Legality of DOE Plans To Distribute $25 Million It Holds Under Terms of Consent Order With Getty Oil Company

B-200170: Published: Oct 10, 1980. Publicly Released: Oct 10, 1980.

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GAO reviewed the legality of plans by the Department of Energy (DOE) to distribute $25 million it holds under the terms of a consent order with Getty Oil Company. The consent order resulted from allegations by DOE that the firm violated Federal oil price and allocation regulations. DOE plans to distribute $21 million of the funds to 20 States, in which the firm sells heating oil, to be used to benefit low-income residents. The remaining $4 million will be distributed through the Department of Defense to lower paid members of the armed services who reside off base in States where the firm does business. DOE cannot implement this plan because it is not designed to effect restitution and is thus beyond the remedial authority of DOE. The Getty consent order is devoid of any facts from which GAO can determine the nature of the violation. In order for the distribution of funds to satisfy the requirements for restitution, it must be made in approximate proportion to the injury actually sustained to customers and to the ultimate consumers of the firm's products who were the victims of the overcharges. The DOE plan does not meet this test. In all respects, except that the servicemen to receive the oil currently reside in States in which the firm did business during the winter of 1978-79, the distribution to these servicemen is unrelated to the firm's violation. Rather than being a plan to remedy the effects of violations, the plan is assistance to individuals whom DOE considers to be in need. Although the victims of the violation were all agricultural and industrial users, only users of home heating oil will benefit from the DOE plan. To the extent to which DOE is not distributing funds to the overcharged customers, it must deposit the funds in the Treasury as miscellaneous receipts. The authority of DOE to enter into consent orders has been challenged in court. Under such circumstances, GAO will not be inclined to take further action, since the court will resolve the issues.

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