to either Case Number VEF-0023 (Houma

Oil Co.) or VEF-0024 (Jedco, Inc.).

FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director,

Office of Hearings and Appeals, 1000 Independence Avenue, SW.,

Washington, DC. 20585-0107, (202) 426-1575.

SUPPLEMENTARY INFORMATION: In accordance with Sec. 205.282(c) of the

procedural regulations of the Department of Energy, 10 CFR 205.282(c),

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

forth below. The Decision relates to a Consent Judgment entered into by

the Houma Oil Company which settled possible pricing violations in the

firm's sales of motor gasoline during the period May 1, 1979 through

April 30, 1980. The Decision also relates to a Bankruptcy Distribution

which settled pricing violations stemming from Jedco, Inc.'s sales of

motor gasoline during the period November 1, 1973 through March 31,

1974. A Proposed Decision and Order tentatively establishing refund

procedures and soliciting comments from the public concerning the

distribution of the Houma and Jedco settlement funds was issued on

October 28, 1996. 61 FR 57868 (November 8, 1996).

The Decision sets forth the procedures and standards that the DOE

has formulated to distribute funds remitted by Houma and Jedco and

being held in escrow. The DOE has decided that the funds should be

distributed in two stages in the manner utilized with respect to

consent order funds in similar proceedings. In the first stage, the DOE

will consider claims for refunds made by firms and individuals that

purchased motor gasoline from Houma and/or Jedco during the respective

audit periods.

The second stage of the refund process will take place only in the

event that the meritorious first stage applicants do not deplete the

settlement funds. Any funds that remain after all first stage claims

have been decided will be distributed to state governments for use in

four energy conservation programs, in accordance with the provisions of

the Petroleum Overcharge Distribution and Restitution Act of l986.

All first stage applications should be submitted within 90 days of

publication of this notice. All comments and applications received in

this proceeding will be available for public inspection between the

hours of 1 to 5 p.m., Monday through Friday, except federal

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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: February 7, 1997.

George B. Breznay,

Director, Office of Hearings and Appeals.

Decision and Order of the Department of Energy

Special Refund Procedures

Name of Firms: Houma Oil Company, Jedco, Inc.

Date of Filing: September 1, 1995

Case Numbers: VEF-0023, VEF-0024

In accordance with the procedural regulations of the Department

of Energy (DOE), 10 C.F.R. Part 205, Subpart V, the Regulatory

Litigation branch of the Office of General Counsel (OGC)(formerly

the Economic Regulatory Administration (ERA)) filed Petitions for

the Implementation of Special Refund Procedures with the Office of

Hearings and Appeals (OHA) on September 1, 1995. The petitions

request that the OHA formulate and implement procedures for the

distribution of funds received pursuant to a Consent Judgment and a

Bankruptcy Distribution concerning Houma Oil Co. (Houma) and Jedco,

Inc. (Jedco), respectively.

Background

Houma was a ``reseller-retailer'' during the period of price

controls. The ERA audited Houma's business records and determined it

violated DOE's regulations in its sales of motor gasoline during the

period May 1, 1979 through April 30, 1980. On November 21, 1983, the

ERA issued a Proposed Remedial Order (PRO) to Houma in which it

determined the firm overcharged its customers by $503,810 during the

audit period. On August 1, 1984, Houma and DOE entered into a

consent order in which Houma agreed to refund the overcharge amount,

plus interest, in installment payments to DOE over a two year

period. Houma ultimately defaulted on its repayment obligation and

the matter was referred to the Department of Justice (DOJ) for

enforcement. The DOJ then obtained a Consent Judgment against Houma

on February 9, 1995. Pursuant to this Judgment, Houma remitted a

total of $210,414.73 to the DOE. Houma then stopped making payment,

and the DOE determined that further legal action against Houma was

unlikely to result in meaningful benefits to the taxpayer. The

residual payment obligation was therefore declared uncollectible.

The DOE issued a Remedial Order (RO) to Jedco on October 24,

1978. Jedco, Inc., Case No. DRW-0006. Like Houma, Jedco was a

``reseller-retailer'' during the audit period November 1, 1973

through March 31, 1974. The RO required the firm to implement a

rollback of its motor gasoline prices, thereby restoring its

overcharged customers to the position they would have been in absent

the overcharges. After the deregulation of petroleum prices, the RO

was modified and this requirement was replaced by an order requiring

payment to the U.S. Treasury. Jedco, Inc., 8 DOE para. 81,068

(1981). Jedco failed to comply with the directives of the DOE in

this matter and ultimately declared bankruptcy. The DOE's claim

against the firm led to a final distribution to the DOE of

$3,821.64. In accordance with current DOE policy, since OGC has been

unable to identify the customers injured by the Jedco overcharges,

it has petitioned OHA to distribute this amount pursuant to Subpart

V.

The funds obtained from the two firms are presently in interest-

bearing escrow accounts maintained by the Department of the

Treasury. They will be distributed in accord with the procedures

outlined herein.

Jurisdiction

The procedural regulations of the DOE set forth general

guidelines by which the OHA may formulate and implement a plan of

distribution for funds received as a result of an enforcement

proceeding. 10 C.F.R. Part 205, Subpart V. It is DOE policy 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 obtained as part of the settlement

agreements, see Office of Enforcement, 9 DOE para. 82,553 (1982);

Office of Enforcement, 9 DOE para. 82,508 (1981). After reviewing

the record in the present case, we have concluded that a Subpart V

proceeding is an appropriate mechanism for distributing the monies

obtained from Houma and Jedco. We therefore grant OGC's petitions

and assume jurisdiction over distribution of the funds.

On October 28, 1996, OHA issued a Proposed Decision and Order

(PDO) establishing tentative procedures to distribute the Houma and

Jedco settlement funds. The PDO was published in the Federal

Register and a 30 day period was provided for the submission of

comments regarding our proposed refund plan. See 61 Fed. Reg. 57868

(November 8, l996). More than 30 days have elapsed and the OHA has

received no comments concerning the proposed procedures for the

distribution of the Houma or Jedco settlement funds. Consequently,

the procedures will be adopted as proposed.

Refund Procedures

In cases where the DOE is unable to identify parties injured by

the alleged overcharges or the specific amounts to which they may be

entitled, we normally implement a two-stage refund procedure. In the

first stage of the proceeding, those who bought refined petroleum

products from the consent order firm may apply for a refund, which

is calculated on a pro-rata or volumetric basis. In order to

calculate the volumetric refund amount, the OHA divides the amount

of money available for direct restitution by the number of gallons

sold by the consent order firm during the period covered by the

consent order. In the second stage, any funds remaining after all

first-stage claims are decided are distributed for indirect

restitution in accordance with the provisions of the Petroleum

Overcharge Distribution and Restitution Act of 1986 (PODRA), 15

U.S.C. Secs. 4501-07.

In the two cases covered by this Decision, however, we lack much

of the information that we normally use to provide direct

restitution to injured customers of the consent order firms. In

particular, we have been unable to obtain any information on the

volume of the relevant petroleum products sold by Houma and Jedco

during the respective settlement periods. Nor do we have any

information concerning the customers of these firms. Based on the

present state of the record in these cases, it would be difficult to

implement a volumetric refund process. Nevertheless, we shall accept

any refund claims submitted by persons who purchased motor gasoline

from Houma during the period May 1, 1979 through April 30, 1980 or

from Jedco during the period November 1, 1973 through March 31,

1974. We will work with those claimants to develop additional

information that would enable us to determine who should receive

refunds and in what amounts. See Bell Fuels, Inc., 25 DOE para.

85,020 (1995).

Injury Presumptions/Showing of injury

As in previous Subpart V proceedings, those customers of Houma

and Jedco who were ultimate consumers (end-users) of their motor

gasoline shall be presumed injured by their alleged overcharges.

These customers will therefore not be required to make a further

demonstration of injury in order to receive a refund.

Reseller claimants (including retailers and refiners) who

purchased motor gasoline from either of the two firms on a regular

(non-spot) basis and whose refund claim is $10,000 or less will also

be presumed injured and therefore need not provide further

demonstration of injury. See E.D.G., Inc., 17 DOE para. 85,679

(1988). We realize that the cost to an applicant of gathering

evidence of injury to support a relatively small refund claim could

exceed the expected refund. Consequently, in the absence of

simplified procedures some injured parties would be denied an

opportunity to obtain a refund.

In addition, any reseller refund claimant advancing a refund claim

in excess of $10,000 must establish that it did not pass the alleged

Houma or Jedco overcharges along to its customers. See, e.g., Office of

Enforcement, 8 DOE para. 82,597 (1981). While there are a variety of

means by which a claimant could make this showing, a successful

claimant should demonstrate that at the time it purchased motor

gasoline from the consent order firm, market conditions would not

permit it to increase its prices to pass through the additional costs

associated with the alleged overcharges. In addition, such claimants

must show that they had a ``bank'' of unrecovered product costs

sufficient to support their refund claim in order to demonstrate that

they did not subsequently recover those costs by increasing their

product prices. However, the maintenance of a cost bank does not

automatically establish injury. See Tenneco Oil/Chevron U.S.A., 10 DOE

para. 85,014 (1982); Vickers Energy Corp./Standard Oil Co., 10 DOE

para.

[[Page 7229]]

85,036 (1982); Vickers Energy Corp./Koch Industries, Inc., 10 DOE para.

85,038 (1982), Motion for Modification denied, 10 DOE para. 85,062

(1983).

Finally, we hereby establish a minimum amount of $15 for refund

claims. We have found in prior refund proceedings that the cost of

processing claims in which refunds are sought for amounts less than

$15 outweighs the benefits of restitution in those situations. See,

e.g., Uban Oil Co., 9 DOE para. 82,541 at 85,225 (1982). See also 10

C.F.R. Sec. 205.286(b).

Refund Application Requirements

To apply for a refund from either the Houma or Jedco settlement

fund, 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, a statement indicating whether the

claimant is an individual, corporation, partnership, sole

proprietorship, or other business entity, the name, title, and

telephone number of the person to contact for any additional

information, and the name and address of the person who should

receive any 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 l974, 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 and the regulations

codified at 10 C.F.R. Part 205, Subpart V. The information may be

shared with other Federal agencies for statistical, audition 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) The applicant's use of motor gasoline from Houma and/or

Jedco during the audit period: e.g., consumer (end-user),

cooperative, or reseller;

(3) A statement certifying that the applicant purchased motor

gasoline from Houma during the period May 1, 1979 through April 30,

1980, or from Jedco during the period November 1, 1973 through March

31, 1974;

(4) A statement as to whether the applicant or a related firm

has filed, or has authorized any individual to file on its behalf,

any other application in the Houma and/or Jedco refund proceeding.

If so, an explanation of the circumstances of the other filing or

authorization should be submitted;

(5) If the applicant is or was in any way affiliated with Houma

and/or Jedco, it should explain this affiliation, including the time

period in which the affiliation existed;

(6) A statement as to whether the ownership of the applicant's

firm changed during or since the respective audit periods. If an

ownership change occurred, the applicant should list the names,

addresses, and telephone numbers of any prior or subsequent owners.

The applicant should also provide copies of any relevant Purchase

and Sale Agreements, if available. If such written documents are not

available, the applicant should submit a description of the

ownership change, including the year of the sale and the type of

sale, e.g., sale of corporate stock, sale of company assets;

(7) A statement as to whether the applicant has ever been a

party in a DOE enforcement action or a private Section 210 action.

If so, an explanation of the case and copies of the relevant

documents should also be provided;

(8) The following statement signed by the individual applicant

or a responsible official of the firm filing the refund application:

2

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\2\ We will not process applications signed by filing services

or other representatives. In addition, the statement must be dated

on or after the date of this Decision and Order. Any application

signed and dated before the date of this Decision will be summarily

dismissed.

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

application is true and correct 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, a

jail sentence, or both, pursuant to 18 U.S.C. Sec. 1001. 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.

Applications should be either typed or printed and clearly

labeled ``Houma Oil Company Special Refund Proceeding, Case No. VEF-

0023'' or ``Jedco, Inc. Special Refund Proceeding, Case No. VEF-

0024.'' Each applicant must submit an original and one copy of the

application. If the applicant believes that any of the information

in its application is confidential and does not wish for this

information to be publicly disclosed, it must submit an original

application, clearly designated ``confidential,'' containing the

confidential information, two copies of the application with the

confidential information deleted and an explanation of the basis for

its confidentiality claim. All refund applications should be

postmarked no later than 90 days from the publication of this

Decision and Order in the Federal Register, and sent to: Houma Oil

Company, OR, Jedco, Inc., Special Refund Proceeding, Office of

Hearings and Appeals, Department of Energy, 1000 Independence

Avenue, S.W., Washington, D.C. 20585-0107.

Any representative that requests that it be a payee of a refund

check must file with the OHA if it has not already done so a

statement certifying that it maintains a separate escrow account at

a bank or other financial institution for the deposit of all refunds

received on behalf of applicants, and that its normal business

practice is to deposit all Subpart V refund checks in that account

within two business days of receipt and to disburse refunds to

applicants within 30 calendar days thereafter. Unless such

certification is received by the OHA, all refund checks approved

will be made payable solely to the applicants. Representatives who

have not previously submitted an escrow account certification form

to the OHA may obtain a copy of the appropriate form by contacting:

Marcia B. Carlson, Chief, Docket & Publications Division, Office of

Hearings and Appeals, Department of Energy, Washington, D.C. 20585-

0107.

Distribution of Funds Remaining After First Stage

Any funds that remain after all first-stage claims have been

decided will be distributed in accordance with the provisions of

PODRA. PODRA requires that the Secretary of Energy determine

annually the amount of all overcharge funds that will not be

required to refund monies to injured parties in Subpart V

proceedings and make those funds available to state governments for

use in four energy conservation programs. The Secretary has

delegated these responsibilities to OHA. Any funds in the Houma and/

or Jedco escrow accounts the OHA determines will not be needed to

effect direct restitution to injured customers of either Houma or

Jedco will be distributed in accordance with the provisions of

PODRA.

It Is Therefore Ordered That:

(1) Applications for Refund from the funds remitted to the

Department of Energy by the Houma Oil Company pursuant to the

Consent Judgment that became effective on February 9, 1995, may now

be filed.

(2) Applications for Refund from the funds remitted to the

Department of Energy by Jedco, Inc., pursuant to a final bankruptcy

distribution effective July 23, l995, may now be filed.

(3) All Applications for Refund must be postmarked no later than

90 days after publication of this Decision and Order in the Federal

Register.

Dated: February 7, 1997.

George B. Breznay,

Director, Office of Hearings and Appeals.

[FR Doc. 97-3874 Filed 2-14-97; 8:45 am]

BILLING CODE 6450-01-P