Energy Regulation:

Factors Relating to Oil Overcharge Settlements Need Better Documentation

RCED-90-181: Published: Aug 23, 1990. Publicly Released: Sep 27, 1990.

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Pursuant to a congressional request, GAO provided information on several aspects of the Department of Energy's (DOE) Economic Regulatory Administration's (ERA) handling of the proposed settlement of overcharge litigation against an oil company.

GAO found that: (1) ERA had little documentation of many of the significant events and decisions leading to the proposed settlement; (2) the proposed consent order between ERA and the oil company allowed the oil company to pay the settlement amount, plus interest, over an 8-year period; (3) ERA later determined that the oil company could pay the settlement in less than 8 years; (4) ERA did not adequately document its litigation risk analysis; and (5) ERA litigating attorney participation in the negotiations leading to the proposed consent order was very limited.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The ERA Administrator issued guidance on documenting settlement negotiations, litigation risk analyses, and long-term payments, and for maintaining documents in a central location. ERA will also seek documentation on reviews by other DOE officials.

    Recommendation: The Secretary of Energy should instruct the Administrator, ERA, to develop and implement explicit requirements for documenting significant events relating to the settlement of oil overcharge cases, including: (1) settlement negotiations; (2) the factors considered in litigation risk analyses; (3) reviews of and comments on proposed settlements by other DOE officials; and (4) the bases for agreeing to allow long-term payments of proposed settlement amounts. A requirement should be included that all documentation be maintained at a central location, where it is readily available for examination.

    Agency Affected: Department of Energy

 

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