Case No. RJ272-00062
June 18, 1998
DECISION AND ORDER
OF THE DEPARTMENT OF ENERGY
Supplemental Order
Names of Applicants: Howard Cab, Inc.
Hoquiam Plywood Company, Inc.
Date of Filing: June 15, 1998
Case Numbers: RJ272-00061
RJ272-00062
RK272-04818
RK272-04819
On January 27, 1997, the Office of Hearings and Appeals (OHA) issued a Supplemental Order granting Howard Cab, Inc. (Howard) and Hoquiam Plywood Company, Inc. (Hoquiam) supplemental refunds in the crude oil refund proceeding. Crude Oil Supplemental Refund Distribution, Case No. RB272-99. Howard received a refund of $536 under Case No. RF272-55258. Hoquiam received a refund of $477 under Case No. RF272-65875. Both Howard and Hoquiam were represented by Federal Action, Inc., a private filing service, in their original Applications for Refund, and their refunds were sent to Federal Action.
On January 15, 1998, Richard Blackmun of Hoquiam contacted the OHA by telephone. He stated that he received a check from Federal Action dated June 25, 1997. The check was in the amount of $263.50, which is 55.2 percent of the $477 that was granted to Hoquiam. Mr. Blackmun further explained that the check had been returned to him by his bank because the check could not be cashed due to uncollected funds. Mr. Blackmun sent us a copy of the returned check and a copy of the letter he received with the check from Federal Action.
The letter from Federal Action to Hoquiam was written by John Widder, the president of Federal Action. Mr. Widders letter explained that 20 percent of the check was withheld from Hoquiam as Federal Actions fee, and 24.8 percent was withheld pending clearance of your Taxpayer Information by the IRS and the DOE.
In order to receive checks on behalf of applicants, Federal Action was required to file an Escrow Certification with the OHA. Federal
Action submitted its Escrow Certification on June 22, 1992. In a letter dated January 20, 1998, we notified Mr. Widder that the method in which Federal Action distributed Hoquiams refund was clearly in violation of the Escrow Certification. In the Certification, Federal Action agreed to deposit all refund checks into its escrow account within two business days of receipt. It also agreed that all refunds, less applicant commissions or fees, will be disbursed from its escrow account to clients whose refunds have been approved by the Office of Hearings and Appeals within 30 calendar days of deposit of funds into the escrow account. Hoquiam did not receive its check from Federal Action until five months after the date of our Decision and Order. Federal Action withheld more than its fee from Hoquiam, and the amount that it sent could not be cashed due to uncollected funds. We explained in our letter that we view the foregoing as a very serious matter and gave Mr. Widder an opportunity to respond.
Mr. Widder responded in a letter dated February 2, 1998. He stated that the check bounced, to the best of his knowledge, due to an error by the bank. He did not submit any evidence to support this statement. He also stated that Federal Action would send Hoquiam another check provided that Hoquiam returned the first check to Federal Action. Regarding the amount of the check and the length of time it took Hoquiam to receive it, Mr. Widder stated that the amount and timing of any distribution to Hoquiam . . . are matters of contract between Hoquiam Plywood and Federal Action, Inc., and are not a matter of lawful federal regulation.
Federal Actions response did not alleviate our concerns. Therefore, on February 12, 1998, we sent Federal Action a letter requesting that it submit evidence showing that Hoquiam and the other applicants granted refunds in the January 27 Decision had received their full refund, less Federal Actions 20 percent fee. On June 5, 1998, we received bank records and copies of checks to the applicants from Federal Action. Federal Actions letter accompanying the records stated that there is no indication on its bank statements that the refunds to Hoquiam and Howard were paid. Federal Action stated that it recently reissued the checks to Hoquiam and Howard.
It is clear that Federal Action is in violation of its Escrow Certification regarding Hoquiam and Howard. The refund checks to Hoquiam and Howard were dated June 25, 1997, five months after the January 27 Decision granting their refunds was issued. It is now a year after Hoquiams check was returned due to uncollected funds, and Federal Action claims that it just reissued the uncashed checks. The amount of time it took Federal Action to issue the checks initially, the fact that at least one of the two checks bounced, and the amount of time it has taken Federal Action to reissue the uncashed checks are unacceptable.
Additionally, because Hoquiam alerted us of the bounced check, we have been made aware that Federal Action withheld too much from Hoquiam and Howard. Federal Actions fee is 20 percent, and yet it withheld an additional 24.8 percent from each of the checks. Federal Action has given several explanations for why the extra 24.8 percent was withheld. These explanations include that Federal Action needed to hold the money pending clearance of Taxpayer Information by the IRS and the DOE, and that Federal Action needed a provision of adequate security with respect to its future fees in the crude oil refund proceeding. Neither of these explanations is consistent with Federal Actions obligations under the Escrow Certification.
Considering Federal Actions mishandling of Hoquiam and Howards refunds, we will rescind Crude Oil Supplemental Refund Distribution, Case No. RB272-99, with respect to Hoquiam and Howard and require Federal Action to return the full amount of each refund to the DOE. We will also reissue the refunds directly to Hoquiam and Howard under new case numbers. Howard will be assigned to Case No. RK272-04818, and Hoquiam will be assigned to Case No. RK272- 04819. For future purposes, the Applications will be known by the new case numbers.
It Is Therefore Ordered That:
(1) The Supplemental Order issued by the DOE on January 27, 1997, Crude Oil Supplemental Refund Distribution, Case No. RB272-99, is hereby rescinded as to Howard Cab, Inc., Case No. RF272-55258, redesignated RJ272-00061, and Hoquiam Plywood Company, Inc., Case No. RF272-65875, redesignated RJ272-00062.
(2) Federal Action, Inc., shall remit the sum of $1,013 to the DOE within 30 days. The check shall be made payable to the U.S. Department of Energy, shall prominently display Case Nos. RJ272- 00061 and RJ272-00062, and shall be sent to:
Department of Energy
Office of the Controller
Cash Control Branch
P.O. Box 500
Germantown, MD 20874
In the event that payment is not made within 30 days of the date of this Decision and Order, interest shall accrue from the date of this Decision and Order on the amount due at the rate generally assessed by the Department of Energy on overdue DOE receivables. Other charges generally assessed on overdue DOE receivables shall also apply.
(3) Upon notification by the Office of the Controller of the receipt of these funds, the Director of Special Accounts and Payroll, Office of the Departmental Accounting and Financial Systems Development, Office of the Controller of the Department of Energy, shall deposit these funds into the deposit fund escrow account maintained at the Department of the Treasury denominated Crude Tracking-Claimants 4, Account No. 999DOE010Z.
(4) The Director of Special Accounts and Payroll, Office of Departmental Accounting and Financial Systems Development, Office of the Controller of the Department of Energy shall take appropriate action to disburse a supplemental refund in the amount of $536 to (Case No. RK272-04818):
Howard Cab, Inc.
c/o Robert Eveland
P.O. Box 163
Calumet City, IL 60409
and a supplemental refund in the amount of $477 to (Case No. RK272- 04819):
Hoquiam Plywood Company, Inc.
c/o Richard Blackmun
P.O. Box 737
Hoquiam, WA 98550
(5) The funds shall be disbursed from the escrow fund denominated Crude Tracking-Claimants 4, Account No. 999DOE010Z, maintained at the Department of the Treasury.
(6) To facilitate the payment of future refunds, an Applicant shall notify the Office of Hearings and Appeals in the event that there is a change of address, or if an address correction is necessary. Such notification shall be sent to:
Director of Management Information
Office of Hearings and Appeals
Department of Energy
Washington, DC 20585-0107
(7) Any conditions that applied to an Applicant's receipt of the initial crude oil refund shall also apply to that Applicant's receipt of this supplemental refund.
(8) This is a final Order of the Department of Energy.
George B. Breznay
Director
Office of Hearings and Appeals
Date: June 18, 1998