79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–965 

STRATEGIC PETROLEUM RESERVE REFORM ACT 

SEPTEMBER 25, 2018.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. WALDEN, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 6511] 

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 6511) to authorize the Secretary of Energy to carry 

out a program to lease underutilized Strategic Petroleum Reserve 

facilities, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 3 

Background and Need for Legislation .................................................................... 3 

Committee Action .................................................................................................... 7 

Committee Votes ...................................................................................................... 8 

Oversight Findings and Recommendations ........................................................... 8 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 8 

Congressional Budget Office Estimate ................................................................... 8 

Federal Mandates Statement ................................................................................. 8 

Statement of General Performance Goals and Objectives .................................... 8 

Duplication of Federal Programs ............................................................................ 8 

Committee Cost Estimate ....................................................................................... 9 

Earmark, Limited Tax Benefits, and Limited Tariff Benefits ............................. 9 

Disclosure of Directed Rule Makings ..................................................................... 9 

Advisory Committee Statement .............................................................................. 9 

Applicability to Legislative Branch ........................................................................ 9 

Section-by-Section Analysis of the Legislation ...................................................... 9 

Changes in Existing Law Made by the Bill, as Reported ..................................... 10 

Additional Views ...................................................................................................... 13 

The amendment is as follows: 

2 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Strategic Petroleum Reserve Reform Act’’. 

SEC. 2. USE OF UNDERUTILIZED STRATEGIC PETROLEUM RESERVE FACILITIES. 

Section 168 of the Energy Policy and Conservation Act (42 U.S.C. 6247a) is 

amended to read as follows: 

‘‘SEC. 168. USE OF UNDERUTILIZED FACILITIES. 

‘‘(a) AUTHORITY.—Notwithstanding any other provision of this title, the Secretary 

may establish and carry out a program to lease underutilized Strategic Petroleum 

Reserve storage facilities and related facilities to the private sector, or a foreign government or its representative. Petroleum products stored under this section are not 

part of the Strategic Petroleum Reserve. 

‘‘(b) PROTECTION OF FACILITIES.—Any lease entered into under the program established under subsection (a) shall contain provisions providing for fees to fully compensate the United States for all related costs of storage and removals of petroleum 

products (including the proportionate cost of replacement facilities necessitated as 

a result of any withdrawals) incurred by the United States as a result of such lease. 

‘‘(c) ACCESS BY THE UNITED STATES.—The Secretary shall ensure that leasing of 

facilities under the program established under subsection (a) does not impair the 

ability of the United States to withdraw, distribute, or sell petroleum products from 

the Strategic Petroleum Reserve in response to an energy emergency or to the obligations of the United States under the Agreement on an International Energy Program. 

‘‘(d) NATIONAL SECURITY.—The Secretary shall ensure that leasing of facilities 

under the program established under subsection (a) to a foreign government or its 

representative will not impair national security. 

‘‘(e) DEPOSITS OF AMOUNTS RECEIVED.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), amounts received 

through the leasing of facilities under the program established under subsection 

(a) shall be deposited in the general fund of the Treasury during the fiscal year 

in which such amounts are received. 

‘‘(2) COSTS.—The Secretary may use for costs described in subsection (b) 

(other than costs described in subsection (f)), without further appropriation, 

amounts received through the leasing of facilities under the program established under subsection (a). 

‘‘(f) PREPARATION OF FACILITIES.—The Secretary shall only use amounts available 

in the Energy Security and Infrastructure Modernization Fund established by section 404 of the Bipartisan Budget Act of 2015 for costs described in subsection (b) 

of this section that relate to addition of facilities or changes to facilities or facility 

operations necessary to lease such facilities, including costs related to acquisition of 

land, acquisition of ancillary facilities and equipment, and site development, and 

other necessary costs related to capital improvement.’’. 

SEC. 3. PILOT PROGRAM TO LEASE STRATEGIC PETROLEUM RESERVE FACILITIES. 

(a) IN GENERAL.—Part B of title I of the Energy Policy and Conservation Act (42 

U.S.C. 6231 et seq.) is amended by adding at the end the following: 

‘‘SEC. 170. PILOT PROGRAM TO LEASE STORAGE AND RELATED FACILITIES. 

‘‘(a) ESTABLISHMENT.—In carrying out section 168 and not later than 180 days 

after the date of enactment of the Strategic Petroleum Reserve Reform Act, the Secretary shall establish and carry out a pilot program to make available for lease— 

‘‘(1) capacity for storage of up to 200,000,000 barrels of petroleum products 

at Strategic Petroleum Reserve storage facilities; and 

‘‘(2) related facilities. 

‘‘(b) CONTENTS.—In carrying out the pilot program established under subsection 

(a), the Secretary shall— 

‘‘(1) identify appropriate Strategic Petroleum Reserve storage facilities and related facilities to lease, in order to make maximum use of such facilities; 

‘‘(2) identify and implement any changes to facilities or facility operations necessary to so lease such facilities, including any such changes necessary to ensure the long-term structural viability and use of the facilities for purposes of 

this part and part C; 

‘‘(3) make such facilities available for lease; and 

‘‘(4) identify environmental effects, including benefits, of leasing storage facilities and related facilities. 

3 

1See International Energy Agency, Agreement on an International Energy Program. 

2 Based on 2017 U.S. net imports of crude oil and refined products. 

3 H.R. 1625, Consolidated Appropriations Act of 2018. (P.L. 115–141). 

4Department of Energy. Letter from Assistant Secretary for Fossil Energy Steven Winberg 

to Chairman Greg Walden. September 17, 2018. 

‘‘(c) REPORT.—Not later than 1 year after the date of enactment of the Strategic 

Petroleum Reserve Reform Act, the Secretary shall submit to Congress a report on 

the status of the pilot program established under subsection (a).’’. 

(b) CONFORMING AMENDMENT.—The table of contents for the Energy Policy and 

Conservation Act is amended by adding after the item relating to section 169 the 

following: 

‘‘Sec. 170. Pilot program to lease storage and related facilities.’’. 

PURPOSE AND SUMMARY

H.R. 6511, Strategic Petroleum Reserve Reform Act, was introduced by Rep. Joe Barton (R–TX) and Rep. Bobby Rush (D–IL) on 

June 25, 2018. H.R. 6511 requires the Secretary of Energy to carry 

out a pilot program to lease underutilized caverns and other facilities at the Strategic Petroleum Reserve (SPR). 

BACKGROUND AND NEED FOR LEGISLATION

Strategic Petroleum Reserve 

The Strategic Petroleum Reserve is a stockpile of governmentowned petroleum managed by the Department of Energy (DOE) 

that Congress authorized as a response to gasoline supply shortages and price spikes associated with the Organization of Arab Petroleum Exporting Countries (OPEC) oil trade embargo in 1973 

and 1974. The Energy Policy and Conservation Act of 1975 (EPCA) 

authorized the SPR to reduce the impact of disruptions in supplies 

of petroleum products and to carry out U.S. obligations under the 

1974 Agreement on an International Energy Program (IEA).1

EPCA authorizes the President to draw down the SPR upon finding 

that there is a ‘‘severe supply interruption.’’ 

The SPR’s crude oil storage facilities are comprised of 62 underground caverns mined in naturally occurring salt domes. Two sites 

are located in Texas, and two in Louisiana (Figure 1). The sites 

offer access to marine terminals and pipeline systems to move 

crude oil to and from the SPR. The SPR currently holds 660 million 

barrels (MMbbl) of crude oil, representing 176 days of net import 

protection.2 DOE also maintains the Northeast Gasoline Supply 

Reserve (NGSR), which holds 1 MMbbl of gasoline. The NGSR was 

established by Secretary Moniz in 2014 using funds collected from 

a test sale of SPR crude oil. The NGSR is currently operating 

under temporary authority provided by Congress.3

In September, the Committee received a letter from DOE, providing its responses to a recommendation by the Government Accountability Office that DOE should conduct or complete studies on 

the costs and benefits of regional petroleum product reserves for all 

of the regions of the United States that had been identified as vulnerable to fuel supply disruptions.4

It is DOE’s position that above-ground government-owned and 

-operated regional petroleum product reserves are an inefficient 

and expensive solution to respond to regional petroleum supply disruptions. According to DOE, based on the current annual costs of 

maintaining 1 million barrels of refined petroleum products in the 

4 

5See, for example, testimony by Steven E. Winberg, Assistant Secretary for Fossil Energy, Department of Energy at Subcommittee on Energy hearing entitled, ‘‘DOE Modernization: Legislation to Authorize a Pilot Project to Commercialize the Strategic Petroleum Reserve,’’ July 24, 

2018. 6See Energy Information Administration. U.S. Net Imports of Crude Oil and Petroleum Products. U.S. net imports declined from an average of 12.5 MMbbl/day in 2005 to 3.7 MMbbl/day 

in 2017. 

Northeast, costs of storing refined petroleum products in above 

ground tanks can range from $10 to $30 million per year, depending on the product and local conditions. This compares to the approximate annual cost of about $200 million to maintain the current SPR inventory level of about 660 million barrels. 

Citing the expensive nature of storing refined petroleum products 

and the logistical issues in making them available to the market, 

the Administration has proposed disestablishing the NGSR in both 

the 2018 and 2019 federal budgets. It is DOE’s position that, given 

the inefficient and expensive nature of storing refined petroleum 

products in above ground tanks, it would be inappropriate to use 

taxpayer funds to conduct additional studies on the use of federal 

government owned storage of refined petroleum products. 

As a member of the IEA, the United States is obligated (1) as a 

net importer, to maintain crude oil and/or refined product reserves 

equal to at least 90 days of net petroleum imports and (2) to be 

able to contribute a proportional share to an IEA collective action 

response, based on its share of IEA oil consumption, which at 

present is about 41 percent of the barrels released in a collective 

action.5

The U.S. currently exceeds its obligation to maintain at least 90 

days of strategic stocks. In the face of declining net U.S. imports, 

a 70 percent reduction from 2005 peak levels, Congress has taken 

steps to reduce the size of the SPR.6 At the same time, Congress has also authorized an investment of up to $2 billion to carry out 

an SPR modernization program. The purpose of the SPR modernization program is to provide for the construction, maintenance, 

repair, and replacement of SPR facilities. The program may include 

operational improvements to extend the useful life of surface and 

subsurface infrastructure; maintenance of cavern storage integrity; 

and addition of infrastructure and facilities to optimize the drawdown and incremental distribution capacity of the SPR. 

5 

Congressionally-mandated sales 

Congress has passed several laws mandating the sale of crude oil 

from the SPR. These sales, totaling an estimated $16 billion, are 

projected to reduce the SPR’s inventory from the current level of 

660 MMbbl to approximately 400 MMbbl over the next decade, provided the drawdowns do not limit the ability of the SPR to prevent 

or reduce the adverse impact of an energy supply shortage (Figure 

2, Table 1). 


Insert offset folio 7 here HR965.001
6 


Insert offset folio 8 here HR965.002

-5 

Figure 2. Strategic Petroleum Reserve Projected Inventory 

Table 1. Summary of Mandated Crude Oil Sales 

---· '17 'HI '!9 '20 '2! '22 '23 '24 '25 '26 '27 Total 

6.3 4.7 5* 7.5• 0 0 0 0 0 0 () 23.5 

0 lO lO J() () () 58 

403 

fAST Act () 0 () () (l 0 !6 25 25 0 0 66 

Cures A-ct 9.9 9.2 6 0 () 0 0 (j 0 25.1 

Tax Cuts ID:ld Jobs () 0 0 () 0 0 0 4 7 Act 

0 0 0 0 0 75 7.5 7.5 35 100 

() () 0 0 (l 0 0 0 0 Ill 

Total 16.2 tll.9 16 17.5 10 15.5 33.5 42.5 42.5 39 38 289.6 

Note: For Bipartisan Budget Act Section 404 sales in the 

future, quantities are based on $60/barrel. Projected SPR 

inventory in FY 2028 is approximately 405 million barrels. 
7 

SPR modernization and pilot leasing program 

The Committee finds that modernizing the SPR’s surface and 

subsurface infrastructure and commercializing excess or underutilized SPR storage capacity through a leasing program will improve 

the SPR’s emergency response capability and maximize the longterm strategic value of the government asset. As DOE withdraws 

oil to meet congressionally mandated sales—approximately 300 

MMbbl by 2028—SPR facilities will have unused storage capacity 

of roughly 45 percent of current design capacity. Absent new statutory authority, DOE will be required to maintain the caverns and 

surface infrastructure at considerable taxpayer expense, with no 

associated energy security benefits. 

H.R. 6511 provides DOE with new authorities to allow for the 

preservation of the existing SPR design capacity and further modernization of SPR facilities. H.R. 6511 amends EPCA to authorize 

DOE to lease underutilized SPR facilities to the private sector or 

a foreign government, provided the lease protects existing SPR facilities and does not impair national security or the ability of the 

SPR to respond in an emergency or to fulfill international obligations. H.R. 6511 authorizes DOE to use lease revenues to fully offset associated operations and maintenance costs. 

H.R. 6511 requires DOE to establish a pilot program to lease up 

to 200 MMbbl, which the Committee anticipates will incentivize 

upgrades to the SPR’s distribution capacity, allowing for more efficient movement of petroleum products and increased performance 

of the SPR when addressing energy security needs. The Committee 

expects that DOE may be required to reconfigure the existing infrastructure to handle an increase in inflow/outflow activities across 

SPR sites, which could result in capital expenditures to enable 

leasing. This may include, for example, the addition of new surface 

infrastructure and additional conversion to brine-drive caverns to 

support more frequent drawdown and retrieval cycles. H.R. 6511 

authorizes such capital expenditures from amounts available in the 

Energy Security and Infrastructure Modernization Fund, established by Section 404 of the Bipartisan Budget Act of 2015. The 

Committee finds that such activities are consistent with the purpose of the Modernization Fund and may be necessary to support 

the pilot leasing program. The Committee expects that over the life 

of the SPR leasing program, revenues will be generated that exceed 

the costs associated with preparing, operating, and maintaining the 

leased facilities. 

COMMITTEE ACTION

On July 24, 2018, the Subcommittee on Energy held a hearing 

entitled ‘‘DOE Modernization: Legislation to Authorize a Pilot 

Project to Commercialize the Strategic Petroleum Reserve.’’ The 

Subcommittee received testimony from: 

• Steven Winberg, Assistant Secretary of Fossil Energy, U.S. 

Department of Energy; 

• Kevin Book, Managing Director, ClearView Energy Partners, LLC; 

• Daniel M. Evans, Project Manager, Fluor Federal Petroleum Operations; and, 

8 

• Frank Rusco, Director, Natural Resources and Environment, Government Accountability Office. 

On September 6, 2018, the Subcommittee on Energy met in open 

markup session and forwarded H.R. 6511, without amendment, to 

the full Committee by a voice vote. 

On September 13, 2018, the full Committee on Energy and Commerce met in open markup session and ordered H.R. 6511, as 

amended, favorably reported to the House by a voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII requires the Committee to list the recorded votes on the motion to report legislation and amendments 

thereto. There were no recorded votes taken in connection with ordering H.R. 6511 reported. 

OVERSIGHT FINDINGS AND RECOMMENDATIONS

Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of rule 

XIII, the Committee held a hearing and made findings that are reflected in this report. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

Pursuant to clause 3(c)(2) of rule XIII, the Committee finds that 

H.R. 6511 would result in no new or increased budget authority, 

entitlement authority, or tax expenditures or revenues. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII, at the time this report 

was filed, the cost estimate prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974 was not available. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII, the general performance 

goal or objective of this legislation is to authorize the Secretary of 

Energy to carry out a program to lease underutilized SPR facilities. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to clause 3(c)(5) of rule XIII, no provision of H.R. 6511 

is known to be duplicative of another Federal program, including 

any program that was included in a report to Congress pursuant 

to section 21 of Public Law 111–139 or the most recent Catalog of 

Federal Domestic Assistance. 

9 

COMMITTEE COST ESTIMATE

Pursuant to clause 3(d)(1) of rule XIII, the Committee adopts as 

its own the cost estimate prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional 

Budget Act of 1974. At the time this report was filed, the estimate 

was not available. 

EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the Committee 

finds that H.R. 6511 contains no earmarks, limited tax benefits, or 

limited tariff benefits. 

DISCLOSURE OF DIRECTED RULE MAKINGS

Pursuant to section 3(i) of H.Res. 5, the Committee finds that 

H.R. 6511 contains no directed rule makings. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

Section 1 provides the short title of ‘‘Strategic Petroleum Reserve 

Reform Act.’’ 

Section 2. Use of underutilized strategic petroleum reserve facilities 

Section 2 amends Section 168 of EPCA to provide the Secretary 

of Energy with authority to establish and carry out a program to 

lease underutilized SPR facilities to the private sector or a foreign 

government. The authority provided under this section is limited to 

provide for fees to offset associated operations and maintenance 

costs; to ensure the lease does not impair the government’s ability 

to utilize the SPR in an emergency; and, to ensure a lease to a foreign government does not impair national security. This section requires lease revenues to be deposited into the Treasury, except fees 

that the Secretary may use for associated operations and maintenance costs, without further appropriation. This section clarifies 

that DOE shall only use amounts available in the Energy Security 

and Modernization Fund established by Section 404 of the Bipartisan Budget Act of 2015 for capital improvements necessary to 

prepare SPR facilities for lease. 

10 

Section 3. Pilot program to lease strategic petroleum reserve facilities 

Section 3 requires DOE to establish and carry out a pilot program to lease up to 200 MMbbl of petroleum products at SPR facilities within 180 days of enactment of H.R. 6511. This section requires DOE to report to Congress on the status of the pilot program within 1 year of enactment of H.R. 6511. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

ENERGY POLICY AND CONSERVATION ACT 

Be it enacted by the Senate and House of Representatives of the United 

States of America in Congress assembled, That this Act may be 

cited as the ‘‘Energy Policy and Conservation Act’’. 

TABLE OF CONTENTS 

* * * * * * * 

TITLE I—MATTERS RELATED TO DOMESTIC SUPPLY AVAILABILITY 

* * * * * * * 

PART B—STRATEGIC PETROLEUM RESERVE

* * * * * * * 

Sec. 169. Purchase of oil from marginal wells. 

Sec. 170. Pilot program to lease storage and related facilities. 

* * * * * * * 

TITLE I—MATTERS RELATED TO DOMESTIC SUPPLY 

AVAILABILITY 

* * * * * * * 

PART B—STRATEGIC PETROLEUM RESERVE

* * * * * * * 

øUSE OF UNDERUTILIZED FACILITIES

øSEC. 168. (a) AUTHORITY.—Notwithstanding any other provision 

of this title, the Secretary, by lease or otherwise, for any term and 

under such other conditions as the Secretary considers necessary or 

appropriate, may store in underutilized Strategic Petroleum Reserve facilities petroleum product owned by a foreign government 

or its representative. Petroleum products stored under this section 

are not part of the Strategic Petroleum Reserve and may be exported without license from the United States. 

ø(b) PROTECTION OF FACILITIES.—All agreements entered into 

pursuant to subsection (a) shall contain provisions providing for 

fees to fully compensate the United States for all related costs of 

11 

storage and removals of petroleum products (including the proportionate cost of replacement facilities necessitated as a result of any 

withdrawals) incurred by the United States on behalf of the foreign 

government or its representative. 

ø(c) ACCESS TO STORED OIL.—The Secretary shall ensure that 

agreements to store petroleum products for foreign governments or 

their representatives do not impair the ability of the United States 

to withdraw, distribute, or sell petroleum products from the Strategic Petroleum Reserve in response to an energy emergency or to 

the obligations of the United States under the Agreement on an 

International Energy Program. 

ø(d) AVAILABILITY OF FUNDS.—Funds collected through the leasing of Strategic Petroleum Reserve facilities authorized by subsection (a) after September 30, 2007, shall be used by the Secretary 

of Energy without further appropriation for the purchase of petroleum products for the Strategic Petroleum Reserve.¿ 

SEC. 168. USE OF UNDERUTILIZED FACILITIES. 

(a) AUTHORITY.—Notwithstanding any other provision of this 

title, the Secretary may establish and carry out a program to lease 

underutilized Strategic Petroleum Reserve storage facilities and related facilities to the private sector, or a foreign government or its 

representative. Petroleum products stored under this section are not 

part of the Strategic Petroleum Reserve. 

(b) PROTECTION OF FACILITIES.—Any lease entered into under the 

program established under subsection (a) shall contain provisions 

providing for fees to fully compensate the United States for all related costs of storage and removals of petroleum products (including 

the proportionate cost of replacement facilities necessitated as a result of any withdrawals) incurred by the United States as a result 

of such lease. 

(c) ACCESS BY THE UNITED STATES.—The Secretary shall ensure 

that leasing of facilities under the program established under subsection (a) does not impair the ability of the United States to withdraw, distribute, or sell petroleum products from the Strategic Petroleum Reserve in response to an energy emergency or to the obligations of the United States under the Agreement on an International 

Energy Program. 

(d) NATIONAL SECURITY.—The Secretary shall ensure that leasing 

of facilities under the program established under subsection (a) to 

a foreign government or its representative will not impair national 

security. 

(e) DEPOSITS OF AMOUNTS RECEIVED.— 

(1) IN GENERAL.—Except as provided in paragraph (2), 

amounts received through the leasing of facilities under the program established under subsection (a) shall be deposited in the 

general fund of the Treasury during the fiscal year in which 

such amounts are received. 

(2) COSTS.—The Secretary may use for costs described in subsection (b) (other than costs described in subsection (f)), without 

further appropriation, amounts received through the leasing of 

facilities under the program established under subsection (a). 

(f) PREPARATION OF FACILITIES.—The Secretary shall only use 

amounts available in the Energy Security and Infrastructure Modernization Fund established by section 404 of the Bipartisan Budget 

12 

Act of 2015 for costs described in subsection (b) of this section that 

relate to addition of facilities or changes to facilities or facility operations necessary to lease such facilities, including costs related to 

acquisition of land, acquisition of ancillary facilities and equipment, and site development, and other necessary costs related to 

capital improvement. 

* * * * * * * 

SEC. 170. PILOT PROGRAM TO LEASE STORAGE AND RELATED FACILITIES. 

(a) ESTABLISHMENT.—In carrying out section 168 and not later 

than 180 days after the date of enactment of the Strategic Petroleum 

Reserve Reform Act, the Secretary shall establish and carry out a 

pilot program to make available for lease— 

(1) capacity for storage of up to 200,000,000 barrels of petroleum products at Strategic Petroleum Reserve storage facilities; 

and 

(2) related facilities. 

(b) CONTENTS.—In carrying out the pilot program established 

under subsection (a), the Secretary shall— 

(1) identify appropriate Strategic Petroleum Reserve storage 

facilities and related facilities to lease, in order to make maximum use of such facilities; 

(2) identify and implement any changes to facilities or facility 

operations necessary to so lease such facilities, including any 

such changes necessary to ensure the long-term structural viability and use of the facilities for purposes of this part and part 

C; 

(3) make such facilities available for lease; and 

(4) identify environmental effects, including benefits, of leasing storage facilities and related facilities. 

(c) REPORT.—Not later than 1 year after the date of enactment of 

the Strategic Petroleum Reserve Reform Act, the Secretary shall submit to Congress a report on the status of the pilot program established under subsection (a). 

* * * * * * * 

(13) 

1https://www.energy.gov/sites/prod/files/2015/08/f25/ 

QER%20Chapter%20ll%20Resilience%20April%202015.pdf pg. 2–34 2https://www.energy.gov/sites/prod/files/2015/08/f25/ 

QER%20Chapter%20ll%20Resilience%20April%202015.pdf pg. 2–33 3https://www.gao.gov/assets/700/692113.pdf pg. 23. 

4https://www.energy.gov/sites/prod/files/2015/08/f25/ 

QER%20Chapter%2011%20Resilience%20April%202015.pdf pg. 2–31 

ADDITIONAL VIEWS 

At the September 13, 2018 Energy and Commerce Committee 

full committee markup, numerous Democratic members discussed 

the importance of establishing and maintaining refined petroleum 

product reserves in different regions across the country. These include areas prone to disruptions in the supply of refined products, 

such as gasoline, in the aftermath of natural disasters or severe 

weather events. 

During the markup, Mr. Kennedy offered an amendment that 

would have required the Secretary of Energy to undertake a rulemaking for the development, maintenance, and operation of regional refined petroleum reserves across the U.S., including but not 

limited to, the Northeast, Southeast, and West Coast regions. 

In previous analyses, including a 2011 Department of Energy 

(DOE) cost-benefit analysis on the establishment of a Southeast 

Refined Petroleum Product Reserve and the First Installment of 

the Quadrennial Energy Review (QER) in 2015, DOE concluded 

such refined petroleum product reserves would be greatly beneficial. The 2011 study indicated a Southeast reserve, in particular, 

‘‘would reduce the average gasoline price rise by 50 percent to 70 

percent in the weeks immediately after a hurricane landfall.’’ 1 The 

QER stated one method of addressing vulnerabilities to fuel infrastructure and supply ‘‘is to develop strategic and regional stockpiles 

of oil and refined petroleum products to help respond to shortfalls 

caused by breakdowns in the liquid fuel infrastructure, regardless 

of cause.’’ 2 A May 2018 GAO report requested by this Committee 

further recognized the benefits of such reserves but noted DOE had 

not fully finalized its analyses in the QER and instead relied upon 

draft versions.3

The Kennedy amendment would have addressed a critical shortcoming of the Strategic Petroleum Reserve (SPR) as current law 

only requires it to stockpile unrefined crude oil. The QER acknowledged this risk, identifying events such as Hurricanes Katrina and 

Rita (2005) and Hurricanes Gustav and Ike (2008) in the Gulf 

Coast and Superstorm Sandy in 2012 as major regional and national events affecting fuel supply and price.4 With more than 50 

percent of the nation’s refining capacity in the Gulf Coast, a major 

event in that region would have significant impact nationwide. Regional events, like Superstorm Sandy, may only effect one region 

but negatively impact the ability to import supply due to damaged 

14 

5https://www.energy.gov/fe/creating-northeast-gasoline-supply-reserve 

6https://www.energy.gov/fe/services/petroleum-reserves/northeast-regional-refined-petroleumproduct-reserve 

infrastructure such as pipelines and ports. Regionally-located reserves would provide much needed stability. 

In the wake of Superstorm Sandy, then-Energy Secretary Ernest 

Moniz, using the existing authorities in Title I, Part C of the Energy Policy and Conservation Act, established the Northeast Gasoline Supply Reserve as a component of the SPR in 2014.5 The one 

million barrel reserve holds gasoline in a number of different 

northeastern states as means of strengthening regional fuel resiliency in the event of another major weather event.6 The Trump Administration proposed eliminating the gasoline reserve in its Fiscal 

Year 2018 budget, a proposal we believe to be both short-sighted 

and ill-advised. This reserve is essential to disaster recovery efforts 

in the event of an emergency. Not only should the Northeast Gasoline Supply Reserve remain in operation, DOE should replicate it 

in other parts of the country to ensure recovery efforts are not compounded in rebuilding from a disaster due to lack or price of fuel. 

We support the underlying bill, H.R. 6511, as a useful step toward modernizing the Strategic Petroleum Reserve. However, we 

find it unfortunate that the Republican Majority was unwilling to 

adopt this amendment, which would further advance the goal of a 

modernized, more flexible SPR. Democratic Members continue to 

believe that regional reserves should play an important role in the 

future of the SPR and will continue to push forward this concept. 

We hope the Majority will join us in our support for these reserves, 

particularly before the next hurricane or other natural disaster results in a significant supply disruption in the supply-constrained 

Southeast or in other regions of the country. 

JOSEPH P. KENNEDY, III. 

FRANK PALLONE, Jr. 

BOBBY L. RUSH. 

G.K. BUTTERFIELD. 

KATHY CASTOR. 

JERRY MCNERNEY. 

Æ