Buying $1.3 million worth of electric fans and air conditioners for victims of last summer's heat wave in Missouri may have been a nice thought, but it was not a proper use of money earmarked to repay those allegedly overcharged by the Getty Oil Co. in the mid-1970s, the General Accounting Office said yesterday.
In fact, GAO general counsel Milton J. Socolar told the House energy subcommittee, the Department of Energy's entire plan to distribute $25 million from Getty to consumers is illegal. This is because the department made no attempt to find and compensate the people who were overcharged and because DOE doesn't have the statutory authority to draw up such an expansive plan, he said.
DOE should attempt to return the money to those overcharged or transfer the money to the Treasury, Socolar said.
Energy officials present at the hearing disputed the GAO legal opinion and said they would await an opinion by the Justic Department before determining a course of action. They said they couldn't follow the usual procedure of advertising for claims against Getty because the firm refused to agree to a settlement containing that provision.
The $75 million settlement with Getty was announced by DOE last December. As part of it, the company put $25 million in an account under DOE control "to defray heating oil costs of low-income persons" and said it would forgo $50 million in future price increases.
In July, after much infighting between DOE and the Office of Management and Budget over the legality of different proposals, the department announced that it would distribute $21 million from the fund to 20 states and another $4 million to military personnel. Internal administration memos obtained by the subcommittee show that some officials doubted whether the plan met the definition of "restitution" required by DOE authority.
Soon after the distribution plan was announced, officials in Missouri made an emergency request to use its $1.3 million share of the fund for fans and air conditioners.The DOE concurred, despite the less-than-clear connection of the request to overcharges on heating oil by Getty.
Yesterday's hearing was the subcommittee's first comprehensive look at settlements DOE has made with Getty and several other refiners. Reps. John D. Dingell (D-Mich.), the chairman, and Albert Gore Jr. (D-Tenn.) criticized both the Getty distribution plan and the consent orders.
"It's not nearly good enough, it's not even close," Gore said of the Getty plan. He and Dingell also questioned the other settlements negotiated by DOE special counsel Paul Bloom because much of the penalty involved requiring the oil companies to improve production facilities -- benefiting the energy giants as much as the public.
Last week a coalition of consumer and union groups challenged Bloom's settlements with Getty and other major refiners, saying that only a penny on the dollar was being set aside for consumers. Yesterday, Jim Feldesman, attorney for the Consumer Energy Council, said he felt the GAO legal opinion bolstered his position in court. But he said he disagreed with Socolar's conclusion that DOE probably would have to return much of the money to the Treasury.
Feldesman also said it seemed clear that Energy Department officials didn't really know what to do with the money set aside for restitution to consumers.
Bloom and Lynn Coleman, acting deputy secretary at DOE, defended the department's efforts to make a fair distribution of the $25 million in the Getty settlement. Coleman said that if DOE's authority is limited, as the GAO claimed yesterday, "We may as well let the oil companies keep the money."