[Federal Register Volume 61, Number 186 (Tuesday, September 24, 1996)]
[Notices]
[Pages 50018-50020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24396]
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DEPARTMENT OF ENERGY
Implementation of Special Refund Procedures
AGENCY: Office of Hearings and Appeals, Department of Energy.
ACTION: Notice of proposed 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 proposed procedures and solicits comments concerning the
refunding of $30,000 (plus accrued
[[Page 50019]]
interest) in consent order funds. The funds are being held in escrow
pursuant to a Stipulation for Compromise Settlement involving Houston-
Pasadena Apache Oil Company.
DATES AND ADDRESSES: Comments must be filed on or before October 24,
1996 and should be addressed to the Office of Hearings and Appeals,
Department of Energy, 1000 Independence Avenue, S.W., Washington, D.C.
20585-0107. All comments should conspicuously display a reference to
Case Number VEF-0022.
FOR FURTHER INFORMATION CONTACT: Richard W. Dugan, Associate Director,
Office of Hearings and Appeals, 1000 Independence Avenue, S. W.,
Washington, D.C. 20585-0107, (202) 426-1575.
SUPPLEMENTARY INFORMATION: In accordance with Section 205.282(b) of the
procedural regulations of the Department of Energy, 10 C.F.R.
205.282(b), notice is hereby given of the issuance of the Proposed
Decision and Order set forth below. The Proposed Decision relates to a
Stipulation for Compromise Settlement entered into by the Houston-
Pasadena Apache Oil Company (Apache) which settled possible pricing
violations in the firm's wholesale transactions of motor gasoline
during the period October-December 1979.
The Proposed Decision sets forth the procedures and standards that
the DOE has tentatively formulated to distribute funds remitted by
Apache and being held in escrow. The DOE has tentatively decided that
the funds should be distributed in two stages in the manner utilized
with respect to consent order funds in similar proceedings.
Applications for Refund should not be filed at this time.
Appropriate public notice will be given when the submission of claims
is authorized.
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 publication of this notice in the Federal Register, and should
be sent to the address set forth at the beginning of this notice. All
comments received in this proceeding will be available for public
inspection between the hours of 1:00 to 5:00 p.m., 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, S.W., Washington, D.C. 20585-0107.
Dated: September 16, 1996.
George B. Breznay,
Director, Office of Hearings and Appeals.
Proposed Decision and Order of the Department of Energy
Special Refund Procedures
Name of Petitioner: Houston-Pasadena Apache Oil Co.
Date of Filing: September 1, 1995
Case Number: VEF-0022
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 a Petition for
the Implementation of Special Refund Procedures with the Office of
Hearings and Appeals (OHA) on September 1, 1995. The petition
requests that the OHA formulate and implement procedures for the
distribution of funds received pursuant to a Stipulation for
Compromise Settlement (Settlement Stipulation) concerning the
Houston-Pasadena Apache Oil Company (Apache).
Background
Apache was a ``reseller-retailer'' of motor gasoline during the
period of price controls. Accordingly, Apache was subject to the
provisions of 10 C.F.R. Part 212, Subpart F, governing wholesale and
retail sales of refined petroleum products. On April 30, 1985, the
ERA issued a Proposed Remedial Order (PRO) to Apache concerning
Apache's compliance with the price regulations for the period March
1, 1979 through December 31, 1979 (the audit period). Apache
provided documents for a more limited period (October-December
1979), and based upon those documents, the ERA found that Apache
sold motor gasoline at prices in excess of those permitted under the
DOE price regulations governing reseller-retailers during that
period. After considering Apache's challenge to the PRO, the OHA
issued a final Remedial Order (RO) to Apache on June 19, 1989. See
Houston/Pasadena Apache Oil Company, 19 DOE para. 83,001 (1989). In
the RO, the OHA remanded to the ERA a portion of the PRO involving
retail transactions and two sales to Dow Chemical Company (Dow) and
affirmed the rest of the PRO. The OHA also directed Apache to refund
the amount of $160,713 plus interest, this sum representing the
overcharges realized by the firm in its wholesale transactions
during the period October-December 1979. Apache did not honor its
repayment obligation and the matter was referred to the Department
of Justice (DOJ) for resolution. On June 4, 1993, the DOJ and Apache
executed a Stipulation for Compromise Settlement resolving the
issues addressed by the RO. Pursuant to this settlement, Apache
agreed to pay $30,000 in full settlement of the DOE claim. Apache's
compliance with the settlement has resulted in payment to DOE of
$30,000 which we propose to disburse pursuant to the procedures set
forth in this Proposed Decision. These funds are presently in an
interest-bearing escrow account maintained by the Department of the
Treasury.
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. Generally, 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
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 Apache. We therefore propose to grant OGC's
petition and assume jurisdiction over distribution of the funds.
Proposed Refund Procedures
A. Refund Claimants
We propose that refund monies be distributed to those wholesale
customers which were injured in their transactions with Apache
during the period October 1, 1979 through December 31, 1979. These
customers of Apache are listed in Appendix A to the RO. If any of
these customers are affiliates of Apache, they will be ineligible to
apply for a refund in this proceeding.
B. Calculation of Refund Amounts
For claims against the funds obtained from Apache, we propose to
establish a maximum potential refund (allocable share) for each of
the customers identified in the Apache RO as an overcharged
customer. These claimant-specific maximum potential refunds will be
based upon the ratio of overcharges incurred by each customer to the
total overcharge amount multiplied by the principal amount in the
Apache escrow account. A list of the identified Apache customers and
their maximum potential refunds is presented in the Appendix to this
Proposed Decision. Each successful refund claimant shall also
receive a pro rata share of interest which has accrued on the Apache
escrow fund account.
C. Showing of Injury/Injury Presumptions
As in previous Subpart V proceedings, we propose that those
customers who were ultimate consumers (end-users) of Apache motor
gasoline be presumed injured by Apache's alleged overcharges. They
will therefore not be required to make a further demonstration of
injury in order to receive a refund.
We propose that reseller claimants (including retailers and
refiners) who purchased on a regular (non-spot) basis and whose
maximum potential refund is $10,000 or less will 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. We
further propose that Tesoro Crude (Tesoro
[[Page 50020]]
Energy), the only potential reseller claimant whose allocable share
exceeds $10,000, may elect either to receive a refund under the
small claims presumption outlined above or to pursue its potential
refund of $16,034.97. If Tesoro limits its claim to the $10,000
small claims threshold, it need not demonstrate injury beyond the
requirements established for other small claimants. If the firm
elects to claim its entire potential refund it must establish that
it did not pass the Apache overcharges along to its customers.1
See, e.g., Office of Enforcement, 8 DOE para. 82,597 (1981). Tesoro
can make such an injury showing by demonstrating that it would have
kept its motor gasoline prices at the same level had the Apache
overcharges not occurred. While there are a variety of means by
which a claimant could make this showing, Tesoro should demonstrate
that at the time it purchased Apache motor gasoline, market
conditions would not permit it to increase its prices to pass
through the additional costs associated with the Apache overcharges.
In addition, Tesoro must show that it had a ``bank'' of unrecovered
product costs sufficient to support its refund claim in order to
demonstrate that it did not subsequently recover those costs by
increasing its 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. 85,036 (1982); Vickers Energy Corp./Koch Industries,
Inc., 10 DOE para. 85,038 (1982).
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\1\ In the event that Tesoro demonstrates that it should be
treated as an end-user instead of as a reseller, it will not be
required to make this injury showing.
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Finally, we propose to 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). This proposed
restriction would rule out the participation in this proceeding of
two of the firms listed in the Appendix: Gulf Coast Waste, and
Parrish Corp.2
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\2\ Although the allocable share of Clay Texaco, $14.70, is
under the $15 threshold, we have calculated that with interest its
refund would exceed $15.
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Conclusion
Refund applications in this proceeding should not be filed until
the issuance of a final Decision and Order pertaining to the instant
OGC Implementation Petition. Detailed procedures for filing
applications will be provided in the final Decision and Order.
Before disposing of any of the funds received, we intend to
publicize the distribution process and to provide an opportunity for
any affected party to file a claim. A copy of this Proposed Decision
and Order will be published in the Federal Register and public
comments will be solicited.
Any funds that remain after all first-stage claims have been
decided will be distributed in accordance with the provisions of the
Petroleum Overcharge Distribution and Restitution Act of 1986
(PODRA), 15 U.S.C. 4501-07. PODRA requires that the Secretary of
Energy determine annually the amount of oil 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 energy conservation programs. The Secretary has delegated
these responsibilities to OHA. Any funds in the Apache escrow
account the OHA determines will not be needed to effect direct
restitution to injured Apache customers will be distributed in
accordance with the provisions of PODRA.
It Is Therefore Ordered That:
The refund amount remitted to the Department of Energy by
Houston-Pasadena Apache Oil Company, Inc. pursuant to the
Stipulation for Compromise Settlement executed on June 4, 1993, will
be distributed in accordance with the foregoing Decision.
Appendix
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Allocable
Applicant share
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Car Wash.................................................. $31.17
Clay Texaco............................................... 14.70
DuMac Oil................................................. 22.59
Gulf Coast Waste \1\...................................... 8.97
Jas Lee................................................... 126.06
Joe Lee................................................... 3,059.22
John Parker............................................... 28.60
Kirby Car Wash............................................ 19.83
Lloyd Parrish............................................. 288.03
Main Stop................................................. 48.90
Parrish Corp.\1\.......................................... 11.43
Quail Valley Gulf......................................... 166.95
So Sweet Energy........................................... 2,098.14
Tesoro Energy (Tesoro Crude).............................. 16,034.97
Trio Oil Co............................................... 1,414.17
True Oil Co............................................... 1,119.96
Two Oil Co................................................ 5,489.67
Yims Texaco............................................... 16.64
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Total............................................... 30,000.00
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The allocable share entries were generated by multiplying the principal
amount in the Apache escrow account by the percentage of total
overcharges incurred by each individual claimant as determined by the
ERA audit of Apache's business records.
\1\ Under $15 threshold. See n.2 of Decision.
[FR Doc. 96-24396 Filed 9-23-96; 8:45 am]
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