Department of Energy Needs To Resolve Billions in Alleged Oil Pricing Violations

EMD-81-45: Published: Mar 31, 1981. Publicly Released: Apr 2, 1981.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Congress attempted to minimize the effects of rapidly increasing prices for imported oil by passing the Emergency Petroleum Allocation Act which established petroleum pricing controls. The Department of Energy (DOE) seeks to identify oil pricing violations, recover oil company overcharges, and obtain restitution for parties injured by the overcharges.

DOE has alleged billions of dollars in oil pricing violations but has not been able to effectively enforce pricing regulations, primarily because of oil industry legal challenges. In many cases, DOE has attempted to avoid the cost and time involved in litigating civil cases by negotiating settlements with companies. However, less than one-third of the total alleged violations had been settled as of January 1981. In addition, DOE has generally been unable to obtain restitution for parties that have been injured through overcharges. The major obstacle to making restitution is the inability of DOE to identify precisely who has been injured by overcharges, since in many instances the overcharges were passed through the marketing chain in subsequent sales.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should approve the DOE funding request, assuming it is reasonable and appropriate, for DOE to carry out a plan for resolving the violations and litigation outstanding when deregulation occurred.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should pursue ongoing litigation and continue to use administrative and court litigation, where appropriate. DOE should, however, negotiate settlements where it is deemed to be in the public interest.

    Agency Affected: Department of Energy

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should work with the Attorney General to (1) establish guidelines for Justice's review of settlement agreements which include companies withdrawal of civil suits against the Government; and (2) develop appropriate language to resolve current Justice objections to nonlitigative provisions in Office of Special Counsel global settlements for inclusion in pertinent future settlements.

    Agency Affected: Department of Energy

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should expedite DOE efforts to issue proposed remedial orders.

    Agency Affected: Department of Energy

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should (1) separately identify and publicly disclose restitutional and nonrestitutional provisions in consent orders; and (2) include in consent orders specific requirements for the documentation a company must provide DOE as evidence of compliance.

    Agency Affected: Department of Energy

  5. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should (1) allow refunds to customers only when DOE can assure itself that such refunds will result in restitution to injured parties; and (2) direct the appropriate enforcement officials, when injured parties cannot be readily identified, to petition the Office of Hearings and Appeals to implement special refund procedures to identify and make refunds to parties who have suffered injuries because of overcharges. After applying this process, deposit any remaining escrow accounts' funds and the remaining cash proceeds of consent orders directly into the United States Treasury.

    Agency Affected: Department of Energy

  6. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Commissioner of IRS should conduct a study to determine the effect that successful legal challenges to DOE regulations could have on IRS ability to enforce the Windfall Profit Tax Act. The Commissioner, through the Secretary of the Treasury, should then issue IRS regulations that reflect the changes required by the study.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  7. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of OMB should assist DOE in developing a plan to include DOE personnel and funding needs for the orderly resolution of the violations and litigation outstanding when deregulation occurred. The Director should approve the plan and submit it for congressional approval.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

Explore the full database of GAO's Open Recommendations »

Sep 14, 2016

Sep 8, 2016

Aug 11, 2016

Aug 9, 2016

Aug 4, 2016

Jul 15, 2016

Jul 14, 2016

Jun 20, 2016

Mar 3, 2016

Looking for more? Browse all our products here