DOE Administration of Entitlements and Oil Overcharge Funds

GAO discussed the Department of Energy's (DOE) commitment to distribute overcharge funds in order to achieve restitution to the greatest extent possible. Issues of concern included: (1) the propriety of the terms of a proposed Memorandum of Understanding; (2) the propriety of the DOE Statement of Restitutionary Policy and the moratorium on crude-oil proceedings based on that policy; and (3) DOE administrative responsibilities. GAO found that: (1) DOE established the Entitlement Program to spread the benefits of price-controlled crude oil more equitably through money transfers based on refiners' access to cheaper oil; (2) the extent to which the proposed settlement attempts to alter current procedures would be improper, since it establishes a mandatory even split of escrow funds between the Treasury and the states; (3) since DOE must comply with its regulations in distributing overcharge funds, it cannot refuse to initiate refund proceedings by implementing a moratorium; (4) DOE has the responsibility to ensure that the states use oil overcharge funds only for authorized purposes; and (5) although regulations were silent on the question of interest and Congress recognized that the funds would be deposited in interest-bearing accounts, DOE concluded that Congress expected the states to retain the interest and apply it only to purposes and programs likely to benefit injured parties. GAO believed that DOE needs to: (1) ensure that the states use interest earned on the funds only for authorized purposes; and (2) provide states with criteria for determining what documentation is needed to justify energy conservation demonstration projects.