The government's once-ambitious effort to force billions of dollars in refunds by the 34 largest oil companies for overcharges on gasoline and other products during the last decade would be much limited and perhaps wiped out under the forthcoming budget from the Reagan administration.
Planned budget cuts of 70 to 80 percent plus a 12-month deadline to complete pending audits and lawsuits against the oil companies, prompted departed Energy Department counsel Paul L. Bloom to say in an interview: "What this amounts to is amnesty for the oil industry under the guise of budget-cutting."
For each of the past three years, the Energy Department has been spending about $60 million in its enforcement program and has identified $11 billion in alleged pricing violations against customers.
Most of the alleged overcharges have yet to be collected by government lawyers, and the oil industry has contested them vigorously. A parting decision by Bloom to give $4 million of interest collected from overcharge funds to charities with instructions that the money be distributed to the poor touched off a round of criticism of Bloom's enforcement record.
Every major oil company has been cited for pricing infractions during the era of regulation that followed the 1973 embargo by producing nations. Three companies, Exxon, Texaco and Gulf, face overcharge allegations of more than $1.2 billion each.
The first inking that the enforcement effort would be slashed came from the 145-page budget attack plan of David A. Stockman, Office of Management and Budget director. Stockman called for cutting the combined budget of Energy's office of special counsel and office of enforcement from this year's level of $70 million to $13 million in the comming fiscal year.
One source in the enforcement office said staff members were told that President Reagan's final budget plan would adhere to a 70 percent reduction.
The enforcement program has two divisions: one focused on the major oil companies under a special counsel for compliance, and another focused on the rest of the industry.
A 70 percent budget reduction would leave the 500-member special counsel's office with a skeleton staff to resolve more than 200 unresolved cases of overcharges by the largest companies. The rest of the enforcement program employs about 1,300 auditors and lawyers who preside over thousands of unresolved cases of pricing violations, plus civil and criminal fraud.
Congressional concern about the future of the enforcement program resulted in a Feb. 3 letter from House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.) to Edwards saying, "Reorganization, reductions in personnel, and transfers of personel in these offices is not warranted until this work is accomplished and violations are fully resolved."
The Energy Department's special counsel's office has over the last three years undertaken one of the most ambitious federal attempts to conduct audits of the major oil companies to determine whether they complied with the oil-pricing regulations.
The audits have since been extended to cover pricing activities through 1980.
The oil industry appeared restrained in its reaction to the possible demise of the enforcement program. "Our position is that we don't know exactly what the cutbacks will be and therefore we can't comment or speculate," said a spokesman for the American Petroleum Institute.
Bloom, who was once described by a Wall Street Journal editorial as the man who was "trying up the entire [oil] industry in paperwork" with his subpoenas for records, has returned to the practice of water law.