[Federal Register Volume 59, Number 57 (Thursday, March 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6885]


[[Page Unknown]]

[Federal Register: March 24, 1994]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Part 777

[Docket No. 930653-3153]
RIN 0694-AA70

 

Exports of Certain California Crude Oil

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Proposed rule with a request for comments.

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SUMMARY: The Bureau of Export Administration (BXA) is proposing to 
amend the short supply provisions of the Export Administration 
Regulations (EAR) by revising the restrictions on exports to initially 
allow the export of up to 25,000 barrels per day of California heavy 
crude oil having a gravity of 20 degrees API or lower. The changes 
proposed by this rule are based on the President's October 22, 1992, 
memorandum to the Secretary of Commerce to modify existing restrictions 
on the export of certain California heavy crude oil. This notice 
delineates the actions the Department is taking to implement the 
President's decision. It also proposes specific regulatory changes 
implementing those actions and solicits public comments.

DATES: Comments must be received by April 25, 1994.

ADDRESSES: Written comments (six copies) should be sent to Bernard 
Kritzer, Senior Industry Analyst, Office of Foreign Availability, room 
1087, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue 
NW., Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT: Bernard Kritzer, Office of Foreign 
Availability (OFA), Bureau of Export Administration, Telephone: (202) 
482-0074.

SUPPLEMENTARY INFORMATION:

Background

    Section 777.6(d)(1) of the Export Administration Regulations (EAR) 
restricts exports of crude petroleum, including reconstituted crude 
petroleum, tar sands and crude shale oil. This rule proposes to amend 
Sec. 777.6(d)(1) to permit exports of certain California crude oil 
pursuant to a Presidential Memorandum of October 22, 1992,\1\ in which 
the President determined that exports of California heavy crude oil 
having a gravity of 20 degrees API or lower were in the national 
interest. Before the President authorized this export of crude oil, he 
made findings and determinations under three statutes: Section 103 of 
the Energy Policy and Conservation Act (42 U.S.C. 6212(b)); section 
28(u) of the Mineral Leasing Act, as amended by the Trans-Alaska 
Pipeline Authorization Act of 1973 (30 U.S.C. 185(u)); and provisions 
of the Export Administration Act, as amended, and to the extent 
consistent with law, continued in effect through the President's 
invocation of the International Emergency Economic Powers Act. The 
Export Administration Act was continued on March 27, 1993, by Public 
Law 103-10. The President made findings that exports of California 
heavy crude oil having a gravity of 20 degrees API or lower: (1) Were 
in accord with the provisions of the Export Administration Act of 1979, 
as amended;
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    \1\ The President's memorandum of October 22, 1992, ``Exports of 
Domestically Produced Heavy Crude Oil'' (3 CFR, 1992 Comp., p. 382).
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    (2) Were consistent with the purposes of the Energy Policy and 
Conservation Act; and
    (3) Would not diminish the total quality or quantity of petroleum 
available to the United States.
    Based upon the above findings, the President authorized the 
Secretary of Commerce to modify the existing restrictions on the export 
of crude oil produced in the lower 48 states to initially allow the 
export of an average quantity of 25,000 barrels per day (MB/D) of 
California heavy crude oil having a gravity of 20 degrees API or lower.
    The President also directed the Secretary of Energy, in 
consultation with the Secretaries of Commerce, the Interior, 
Transportation, and other interested agencies, to conduct periodic 
reviews of such exports in light of then-existing market circumstances. 
Based upon the results of these market reviews, the President 
authorized the Secretary of Energy to recommend to the Secretary of 
Commerce that adjustments be made in the quantity of California heavy 
crude oil that may be authorized for export (i.e., adjustments to the 
initial average authorized level of 25 MB/D).

Department of Commerce Actions

    The Department proposes to take the following actions to implement 
the President's decision: (1) Propose rules to implement the 
President's decision;
     (2) Solicit public comments on the rules; and
     (3) Publish a final rule implementing the President's findings and 
taking into account public comments on this proposed rule and other 
relevant evidence.

The Department of Commerce's Proposals

    This notice proposes to amend Sec. 777.6 of the Export 
Administration Regulations (EAR) to allow the licensing of exports of 
up to 25 MB/D per day of California heavy crude oil having a gravity of 
20 degrees API or lower.
    To implement this program, the Department proposes to: (1) Grant 
licenses for these exports on a first-come-first-served basis; (2) 
authorize the export of up to 25 percent (2.28 million barrels) of the 
annual authorized volume (9.125 million barrels) of such California 
crude oil per license; (3) approve only one application per company, 
including its affiliates, as long as there are other outstanding non-
affiliate company applications in that month; (4) allow the licensee up 
to 90 days from the issuance of the license to export the oil; (5) 
require the licensee to certify to the Department in writing that the 
export(s) occurred during the 90-day license term; (6) carry forward 
any portion of the 25 MB/D quota that the Department has not licensed, 
except that the Department will not carry forward unlicensed portions 
more than 30 days into a new calendar year; (7) return to the available 
quota volume all licensed volumes not shipped during the 90-day term of 
an export license, except that the Department will not carry forward 
unshipped portions more than 30 days into the new calendar year; and 
(8) allow a 10 percent shipping tolerance on the licensed, but not 
shipped volume of barrels and a 25 percent shipping tolerance on the 
total dollar value of the license, respectively.
    The Department proposes to require that a prospective exporter: (1) 
Submit an application on BXA Form 622-P; (2) state the total number of 
barrels for export during the 90-day license term not a per day rate; 
(3) include supporting documents proving that the applicant has: (i) 
Title to the quantity of barrels stated in the application, or an 
accepted order for the purchase of the quantity of barrels stated in 
the application, (ii) a verifiable contract of sale to export the crude 
oil contingent on the applicant obtaining an export license, (iii) 
documentation proving that the crude oil to be exported has a gravity 
of 20 degrees API or lower, (iv) documentation proving that the crude 
oil was derived from production within the state of California, 
including its state submerged lands, (v) documentation certifying that 
the crude oil was not produced or derived from a U.S. Naval Petroleum 
Reserve, and (vi) documentation certifying that the crude oil was not 
produced from the submerged lands of the U.S. Outer Continental Shelf; 
and (4) export the licensed volumes within 90 days of the issuance of 
the license and to report the export to the Department of Commerce. In 
addition, the Department will allow the applicant to combine licensed 
quantities into one or more shipments, provided that the validity 
period of none of the affected licenses has expired. As set forth in 
the EAR, the applicant cannot transfer a license to another person.
    An applicant can file for a license at any time during the calendar 
year. The Department, however, will process only one license per 
applicant per month as long as there are other non-affiliated 
applications pending during that month. The Department will issue 
validated licenses expeditiously as long as there are sufficient 
quantities of the authorized heavy crude oil volumes available. If 
there is no available volume of heavy crude oil, the Department will 
return the application without action. If the volume of heavy crude oil 
available for export is less than the applicant requested, the 
Department will contact the applicant and determine if the applicant 
wants the available volume. If not, the Department will return the 
application without action. If the applicant wants the available 
volume, the Department will request that the applicant amend its 
application to reflect the lesser volume.
    The Department will apply the procedures eventually adopted in 
response to this proposed rulemaking with additional notice and comment 
to any future increase in the export volume that the Secretary of 
Energy may from time to time recommend to the Department of Commerce.

Nature of the Export Market

    In developing an approach to implementing the President's decision, 
the Department is taking into account the nature of the heavy crude oil 
export market. The Department's 1989 ``Report to the Congress on U.S. 
Crude Oil Exports,'' (pp. IV-4-IV-11) concluded that opportunities to 
export California heavy crude generally consist of spot market rather 
than year-round export activity. The report found that opportunities to 
export California heavy crude oil occur intermittently and randomly 
throughout the year when the price of these oils are low and the price 
of Pacific Rim substitutes are high. The Department's recent experience 
monitoring licensed export volumes strongly supports this position. The 
Department recognized the need, therefore, to develop licensing 
procedures permitting firms to take advantage of brief windows of 
opportunity and to conduct spot market export transactions.
    The 1989 Commerce Report also identified numerous potential 
participants in such a market with a wide range of economic strengths 
and capabilities. The study found that allowing limited exports of 
California heavy crude oil would enable some firms (e.g., the 
independent producers) to expand their crude oil marketing 
opportunities, to maintain their existing oil production, and to earn 
additional revenue to reinvest in exploring for new domestic oil 
reserves.
    The Department also recognized that having only one applicant could 
reduce the effectiveness of the export program. For example, an 
exporter could, in a licensing program without time limits, apply for 
and obtain an export license for the entire 25 MB/D per day for a one 
year period. If, however, the firm did not export the oil because of 
some problem with the transaction, the license would never be used. 
This would limit the number of potential exporters, deny commercial 
opportunities to other participants, and frustrate the intent of the 
President's export initiative. This concern argued for limiting the 
term of an export license to insure that the licensee used the license 
and exported the oil, or that the volume of oil quickly became 
available to other interested applicants.
    There was also a need to assure that licenses issued to exporters 
would be in commercially viable volumes since the total volume 
initially authorized for export is low--9.125 million barrels annually. 
It would be difficult to achieve economically viable shipments if the 
Department were to issue numerous licenses for small volumes (e.g., 
100,000 barrels).

Departmental Considerations

    Given the noted market dynamics and commercial consideration, the 
Department considers it necessary to develop a licensing regime that: 
(1) Is equitable; (2) minimizes government involvement in commercial 
transactions; (3) makes licenses available to a wide number of 
participants; (4) reviews license applications expeditiously to allow 
firms to take advantage of time-sensitive spot market trading 
opportunities; (5) prevents a firm from obtaining a license and not 
exporting the oil; (6) allows for economically viable export cargoes; 
and (7) does not impose unnecessary administrative burdens on 
exporters.
    Although the Department proposes to implement the option of first-
come-first-served, the Department will consider and may adopt any of 
the options in this rulemaking, or an alternative proposal that 
addresses the above considerations. In fact, the Department did 
consider several different options; they are discussed below. The 
Department is soliciting comments from interested parties on the most 
effective approach for the Department to implement the President's 
decision.

Option #1--First-Come-First-Served

    Under this option, the Department would grant licenses for the 
export of California heavy crude oil on a first-come-first-served 
basis. This option involves the minimum government management of an 
export licensing regime and intervention in the market. There are 
numerous variations to this option which involve the number of times 
per year that the Department would review and authorize export 
licenses. The Department could grant the licenses annually, quarterly 
or monthly on a first-come-first-served basis. There are also numerous 
variations on the volume of oil the Department could authorize per 
license. Under one variation the Department could license the entire 
export volume (9.125 million barrels) to the first firm that filed an 
export license application.
    Although licensing the entire volume at one time would achieve the 
Department's objective of minimizing the government's role in export 
transactions, it may result in limiting this export opportunity to the 
first firm that filed a license application. The Department, however, 
wants to ensure that the potential benefits of the program are diffused 
among many firms and utilized. This option, therefore, calls for 
limiting the quantity per license (i.e., 25 percent of the total 
authorized volume) and for each license to have a 90 day limit. In 
addition, a company and its affiliates can receive only one license per 
month as long as there are other outstanding applications.
    The Department considers this option to be the best means available 
to provide a number of opportunities (at least four) for a number of 
firms to participate in heavy crude oil exports with a minimum of 
government interference in the export transaction. The Department also 
considers that the 90 day license term would assure the utilization of 
the license or the rapid return of the volume of oil to the quota so 
others may use it.
    On the negative side, a single company could request and receive 
for four months in a row a license covering 25 percent of the 
authorized volume of oil just by being the earliest applicant to file 
with the Department. In addition, this option would require the 
Department to keep running accounts on the amount available for 
licensing at any one time. The Department, however, should be able to 
handle this because the authorized export volumes are small and the 
exports are likely to occur intermittently rather than year round.

Option #2--Prorationing

    Prorationing procedures, such as the one the Department uses for 
the Alaskan North Slope/Canada (ANS/Canada) crude oil export regime, 
offer some advantages but also involve a greater measure of government 
involvement than does licensing on a first-come-first-served basis.
    On the positive side, this option may ensure that more firms could 
participate in the export program than would be the case under 
licensing option #1. This option also would assure everyone who applies 
would get some portion of the authorized export volume.
    On the negative side, this option would entail active government 
involvement in administering an export prorationing regime on a year 
round basis. In addition, a prorationing scheme could be difficult to 
administer and could result in economically not viable volumes. The 
volume of California heavy crude oil exports (25 MB/D) allowed under 
the President's October 22, 1992 decision amounts to one-half of the 
volume authorized for the ANS/Canada export regime (50 MB/D). Over the 
past four years the demand for ANS exports to Western Canada has not 
forced the Department to prorate exports among competing applications. 
This may not be the case in the California situation where the volume 
is much smaller and more firms have expressed an interest in 
participating in this program. Although several licensees with small 
volumes could possibly combine volumes to make one shipment, it would 
not help exporters that had contracts to deliver large volumes.

Option #3--Pre-Qualification With Export Nominations

    This option would result in a greater degree of government 
management than would be the case under any of the other options 
described above because it would involve a two step review process of 
all export licensing transactions.
    Under this procedure, potential exporters would provide enough 
information to allow the Department to pre-qualify a firm as an 
exporter and subsequently grant final export authorization to the firm 
upon the provision of satisfactory information regarding end-users and 
intermediate consignees, if any.
    The first step would involve the Department pre-qualifying 
exporters based upon the following criteria: (1) The firm is a 
commercial entity that is interested in exporting California heavy 
crude oil; (2) the applicant can demonstrate that an end-user is 
interested in purchasing oil from them as evidenced by a letter/telex.
    The nominations process--step 2--would operate as follows:
    1. On a monthly basis, a pre-qualified exporter would nominate the 
quantity it would like to export during the month.
    2. A pre-qualified exporter would have to submit his nomination no 
later than 10 calendar days before the first day of the month.
    3. At the outset of each month, the Department would notify pre-
qualified exporters of how much oil was available for export pursuant 
to the quota for the month. (It could provide notice by having firms 
telephone a special number and/or talk with a licensing officer.)
    4. When nominating export volumes, the licensee would be required 
to provide the Department with documentation establishing: (a) Title to 
the oil or a contract to purchase the oil subject to approval of the 
export transaction; (b) a contract or contingent contract to export the 
oil subject to approval of the export transaction. The Department would 
also have to approve the intermediate and ultimate foreign consignees 
for the oil, and;
    5. The licensee would have 30 days to complete the export. If the 
export did not occur during the 30 day license term, the Department 
would return the volume to the quota. If the licensee shipped part of 
the volume, the Department would return unshipped volumes to the quota.
    Other key provisions include:
    1. The Department would allow the export of up to a total of 
2,281,000 barrels during any 30 day period.
    2. The Department would limit individual company exports to 
1,000,000 barrels of oil during any 30 day period.
    3. The Department would process only one nomination per firm per 30 
day period as long as there are outstanding nominations from non-
affiliated firms.
    The Department would implement the following provision in the event 
the volume of crude oil nominated for export exceeds the amount allowed 
during a 30 day period: 1. It would allocate to each applicant an equal 
share of the authorized volume. For example, if five licensees 
nominated a total over the authorized volume of exports, the Department 
would allocate each party 20 percent of the volume available for export 
(i.e., 456,000 barrels out the total of 2,281,000 barrels available), 
and
    2. Licensees would be allowed to combine volumes to achieve 
economic-sized cargoes.
    On the positive side, this option would be responsive to the spot-
market nature of the market. The pre-qualifying process may ensure that 
many firms had the opportunity to participate in the export program.
    On the negative side, the Department considers the two-step review 
process unnecessarily bureaucratic. This approach would require the 
Department to actively manage licenses and keep running accounts on the 
amounts available for licensing at any one time. In addition, exporters 
would have to contact the Department on an ongoing basis to determine 
what volume was available for export during a given month. Exporters 
would have to constantly report on whether they conducted exports and 
whether they exceeded their authorized export level. The Department 
would also have to establish a procedure to screen and pre-qualify new 
entrants on a continuous basis to ensure that they would receive an 
opportunity to participate in the export program.
    The Department invites written comments from interested parties 
that may assist it in implementing the President's decision. 
Specifically, we solicit information concerning the following:
    (1) What are the pros and cons of each of the licensing options 
presented, and which, if any, do you prefer?
    (2) Are there other licensing approaches that would better allow 
U.S. exporters to take advantage of this opportunity? If you have a 
specific licensing scheme in mind, please explain it, discuss the pros 
and cons of the selected option, and explain how the Department should 
implement your approach.
    (2) Should the Department review export license applications 
monthly, or more or less frequently (e.g., quarterly, semiannually, 
annually, continuously)? Are exports of up to 2.28 million barrels per 
license sufficient to make licenses available to more than one company 
while retaining the commercial viability of the exports? If not, what 
is the optimal cargo size (barrels) for economically viable export 
shipments?
    (3) Should an exporter have more or less than a 90-day license to 
export California crude oil in a spot market trading environment? What 
would be the optimal time to allow an exporter to pursue business 
activities while not denying opportunities to other exporters?
    (4) Should the Department carry over export volumes not shipped in 
one calendar year to the next year? What is the optimal time that the 
Department should carry over volumes not shipped during one calendar 
year?
    (5) Are there any specific heavy crudes, with particular assay 
properties, that the Department should exclude from licensing? Comments 
in this area should indicate the specific source and type of crude, its 
full assay, the unique nature of the assay, the availability of 
substitutes and the special user.

Comment Procedures

    The Department is issuing this rule in proposed form and will 
consider public comments in the development of the final regulations. 
The Department encourages interested persons who wish to comment to do 
so at the earliest possible time to permit the fullest consideration of 
their views.
    The following procedures will apply to any comments submitted 
pursuant to this procedure: (1) Interested parties are invited to 
submit written comments (6 copies), opinions, data, information, or 
advice with respect to this notice to the address above by the dates 
specified above;
    (2) The Department will consider all comments received before the 
close of the comment period in developing final regulations. While 
comments received after the end of the comment period will be 
considered if possible, this cannot be assured;
    (3) All public comments on these regulations will be a matter of 
public record and will be available for public inspection and copying. 
(Communications from agencies of the United States Government or 
foreign governments will not be made available for public inspection.);
    (4) In the interest of accuracy and completeness, the Department 
requires comments in written form. Oral comments must be followed by 
written memoranda which will also be a matter of public record and will 
be available for public review and copying;
    (5) The Department will not accept public comments accompanied by a 
request that a part or all of the material be treated confidentially 
because of its business proprietary nature or for any other reason. The 
Department will return such comments and materials to the person 
submitting the comments and will not consider them in the development 
of final regulations; and
    (6) The comments received in response to this notice will be 
maintained in the Bureau of Export Administration Freedom of 
Information Records Inspection Facility, room 4525, Department of 
Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC 
20230. Interested parties may inspect and copy records in this 
facility, including written public comments and memoranda summarizing 
the substance of oral communications, in accordance with regulations 
published in part 4 of title 15 of the Code of Federal Regulations. 
Information about the inspection and copying of records at the facility 
may be obtained from Margaret Cornejo, Bureau of Export Administration 
Freedom of Information Officer, at the above address or by calling 
(202) 482-5653.

Rulemaking Requirements

    1. This proposed rule contains collections of information subject 
to the requirements of the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501 et seq.) The public reporting burden for this collection of 
information is estimated to average 12 hours per response, including 
the time required for reviewing instructions, searching and maintaining 
the necessary data, and completing and reviewing the collection of 
information. Send comments regarding this burden to: Bernard Kritzer, 
Senior Industry Analyst, Office of Foreign Availability, room 1087, 
U.S. Department of Commerce, 14th Street and Pennsylvania Avenue, NW., 
Washington, D.C., 20230; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503. Project No. 0694-AA70.
    2. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by section 
553 of the Administrative Procedure Act (5 U.S.C. 553) or by any other 
law, under section 3(a) of the Regulatory Flexibility Act (5 U.S.C. 
603(a) and 604(a)) no initial or final Regulatory Flexibility Analysis 
has to be or will be prepared.
    3. This proposed rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under Executive Order 12612.
    4. This rule was not subject to review by the Office of Management 
and Budget under Executive Order 12866.

List of Subjects in 15 CFR Part 777

    Administrative practice and procedure, Exports, Forest and forest 
products, Petroleum, Reporting and recordkeeping requirements.

    Accordingly, part 777 of the Export Administration Regulations (15 
CFR parts 730-799) is proposed to be amended as follows:
    1. The authority citation for 15 CFR part 777 continues to read as 
follows:

    Authority: Pub. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et seq.), 
as amended; sec. 101, Pub. L. 93-153, 87 Stat. 576 (30 U.S.C. 185), 
as amended; sec. 103, Pub. L. 94-163, 89 Stat. 877 (42 U.S.C. 6212), 
as amended; secs. 201 and 201(11)(e), Pub. L. 94-258, 90 Stat. 309 
(10 U.S.C. 7420 and 7430(e)), as amended; Pub. L. 95-223, 91 Stat 
1626 (50 U.S.C. 1701 et seq.); Pub. L. 95-242, 92 Stat. 120 (22 
U.S.C. 3201 et seq. and 42 U.S.C. 2139a); sec. 208, Pub. L. 95-372, 
92 Stat. 668 (43 U.S.C. 1354); Pub. L. 96-72, 93 Stat. 503 (50 
U.S.C. App. 2401 et seq.), as amended; E.O. 11912 of April 13, 1976 
(41 FR 15825, April 15, 1976); E.O. 12002 of July 7, 1977 (42 FR 
35623, July 7, 1977), as amended; E.O. 12058 of May 11, 1978 (43 FR 
20947, May 16, 1978); E.O. 12214 of May 2, 1980 (45 FR 29783, May 6, 
1980); E.O.12730 of September 30, 1990 (55 FR 40373, October 2, 
1990), as continued by Notice of September 25, 1992 (57 FR 44649, 
September 28, 1992); and E.O. 12735 of November 16, 1990 (55 FR 
48587, November 20, 1990), as continued by Notice of November 14, 
1991 (56 FR 58171, November 15, 1991).

PART 777--[AMENDED]

    3. Section 777.6 is amended by adding a new paragraph (d)(1)(xii) 
and a new paragraph (k) to read as follows:


Sec. 777.6  Petroleum and petroleum products.

* * * * *
    (d) * * *
    (1) * * *
    (xii) Exports of certain California crude oil. California heavy 
crude oil can be exported under the following conditions: (A) The 
commodity has a gravity of 20 degrees API or lower;
    (B) The commodity is produced in the state of California, including 
its submerged state lands;
    (C) The applicant certifies by affidavit that: (1) The commodity is 
not produced or derived from a U.S. Naval Petroleum Reserve;
    (2) The commodity is not produced from the submerged lands of the 
U.S. Outer Continental Shelf; and
    (3) All aspects of the transaction comply with the provisions of 
paragraph (k) of this section.
* * * * *
    (k) Exports of California heavy crude oil pursuant to 
Sec. 777.6(d)(1)(xii). The export of California heavy crude oil will be 
allowed for an average of no more than 25,000 barrels per day (MB/D) 
(or such greater or lesser volume as the Secretary of Commerce 
authorizes based on the determination and recommendation of the 
Secretary of Energy) California heavy crude oil having a gravity of 20 
degrees API or lower as follows:
    (1) Applicants must submit applications on Form BXA-622P to the 
following address: Office of Export Licensing, ATTN: Short Supply, 
Petroleum, Bureau of Export Administration, U.S. Department of 
Commerce, P.O. Box 273, Washington, DC 20044.
    (2) The quantity stated on each application must be the total 
number of barrels--not a per day rate. This quantity must not exceed 
2.28 million barrels or 25 percent of the annual authorized export 
quota.
    (3) Each application shall be accompanied by documents that show: 
(i) The applicant has or will acquire a title to the quantity of 
barrels stated in the application by providing either an accepted 
contract or bill of sale for the quantity of barrels stated in the 
application; or a contract to purchase the quantity of barrels stated 
in the application, which may be contingent upon issuance of an export 
license to the applicant;
    (ii) Contract(s) to export the quantity of barrels stated in the 
application, which may be contingent upon issuance of the export 
license to the applicant.
    (iii) The crude oil: (A) Has a gravity of 20 degrees API or lower;
    (B) Was produced within the state of California, including its 
submerged state lands;
    (C) Was not produced or derived from a U.S. Naval Petroleum 
Reserve; and
    (D) Was not produced from submerged lands of the U.S. Outer 
Continental Shelf.
    (4) OEL will adhere to the following procedures for licensing 
exports of California crude oil:
    (i) OEL will issue validated licenses for approved applications in 
the order in which OEL received the application (date-time stamped), 
with the total quantity authorized not to exceed 25 percent (2.28 
million barrels) of the annual (9.125 million barrels) authorized 
volume per license. If any unused quota exists, OEL will continue to 
issue licenses for the unused portion of the quota.
    (ii) OEL will approve only one application per month for each 
company and its affiliates, as long as there are other non-affiliated 
applications pending during that month.
    (iii) OEL will carry forward any portion of the 25 MB/D quota that 
OEL has not licensed, except that OEL will not carry over any 
unallocated portions more than 30 days into a new calendar year.
    (iv) OEL will return to the available authorized export quota any 
portion of the 25 MB/D quota that OEL had licensed but a licensee had 
not shipped within the 90 day authorized license term, except that OEL 
will not carry over unshipped volumes more than 30 days into a new 
calendar year.
    (5) License holders:
    (i) Have 90 calendar days from the date OEL issued the license to 
export the quantity authorized on the license. The exporter is required 
to provide OEL with a certified statement confirming the date and 
quantity of exports.
    (ii) May combine authorized quantities into one or more shipments, 
provided that the validity period of none of the affected licenses has 
expired.
    (iii) Are prohibited from transferring the license to another 
party. See, 15 CFR part 787.
    (6) OEL will allow, pursuant to Sec. 786.7(c) of this subchapter, a 
10 percent shipping tolerance on the unshipped balance based upon the 
volume of barrels it has authorized. In addition to the 10 percent 
tolerance on the unshipped volume of barrels, OEL will allow a 25 
percent shipping tolerance on the total dollar value of the license.
    (7) OEL:
    (i) Will not carry over to the next calendar year pending 
applications from the previous year.
    (ii) Will apply the procedures described in this section without 
notifying the public concerning any increase in export volume 
authorized by the Secretary of Energy from time to time.

    Dated: March 17, 1994.
Sue E. Eckert,
Assistant Secretary for Export Administration.
[FR Doc. 94-6885 Filed 3-23-94; 8:45 am]
BILLING CODE 3510-DT-P