Improvements Needed in the DOE Petroleum Pricing and Allocation Compliance Program

RCED-84-51: Published: Apr 18, 1984. Publicly Released: May 16, 1984.

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In response to a congressional request, GAO reviewed aspects of the Department of Energy's (DOE) petroleum allocation and pricing compliance program established under the Emergency Petroleum Allocation Act of 1973. In addition, GAO reviewed the proposed compliance budgets for the past 3 years, the DOE basis for resolving major refiners' alleged violations, and the status of prior GAO recommendations to improve the compliance program.

GAO found that the Economic Recovery Administration (ERA) did not initially request sufficient funds in three budgets for audit and investigation work. Although alleged violations have been resolved or tentative settlement agreements have been reached in most cases involving major refiners, the status of five cases has not changed since 1982. GAO found that documentation of alleged violations involving billions of dollars was inadequate in selected cases. In addition, ERA cannot identify the impact of potential overcharges on individual customers or ensure that the final settlements with major refiners include sufficient refunds for all overcharged customers. GAO believes that ERA has not adequately responded to the June 1982 GAO recommendation which required EPA to provide audit coverage of selected major refiners' crude oil sales and purchase activities that were not precluded by a settlement agreement.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: As part of its follow-on review of ERA settlement of major refiner cases, GAO found that the number of cases impacted by this recommendation has declined from 12 to 9. ERA opposes the need for additional documentation and will not implement any recommendation calling for additional documentation or analysis. GAO will not make recommendations as a result of the review.

    Recommendation: The Secretary of Energy should direct the ERA Administrator to establish a case history for each of the 12 major refiners with unresolved issues. This history should include all relevant data, including audit reports, compliance documents, computer runs, and records of manual calculations of potential violations. The resolution of all alleged violations should be clearly traceable in this history.

    Agency Affected: Department of Energy

  2. Status: Closed - Not Implemented

    Comments: As part of its follow-on review of ERA settlement of major refiner cases, GAO found that the number of cases impacted by this recommendation has declined from 12 to 9. ERA opposed the need for additional documentation and will not implement any recommendation calling for additional documentation or analysis. GAO will not make any recommendation as of result of the review.

    Recommendation: The Secretary of Energy should direct the ERA Administrator to reevaluate the computer program and the attendant manual calculations used in settlements and litigation to determine whether a new program or modification to the existing program is needed to enable ERA to effectively meet its responsibility for obtaining restitution for overcharged parties.

    Agency Affected: Department of Energy

  3. Status: Closed - Not Implemented

    Comments: DOE disagrees with this recommendation for the second time. GAO first made this recommendation in EMD-82-46, June 1, 1982. GAO believes it is no longer worthwhile to pursue this recommendation in light of the agency's continued opposition.

    Recommendation: To properly conclude the compliance program and to ensure that ERA provides the audit coverage necessary to meet its responsibility for identifying violations of the petroleum pricing regulations, the Secretary of Energy should direct the ERA Administrator to provide for audit coverage of the 11 major refiners whose crude oil sales and purchases have not been subjected to civil audits and which have not entered into settlements. In determining its future resource requirements, ERA should factor in the resources needed to perform these audits.

    Agency Affected: Department of Energy

 

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