Department of Energy Has Made Slow Progress Resolving Alleged Crude Oil Reseller Pricing Violations

GAO reviewed the Department of Energy (DOE) crude oil reseller program. Specifically, GAO examined the: (1) extent of civil and criminal violations; (2) slowness in issuing proposed remedial orders; (3) subpoena problems; (4) adequacy of staffing; (5) settlement efforts; and (5) effect on the program of the reorganization of the Economic Regulatory Administration (ERA), which took place in late 1981.

GAO found that the situation in the crude reseller program has not improved significantly since the last GAO review of the program. The crude oil reseller program was established to enforce the Emergency Petroleum Allocation Act of 1973 which required the President to establish regulations for controlling the allocation and the selling price of crude oil and refined products. The President delegated this authority to DOE and its predecessor agencies. The program will not improve, regardless of the ambitious objectives ERA will set for fiscal year 1982, without a firm commitment and concerted actions on the part of DOE to resolve the alleged violations identified in crude reseller audits. DOE must be willing to continue the crude reseller program long enough to obtain the data necessary to disclose potential willful violations, including evidence of involvement by major refiners. The necessary work must be done because of the 5-year statute of limitations on willful violations. In addition, GAO found that: (1) the number of audits undertaken and the number of violations alleged have increased; (2) ERA audit coverage of the sales and purchases of crude oil by major refiners has been inadequate; (3) ERA has experienced decreasing company cooperation; (4) ERA staff morale has continued to suffer because of uncertainties about the program's future; (5) the reorganization removed the position of Director, Crude Oil Reseller Program; and (6) ERA has had little success in negotiating settlements of alleged violations with companies.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: James Duffus Iii Team: General Accounting Office: Energy and Minerals Division Phone: (202) 512-7756