Date: 1983-03-10
Speaker: FREDERICK N. KHEDOURI (democrat)
Chamber: S

Associate Director for Natural Resources. Energy and Science. Office of Management and Budget. Washington. D.C. DEAR Ma. KXDouaR: Enclosed is a copy of the opinion of the General Counsel of the Department of Energy. dated today. which was requested by me as a result of questions from Senator Jackson concerning the minimum required fill rate for the Strategic Petroleum Reserve (SPR) in FY 1983. assumIng the availability of funds from the FY 1983 appropriation or continuing resolution plus carryover funds from FY 1982. In the opinion of the General Counsel. "the minimum required fill rate for the SPR in fiscal year 1983 Is the highest practicable rate which can be achieved utilizing all available appropriations. * * * even if the resulting fiscal year 1983 rate exceeds 220.000 barrels per day (b/d)." I am informed that the Counsel and the Deputy General Counsel to the Director of the Office of Management and Budget have had extensive discussions with the DOE General Counsel on this subject. but that they have not been able to agree upon the proper interpretation of applicable law and legislative history. Although the opinion of the DOE General Counsel acknowledges that. in certain respects. there is ambiguity in the Energy Emergency Preparedness Act (EEPA). his abovequoted conclusion is clear. in his opinion. the statutory references to a minimum fill rate of 220.000 barrels per day. even when coupled with the Presidents statutory finding that it is not in the national interest to fill at the rate of 300.000 barrels per day. will not permit the Department to fill at the 220.000 barrels per day rate in FY 1983 if a higher practicable rate can be achieved by utilization of available appropriations. including carryover funds from FY 1982. Notwithstanding such merit as there may be to the contrary conclusion of the Counsel to the Director. I am obliged to forward the opinion of the DOE General Counsel to Senator Jackson and to the Chairman and Ranking Member of the Senate Committee on Energy and Natural Resources. I also am mindful of the portions of the subject opinion which state that it is "open to the President to make a reasonable judgment as to what the highest practicable fill rate is." that "the President properly may take into account any programmatic requirements which are not compatible with maximizing SPR fill in a given fiscal year." and that in some circumstances compliance with the objectives of Section 160(b) of the Energy Policy and Conservation Act (which include the "minimization of the cost of the Reserve") "may be inconsistent with filling the SPR at a rate that would exhaust available appropriations by the end of the fiscal year." In these circumstances. my understanding of the opinion of the DOE General Counsel is that the Administration is required to make a conscientious effort to utilize all "available" appropriations. including carryovers from FY 1982. so as to maximize the rate of fill in FY 1983. while. at the same time. not disregarding the other statutory and programmatic requirements of the SPR which bear upon determining the "highest practicable" fill rate. The opinion of the DOE General Counsel indicates it would be appropriate to use some of such available funds for advance purchases of oil in FY 1983 to cover six months of deliveries in FY 1984. At current oil price estimates of the Administration. it appears that. after taking into account such advance purchases and the cost of interim storage. appropriations available to the Department would permit an average fill rate in FY 1983 of approximately 255.000 barrels per day. At the same time. it appears highly likely that world oil prices will continue to decline. perhaps substantially. during the next several months. To my way of thinking. "practicability"-however one wishes to define the termshould be read in a manner which does not compel current oil purchases at prices which needlessly increase the cost of the GPR. The circumstances well may warrant deferral. but. if feasible. I would like to avoid resolution of the complex issues involved in this matter by that means. It is my intention. therefore. promptly to initiate appropriate discussion of this matter with the Congress. If agreement as to a permissible course of Departmental action under applicable law cannot be reached. I shall advise you promptly. Sincerely yours.