The Department of Energy is gutting an effort to collect billions of dollars in overcharges made by oil companies when that industry was operating under price controls, a DOE official said yesterday.
Jack Wuerker, an attorney in the DOE's office of general counsel and former deputy director of the Office of Special Investigations, said that reorganizations were wiping out "the ability to collect billions of dollars" from companies that violated regulations imposed after the Arab oil embargo in 1973.
"In my opinion, it constitutes a fraud on the American people of the first magnitude," Wuerker told a hearing of a House Energy and Commerce subcommittee.
The Energy Department reorganization in question is the second step in the process. Last December, the part of the DOE charged with bringing civil actions was reorganized. Last month, the part of DOE handling potential criminal cases was reorganized.
Critics of the reorganizations have said that they demoralized remaining personnel, resulted in experienced people being replaced by employes with less experience and sent a signal to the oil companies that violations will not be pursued with any vigor.
The government has collected more than $1 billion so far from companies that charged more than they should have in sales of crude oil.In the past, DOE officials have estimated that another $4.7 billion might be collected through enforcement efforts.
The General Accounting Office said in a report prepared for Rep. John D. Dingell (D-Mich.) that reorganization and cutbacks in the resources available for collecting overcharges threaten the DOE's ability to accomplish as much as it has said it will.
The GAO said that some of the principal problems in the enforcement program include continued uncertainty about its future that has encouraged some companies not to cooperate and has led to the loss of "key and highly experienced personnel."
Still other problems, according to GAO, are that companies will contest enforcement actions and delay resolution of the cases, and that negotiated settlements, which the DOE has emphasized recently, have had little success.
The GAO recommended that Secretary of Energy James B. Edwards re-establish the position of director of the crude oil reseller program and fill it with "a highly experienced official."
Rayburn Hanzlik, administrator of the DOE's Economic Regulatory Administration and the author of the reorganizations, defended what had been done and said that it would not work to the disadvantage of enforcement actions.
"I challenge this committee to find a single case this office has dropped . . . pushed aside, or scuttled," he said.