II

103D CONGRESS

2D SESSION S. 2032

To amend the Energy Policy and Conservation Act with respect to purchases

from the Strategic Petroleum Reserve by entities in the insular areas

of the United States, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 20 (legislative day, APRIL 11), 1994

Mr. AKAKA (for himself and Mr. INOUYE) introduced the following bill; which

was read twice and referred to the Committee on Energy and Natural

Resources

A BILL

To amend the Energy Policy and Conservation Act with

respect to purchases from the Strategic Petroleum Reserve by entities in the insular areas of the United

States, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Emergency Petroleum

5 Supply Act’’.
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1 SEC. 2. PURCHASES FROM THE STRATEGIC PETROLEUM

2 RESERVE BY ENTITIES IN THE INSULAR

3 AREAS OF THE UNITED STATES.

4 (a) GENERAL PROVISIONS.—Section 161 of the En5 ergy Policy and Conservation Act (42 U.S.C. 6241) is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(j)(1) With respect to each offering of a quantity

9 of petroleum product during a drawdown of the Strategic

10 Petroleum Reserve:

11 ‘‘(A) A purchaser located in an eligible insular

12 area of the United States, in addition to having the

13 opportunity to submit a competitive bid, may submit

14 (at the time bids are due) a binding offer, and shall

15 on submission of the bid be entitled to purchase a

16 category of a petroleum product specified in a notice

17 of sale at a price equal to the average of the success18 ful bids made for the remaining quantity of petro19 leum product within the category that is the subject

20 of the offering.

21 ‘‘(B) A vessel that arrives at a delivery line of

22 the Strategic Petroleum Reserve to take on a petro23 leum product for delivery to a purchaser located in

24 an eligible insular area of the United States shall be

25 loaded ahead of other vessels waiting for delivery if

26 the Governor or other chief executive officer of the
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1 eligible insular area of the United States certifies

2 that delivery must be expedited to avert a critical

3 supply shortage in the eligible insular area of the

4 United States.

5 ‘‘(2)(A) In administering this subsection, and with re6 gard to each offering, the Secretary may impose the limi7 tation described in subparagraph (B) or (C) that results

8 in the purchase of the lesser quantity of petroleum

9 product.

10 ‘‘(B) The Secretary may limit the quantity that any

11 one purchaser may purchase through a binding offer at

any one offering to 1 12 ⁄12 of the total quantity of petroleum

13 products that the purchaser imported during the previous

14 year.

15 ‘‘(C)(i) Subject to clause (ii), the Secretary may limit

16 the quantity that may be purchased through binding offers

17 at any one offering to 3 percent of the offering.

18 ‘‘(ii) If the Secretary imposes the limitation stated

19 in clause (i), the Secretary shall prorate the quantity

20 among the purchasers who submitted binding offers.

21 ‘‘(3) In administering this subsection, and with re22 gard to each offering, the Secretary shall, at the request

23 of a purchaser—

24 ‘‘(A) if the quantity is less than 50 percent of

25 1 full tanker load less than a whole-number incre-
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1 ment of a full tanker load of a petroleum product,

2 adjust upward, to the next whole-number increment

3 of a full tanker load, the quantity to be sold to the

4 purchaser; or

5 ‘‘(B) if the quantity is 50 percent of 1 full

6 tanker load more than a whole-number increment of

7 a full tanker load of a petroleum product, adjust

8 downward, to the next whole-number increment of a

9 full tanker load, the quantity to be sold to the pur10 chaser.

11 ‘‘(4)(A) Except as provided in subparagraph (B), pe12 troleum products purchased through binding offers pursu13 ant to this subsection shall be delivered to the eligible in14 sular area of the United States.

15 ‘‘(B) Purchasers may enter into exchange or process16 ing agreements that require delivery to other locations.

17 ‘‘(5) As used in this subsection:

18 ‘‘(A) The term ‘eligible insular area of the

19 United States’ means the State of Hawaii, the Com20 monwealth of Puerto Rico, the Virgin Islands,

21 Guam, American Samoa, and the Commonwealth of

22 the Northern Mariana Islands.

23 ‘‘(B) The term ‘offering’ means a solicitation

24 for bids to be submitted not later than any specified

25 day for a quantity or quantities of crude oil or petro-
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1 leum product from a delivery line of the Strategic

2 Petroleum Reserve.’’.

3 (b) EFFECTIVE DATES.—The amendments made by

4 subsection (a) shall remain in effect until such time as

5 the Secretary promulgates and implements regulations

6 pursuant to section 3.

7 SEC. 3. REGULATIONS.

8 (a) DEFINITIONS.—For the purposes of this sec9 tion—

10 (1) the term ‘‘insular area’’ means the State of

11 Hawaii, the Commonwealth of Puerto Rico, the Vir12 gin Islands, Guam, American Samoa, and the Com13 monwealth of the Northern Mariana Islands; and

14 (2) the term ‘‘eligible purchaser’’ means—

15 (A) an insular area government; or

16 (B) a person who owns a refinery that—

17 (i) is located in an insular area; or

18 (ii) has supplied refined petroleum

19 product to an insular area within the year

20 immediately preceding the sale, or within

21 another period the Secretary determines to

22 be representative of recent imports to the

23 insular area.

24 (b) IN GENERAL.—The Secretary shall issue regula25 tions that provide benefits for insular areas during the sale
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1 of petroleum product withdrawn from the Strategic Petro2 leum Reserve.

3 (c) CONTENT.—The regulations issued under sub4 section (a)—

5 (1) shall permit an eligible purchaser to pur6 chase petroleum product—

7 (A) at a price equal to the average price of

8 comparable quality petroleum product sold at

9 the contemporaneous competitive sale of petro10 leum product withdrawn from the Strategic Pe11 troleum Reserve; or

12 (B) if no comparable quality petroleum

13 product sold at the contemporaneous competi14 tive sale, at a price estimated by the Secretary

15 to be equivalent to the price described in sub16 paragraph (A);

17 (2) shall provide for priority cargo lifting of pe18 troleum product purchased by an eligible purchaser

19 at a competitive sale or under paragraph (1);

20 (3) may limit the amount of petroleum product

21 that may be purchased under paragraph (1) during

22 a sales period—

23 (A) by an eligible purchaser, to no less

than 1 24 ⁄12 of the total amount of petroleum prod25 uct that the purchaser brought into an insular
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1 area during the year immediately preceding the

2 sale or during another period the Secretary de3 termines to be representative of recent imports

4 to the insular area; or

5 (B) by all eligible purchasers, to no less

6 than 3 percent of the amount of petroleum

7 product offered for sale during the sales period

8 prorated among the eligible purchasers;

9 (4) may provide that, at the request of a pur10 chaser, the quantity of petroleum product to be sold

11 to the purchaser may be adjusted upward or down12 ward, to the next whole-number increment of a full

13 tanker load, if the quantity that otherwise would be

14 sold is less than a whole-number increment;

15 (5) may establish procedures for qualifying an

16 entity as an eligible person before a sale of petro17 leum product withdrawn from the Strategic Petro18 leum Reserve;

19 (6) may require an eligible purchaser to comply

20 with financial and performance responsibility re21 quirements applied to offerors in competitive sale;

22 (7) except as otherwise provided by this sub23 section, may require an eligible purchaser who pur24 chases petroleum product under paragraph (1) to
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1 comply with standard contract provisions applied to

2 purchasers at competitive sales;

3 (8) may ensure, to the extent practicable, that

4 an eligible purchaser who receives benefits under

5 paragraph (1) or (2) passes on the benefits to an in6 sular area;

7 (9) may require an eligible purchaser who re8 ceives benefits under paragraph (1) or (2) to furnish

9 the Secretary with documents and other appropriate

10 information to determine compliance with this sub11 section; and

12 (10) may establish procedures for imposing

13 sanctions on an eligible purchaser who receives bene14 fits under paragraph (1) or (2) and who does not

15 comply with the requirements of this subsection.

16 (d) PLAN AMENDMENTS.—No amendment of the

17 Strategic Petroleum Reserve Plan or the Distribution Plan

18 contained in the Strategic Petroleum Reserve Plan is re19 quired for any action taken under this subsection if the

20 Secretary determines that an amendment to the plan is

21 necessary to carry out this section.

22 (e) ADMINISTRATIVE PROCEDURE.—Regulations is23 sued to carry out this subsection shall not be subject to

24 the requirements of section 523 of the Energy Policy and

25 Conservation Act (42 U.S.C. 6393) or of section 501 of
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1 the Department of Energy Organization Act (42 U.S.C.

2 7191).

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