[House Report 115-965]
[From the U.S. Government Publishing Office]
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:
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.
``(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
government-owned 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.''
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\1\See International Energy Agency, Agreement on an International
Energy Program.
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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\
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\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).
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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\
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\4\Department of Energy. Letter from Assistant Secretary for Fossil
Energy Steven Winberg to Chairman Greg Walden. September 17, 2018.
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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 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\
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\5\See, 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.
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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.
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\6\See 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.
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).
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 long-term 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,
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.
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.
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
* * * * * * *
[use of underutilized facilities
[Sec. 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.
[(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 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.
[(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.
[(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 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).
* * * * * * *
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\
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\1\https://www.energy.gov/sites/prod/files/2015/08/f25/
QER%20Chapter%20ll%20Resilience%20April%202015.pdf pg. 2-34
\2\https://www.energy.gov/sites/prod/files/2015/08/f25/
QER%20Chapter%20ll%20Resilience%20April%202015.pdf pg. 2-33
\3\https://www.gao.gov/assets/700/692113.pdf pg. 23.
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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 infrastructure such as pipelines
and ports. Regionally-located reserves would provide much
needed stability.
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\4\https://www.energy.gov/sites/prod/files/2015/08/f25/
QER%20Chapter%2011%20Resilience%20April%202015.pdf pg. 2-31
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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.
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\5\https://www.energy.gov/fe/creating-northeast-gasoline-supply-
reserve
\6\https://www.energy.gov/fe/services/petroleum-reserves/northeast-
regional-refined-petroleum-product-reserve
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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.