The Carter administration will undertake a major investigation of the 15 major oil companies aimed at recouping alleged overcharges since the 1973 Arab oil embargo, "possibly amounting to several billion dollars, Federal Energy Administration head John F. O'Leary said yesterday.
O'Leary said efforts to enforce the FEA's complicated oil printing regulations had been "skimped" in the past, and he strongly endorsed the findings of a 14-members task force led by Stanley Sporkin, head of enforcement at the Securities and Exchange Comminission.
The task force report said "FEA's enforcement program has historically been ineffective without either the commitment or direction to do the job . . . (it) has floundered and moved from crisis to crisis with few real successes."
Sporkin, who has a reputation as a tough enforcer in the corporate world saied FEA's attempts to get the countries largest refiners to comply with oil pricing regulations were "a failure."
FEA has a backlog of about 3,600 open cases with a potential of $1.7 billion in pricing violations. Since July, 1974. FEA has settled cases with major refiners involving $358 million in violations.
"We still haven't gotten a hold on the major refiners," Sporkin said.
"This intensive major refiner audit program makers the most sense from a cost-benefit basis."
FEA officials indentified the 15 integrated oil companies and others with large refinery operations as Exxon, Standard Oil Co. of Indiana (Amoco). Shell, Texaco, Standard Oil Co. of California (Socal), Mobil, Gulf, Atlantic Richfield, Sun, Marathon, Union, Continental Oil Co. (Conoco), Philips, Ctities Service and Getty-Skelly.
Industry reaction, especially among the companies who will be targeted under FEA's investigation, was highly critical. A Conoco spokesman labeled the FEA's regulations as "complex, confusing and oftentimes contradictory."
FEA's oil pricing and allocation regulations were designed during the embargo emergency foru years ago, now run to over 20,000 pages, filling eight volumes.
Asked to indentify who was responsible for FEA's admitted failure to ensure that the oil companies comply with the pricing regulations. 'O'Leary said. "I don't want to point the finger at any of my predecessors."
John C. Sawhill, who headed FEA under President Ford, said, "We created FEA so quickly it was very difficult to generate an ongoing strong audit program."
Sporkin's report called for a permanent investigative task force made up of auditors and attorneys and headed by "a tough enforcer and litigator . . . not unlike the concept of a special prosecutor."