[Federal Register Volume 70, Number 129 (Thursday, July 7, 2005)]
[Rules and Regulations]
[Pages 39364-39383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12906]



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Part II





Department of Energy





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10 CFR Part 625



Price Competitive Sale of Strategic Petroleum Reserve Petroleum; 
Standard Sales Provisions; Final Rule

  Federal Register / Vol. 70, No. 129 / Thursday, July 7, 2005 / Rules 
and Regulations  

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DEPARTMENT OF ENERGY

10 CFR Part 625

RIN 1901-AB15


Price Competitive Sale of Strategic Petroleum Reserve Petroleum; 
Standard Sales Provisions

AGENCY: Department of Energy.

ACTION: Final rule; revised appendix.

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SUMMARY: On December 21, 1983, the Department of Energy (DOE) published 
in the Federal Register a final rule governing the price competitive 
sales of petroleum from the Strategic Petroleum Reserve (SPR) in the 
event that the SPR is drawn down to respond to a severe energy supply 
interruption or to meet obligations of the United States under the 
Agreement on an International Energy Program. The final rule provides 
for the publication and periodic update, as an appendix to the rule, of 
Standard Sales Provisions (SSPs) containing or describing contract 
clauses, terms and conditions of sale, and performance and financial 
responsibility measures, which may be used for particular sales of SPR 
petroleum. First published in interim final form on January 20, 1984, 
the SSPs have since been updated several times, with the latest version 
published in the Federal Register on October 8, 1998 (63 FR 54196). As 
provided in the rule, DOE is now issuing revised SSPs for use in an SPR 
drawdown.

EFFECTIVE DATE: As of July 7, 2005, these SSPs are adopted for use in 
the price competitive sale of SPR petroleum.

FOR FURTHER INFORMATION CONTACT:
Nancy T. Marland, U.S. Department of Energy, Strategic Petroleum 
Reserve, FE-43, Room 3G-038, 1000 Independence Ave., SW., Washington, 
DC 20585-0340, Phone: (202) 586-4691, Fax: (202) 586-0835 E-mail: 
[email protected].
Gary C. Landry, FE-4451, U.S. Department of Energy, Strategic Petroleum 
Reserve, Project Management Office, 900 Commerce Road East, New 
Orleans, LA 70123, Phone: (504) 734-4660, Fax: (504) 734-4947, E-mail: 
[email protected].
Diane J. Stubbs, U.S. Department of Energy, Office of Assistant General 
Counsel for Legislation and Regulatory Law, GC-71, Room 6E-042, 1000 
Independence Ave., SW., Washington, DC 20585-0103, Phone: (202) 586-
4297, Fax: (202) 586-0971, E-mail: [email protected].

SUPPLEMENTARY INFORMATION: 
I. Background
    A. The Strategic Petroleum Reserve Drawdown Plan and Sales Rule
    B. General Sales Procedures
II. The Revised Standard Sales Provisions
III. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under the Treasury and General Government 
Appropriations Act, 2001
    J. Review Under Executive Order 13211
    K. Congressional Notification

I. Background

A. The Strategic Petroleum Reserve Drawdown Plan and Sales Rule

    The Strategic Petroleum Reserve (SPR) was established by the Energy 
Policy and Conservation Act of 1975 (EPCA), Pub. L. 94-163, to store 
petroleum to diminish the impact of disruptions on petroleum supplies 
and to carry out the obligations of the United States under the 
International Energy Program. EPCA required the preparation of a ``SPR 
Plan'' detailing proposals for the development of the SPR. The SPR Plan 
was to include a Distribution Plan setting forth the methods for 
drawing down and distributing the SPR in the event of an emergency. In 
1979, a detailed Distribution Plan was transmitted to Congress as 
Amendment No. 3 to the SPR Plan. This Distribution Plan set out a 
number of alternative distribution methods, ranging from allocation to 
price competitive sales.
    In the Energy Emergency Preparedness Act of 1982, Pub. L. 97-229, 
Congress required a new ``Drawdown'' (Distribution) Plan. The new plan, 
SPR Plan Amendment No. 4, was transmitted to Congress on December 1, 
1982, and provided that the principal method of distributing SPR oil 
would be price competitive sale.
    On March 16, 1983, DOE published a notice of proposed rulemaking 
(48 FR 11125) to establish a framework for implementing the policies 
and procedures set out in SPR Plan Amendment No. 4. The final SPR sales 
rule (published at 48 FR 56538, December 21, 1983), adopted after 
consideration of public comments, provides for the establishment of 
Standard Sales Provisions (SSPs), containing contract terms and 
conditions expected to be contained in contracts for the sale of SPR 
petroleum. The final SPR sales rule is at 10 CFR part 625. The rule 
calls for the publication of the SSPs in the Federal Register and the 
Code of Federal Regulations as an appendix to the rule (10 CFR 
625.4(a)). The rule also provides for the periodic review and 
republication of the SSPs in the Federal Register, including any 
revisions to such provisions (10 CFR 625.4(b)).
    Upon a Presidential decision to draw down the SPR, DOE would issue 
a Notice of Sale, announcing the amounts and types of the SPR petroleum 
to be sold, the delivery locations and modes, and other pertinent 
information. The rule provides that the Secretary of Energy or the 
Secretary's designee would specify in the Notice of Sale, by 
referencing the latest version of the SSPs, which of the terms and 
conditions in the SSPs would or would not apply to a particular sale 
(10 CFR 625.3(a); 625.4(c)). In addition, in the Notice of Sale, the 
Secretary could revise the terms and conditions, or add new ones 
applicable to that sale (10 CFR 625.3(a)). The rule provides that no 
contract could be awarded to an offeror who had not unconditionally 
agreed to all provisions made applicable by the Notice of Sale (10 CFR 
625.3(c)).

B. General Sales Procedures

    Under the SPR sales rule, the first step in the SPR competitive 
sales process is the issuance of a Notice of Sale which lists the 
volume, characteristics, and location of the petroleum for sale, 
delivery dates and procedures for submitting offers, as well as 
measures for assuring performance and financial responsibility.
    Over the course of a drawdown, several Notices of Sale may be 
issued, each covering a sales period of one to two months. Offerors may 
have only five days from the date a Notice of Sale is issued until 
offers are due, with delivery of oil commencing no later than thirty 
days after the Presidential direction to draw down the Reserve. 
Subsequent sales periods will coordinate Notice of Sale issuance with 
standard industry delivery periods. Because of the possible short 
initial lead-time, the Department maintains a registry of prospective 
offerors who will receive electronic notification of all Notices of 
Sale.
    The next step in the sales process is for prospective purchasers to 
submit offers, as specified in the Notice of Sale. Offerors must 
unconditionally accept all terms and conditions in the Notice of Sale, 
and submit an offer guarantee based on potential contract value. After 
submission, the offers are evaluated and ``apparently successful 
offerors'' are selected. The offer evaluation process is structured so 
that the offerors bidding the highest prices determine their

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method of delivery, up to the limits of the distribution system, with 
specific delivery arrangements negotiated later in the process.
    All apparently successful offerors are required, within five 
business days of being notified, to provide a letter of credit as a 
guarantee of performance and payment of amounts due under the contract. 
Upon timely receipt of the letters of credit, and a final determination 
by the Contracting Officer that offers are responsive and offerors 
responsible, the DOE issues the Notices of Award. Deliveries then 
commence to the purchasers, consistent with their arrangements for 
commercial pipeline or marine vessel transportation. Purchasers are 
invoiced following crude oil deliveries.

II. The Revised Standard Sales Provisions

A. Major Revisions

    The SSPs are being revised as contemplated by the SPR sales rule. 
The revisions primarily relate to the increased use of the internet as 
the primary means of providing SPR program information and conducting 
business operations. The most significant of these revisions is the 
adoption by DOE of a web-based drawdown sales system for registering 
and communicating with potential offerors, posting sales documents and 
receiving offers. The new system replaces the existing registration 
database in its entirety, so any interested parties who had previously 
registered on DOE's Sales Offerors Mailing List must complete a new 
registration in order to receive drawdown sales notifications and 
participate in a sale. Also, due to the transference of the sales 
process to the internet, several former SSP exhibits, e.g., Exhibit A, 
``Strategic Petroleum Reserve Sales Offer Form,'' have been eliminated 
as their functions have been superseded by the on-line program.
    Other noteworthy revisions relate to the crude oil streams and 
delivery options offered during a sale. Maya crude oil is no longer 
stored as a separate segregation at the SPR, resulting in the 
elimination of former Master Line Item 003, Bryan Mound Maya. In 
addition, a change has been made to the nominal definition of marine 
delivery line items, wherein the three sequential 10-day periods within 
a sales cycle for vessel or barge deliveries have been replaced by a 
single 30-day period which coincides with the cycle. Also, as the SPR 
crude oil stream assays are periodically updated according to a long-
term storage cavern sampling program, the revised provisions provide an 
internet link to the latest assay files for each of the eight SPR crude 
oil streams.
    In accordance with subsection 161(j) of the Energy Policy and 
Conservation Act (42 U.S.C. 6241(j)), the State of Hawaii, or a State-
designated eligible entity authorized to act on the State's behalf, may 
submit a ``binding offer'' for the purchase of SPR petroleum. A new 
sales provision C.7 summarizes the rights accorded to the State under 
that authority.
    Finally, cash wire deposits and electronic funds transfers to the 
account of the U.S. Treasury are no longer acceptable methods for 
submission of offer guarantees. An irrevocable standby letter of credit 
is now the only acceptable form of offer guarantee. Slightly revised 
irrevocable standby letter of credit formats have been provided for 
both the offer guarantee and the payment and performance guarantee. The 
instructions for the return of cash wire deposit or funds transfer 
offer guarantees have been eliminated.
    The following is a provision-by-provision discussion of the 
noteworthy changes to the SSPs.

B. Revised Provisions

SSP No. A.1 List of abbreviations
SSP No. A.5 Sales Notification List (SNL)
    These provisions make clear that the previous Sales Offeror Mailing 
List has been totally replaced by the new on-line Sales Notification 
List, and that new registration is required on the SNL.
SSP No. A.2 Definitions
    New subparagraph (e) is the definition of an electronic signature, 
as recognized for the internet-based sales program.
SSP A.6 Publication of the Notice of Sale
    This provision reinforces that such publication will primarily be 
accomplished by electronically notifying the SNL registrants and 
posting the document on identified Department of Energy websites.
SSP No. B.1 Requirements for a valid offer--caution to offerors
SSP No. B.9 Submission of offers and modification of previously 
submitted offers
    These provisions stipulate that offers to purchase SPR petroleum 
must be submitted, modified or withdrawn using the internet-based sales 
system.
SSP No. B.7 State of Hawaii Access to SPR Crude Oil
    The provision summarizes the rights of the State of Hawaii under 
its authority to submit a binding offer to purchase SPR petroleum in 
accordance with subsection 161(j) of the Energy Policy and Conservation 
Act (42 U.S.C. 6241(j)).
SSP No. B.12 Offer guarantee
    This provision specifies that the only acceptable offer guarantee 
is an irrevocable standby letter of credit, and allows an offeror to 
fax a properly executed copy in advance of the original document. The 
issuing financial institution must be a participant in the Fedwire 
Deposit System Network funds transfer system.
SSP No. B.18 Notice of Sale line item schedule--petroleum quantity, 
quality, and delivery method
    This provision redefines marine delivery line items (tanker and 
barge) to be single 30-day delivery periods instead of the former three 
sequential 10-day delivery periods within a sales cycle.
SSP No. B.22 Procedures for Evaluation of Offers
    This provision describes how DOE evaluates offers in relation to 
the Government's estimates of the market values for each SPR crude oil 
stream offered for sale.
SSP No. C.21 Payment and Performance Letter of Credit
    The requirement that the issuing financial institution be a 
participant in the Fedwire Deposit System Network funds transfer system 
also applies to payment and performance irrevocable standby letters of 
credit.

III. Procedural Requirements

A. Review Under Executive Order 12866

    The Office of Information and Regulatory Affairs of the Office of 
Management and Budget (OMB) has determined that today's regulatory 
action is not a ``significant regulatory action'' under Executive Order 
12866, ``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 
1993). Accordingly, this action was not subject to review under the 
Executive Order.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless

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the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    No statute or other law requires DOE to propose today's rule for 
public comment. Accordingly, the requirements of the Regulatory 
Flexibility Act do not apply to this rulemaking.

C. Review Under the Paperwork Reduction Act

    This rulemaking will impose no new information or record keeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.)

D. Review Under the National Environmental Policy Act

    DOE has determined that this rule falls into a class of actions 
that are categorically excluded from review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and the 
Department's implementing regulations at 10 CFR part 1021. 
Specifically, this rule is strictly procedural, and, therefore, is 
covered by the Categorical Exclusion in paragraph A6 to subpart D, 10 
CFR part 1021. Accordingly, neither an environmental assessment nor an 
environmental impact statement is required.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The Executive Order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and carefully assess 
the necessity for such actions. The Executive Order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations (65 FR 13735). DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729, February 7, 1996), imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of Executive 
Order 12988 specifically requires that Executive agencies make every 
reasonable effort to ensure that the regulation: (1) Clearly specifies 
the preemptive effect, if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and burden 
reduction; (4) specifies the retroactive effect, if any; (5) adequately 
defines key terms; and (6) addresses other important issues affecting 
clarity and general draftsmanship under any guidelines issued by the 
Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, this rule meets the relevant standards of Executive 
Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995.

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and tribal governments and the 
private sector. With respect to a proposed regulatory action that may 
result in the expenditure by State, local and tribal governments, in 
the aggregate, or by the private sector of $100 million or more 
(adjusted annually for inflation), section 202 of the Act requires a 
Federal agency to publish estimates of the resulting costs, benefits, 
and other effects on the national economy (2 U.S.C. 1532(a),(b)). The 
Act also requires a Federal agency to develop an effective process to 
permit timely input by elected officers of State, local, and tribal 
governments on a proposed ``significant intergovernmental mandate,'' 
and requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments before 
establishing any requirements that might significantly or uniquely 
affect small governments. On March 18, 1997, DOE published a statement 
of policy on its process for intergovernmental consultation under the 
Act (62 FR 12820) (also available at http://www.gc.doe.gov). The rule 
published today does not contain any Federal mandate, so these 
requirements do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's notice under the OMB and DOE guidelines and 
has concluded that it is consistent with applicable policies in those 
guidelines.

J. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to

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prepare and submit to the Office of Information and Regulatory Affairs 
(OIRA), Office of Management and Budget, a Statement of Energy Effects 
for any proposed significant energy action. A ``significant energy 
action'' is defined as any action by an agency that promulgated or is 
expected to lead to promulgation of a final rule, and that: (1) Is a 
significant regulatory action under Executive Order 12866, or any 
successor order; and (2) is likely to have a significant adverse effect 
on the supply, distribution, or use of energy, or (3) is designated by 
the Administrator of OIRA as a significant energy action. For any 
proposed significant energy action, the agency must give a detailed 
statement of any adverse effects on energy supply, distribution, or use 
should the proposal be implemented, and of reasonable alternatives to 
the action and their expected benefits on energy supply, distribution, 
and use. Today's regulatory action would not have a significant adverse 
effect on the supply, distribution, or use of energy and, therefore, is 
not a significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

K. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of today's rule prior to its effective date. The report 
will state that it has been determined that the rule is not a ``major 
rule'' as defined by 5 U.S.C. 804(2).

List of Subjects in 10 CFR Part 625

    Government contracts, Oil and gas reserves, Strategic and critical 
materials.

    Issued in Washington, DC on May 20, 2005.
John D. Shages,
Deputy Assistant Secretary, Petroleum Reserves.

0
For the reasons set forth in the preamble, 10 CFR Part 625 is amended 
as follows:

PART 625--PRICE COMPETITIVE SALE OF STRATEGIC PETROLEUM RESERVE 
PETROLEUM

0
1. The authority citation for Part 625 continues to read as follows:

    Authority: 15 U.S.C. 761; 42 U.S.C. 7101; 42 U.S.C. 6201.

0
2. Appendix A to 10 CFR part 625 is revised to read as follows:

Appendix A To Part 625--Standard Sales Provisions

Index

Section A--General Pre-Sale Information

A.1 List of abbreviations
A.2 Definitions
A.3 Standard Sales Provisions (SSPs)
A.4 Periodic revisions of the Standard Sales Provisions
A.5 Sales Notification List (SNL)
A.6 Publication of the Notice of Sale
A.7 Penalty for false statements in offers to buy SPR petroleum

Section B--Sales Solicitation Provisions

B.1 Requirements for a valid offer--caution to offerors
B.2 Price indexing
B.3 Certification of independent price determination
B.4 Requirements for vessels--caution to offerors
B.5 ``Superfund'' tax on SPR petroleum--caution to offerors
B.6 Export limitations and licensing--caution to offerors
B.7 State of Hawaii access to SPR crude oil
B.8 Issuance of the Notice of Sale
B.9 Submission of offers and modification of previously submitted 
offers
B.10 Acknowledgment of amendments to a Notice of Sale
B.11 Late offers, modifications of offers, and withdrawal of offers
B.12 Offer guarantee
B.13 Explanation requests from offerors
B.14 Currency for offers
B.15 Language of offers and contracts
B.16 Proprietary data
B.17 SPR crude oil streams and delivery points
B.18 Notice of Sale line item schedule--petroleum quantity, quality, 
and delivery method
B.19 Line item information to be provided in the offer
B.20 Mistake in offer
B.21 Evaluation of offers
B.22 Procedures for evaluation of offers
B.23 Financial statements and other information
B.24 Resolicitation procedures on unsold petroleum
B.25 Offeror's certification of acceptance
B.26 Notification of Apparently Successful Offeror
B.27 Contract documents
B.28 [Reserved]
B.29 Procedures for selling to other U.S. Government agencies

Section C--Sales Contract Provisions

C.1 Delivery of SPR petroleum
C.2 Compliance with the ``Jones Act'' and the U.S. export control 
laws
C.3 [Reserved]
C.4 Environmental compliance
C.5 Delivery and transportation scheduling
C.6 Contract modification--alternate delivery line items
C.7 Application procedures for ``Jones Act'' and Construction 
Differential Subsidy waivers
C.8 Vessel loading procedures
C.9 Vessel laytime and demurrage
C.10 Vessel loading expedition options
C.11 Purchaser liability for excessive berth time
C.12 Pipeline delivery procedures
C.13 Title and risk of loss
C.14 Acceptance of crude oil
C.15 Delivery acceptance and verification
C.16 Price adjustments for quality differentials
C.17 Determination of quality
C.18 Determination of quantity
C.19 Delivery documentation
C.20 Contract amounts
C.21 Payment and Performance Letter of Credit
C.22 Billing and payment
C.23 Method of payments
C.24 Interest
C.25 Termination
C.26 Other Government remedies
C.27 Liquidated damages
C.28 Failure to perform under SPR contracts
C.29 Government options in case of impossibility of performance
C.30 Limitation of Government liability
C.31 Notices
C.32 Disputes
C.33 Assignment
C.34 Order of precedence
C.35 Gratuities

Exhibits:

A--SPR Crude Oil Comprehensive Analysis
B--SPR Delivery Point Data
C--Offer Standby Letter of Credit
D--Payment and Performance Letter of Credit
E--Strategic Petroleum Reserve Crude Oil Delivery Report--SPRPMO-F-
6110.2-14b 1/87 REV.8/91

Section A--General Pre-Sale Information

A.1 List of Abbreviations

(a) ASO: Apparently Successful Offeror
(b) DLI: Delivery Line Item
(c) DOE: U.S. Department of Energy
(d) MLI: Master Line Item
(e) NA: Notice of Acceptance
(f) NS: Notice of Sale
(g) SNL: Sales Notification List
(h) SSPs: Standard Sales Provisions
(i) SPR: Strategic Petroleum Reserve
(j) SPRCODR: SPR Crude Oil Delivery Report (Exhibit E)
(k) SPR/PMO: Strategic Petroleum Reserve Project Management Office

A.2 Definitions

    Affiliate. The term ``affiliate'' means associated business 
concerns or individuals if, directly or indirectly, (1) either one 
controls or can control the other, or (2) a third party controls or 
can control both.
    Business Day. The term ``business day'' means any day except 
Saturday, Sunday or a U.S. Government holiday.
    Contract. The term ``contract'' means the contract under which 
DOE sells SPR petroleum. It is composed of the NS, the NA, the 
successful offer, and the SSPs incorporated by reference.
    Contracting Officer. The term ``Contracting Officer'' means the 
person executing sales contracts on behalf of the Government, and 
any other Government employee properly designated as Contracting 
Officer. The term includes the authorized representative of a 
Contracting Officer acting within the limits of his or her 
authority.
    Electronic signature or signature means a method of signing an 
electronic message that--

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    (1) Identifies and authenticates a particular person as the 
source of the electronic message; and
    (2) Indicates such person's approval of the information 
contained in the electronic message.
    Government. The term ``Government'', unless otherwise indicated 
in the text, means the United States Government.
    Head of the Contracting Activity. The term ``Head of the 
Contracting Activity'' means Project Manager, Strategic Petroleum 
Reserve Project Management Office.
    Notice of Acceptance (NA). The term ``Notice of Acceptance'' 
means the document that is sent by DOE to accept the purchaser's 
offer to create a contract.
    Notification of Apparently Successful Offeror (ASO). The term 
``notification of apparently successful offeror'' means the notice, 
written or oral, by the Contracting Officer to an offeror that it 
will be awarded a contract if it is determined to be responsible.
    Notice of Sale (NS). The term ``Notice of Sale'' means the 
document announcing the sale of SPR petroleum, the amount, 
characteristics and location of the petroleum being sold, the 
delivery period and the procedures for submitting offers. The NS 
will specify what contractual provisions and financial and 
performance responsibility measures are applicable to that 
particular sale of petroleum and provide other pertinent 
information.
    Offeror. The term ``offeror'' means any person or entity 
(including a government agency) who submits an offer in response to 
a NS.
    Petroleum. The term ``petroleum'' means crude oil, residual fuel 
oil, or any refined product (including any natural gas liquid, and 
any natural gas liquid product) owned or contracted for by DOE and 
in storage in any permanent SPR facility, or temporarily stored in 
other storage facilities.
    Project Management Office (SPR/PMO). The term ``Project 
Management Office'' means the DOE personnel and DOE contractors 
located in Louisiana and Texas responsible for the operation of the 
SPR.
    Purchaser. The term ``purchaser'' means any person or entity 
(including a government agency) who enters into a contract with DOE 
to purchase SPR petroleum.
    Standard Sales Provisions (SSPs). The term ``Standard Sales 
Provisions'' means this set of terms and conditions of sale 
applicable to price competitive sales of SPR petroleum. These SSPs 
constitute the ``standard sales agreement'' referenced in the 
Strategic Petroleum Reserve ``Drawdown'' (Distribution) Plan, 
Amendment No. 4 (December 1, 1982, DOE/EP 0073) to the SPR Plan.
    Strategic Petroleum Reserve (SPR). The term ``Strategic 
Petroleum Reserve'' means that DOE program established by Title I, 
Part B, of the Energy Policy and Conservation Act, 42 U.S.C. 6201, 
as amended.
    Vessel. The term ``vessel'' means a tankship, an integrated tug-
barge (ITB) system, a self-propelled barge, or other barge.

A.3 Standard Sales Provisions (SSPs)

    (a) These SSPs contain pre-sale information, sales solicitation 
provisions, and sales contract clauses setting forth terms and 
conditions of sale, including purchaser financial and performance 
responsibility measures, or descriptions thereof, which may be 
applicable to price competitive sales of petroleum from the SPR in 
accordance with the SPR Sales Rule, 10 CFR Part 625. The NS will 
specify which of these provisions shall apply to a particular sale 
of such petroleum, and it may specify any revisions therein and any 
additional provisions which shall be applicable to that sale.
    (b) All offerors must, as part of their offers for SPR petroleum 
in response to a NS, agree without exception to all sales provisions 
of that NS.

A.4 Periodic Revisions of the Standard Sales Provisions

    DOE will review the SSPs periodically and republish them in the 
Federal Register, with any revisions. When an NS is issued, it will 
cite the Federal Register and the Code of Federal Regulations (if 
any) in which the latest version of the SSPs was published. Offerors 
are cautioned that the Code of Federal Regulations may not contain 
the latest version of the SSPs published in the Federal Register. 
Interested persons may view the current SSPs at http://www.spr.doe.gov/reports/SSPs/ssp.htm.

A.5 Sales Notification List (SNL)

    (a) The SPR/PMO will maintain a Sales Notification List (SNL) of 
those potential offerors who wish to receive notification of an NS 
whenever one is issued. In order to assure that prospective offerors 
will receive such notification in a timely fashion, all potential 
offerors are encouraged to register on the SNL as soon as possible.
    (b) Any firm or individual may complete the SNL on-line 
registration process at http://www.spr.doe.gov.

A.6 Publication of the Notice of Sale

    (a) Notification of a NS will be sent via e-mail to those who 
have registered on the SNL referenced in Provision A.5.
    (b) The NS will be posted on the SPR web page http://www.spr.doe.gov for public viewing. In addition, the issuance of the 
NS will be publicized on the Fossil Energy web page http://www.fe.doe.gov/programs/reserves/.
    (c) A DOE press release, which will include the salient features 
of the NS, will be made available to all news agencies.

A.7 Penalty for False Statements in Offers to Buy SPR Petroleum

    (a) Making false statements in an offer to buy SPR petroleum may 
expose an offeror to a penalty under the False Statements Act, 18 
U.S.C. 1001, which provides:

 Whoever, in any matter within the jurisdiction of any department or 
agency of the United States knowingly and willfully falsifies, 
conceals or covers up by any trick, scheme, or device a material 
fact, or makes any false, fictitious or fraudulent statements or 
representations, or makes or uses any false writing or document 
knowing the same to contain any false, fictitious or fraudulent 
statement or entry, shall be fined under this title or imprisoned 
not more than 5 years, or both.

    (b) Under 18 U.S.C. 3571, the maximum fine to which an 
individual or organization may be sentenced for violations of 18 
U.S.C. (including Section 1001) is set at $250,000 and $500,000 
respectively, unless there is a greater amount specified in the 
statute setting out the offense, or the violation is subject to 
special factors set out in Section 3571. The United States 
Sentencing Guidelines also apply to violations of Section 1001, and 
offenders may be subject to a range of fines under the guidelines up 
to and including the maximum amounts permitted by law.

Section B--Sales Solicitation Provisions

B.1 Requirements for a Valid Offer--Caution to Offerors

    (a) Offerors are advised that the submission of an offer 
electronically is required. Submission of an offer via the SPR's 
specified on-line system will constitute a legal, binding offer. The 
use of the combination of User Name and password to login and submit 
offers constitutes an electronic signature.
    (b) A valid offer to purchase SPR petroleum must meet the 
following conditions:
    (1) The offer must be submitted via the SPR's on-line system as 
designated in the NS;
    (2) The offer must be received no later than the date and time 
set for receipt of offers;
    (3) The offer guarantee (see Provision B.12) must be received no 
later than the time set for the receipt of offers;
    (4) Any amendments to the NS that explicitly require 
acknowledgment of receipt must be properly acknowledged as specified 
in the NS; and
    (5) Submission of an on-line offer in accordance with this 
provision constitutes agreement without exception to all provisions 
of the SSPs that the NS makes applicable to a particular sale, as 
well as to all provisions in the NS.
    (c) At the discretion of the Contracting Officer, offers may be 
received by alternative means if circumstances preclude use of the 
specified on-line system.

B.2 Price Indexing

    The Government, at its discretion, may make use of a price 
indexing mechanism to effect contract price adjustments based on 
petroleum market conditions, e.g., crude oil market price changes 
between the times of offer price submissions and physical 
deliveries. The NS will set forth the provisions applicable to any 
such mechanism.

B.3 Certification of Independent Price Determination

    (a) The offeror certifies that:
    (1) The prices in this offer have been arrived at independently, 
without, for the purposes of restricting competition, any 
consultation, communication, or agreement with any other offeror or 
competitor relating to:
    (i) Those prices;
    (ii) The intention to submit an offer; or
    (iii) The methods or factors used to calculate the prices 
offered.
    (2) The prices in this offer have not been and will not be 
knowingly disclosed by the offeror, directly or indirectly, to any 
other

[[Page 39369]]

offeror or to any competitor before the time set for receipt of 
offers, unless otherwise required by law; and
    (3) No attempt has been made or will be made by the offeror to 
induce any other concern to submit or not to submit an offer for the 
purpose of restricting competition.
    (b) Each submission of an offer is considered to be a 
certification by the offeror that the offeror:
    (1) Is the person within the offeror's organization responsible 
for determining the prices being offered, and that the offeror has 
not participated, and will not participate, in any action contrary 
to paragraphs (a)(1) through (a)(3) of this provision; or
    (2)(i) Has been authorized in writing to act as agent for the 
persons responsible for such decision in certifying that such 
persons have not participated, and will not participate, in any 
action contrary to (a)(1) through (a)(3) of this provision;
    (ii) As their agent does hereby so certify; and
    (iii) As their agent has not participated, and will not 
participate, in any action contrary to paragraphs (a)(1) through 
(a)(3) of this provision.

B.4 Requirements for Vessels--Caution to Offerors

    (a) The ``Jones Act'', 46 U.S.C. 883, prohibits the 
transportation of any merchandise, including SPR petroleum, by water 
or land and water, on penalty of forfeiture thereof, between points 
within the United States (including Puerto Rico, but excluding the 
Virgin Islands) in vessels other than vessels built in and 
documented under laws of the United States, and owned by United 
States citizens, unless the prohibition has been waived by the 
Secretary of Homeland Security. Further, certain U.S.-flag vessels 
built with Construction Differential Subsidies (CDS) are precluded 
by Section 506 of the Merchant Marine Act of 1936 (46 U.S.C. 1156) 
from participating in U.S. coastwise trade, unless such prohibition 
has been waived by the Secretary of Transportation, the waiver being 
limited to a maximum of 6 months in any given year. CDS vessels may 
also receive Operating Differential Subsidies, requiring separate 
permission from the Secretary of Transportation for domestic 
operation, under Section 805(a) of the same statute. The NS will 
advise offerors of any general waivers allowing use of non-coastwise 
qualified vessels or vessels built with Construction Differential 
Subsidies for a particular sale of SPR petroleum. If there is no 
general waiver, purchasers may request waivers in accordance with 
Provision C.7, but remain obligated to complete performance under 
this contract regardless of the outcome of that waiver process.
    (b) The Department of Homeland Security's regulations concerning 
Vessels Carrying Oil, Noxious Liquid Substances, Garbage, Municipal 
or Commercial Waste, and Ballast Water (33 CFR part 151) and 
Reception Facilities For Oil, Noxious Liquid Substances, and Garbage 
(33 CFR part 158) implement the requirements of the International 
Convention for the Prevention of Pollution from Ships, 1973, as 
modified by the 1978 Protocol relating thereto (MARPOL 73/78). These 
regulations prohibit any oceangoing tankship, required to retain oil 
or oily mixtures on-board while at sea, from entering any port or 
terminal unless the port or terminal has a valid Certificate of 
Adequacy as to its oil reception capabilities. Marine terminals in 
support of the SPR (see Exhibit B, SPR Delivery Point Data) have 
Certificates of Adequacy; however, they may not have reception 
facilities for oily ballast, vessel sludge or oily bilge water 
wastes. Accordingly, tankships will be required to make arrangements 
for and be responsible for all costs associated with appropriate 
disposal of such ballast, vessel sludge or oily bilge water waste or 
permission to load may be denied.

B.5 ``Superfund'' Tax on SPR Petroleum--Caution to Offerors

    (a) Sections 4611 and 4612 of the Internal Revenue Code, provide 
for the imposition of taxes on domestic and imported petroleum to 
support the Hazardous Substance Response Fund (the ``Superfund'') 
and the Oil Spill Liability Trust Fund (``Trust Fund''). These taxes 
are not currently being collected.
    (b) DOE has already paid the Superfund and Trust Fund taxes on 
some of the oil imported and stored in the SPR. However, no 
Superfund or Trust Fund tax has been paid on any domestic oil stored 
in the SPR or on imported oil stored prior to the imposition of 
these taxes. Because domestic and imported crude oil for which no 
Superfund and Trust Fund taxes have been paid and crude oils for 
which these taxes have been paid have been commingled in the SPR, 
the Government retains records of the tax status of all SPR 
petroleum in storage. The NS will advise purchasers in the event 
these taxes are reimposed.

B.6 Export Limitations and Licensing--Caution to Offerors

    Offerors for SPR petroleum are put on notice that export of SPR 
crude oil is subject to U.S. export control laws implemented by the 
Department of Commerce Short Supply Controls, codified at 15 CFR 
part 754, Sec.  754.2, Crude oil. Subsections of Sec.  754.2 provide 
for the approval of applications to export crude oil from the SPR in 
connection with refining or exchange of SPR oil. Specifically, these 
subsections are Sec. Sec.  754.2(b)(iii), and 754.2(f), Refining or 
exchange of Strategic Petroleum Reserve Oil. These provisions 
implement the authority given to the President by 42 U.S.C. 6241(i) 
to permit the export of oil in the SPR for the purpose of obtaining 
refined petroleum for the U.S. market. In addition, the President 
could waive the requirement for an export license altogether. The NS 
will advise of any waivers under this Presidential authority.

B.7 State of Hawaii Access to SPR crude oil

    Potential offerors are advised that pursuant to subsection 161 
(j) of the Energy Policy and Conservation Act (42 U.S.C. 6241 (j)), 
the State of Hawaii, or a State-designated eligible entity 
authorized to act on the State's behalf, may submit a ``binding 
offer'' for the purchase of SPR petroleum. By submission of a 
binding offer, the State of Hawaii is entitled to purchase up to 
three percent of the quantity of SPR petroleum offered for sale or 
one-twelfth of the state's annual import quantity barrels. The price 
will be equal to the volumetrically weighted average price of the 
successful competitive offers for the applicable Master Line Item. 
Furthermore, at the request of the Hawaii or its designated eligible 
entity, the petroleum purchased will have first preference in its 
scheduling for delivery. The State of Hawaii may also enter into 
exchange or processing agreements to permit delivery of the 
purchased petroleum to other locations, if a petroleum product of 
similar value or quantity is delivered to the State.

B.8 Issuance of the Notice of Sale

    In the event petroleum is sold from the SPR, DOE will issue a NS 
containing all the pertinent information necessary for the offeror 
to prepare a priced offer. A NS may be issued with a week or less 
allowed for the receipt of offers. Offerors are expected to examine 
the complete NS document, and to become familiar with the SSPs cited 
therein. Failure to do so will be at the offeror's risk.

B.9 Submission of Offers and Modification of Previously Submitted 
Offers

    (a) Unless otherwise provided in the NS, offers must be 
submitted via SPR's on-line system and received no later than the 
date and time set for offer receipt as specified in the NS.
    (b) Unless otherwise provided in the NS, offers may be modified 
or withdrawn on-line, provided that the modification or withdrawal 
is accomplished prior to the date and time specified for receipt of 
offers.
    (c) An offeror may withdraw an offer by deleting the submission 
in accordance with the instructions provided for the SPR's on-line 
system.
    (d) An offeror may modify a previously submitted offer by 
withdrawing the original offer (see (c) above) and resubmitting the 
replacement offer in its entirety no later than the date and time 
set for offer receipt.
    (e) DOE will not release to the general public the identities of 
the offerors, or their offer quantities and prices, until the 
Apparently Successful Offerors have been determined. DOE will inform 
simultaneously all offerors and other interested parties of the 
successful and unsuccessful offerors and their offer data by means 
of a public ``offer posting.'' The offer posting will normally occur 
within a week of receipt of offers and will provide all interested 
parties access to offer data as well as any DOE changes in the 
petroleum quantities or quality to be sold. DOE will announce the 
date, time, and location of the offer posting as soon as 
practicable.

B.10 Acknowledgment of Amendments to a Notice of Sale

    When an amendment to a NS requires acknowledgment of issuance, 
it must be acknowledged by an offeror in accordance with 
instructions provided in the NS. Such acknowledgment must be 
received as part of a timely offer submission.

B.11 Late Offers, Modifications of Offers, and Withdrawal of Offers

    (a) The date/time stamp affixed by the SPR's on-line system will 
be the sole determinant of timely offer receipt. Any offer

[[Page 39370]]

received after the date and time specified in the NS for receipt 
will be considered only if
    (1) it is received before award is made; and
    (2) the Contracting Officer determines that the late receipt was 
due solely to a failure of the Government's electronic receiving 
equipment, or
    (3) it is the only offer received.
    (b) Any modification or withdrawal of an offer is subject to the 
same conditions as in (a) of this provision.
    (c) Notwithstanding (a) and (b) of this provision, a late 
modification of an otherwise successful offer that makes its terms 
more favorable to the Government will be considered at any time it 
is received and may be accepted.

B.12 Offer Guarantee

    (a) Each offeror must submit an acceptable offer guarantee for 
each offer submitted. Each offer guarantee must be received at the 
place specified in the NS no later than the date and time set for 
receipt of offers.
    (b) An offeror's failure to submit a timely, acceptable 
guarantee will result in rejection of its offer. A properly executed 
copy of the offer guarantee(s) may be faxed to the telephone numbers 
provided in the NS, with the original sent to the Contracting 
Officer as provided in paragraph (d) of this provision.
    (c) The amount of each offer guarantee is $10 million or 5 
percent of the maximum potential contract amount, whichever is less. 
The maximum potential contract amount is the sum of the products 
determined by multiplying the offer's maximum purchase quantity for 
each master line item, times the highest offer prices that the 
offeror would have to pay for that master line item if the offer 
were to be successful. The SPR on-line system will perform this 
calculation automatically as offer information is entered.
    (d) For each offer, an offeror must submit an irrevocable 
standby letter of credit from a U.S. depository institution 
containing the substantive provisions set out in Exhibit C, Offer 
Standby Letter of Credit, all letter of credit costs to be borne by 
the offeror. If the letter of credit contains any provisions at 
variance with Exhibit C or fails to include any provisions contained 
in Exhibit C, nonconforming provisions must be deleted and missing 
substantive provisions must be added or the letter of credit will 
not be accepted. The depository institution must be located in and 
authorized to do business in any state of the United States or the 
District of Columbia, and authorized to issue letters of credit by 
the banking laws of the United States or any state of the United 
States or the District of Columbia. The depository institution must 
be an account holder with the Federal Reserve Banking system and a 
participant (on line) in the Fed's Fedwire Deposit System Network 
funds transfer system. The original of the letter of credit must be 
sent to the Contracting Officer at the address specified in the NS. 
The issuing bank must provide documentation indicating that the 
person signing the letter of credit is authorized to do so, in the 
form of corporate minutes, the Authorized Signature List, or the 
General Resolution of Signature Authority.
    (e) The envelope containing the original letter of credit shall 
clearly be marked ``RE: NS  --------. OFFER STANDBY LETTER 
OF CREDIT (Name of Company). Offerors are cautioned that if they 
provide more than one Offer Standby Letter of Credit for multiple 
offers and, due to the absence of clear information from the 
offeror, the Government is unable to identify which letter of credit 
applies to which offer, the Contracting Officer in his sole 
discretion may assign the letters of credit to specific offers.
    (f) The offeror shall be liable for any amount lost by DOE due 
to the difference between the offer and the resale price, and for 
any additional resale costs incurred by DOE in the event that the 
offeror:
    (1) withdraws its offer within 10 days following the time set 
for receipt of offers;
    (2) withdraws its offer after having agreed to extend its 
acceptance period; or
    (3) having received a notification of ASO, fails to furnish an 
acceptable payment and performance letter of credit (see Provision 
C.21) within the time limit specified by the Contracting Officer.
    The offer guarantee shall be used toward offsetting such price 
difference or additional resale costs. Use of the offer guarantee 
for such recovery shall not preclude recovery by DOE of damages in 
excess of the amount of the offer guarantee caused by such failure 
of the offeror.
    (g) Letters of credit furnished as offer guarantees must be 
valid for at least 60 calendar days after the date set for the 
receipt of offers.
    (h) Offer guarantee letters of credit may be returned upon 
request to an unsuccessful offeror 5 business days after expiration 
of the offeror's acceptance period, and, except as provided in (i) 
of this provision, to a successful offeror upon receipt of a 
satisfactory payment and performance letter of credit.
    (i) If an offeror defaults on its offer, DOE will hold the offer 
guarantee so that damages can be assessed against it.

B.13 Explanation Requests From Offerors

    Offerors may request explanations regarding meaning or 
interpretation of the NS from the individual at the telephone number 
and/or e-mail address indicated in the NS. On complex and/or 
significant questions, DOE reserves the right to have the offeror 
put the question in writing; explanation or instructions regarding 
these questions will be given as an amendment to the NS.

B.14 Currency for Offers

    Prices shall be stated and invoices shall be paid in U.S. 
dollars.

B.15 Language of Offers and Contracts

    All offers in response to the NS and all modifications of offers 
shall be in English. All correspondence between offerors or 
purchasers and DOE shall be in English.

B.16 Proprietary Data

    Offer quantities and prices are not considered proprietary 
information. If any other information submitted in connection with a 
sale is considered proprietary, that information shall be identified 
by e-mail to the address indicated in the NS, and an explanation 
provided as to the reason such data should be considered 
proprietary. Any final decision as to whether the material so 
identified is proprietary will be made by DOE. DOE's Freedom of 
Information Act regulations governing the release of proprietary 
data shall apply.

B.17 SPR Crude Oil Streams and Delivery Points

    (a) The geographical locations of the terminals, pipelines, and 
docks interconnected with permanent SPR storage locations, the SPR 
crude oil streams available at each location and the delivery points 
for those streams are as follows, (See also Exhibit A, SPR Crude Oil 
Comprehensive Analysis, and Exhibit B, SPR Delivery Point Data):

------------------------------------------------------------------------
    Geographical location        Delivery points      Crude oil stream
------------------------------------------------------------------------
Freeport, Texas.............  Seaway Terminal or    SPR Bryan Mound
                               Seaway Pipeline       Sweet, SPR Bryan
                               Jones Creek.          Mound Sour
Texas City, Texas...........   Seaway Terminal or   SPR Bryan Mound
                               Local Pipelines.      Sweet, SPR Bryan
                                                     Mound Sour
Nederland, Texas............  Sunoco Logistics      SPR West Hackberry
                               Partners, Nederland   Sweet, SPR West
                               Terminal.             Hackberry Sour, SPR
                                                     Big Hill Sweet, SPR
                                                     Big Hill Sour
Lake Charles, Louisiana.....  Shell 22-Inch/DOE     SPR West Hackberry
                               Lake Charles          Sweet, SPR West
                               Pipeline Connection.  Hackberry Sour
St. James, Louisiana........  Shell Sugarland       SPR Bayou Choctaw
                               Terminal connected    Sweet, SPR Bayou
                               to LOCAP and          Choctaw Sour
                               Capline.
Beaumont, Texas.............  Unocal Terminal.....  SPR Big Hill Sweet,
                                                     SPR Big Hill Sour
Winnie, Texas...............  Shell 20-Inch Meter   SPR Big Hill Sweet,
                               Station.              SPR Big Hill Sour
------------------------------------------------------------------------


[[Page 39371]]

    (b) The NS may change delivery points and it may also include 
additional crude oils, terminals, temporary storage facilities or 
systems utilized in connection with petroleum in transit to the SPR.
    (c) The NS may contain additional information supplementing 
Exhibit B, SPR Delivery Point Data.

B.18 Notice of Sale Line Item Schedule--Petroleum Quantity, Quality, 
and Delivery Method

    (a) Unless the NS provides otherwise, the possible master line 
items (MLI) that may be offered are as identified in Provision B.17. 
Currently, there are eight MLIs, one for each of the eight crude oil 
streams that the SPR has in storage. The NS may not offer all the 
possible MLIs.
    (b) Each MLI contains multiple delivery line items (DLIs), each 
of which specifies an available delivery method and the nominal 
delivery period. Offerors are cautioned that the NS may alter the 
period of time covered by each DLI. The NS will specify which DLIs 
are offered for each MLI.
    (1) DLI-A covers petroleum to be transported by pipeline, either 
common carrier or local. The nominal delivery period is one month.
    (2) DLI-B covers petroleum to be transported by tankships. The 
nominal delivery period is one month.
    (3) DLI-E covers petroleum to be transported by barges (Note: 
These DLIs are usually only applicable to deliveries of West 
Hackberry and Big Hill Sweet and Sour crude oil streams from Sun 
Docks). The nominal delivery period is one month.
    (4) Where the storage site is connected to more than one 
terminal or pipeline, additional DLIs will be offered. The 
additional DLIs will include DLI-H, covering petroleum to be 
transported by pipeline over the period of a month; DLI-I, covering 
tankships, etc. The Notice of Sale will specify any additional DLIs 
which may be applicable.
    (c) The NS will state the total estimated number of barrels to 
be sold on each MLI. An offeror may offer to buy all or part of the 
petroleum offered on an MLI. In making awards, the Contracting 
Officer shall attempt to achieve award of the exact quantities 
offered by the NS, but may sell a quantity of petroleum in excess of 
the quantity offered for sale on a particular MLI in order to match 
the DLI offers received. In addition, the Contracting Officer may 
reduce the MLI quantity available for award by any amount and reject 
otherwise acceptable offers, if he determines, in his sole 
discretion after consideration of the offers received on all of the 
MLIs, that award of those quantities is not in the best interest of 
the Government because the prices offered for them are not 
reasonable, or that, in light of market conditions after offers are 
received, a lesser quantity than that offered should be sold.
    (d) The NS will specify a minimum contract quantity for each 
DLI. To be responsive, an offer on a DLI must be for at least that 
quantity.
    (e) The NS will specify the maximum quantity that could be sold 
on each of the DLIs. The maximum quantity is not an indication of 
the amount of petroleum that, in fact, will be sold on that DLI. 
Rather, it represents DOE's best estimate of the maximum amount of 
the particular SPR crude oil stream that can be moved by that 
transportation system over the delivery period. The total DOE 
estimated DLI maximums may exceed the total number of barrels to be 
sold on that MLI, as the NS DLI estimates represent estimated 
transportation capacity, not the amount of petroleum offered for 
sale.
    (f) The NS will not specify what portion of the petroleum that 
DOE offers on a MLI will, in fact, be sold on any given DLI. Rather, 
the highest priced offers received on the MLI will determine the 
DLIs against which the offered petroleum is sold.
    (g) DOE will not sell petroleum on a DLI in excess of the DLI 
maximum; however, DOE reserves the right to revise its estimates at 
any time and to award or modify contracts in accordance with its 
revised estimates. Offerors are cautioned that: DOE cannot guarantee 
that such transportation capacity is available; offerors should 
undertake their own analyses of available transportation capacity; 
and each purchaser is wholly responsible for arranging all 
transportation other than terminal arrangements at the terminals 
listed in Provision B.17, which shall be made in accordance with 
Provision C.5. A purchaser against one DLI cannot change a 
transportation mode without prior written permission from DOE, 
although such permission will be given whenever possible, in 
accordance with Provision C.6.
    (h) Exhibit A, SPR Crude Oil Comprehensive Analysis, contains 
nominal characteristics for each SPR crude oil stream. Prospective 
offerors are cautioned that these data may change with SPR inventory 
changes. The NS will provide, to the maximum extent practicable, the 
latest data on each stream offered.

B.19 Line Item Information To Be Provided in the Offer

    (a) Each offeror, if determined to be an ASO on a DLI, agrees to 
enter into a contract under the terms of its offer for the purchase 
of petroleum in the offer and to take delivery of that petroleum 
(plus or minus 10 percent as provided for in Provision C.20) in 
accordance with the terms of that contract.
    (b) An offeror may submit an offer for any or all the MLIs 
offered by the NS. However, offerors are cautioned that alternate 
offers on different MLIs are not permitted. For example, an offeror 
may offer to purchase 1,000,000 barrels of SPR West Hackberry Sweet 
and 1,000,000 barrels of SPR West Hackberry Sour, but may not offer 
to purchase, in the alternative, either 1,000,000 barrels of sweet 
or 1,000,000 barrels of sour.
    (c) An offeror may submit multiple offers. However, separate on-
line offers and offer guarantees must be submitted and each offer 
will be evaluated on an individual basis.
    (d) The following information will be provided to DOE by the 
offeror on the SPR on-line offer form:
    (1) Maximum MLI Quantity. The offer shall state the maximum 
quantity of each crude oil stream that the offeror is willing to 
buy.
    (2) Desired Qty. The offer shall state the number of barrels 
that the offeror will accept on each DLI, i.e., by the delivery mode 
and during the delivery period specified. The quantity stated on a 
single DLI shall not exceed the Maximum MLI Quantity for the MLI. 
The offeror shall designate a quantity on at least one DLI for the 
MLI, but may designate quantities on more than one DLI. If the 
offeror is willing to accept alternate DLIs, the total of its 
desired DLI quantities would exceed its Maximum MLI quantity; 
otherwise, the total of its desired DLI quantities should equal its 
Maximum MLI quantity.
    (3) Price. The offer shall state the price per barrel for each 
DLI for which the offeror has designated a Desired Qty. Where offers 
have indicated quantities on more than one DLI with a different 
price on each, DOE will award the highest priced DLI first. If the 
offeror has the same price for two or more DLIs, it may indicate its 
first choice, second choice, etc., for award of those items; if the 
offeror does not indicate a preference, or indicates the same 
preference for more than one DLI, DOE may select the DLIs to be 
awarded at its discretion. Prices may be stated in hundredths of a 
cent ($0.000l). DOE shall drop from the offer and not consider any 
numbers of less than one one-hundredth of a cent.
    (4) Accept Minimum Quantity. The offeror must choose whether to 
accept only the Desired Qty (by deselecting the Accept Min Qty 
checkbox to indicate an unwillingness to accept less than the 
Desired Qty for that DLI) or, in the alternative, to accept any 
quantity awarded between the offer's Desired Qty and the minimum 
contract quantity for the DLI (by leaving the Accept Min Qty 
checkbox selected). However, DOE will award less than the Desired 
Qty only if the quantity available to be awarded is less than the 
Desired Qty.

B.20 Mistake in Offer

    (a) After receiving offers, the Contracting Officer shall 
examine all offers for mistakes. If the Contracting Officer 
discovers any quantity discrepancies, he may obtain from the offeror 
oral or written verification of the offer actually intended, but in 
any event, he shall proceed with offer evaluation applying the 
following procedures:
    (1) In case of conflict between the maximum MLI quantity and the 
stated DLI quantities (for example, if a single stated DLI quantity 
exceeds the corresponding maximum MLI quantity), the lesser quantity 
will govern in the evaluation of the offer.
    (2) In the event that the offer fails to specify a maximum MLI 
quantity, the offer will be evaluated as though the largest stated 
DLI quantity is the offer's maximum MLI quantity.
    (b) In cases where the Contracting Officer has reason to believe 
a mistake not covered by the procedures set forth in paragraph (a) 
may have been made, he shall request from the offeror a verification 
of the offer, calling attention to the suspected mistake. The 
Contracting Officer may telephone the offeror and confirm the 
request by electronic means. The Contracting Officer may set a limit 
of as little as 6 hours for telephone response, with any required 
written documentation to be received within 2 business days. If no 
response is received, the Contracting Officer may determine that no 
error exists and proceed with offer evaluation.

[[Page 39372]]

    (c) The Head of the Contracting Activity will make 
administrative determinations described in paragraphs (c)(1) and 
(c)(2) of this provision if an offeror alleges a mistake after 
receipt of offers and before award.
    (1) The Head of the Contracting Activity may refuse to permit 
the offeror to withdraw an offer, but permit correction of the offer 
if clear and convincing evidence establishes both the existence of a 
mistake and the offer actually intended. However, if such correction 
would result in displacing one or more higher acceptable offers, the 
Head of the Contracting Activity shall not so determine unless the 
existence of the mistake and the offer actually intended are 
ascertainable substantially from the NS and offer itself.
    (2) The Head of the Contracting Activity may determine that an 
offeror shall be permitted to withdraw an offer in whole, or in part 
if only part of the offer is affected, without penalty under the 
offer guarantee, where the offeror requests permission to do so and 
clear and convincing evidence establishes the existence of a 
mistake, but not the offer actually intended.
    (d) In all cases where the offeror is allowed to make verbal 
corrections to the original offer, confirmation of these corrections 
must be received in writing within the time set by the Contracting 
Officer or the original offer will stand as submitted.

B.21 Evaluation of Offers

    (a) The Contracting Officer will be the determining official as 
to whether an offer is responsive to the SSPs and the NS. DOE 
reserves the right to reject any or all offers and to waive minor 
informalities or irregularities in offers received.
    (b) A minor informality or irregularity in an offer is an 
inconsequential defect the waiver or correction of which would not 
be prejudicial to other offerors. Such a defect or variation from 
the strict requirements of the NS is inconsequential when its 
significance as to price, quantity, quality or delivery is 
negligible.

B.22 Procedures for Evaluation of Offers

    (a) Award on each DLI will be made to the responsible offerors 
that submit the highest priced offers responsive to the SSPs and the 
NS and that have provided the required payment and performance 
guarantee as required by Provision C.21.
    (b) DOE will array all offers on an MLI from highest price to 
lowest price for award evaluation regardless of DLI. However, DOE 
will award against the DLIs and will not award a greater quantity on 
a DLI than DOE's estimate (which is subject to change at any time) 
of the maximum quantity that can be moved by the delivery method. 
Selection of the apparently successful offers involves the following 
steps:
    (1) Any offers below the minimum acceptable price, if any 
minimum price has been established for the sale, will be rejected as 
nonresponsive.
    (2) All offers on each MLI will be arrayed from highest price to 
lowest price.
    (3) (i) Offers may be rejected if they are below 95 percent of 
the sales price, as estimated by the Government, of comparable crude 
oil being sold in the same area at the same time. In making the 
sales price estimate, the Government will consider both the ``Base 
Reference Price'' as defined in the Notice of Sale and other 
available information bearing on the issue.
    (ii) For price offers at or above 95 percent of the sales price 
estimate, the Contracting Officer will determine price 
reasonableness, considering offers received and prevailing market 
conditions.
    (iii) Price offers below 95 percent may be accepted only if the 
Contracting Officer determines such action is necessary to achieve 
SPR crude oil supply objectives and such offered prices are 
reasonable.
    (4) The highest priced offers will be reviewed for 
responsiveness to the NS.
    (5) In the event the highest priced offer does not take all the 
petroleum available on the MLI, sequentially, the next highest 
priced offer will be selected until all of the petroleum offered on 
the MLI is awarded or there are no more acceptable offers. In the 
event that acceptance of an offer against an MLI or a DLI would 
result in the sale of more petroleum on an MLI than DOE has offered 
or the sale of more petroleum on a DLI than DOE estimates can be 
delivered by the specified delivery method, DOE will not award the 
full amount of the offer, but rather the remaining MLI quantity or 
DLI capacity, provided such portion exceeds DOE's minimum contract 
quantity. In the event that the quantity remaining is less than the 
offeror is willing to accept, but more than DOE's minimum contract 
quantity, the Contracting Officer shall proceed to the next highest 
priced offer.
    (6) In the event of tied offers and an insufficient remaining 
quantity available on the MLI or insufficient remaining capacity on 
the DLI to fully award all tied offers, the Contracting Officer 
shall apply an objective random methodology for allocating the 
remaining MLI quantity or DLI capacity among the tied offers, taking 
into consideration the quantity the offeror is willing to accept as 
indicated in its offer. When making this allocation, the Contracting 
Officer in his sole discretion may do one or more of the following:
    (i) Make an additional quantity or capacity available;
    (ii) Contact an offeror to determine whether alternative 
delivery arrangements can be made; or
    (iii) Not award all or part of the remaining quantity of 
petroleum.
    (7) The Contracting Officer may reduce the MLI quantity 
available for award by any amount and reject otherwise acceptable 
offers if in his sole discretion he determines, after consideration 
of the offers received on all of the MLIs, that award of those 
quantities is not in the best interest of the Government because the 
prices offered for them are not reasonable; or if the Government 
determines, in light of market conditions after offers are received, 
to sell less than the overall quantity of SPR petroleum offered for 
sale.
    (8) Determinations of ASO responsibility will be made by the 
Contracting Officer before each award. All ASOs will be notified and 
advised to provide to the Contracting Officer within five business 
days a letter of credit (See Exhibit D, Payment and Performance 
Letter of Credit) as specified in Provision C.21, all letter of 
credit costs to be borne by the purchaser.
    (9) Compliance with required payment and performance guarantees 
will effectively assure a finding of responsibility of offerors, 
except where:
    (i) An offeror is on either DOE's or the Federal Government's 
list of debarred, ineligible and suspended bidders; or
    (ii) Evidence, with respect to an offeror, comes to the 
attention of the Contracting Officer of conduct or activity that 
represents a violation of law or regulation (including an Executive 
Order); or
    (iii) Evidence is brought to the attention of the Contracting 
Officer of past activity or conduct of an offeror that shows a lack 
of integrity (including actions inimical to the welfare of the 
United States) or willingness to perform, so as to substantially 
diminish the Contracting Officer's confidence in the offeror's 
performance under the proposed contract.

B. 23 Financial Statements and Other Information

    (a) As indicated in Provision B.22(b)(9), compliance with the 
required payment and performance guarantee will in most instances 
effectively assure a finding of responsibility. Therefore, DOE does 
not intend to ask for financial information from all offerors. 
However, after receipt of offers, but prior to making award, DOE 
reserves the right to ask for the audited financial statements for 
an offeror's most recent fiscal year and unaudited financial 
statements for any subsequent quarters. These financial statements 
must include a balance sheet and profit and loss statement for each 
period covered thereby. A certification by a principal accounting 
officer that there have been no material changes in financial 
condition since the date of the audited statements, and that these 
present the true financial condition as of the date of the offer, 
shall accompany the statements. If there has been a change, the 
amount and nature of the change must be specified and explained in 
the unaudited statements and a principal accounting officer shall 
certify that they are accurate. The Contracting Officer shall set a 
deadline for receipt of this information.
    (b) DOE also reserves the right to require the submission of 
information from the offeror regarding its plans for use of the 
petroleum, the status of requests for export licenses, plans for 
complying with the Jones Act, and any other information relevant to 
the performance of the contract. The Contracting Officer shall set a 
deadline for receipt of this information.

B.4 Resolicitation Procedures on Unsold Petroleum

    (a) In the event that petroleum offered on an MLI remains unsold 
after evaluation of all offers, the Contracting Officer, at his 
option, may issue an amendment to the NS, resoliciting offers from 
all interested parties. DOE reserves the right to alter the MLIs 
and/or offer different MLIs in the resolicitation.
    (b) In the event that for any reason petroleum that has been 
awarded or allotted for award becomes available to DOE for resale, 
the following procedures will apply:

[[Page 39373]]

    (1) If priced offers remain valid in accordance with Provision 
B.25, the petroleum may go to the next highest ranked offer.
    (2) If offers have expired in accordance with Provision B.25, 
the Contracting Officer at his option may offer the petroleum to the 
highest offeror for that MLI. The pertinent offeror may, at its 
option, accept or reject that petroleum at the price it originally 
offered. If that offeror rejects the petroleum, it may be offered to 
the next highest offeror. This process may continue until all the 
remaining petroleum has been allotted for award.
    (3) If the petroleum is not then resold, the Contracting Officer 
may at his option proceed to amend the NS to resolicit offers for 
that petroleum or add the petroleum to the next sales cycle.

B.25 Offeror's Certification of Acceptance Period

    (a) By submission of an offer, the offeror certifies that its 
priced offer will remain valid for 10 calendar days after the date 
set for the receipt of offers, and further that the successful line 
items of its offer will remain valid for an additional 30 calendar 
days should it receive a notification of ASO either by telephone or 
in writing during the initial 10-day period.
    (b) By mutual agreement of DOE and the offeror, an individual 
offeror's acceptance period may be extended for a longer period.

B.26 Notification of Apparently Successful Offeror

    The following information concerning its offer will be provided 
to the apparently successful offeror by DOE in the notification of 
ASO:
    (a) Identification of SPR crude oil streams to be awarded;
    (b) Total quantity to be awarded on each MLI and on each DLI;
    (c) Price in U.S. dollars per barrel for each DLI;
    (d) Extended total price offer for each DLI;
    (e) Provisional contract number;
    (f) Any other data necessary.

B.27 Contract Documents

    If an offeror is successful, DOE will make award using an NA 
signed by the Contracting Officer. The NA will identify the items, 
quantities, prices and delivery method which DOE is accepting. The 
NS will be attached to the NA. Provisions of the SSPs will be made 
applicable through incorporation by reference in the NS. DOE may 
accept the offeror's offer by an electronic notice and the contract 
award shall be effective upon issuance of such notice. The 
electronic notice will be followed by a mailing of full 
documentation as described in Provision B.26.

B.28 [Reserved]

B.29 Procedures for Selling to Other U.S. Government Agencies

    (a) If a U.S. Government agency submits an offer for petroleum 
in a price competitive sale, that offer will be arrayed for award 
consideration in accordance with Provision B.22. If a U.S. 
Government agency is an ASO, award and payment will be made 
exclusively in accordance with statutory and regulatory requirements 
governing transactions between agencies, and the U.S. Government 
agency will be responsible for complying with these requirements 
within the time limits set by the Contracting Officer.
    (b) U.S. Government agencies are exempt from all guarantee 
requirements, but must make all necessary arrangements to accept 
delivery of and transport SPR petroleum as set out in Provision C.1. 
Failure by a U.S. Government agency to comply with any of the 
requirements of these SSPs shall not provide a basis for challenging 
a contract award to that agency.

Section C--Sales Contract Provisions

C.1 Delivery of SPR Petroleum

    (a) The purchaser, at its expense, shall make all necessary 
arrangements to accept delivery of and transport the SPR petroleum, 
except for terminal arrangements which shall be coordinated with the 
SPR/PMO. The DOE will deliver and the purchaser will accept the 
petroleum at delivery points listed in the NS. The purchaser also 
shall be responsible for meeting any delivery requirements imposed 
at those points including complying with the rules, regulations, and 
procedures contained in applicable port/terminal manuals, pipeline 
tariffs or other applicable documents.
    (b) For petroleum in the SPR's permanent storage sites, DOE 
shall provide, at no cost to the purchaser, transportation by 
pipeline from the SPR to the supporting SPR distribution terminal 
facility specified for the MLI and, for vessel loadings, a safe 
berth and loading facilities sufficient to deliver petroleum to the 
vessel's permanent hose connection. The purchaser agrees to assume 
responsibility for, to pay for, and to indemnify and hold DOE 
harmless for any other costs associated with terminal, port, vessel 
and pipeline services necessary to receive and transport the 
petroleum, including but not limited to demurrage charges assessed 
by the terminal, ballast and oily waste reception services, mooring 
and line-handling services, tank storage charges and port charges 
incurred in the delivery of SPR petroleum to the purchaser. The 
purchaser also agrees to assume responsibility for, to pay for and 
to indemnify and hold DOE harmless for any liability, including 
consequential or other damages, incurred or occasioned by the 
purchaser, its agent, subcontractor at any tier, assignee or any 
subsequent purchaser, in connection with movement of petroleum sold 
under a contract incorporating this provision.

C.2 Compliance With the ``Jones Act'' and the U.S. Export Control Laws

    Failure to comply with the ``Jones Act,'' 46 U.S.C. 883, 
regarding use of U.S.-flag vessels in the transportation of oil 
between points within the United States, and with any applicable 
U.S. export control laws affecting the export of SPR petroleum will 
be considered to be a failure to comply with the terms of any 
contract containing these SSPs and may result in termination for 
default in accordance with Provision C.25. Purchasers who have 
failed to comply with the ``Jones Act'' or the export control laws 
in SPR sales may be found to be non-responsible in the evaluation of 
offers in subsequent sales under Provision B.22 of the SSPs. Those 
purchasers may also be subject to proceedings to make them 
ineligible for future awards in accordance with 10 CFR Part 625.

C.3 [Reserved]

C.4 Environmental Compliance

    (a) SPR offerors must ensure that vessels used to transport SPR 
oil comply with all applicable statutes, including, among others, 
the Ports and Waterways Safety Act of 1972; the Port and Tanker 
Safety Act of 1978; the Act to Prevent Pollution from Ships of 1980 
(implementing Annexes I, II, and V of MARPOL 73/78), and the Oil 
Pollution Act of 1990. Offerors also must ensure that vessels used 
to transport SPR oil comply with all applicable regulations, 
including 33 CFR parts 151, 153, 155, 157, 159, and 160-169, and 46 
CFR chapter I, subchapter D.
    (b) To transport SPR oil, a purchaser or the purchaser's 
subcontractors must use only those tank vessels for which the 
vessel's owner, operator, or demise charter has made a showing of 
financial responsibility under 33 CFR part 138, Financial 
Responsibility for Water Pollution (Vessels).
    (c) Failure of the purchaser or purchaser's subcontractor to 
comply with all applicable statutes and regulations in the 
transportation of SPR petroleum will be considered a failure to 
comply with the terms of any contract containing these SSPs, and may 
result in termination for default, unless, in accordance with 
Provision C.25, such failure was beyond the control and without the 
fault or negligence of the purchaser, its affiliates, or 
subcontractors.

C.5 Delivery and Transportation Scheduling

    (a) Unless otherwise instructed in the notification of ASO, each 
purchaser shall submit a proposed vessel lifting program and/or 
pipeline delivery schedule to the SPR/PMO point of contact 
identified in the NS, no later than the fifteenth day prior to the 
earliest delivery date offered by the NS. The vessel lifting program 
shall specify the requested three-day loading window for each tanker 
and the quantity to be lifted. The pipeline schedule will specify 
the five day shipment ranges (i.e., day 1-5, 6-10, 11-15, etc.) for 
which deliveries are to be tendered to the pipeline and the quantity 
to be tendered for each date. In the event conflicting requests are 
received, preference will be given to such requests in descending 
order, the highest offered price first. The SPR/PMO will respond to 
each purchaser no later than the tenth day prior to the start of 
deliveries, either confirming the schedule as originally submitted 
or proposing alterations. The purchaser shall be deemed to have 
agreed to those alterations unless the purchaser requests the SPR/
PMO to reconsider within two days after receipt of such alterations. 
The SPR/PMO will use its best efforts to accommodate such requests, 
but its decision following any such reconsideration shall be final 
and binding.
    (b) In order to expedite the scheduling process, at the time of 
submission of each vessel lifting program or pipeline delivery 
schedule, each purchaser shall provide the DOE Contracting Officer's 
Representative with a written notice of the intended

[[Page 39374]]

destination for each cargo scheduled, if such destination is known 
at that time. For pipeline deliveries, the purchaser shall also 
include, if known, the name of each pipeline in the routing to the 
final destination.
    (c) Notwithstanding paragraph (a) of this provision, ASOs and 
purchasers may request early deliveries, i.e., deliveries commencing 
prior to the contractual delivery period. DOE will use its best 
efforts to honor such requests, unless unacceptable costs might be 
incurred or SPR schedules might be adversely affected or other 
circumstances make it unreasonable to honor such requests. DOE's 
decision following any such consideration for a change shall be 
final and binding. Requests accepted by DOE will be handled on a 
first-come, first-served basis, except that where conflicting 
requests are received on the same day, the highest-priced offer will 
be given preference. Requests that include both a change in delivery 
method and an early delivery date may also be accommodated subject 
to Provision C.6. DOE may not be able to confirm requests for early 
deliveries until 24 hours prior to the delivery date.
    (d) Not withstanding paragraphs (a) and (c) of this provision, 
in no event will schedules be confirmed prior to award of contracts.

C.6 Contract Modification--Alternate Delivery Line Items

    (a) A purchaser may request a change in delivery method after 
the issuance of the NA. Such requests may be made either orally (to 
be confirmed in writing within 24 hours) or in writing, but will 
require written modification of the contract by the Contracting 
Officer. Such modification shall be permitted by DOE, provided, in 
the sole judgment of DOE, the change is viewed as reasonable and 
would not interfere with the delivery plans of other purchasers, and 
further provided that the purchaser agrees to pay all increased 
costs incurred by DOE because of such modification.
    (b) Changes in delivery method will only be considered after the 
initial confirmation of schedules described in Provision C.5(a).

C.7 Application Procedures for ``Jones Act'' and Construction 
Differential Subsidy Waivers

    (a) Unless otherwise specified in the Notice of Sale, an ASO or 
purchaser seeking a waiver of the ``Jones Act'' should submit a 
request by letter or electronic means to: U.S. Bureau of Customs and 
Border Protection, Office of Regulations and Rulings, Chief, Entry 
Procedures and Carriers Branch, Washington, DC 20229, Telephone: 
(202) 572-8724.
    (b) A purchaser seeking a waiver to use a vessel built with a 
Construction Differential Subsidy should have the vessel owner 
submit a waiver request by letter or electronic means to: Associate 
Administrator for Ship Financial Assistance and Cargo Preference, 
Maritime Administration, U.S. Department of Transportation, 400 7th 
Street, SW., Washington, DC 20590.
    For speed and brevity, the request may incorporate by reference 
appropriate contents of any earlier ``Jones Act'' waiver request by 
the purchaser. Under 46 U.S.C. App. 1223, a hearing is also required 
for any intervenor, and a waiver may not be approved if it will 
result in unfair competition to any person, firm, or corporation 
operating exclusively in the coastwise or intercoastal service.
    (c) Copies of the Jones Act or CDS waiver requests should also 
be sent, as appropriate, to:

(1) Associate Administrator for Port, Intermodal and Environmental 
Activities, Maritime Administration, U.S. Department of 
Transportation, 400 7th Street, SW., Washington, DC 20590.
(2) U.S. Department of Energy, ATTN: Deputy Assistant Secretary for 
Petroleum Reserves, FE-40, 1000 Independence Avenue, SW., 
Washington, DC 20585.
(3) Contracting Officer, FE-4451, Strategic Petroleum Reserve 
Project Management Office, Acquisition and Sales Division, 900 
Commerce Road East, New Orleans, LA 70123.

    (d) In addition to the addresses in paragraph (c), copies of the 
``Jones Act'' request should also be sent to: Office of the Under 
Secretary of Defense (Acquisition, Technology and Logistics), U.S. 
Department of Defense, Washington, DC 20301-3020.
    (e) Any request for waiver should include the following 
information:
    (1) Name, address and telephone number of requestor;
    (2) Purpose for which waiver is sought, e.g., to take delivery 
of so many barrels of SPR crude oil, with reference to the SPR NS 
number and the provisional or assigned contract number;
    (3) Name and flag of registry of vessel for which waiver is 
sought, if known at the time of waiver request, and the scheduled 3-
day delivery window(s), if available, or delivery period applicable 
to the contract;
    (4) The intended number of voyages, including the ports for 
loading and discharging;
    (5) Estimated period of time for which vessel will be employed; 
and
    (6) Reason for not using qualified U.S.-flag vessel, including 
documentary evidence of good faith effort to obtain suitable U.S.-
flag vessel and responses received from that effort. Such evidence 
would include copies of correspondence and telephone conversation 
summaries. Requests for waivers by electronic transmittals may 
reference such documentary evidence, with copies to be provided by 
mail, postmarked no more than one business day after the 
transmission requesting the waiver.
    (7) For waivers to use Construction Differential Subsidy 
vessels, the request must also contain a specific agreement for 
Construction Differential Subsidies payback pursuant to section 506 
of the Merchant Marine Act of 1936 and must be signed by an official 
of the vessel owner authorized to make a payback commitment.
    (f) If there are shown to be ``Jones Act'' vessels available and 
in a position to meet the loading dates required, no waivers may be 
approved.
    (g) The names of any vessel(s) to be employed under a ``Jones 
Act'' waiver must be provided to the U.S. Bureau of Customs and 
Border Protection no later than 3 days prior to the beginning of the 
3-day loading window scheduled in accordance with Provision C.5.

C.8 Vessel Loading Procedures

    (a) After notification of ASO, each ASO shall provide the SPR/
PMO a proposed schedule of vessel loading windows in accordance with 
Provision C.5.
    (b) The length of the scheduled loading window shall be 3 days. 
If the purchaser schedules more than one window, the average 
quantity to be lifted during any single loading window will be no 
less than DOE's minimum lot quantity.
    (c) Tankships, ITBs, and self-propelled barges shall be capable 
of sustaining a minimum average load rate commensurate with 
receiving an entire full cargo within twenty-four (24) hours pumping 
time. Barges with a load rate of not less than 4,000 BPH shall be 
permitted at the Sun Terminal barge docks. With the consent of the 
SPR/PMO, lower loading rates and the use of barges at suitably 
equipped tankship docks at other terminals supporting the SPR may be 
permitted if such do not interfere with DOE's obligations to other 
parties.
    (d) At least 7 days in advance of the beginning of the scheduled 
loading window, the purchaser shall furnish the SPR/PMO with vessel 
nominations specifying:
    (i) Name and size of vessel or advice that the vessel is ``To Be 
Nominated'' at a later date (such date to be no later than 3 days 
before commencement of the loading window);
    (ii) Estimated date of arrival (to be narrowed to a firm date 
not later than 72 hours prior to the first day of the vessel's 3-day 
window, as provided in paragraph (f) of this provision);
    (iii) Quantity to be loaded and contract number; and
    (iv) Other relevant information requested by the SPR/PMO 
including but not limited to ship's specifications, last three ports 
and cargoes, vessel owner/operator and flag, any known deficiencies, 
and on board quantities of cargo and slops.
    DOE will advise the purchaser, in writing, of the acceptance or 
rejection of the nominated vessel within 24 hours of such 
nomination. If no advice is furnished within 24 hours, the 
nomination will be firm. Once established, changes in such 
nomination details may be made only by mutual agreement of the 
parties, to be confirmed by DOE in writing. The purchaser shall be 
entitled to substitute another vessel of similar size for any vessel 
so nominated, subject to DOE's approval. DOE must be given at least 
3 days' notice prior to the first day of the 3-day loading window of 
any such substitution. DOE shall make a reasonable effort to accept 
any nomination for which notice has not been given in strict 
accordance with this provision.
    (e) In the event the purchaser intends to use more than one 
vessel to take delivery of the contract quantity scheduled to be 
delivered during a loading window, the information in paragraphs (d) 
and (f) of this provision shall be provided for each vessel.
    (f) The vessel or purchaser shall notify the SPR/PMO of the 
expected day of arrival 72 hours before the beginning of his 
scheduled 3-day loading window. This notice establishes the firm 
agreed-upon date of arrival which is the 1-day window for the

[[Page 39375]]

purposes of vessel demurrage (see Provision C.9). If the purchaser 
fails to make notification of the expected day of arrival, the 1-day 
window will be deemed to be the middle day of the scheduled 3-day 
window. The vessel shall also notify the SPR/PMO of the expected 
hour of arrival 72, 48 and 24 hours in advance of arrival, and after 
the first notice, to advise of any variation of more than 4 hours. 
With the first notification of the hour of arrival, the Master shall 
advise the SPR/PMO:
    (i) Cargo loading rate requested;
    (ii) Number, size, and material of vessel's manifold 
connections; and
    (iii) Defects in vessel or equipment affecting performance or 
maneuverability.
    (g) Notice of Readiness shall be tendered upon arrival at berth 
or at customary anchorage which is deemed to be any anchorage within 
6 hours vessel time to the SPR dock. The preferred anchorages are 
identified in Exhibit B. The Notice of Readiness shall be confirmed 
promptly in writing to the SPR/PMO and the terminal responsible for 
coordination of crude oil loading operations. Such notice shall be 
effective only if given during customary port operating hours. If 
notice is given after customary business hours of the port, it shall 
be effective as of the beginning of customary business hours on the 
next business day.
    (h) DOE shall use its best efforts to berth the purchaser's 
vessel as soon as possible after receipt of the Notice of Readiness.
    (i) Standard hose and fittings (American Standard Association 
standard connections) for loading shall be provided by DOE. 
Purchasers must arrange for line handling, deballasting, tug boat 
and pilot services, both for arrival and departure, through the 
terminal or ship's agent, and bear all costs associated with such 
services.
    (j) Tankships, ITBs, and self-propelled barges shall be allowed 
berth time of 36 hours. Barges shall be allowed berth time of three 
(3) hours plus the quotient determined by dividing the cargo size 
(gross standard volume barrels) by four thousand (4,000). Vessels 
loading cargo quantities in excess of 500,000 barrels shall be 
allowed berth time of 36 hours plus 1 hour for each 20,000 barrels 
to be loaded in excess of 500,000 barrels. Conditions of this 
provision excepted, however, the vessel shall not remain at berth 
more than 6 hours after completion of cargo loading unless hampered 
by tide or weather.
    (1) Berth time shall commence with the vessel's first line 
ashore and shall continue until loading of the vessel, or vessels in 
case more than one vessel is loaded, is completed and the last line 
is off. In addition, allowable berth time will be increased by the 
amount of any delay occurring subsequent to the commencement of 
berth time and resulting from causes due to adverse weather, labor 
disputes, force majeure and the like, decisions made by port 
authorities affecting loading operations, actions of DOE, its 
contractors and agents resulting in delay of loading operations 
(providing this action does not arise through the fault of the 
purchaser or purchaser's agent), and customs and immigration 
clearance. The time required by the vessel to discharge oily wastes 
or to moor multiple vessels sequentially into berth shall count as 
used berth time.
    (2) For all hours of berth time used by the vessel in excess of 
allowable berth time as provided for in this provision, the 
purchaser shall be liable for dock demurrage and also shall be 
subject to the conditions of Provision C.11.

C.9 Vessel Laytime and Demurrage

    (a) The laytime allowed DOE for handling of the purchaser's 
vessel shall be 36 running hours. For vessels with cargo quantities 
in excess of 500,000 barrels, laytime shall be 36 running hours plus 
1 hour for each 20,000 barrels of cargo to be loaded in excess of 
500,000 barrels. Vessel laytime shall commence when the vessel is 
moored alongside (all fast) the loading berth or 6 hours after 
receipt of a Notice of Readiness, whichever occurs first. It shall 
continue 24 hours per day, seven days per week without interruption 
from its commencement until loading of the vessel is completed and 
cargo hoses or loading arms are disconnected. Any delay to the 
vessel in reaching berth caused by the fault or negligence of the 
vessel or purchaser, delay due to breakdown or inability of the 
vessel's facilities to load, decisions made by vessel owners or 
operators or by port authorities affecting loading operations, 
discharge of ballast or slops, customs and immigration clearance, 
weather, labor disputes, force majeure and the like shall not count 
as used laytime. In addition, movement in roads shall not count as 
used laytime.
    (b) If the vessel is tendered for loading on a date earlier than 
the firm agreed-upon arrival date, established in accordance with 
Provision C.8, and other vessels are loading or have already been 
scheduled for loading prior to the purchaser's vessel, the 
purchaser's vessel shall await its turn and vessel laytime shall not 
commence until the vessel moors alongside (all fast), or at 0600 
hours local time on the firm agreed-upon date of arrival, whichever 
occurs first. If the vessel is tendered for loading later than 2400 
hours on the firm agreed-upon date of arrival, DOE will use its best 
efforts to have the vessel loaded as soon as possible in its proper 
turn with other scheduled vessels, under the circumstances 
prevailing at the time. In such instances, vessel laytime shall 
commence when the vessel moors alongside (all fast).
    (c) For all hours or any part thereof of vessel laytime that 
elapse in excess of the allowed vessel laytime for loading provided 
for in this provision, demurrage shall be paid by DOE, for U.S.-flag 
vessels, at the lesser of the demurrage rate in the tanker voyage or 
charter party agreement, or the most recently available United 
States Freight Rate Average (USFRA) for a hypothetical tanker with a 
deadweight in long tons equal to the weight in long tons of the 
petroleum loaded, multiplied by the most recent edition of the 
American Tanker Rate Schedule rate for such hypothetical tanker and 
voyage. For foreign flag vessels, demurrage shall be as determined 
in this provision, except that the London Tanker Brokers' Panel 
Average Freight Rate Assessment (AFRA) and most recent edition of 
the New Worldwide Tanker Nominal Freight Scale ``Worldscale'' shall 
be used as appropriate, if less than the charter party rate. For all 
foreign flag vessel loadings that commence during a particular 
calendar month, the applicable AFRA shall be the one that is 
determined on the basis of freight assessments for the period ended 
on the 15th day of the preceding month. The demurrage rate for 
barges will be the lesser of the hourly rate contained in the 
charter of a chartered barge, or a rate determined by DOE as a fair 
rate under prevailing conditions. If demurrage is incurred because 
of breakdown of machinery or equipment of DOE or its contractors 
(other than the purchaser), the rate of demurrage shall be reduced 
to one-half the rate stipulated herein per running hour and pro rata 
of such reduced rate for part of an hour for demurrage so incurred. 
Demurrage payable by DOE, however, shall in no event exceed the 
actual demurrage expense incurred by the purchaser as the result of 
the delay.
    (d) In the event the purchaser is using more than one vessel to 
load the contract quantity scheduled to be delivered during a single 
loading window, the terms of this provision and the Government's 
liability for demurrage apply only to the first vessel presenting 
its Notice of Readiness in accordance with (a) of this provision.
    (e) The primary source document and official record for 
demurrage calculations is the SPRCODR (see Provision C.19).

C.10 Vessel Loading Expedition Options

    (a) Notwithstanding Provision C.8(j)(1), in order to avoid 
disruption in the SPR distribution process, the Government may limit 
berthing time for any vessel receiving SPR petroleum to that period 
required for loading operations and the physical berthing/unberthing 
of the vessel. At the direction of the Government, activities not 
associated with the physical loading of the vessel (e.g., preparing 
documentation, gauging, sampling, etc.) may be required to be 
accomplished away from the berth. Time consumed by these activities 
will not be for the Government's account. If berthing time is to be 
restricted, the Government will so advise the vessel prior to 
berthing of the vessel.
    (b) In addition to paragraph (a) of this provision, the 
Government may limit vessels calling at SPR terminals to a total of 
24 hours for petroleum transfer operations. In such an event, the 
loading will be considered completed if the vessel has loaded 95 
percent or more of the nominated quantity within a total of 24 
hours. If the vessel has loaded less than 95 percent of its 
nominated quantity, then Provision C.11 shall apply.

C.11 Purchaser Liability for Excessive Berth Time

    The Government reserves the right to direct a vessel loading SPR 
petroleum at a delivery point specified in the NS, to vacate its SPR 
berth, and absorb all costs associated with this movement, should 
such vessel, through its operational inability to receive oil at the 
average rates provided for in Provision C.8, cause the berth to be 
unavailable for an already scheduled follow-on vessel. Furthermore, 
should a breakdown of the vessel's propulsion system prevent its 
getting under way on its own power, the

[[Page 39376]]

Government may cause the vessel to be removed from the berth with 
all costs to be borne by the purchaser.

C.12 Pipeline Delivery Procedures

    (a) The purchaser shall nominate his delivery requirements to 
the pipeline carrier, to include the total quantity to be moved and 
his preferred five-day shipment range(s) as specified in C.5. The 
purchaser shall provide confirmation of the carrier's acceptance of 
the nominated quantity (in thousands of barrels per day) and 
shipment ranges to the SPR/PMO no later than the last day of the 
month preceding the month of delivery. The purchaser shall also 
furnish the SPR/PMO with the name, telephone number, and e-mail 
address of the pipeline point of contact with whom the SPR/PMO 
should coordinate the delivery.
    (b) The SPR/PMO will ensure oil is made available to the carrier 
within the shipment date range(s) established in accordance with 
Provision C.5. Once established, the pipeline delivery schedule can 
only be changed with SPR/PMO's prior written consent. Should the 
schedule established in accordance with (a) of this provision vary 
from the original schedule established in accordance with Provision 
C.5, the Government will provide its best efforts to accommodate 
this revised schedule but will incur no liability for failure to 
provide delivery on the dates requested.
    (c) Three days prior to the beginning of any five-day shipping 
range in which the purchaser is to receive delivery, the purchaser 
shall furnish the SPR/PMO the firm date within that range on which 
the movement is to commence, the quantity to be moved, and the 
contract number.
    (d) The date of delivery, which will be recorded on the CODR 
(see Provision C.19), is the date delivery commenced to the custody 
transfer point, as identified in the NS.
    (e) The purchaser shall receive pipeline deliveries at a minimum 
average rate of 100,000 barrels per day. The purchaser is solely 
responsible for making the necessary arrangements with pipeline 
carriers, including storage, to achieve the stated minimum.

C.13 Title and Risk of Loss

    Unless otherwise provided in the NS, title to and risk of loss 
for SPR petroleum will pass to the purchaser at the delivery point 
as follows:
    (a) For vessel shipment--when the petroleum passes from the dock 
loading equipment connections to the vessel's permanent hose 
connection.
    (b) For pipeline shipment--as identified in the NS.

C.14 Acceptance of Crude Oil

    (a) When practical, the NS shall update the SPR crude oil stream 
characteristics shown in Exhibit A, SPR Crude Oil Comprehensive 
Analysis. However, the purchaser shall accept the crude oil 
delivered regardless of characteristics. Except as provided in this 
provision, DOE assumes no responsibility for deviations in quality.
    (b) In the event that the crude oil stream delivered both has a 
total sulfur content (by weight) in excess of 2.0 percent if a sour 
crude oil stream, or 0.50 percent if a sweet crude oil stream, and, 
in addition, has an API gravity less than 28[deg]API if a sour crude 
oil stream, or 32[deg]API if a sweet crude oil stream, the purchaser 
shall accept the crude oil delivered and either pay the contract 
price adjusted in accordance with Provision C.16, or request 
negotiation of the contract price. Unless the purchaser submits a 
written request for negotiation of the contract price to the 
Contracting Officer within 10 days from the date of invoice, the 
purchaser shall be deemed to have accepted the adjustment of the 
price in accordance with Provision C.16. Should the purchaser 
request a negotiation of the price and the parties be unable to 
agree as to that price, the dispute shall be settled in accordance 
with Provision C.32.

C.15 Delivery Acceptance and Verification

    (a) The purchaser shall provide written confirmation to SPR/PMO, 
no later than 72 hours prior to the scheduled date of the first 
delivery under the contract, the name(s) of the authorized agent(s) 
given signature authority to sign/endorse the delivery documentation 
(CODR, etc.) on the purchaser's behalf. Any changes to this listing 
of names must be provided to the SPR/PMO in writing no later than 72 
hours before the first delivery to which such change applies. In the 
event that an independent surveyor (separate from the authorized 
signatory agent) is appointed by the purchaser to witness the 
delivery operation (gauging, sampling, testing, etc.), written 
notification must be provided to SPR/PMO, no later than 72 hours 
prior to the scheduled date of each applicable cargo delivery.
    (b) Absence of the provision of the name(s) of bona fide 
agent(s) and the signature of such agent on the delivery 
documentation constitutes acceptance of the delivery quantity and 
quality as determined by DOE and/or its agents.

C.16 Price Adjustments for Quality Differentials

    (a) The NS will specify quality price adjustments applicable to 
the crude oil streams offered for sale. Unless otherwise specified 
by the NS, quality price adjustments will be applied only to the 
amount of variation by which the API gravity of the crude oil 
delivered differs by more than plus or minus five-tenths of one 
degree API (+/-0.5[deg]API) from the API gravity of the crude oil 
stream contracted for as published in the NS.
    (b) Price adjustments for SPR crude oil are expected to be 
similar to one or more commercial crude oil postings for equivalent 
quality crude oil. The contract price per barrel shall be increased 
by that amount if the API gravity of the crude oil delivered exceeds 
the published API gravity by more than 0.5[deg]API and decreased by 
that amount if the API gravity of the crude oil delivered falls 
below the published API gravity by more than 0.5[deg]API.

C.17 Determination of Quality

    (a) The quality of the crude oil delivered to the purchaser will 
be determined from samples taken from the delivery tanks in 
accordance with API Manual of Petroleum Measurement Standards, 
Chapter 8.1, Manual Sampling of Petroleum and Petroleum Products 
(ASTM D4057), latest edition; or from a representative sample 
collected by an automatic sampler whose performance has been proven 
in accordance with the API Manual of Petroleum Measurement 
Standards, Chapter 8.2, Automatic Sampling of Petroleum and 
Petroleum Products (ASTM D4177), latest edition. Preference will be 
given to samples collected by means of an automatic sampler when 
such a system is available and operational. Tests to be performed by 
DOE or its authorized contractor are:

(1) Sediment and Water

    Primary methods: API Manual of Petroleum Measurement Standards, 
Chapter 10.1, Determination of Sediment in Crude Oils and Fuel Oils 
by the Extraction Method (ASTM D473) (IP53), latest edition; or API 
Manual of Petroleum Measurement Standards, Chapter 10.8, Sediment in 
Crude Oil by Membrane Filtration (ASTM D4807), latest edition; and 
API Manual of Petroleum Measurement Standards, Chapter 10.2, 
Determination of Water in Crude Oil by Distillation (ASTM D4006) 
(IP358), latest edition; or API Manual of Petroleum Measurement 
Standards, Chapter 10.9, Water in Crude Oil by Coulometric Karl 
Fischer Titration (ASTM D4928) (IP 386), latest edition.
    Alternate methods: API Manual of Petroleum Measurement 
Standards, Chapter 10.3, Determination of Water and Sediment in 
Crude Oil by the Centrifuge Method (Laboratory Procedure) (ASTM 
D4007) (IP 359), latest edition.

(2) Sulfur

    Primary method: ASTM D4294, Sulfur in Petroleum Products by 
Energy-Dispersive X-ray Fluorescence Spectrometry, latest edition.
    Alternate method: ASTM D2622, Sulfur in Petroleum Products by 
Wavelength Dispersive X-ray Fluorescence Spectrometry.

(3) API Gravity

    Primary methods: API Manual of Petroleum Measurement Standards, 
Chapter 9.1, Density, Relative Density (Specific Gravity), or API 
Gravity of Crude Petroleum and Liquid Petroleum Products by 
Hydrometer Method (ASTM D1298) (IP 160), latest edition; or Density 
and Relative Density of Crude Oils by Digital Density Analyzer (ASTM 
D5002), latest edition.
    Alternate method: API Gravity of Crude Petroleum and Petroleum 
Products (Hydrometer Method) (ASTM D287), latest edition.
    To the maximum extent practicable, the primary methods will be 
used for determination of SPR crude oil quality characteristics. 
However, because of conditions prevailing at the time of delivery, 
it may be necessary to use alternate methods of test for one or more 
of the quality characteristics. The Government's test results will 
be binding in any dispute over quality characteristics of SPR 
petroleum.
    (b) The purchaser or his representative may arrange to witness 
and verify testing simultaneously with the U.S. government

[[Page 39377]]

representative. Such services, however, will be for the account of 
the purchaser. Any disputes will be settled in accordance with 
Provision C.32. Should the purchaser opt not to witness the testing, 
then the Government findings will be binding on the purchaser.

C.18 Determination of Quantity

    (a) The quantity of crude oil delivered to the purchaser will be 
determined by opening and closing tank gauges with adjustment for 
opening and closing free water and sediment and water as determined 
from shore tank samples where an automatic sampler is not available, 
or delivery meter reports. All volumetric measurements will be 
corrected to net standard volume in barrels at 60 [deg]F, using the 
API Manual of Petroleum Measurement Standards, Chapter 11.1, Volume 
1, Volume Correction Factors (ASTM D1250) (IP 200); Table 5A--
Generalized Crude Oils, Correction of Observed API Gravity to API 
Gravity at 60 [deg]F; Table 6A--Generalized Crude Oils, Correction 
of Volume to 60 [deg]F Against API Gravity at 60 [deg]F, latest 
edition, and by deducting the tanks' free water, and the entrained 
sediment and water as determined by the testing of composite all-
levels samples taken from the delivery tanks; or by deducting the 
sediment and water as determined by testing a representative portion 
of the sample collected by a certified automatic sampler, and also 
corrected by the applicable pressure correction factor and meter 
factor.
    (b) The quantity measurements shall be performed and certified 
by the DOE contractor responsible for delivery operations, and 
witnessed by the U.S. government representative at the delivery 
point. The purchaser shall have the right to have representatives 
present at the gauging/metering, sampling, and testing. Should the 
purchaser arrange for additional inspection services, such services 
will be for the account of the purchaser. Any disputes shall be 
settled in accordance with Provision C.32. Should the purchaser not 
arrange for additional services, then DOE's quantity determination 
shall be binding on the purchaser.

C.19 Delivery Documentation

    The quantity and quality determination shall be documented on 
the SPR/PMO Crude Oil Delivery Report (SPRCODR), SPRPMO-F-6110.2-14b 
(Rev 8/91) (see Exhibit E for copy of this form). The SPRCODR will 
be signed by the purchaser's agent to acknowledge receipt of the 
quantity and quality of crude oil indicated. In addition, for vessel 
deliveries, the time statement on the SPRCODR will be signed by the 
vessel's Master when loading is complete. Copies of the completed 
SPRCODR, with applicable supporting documentation (i.e., metering or 
tank gauging tickets and appropriate calculation worksheets), will 
be furnished to the purchaser and/or the purchaser's authorized 
representative after completion of delivery. They will serve as the 
basis for invoicing and/or reconciliation invoicing for the sale of 
petroleum as well as for any associated services that may be 
provided.

C.20 Contract Amounts

    The contract quantities and dollar value stated in the NA are 
estimates. The per barrel unit price is subject to adjustment due to 
variation in the API gravity from the published characteristics, 
changes in delivery mode and price index values, if applicable. In 
addition, due to conditions of vessel loading and shipping or 
pipeline transmission, the quantity actually delivered may vary by 
+/-10 percent for each shipment. However, a purchaser is not 
required to engage additional transportation capacity if sufficient 
capacity to take delivery of at least 90 percent of the contract 
quantity has been engaged.

C.21 Payment and Performance Letter of Credit

    (a) Within five business days of receipt of notification of 
Apparently Successful Offeror, the Purchaser must provide to the 
Contracting Officer an ``Irrevocable Standby Letter of Credit'' 
established in favor of the United States Department of Energy equal 
to 100 percent of the contract awarded value and containing the 
substantive provisions set out in Exhibit D. The purchaser must 
furnish an acceptable letter of credit before DOE will execute the 
NA. The letter of credit MUST NOT VARY IN SUBSTANCE from the sample 
at Exhibit D. If the letter of credit contains any provisions at 
variance with Exhibit D or fails to include any provisions contained 
in Exhibit D, nonconforming provisions must be deleted and missing 
substantive provisions must be added or the letter of credit will 
not be accepted. The letter of credit must be effective on or before 
the first delivery under the contract and remain in effect for a 
period of 120 days, must permit multiple partial drawings, and must 
contain the contract number. The original of the letter of credit 
must be sent to the Contracting Officer.
    (b) The letter of credit must be issued by a depository 
institution located in and authorized to do business in any state of 
the United States or the District of Columbia, and authorized to 
issue letters of credit by the banking laws of the United States or 
any state of the United States or the District of Columbia. The 
depository institution must be an account holder with the Federal 
Reserve Banking system and a participant (on-line) in the Fed's 
Fedwire Deposit System Network funds transfer system. The issuing 
bank must provide documentation indicating that the person signing 
the letter of credit is authorized to do so, in the form of 
corporate minutes, the Authorized Signature List, or the General 
Resolution of Signature Authority.
    (c) All letter of credit costs will be borne by the purchaser.
    (d) The letter of credit must be maintained at 100 percent of 
the contract value of the petroleum remaining to be delivered as 
well as delivered quantities for which payment has not been 
remitted, plus any other charges owed to the Government under the 
contract. In the event the letter of credit falls below the level 
specified, or at the discretion of the Contracting Officer must be 
increased because of the effect of the price indexing mechanism 
provided for in Provision B.2, DOE reserves the right to demand the 
purchaser modify the letter of credit to a level deemed sufficient 
by the Contracting Officer. The purchaser shall make such 
modification within two business days of being notified by the 
Contracting Officer by express mail or electronic means. The 
purchaser is deemed to have received such notification the next 
business day after its dispatch. If such modification is not made 
within two days after purchaser is deemed to have received the 
notice, the Contracting Officer may, on the 3rd business day, 
without prior notice to the purchaser, withhold deliveries in whole 
or in part under the contract and/or terminate the contract in whole 
or in part under Provision C.25.
    (e) Within 30 calendar days after final payment under the 
contract, the Contracting Officer shall authorize the cancellation 
of the letter of credit and shall return it to the bank or financial 
institution issuing the letter of credit. A copy of the notice of 
cancellation will be provided to the purchaser.

C.22 Billing and Payment

    (a) The Government will invoice the Purchaser at the conclusion 
of each delivery.
    (b) Payment is due in full on the 20th of the month following 
each delivery month. Should the 20th of the month fall on a 
Saturday, Sunday, or Federal holiday, payment will be due and 
payable in full on the last business day preceding the 20th of the 
month.
    (c) If an invoice is not paid in full, the Government may 
provide the Purchaser oral or written notification that Purchaser is 
delinquent in its payments; draw against the letter of credit for 
all quantities for which unpaid invoices are outstanding; withhold 
all or any part of future deliveries under the contract; and/or 
terminate the contract, in whole or in part, in accordance with 
Provision C.25.
    (d) In the event that the bank refuses to honor the draft 
against the letter of credit, the purchaser shall be responsible for 
paying the principal and any interest due (see Provision C.24) from 
the due date.

C.23 Method of Payments

    (a) All amounts payable by the purchaser shall be paid by 
either:
    (1) Deposit to the account of the U.S. Treasury by wire transfer 
of funds over the Fedwire Deposit System Network. The information to 
be included in each wire transfer will be provided in the NS.
    (2) Electronic funds transfer through the Automated Clearing 
House (ACH) network, using the Federal Remittance Express Program. 
The information to be included in each transfer will be provided in 
the NS.
    All wire deposit electronic funds transfer costs will be borne 
by the purchaser.
    (b) If the purchaser disagrees with the amounts invoiced by the 
Government, the purchaser shall immediately pay the amount invoiced, 
and notify the Contracting Officer of the basis for its 
disagreement. The Contracting Officer will receive and act upon any 
such objection. Failure to agree to any adjustment shall be a 
dispute, and a purchaser shall file a claim promptly in accordance 
with Provision C.32.
    (c) DOE may designate another place, different timing, or 
another method of payment after reasonable written notice to the 
purchaser.
    (d) Notwithstanding any other contract provision, DOE may via a 
draft message

[[Page 39378]]

request a wire transfer of funds against the standby letter of 
credit at any time for payment of monies due under the contract and 
remaining unpaid in violation of the terms of the contract. These 
would include but not be limited to interest, liquidated damages, 
demurrage, amounts owing for any services provided under the 
contract, and the difference between the contract price and price 
received on the resale of undelivered petroleum as defined in 
Provision C.25. If the invoice is for delinquent payments, interest 
shall accrue from the payment due date.
    (e) No payment due DOE hereunder shall be subject to reduction 
or set-off for any claim of any kind against the United States 
arising independently of the contract.

C.24 Interest

    (a) Amounts due and payable by the purchaser or its bank that 
are not paid in accordance with the provisions governing such 
payments shall bear interest from the date due until the date 
payment is received by the Government.
    (b) Interest shall be computed on a daily basis. The interest 
rate shall be in accordance with the Current Value of Funds rate as 
established by the Department of the Treasury in accordance with the 
Debt Collection Improvement Act of 1997 and published periodically 
in Bulletins to the Treasury Fiscal Requirements Manual and in the 
Federal Register.

C.25 Termination

    (a) Immediate termination.
    (1) The Contracting Officer may terminate this contract in whole 
or in part, without liability of DOE, by written notice to the 
purchaser effective upon its being deposited in the U.S. Postal 
System addressed to the purchaser as provided in Provision C.31 in 
the event that the purchaser either notifies the Contracting Officer 
that it will not be able to accept, or fails to accept, any delivery 
line item in accordance with the terms of the contract. Such notice 
shall invite the purchaser to submit information to the Contracting 
Officer as to the reasons for the failure to accept the delivery 
line item in accordance with the terms of the contract.
    (2) Within 10 business days after the issuance of the notice of 
termination, the Contracting Officer may determine that such 
termination was a termination for default under paragraph (b)(1)(ii) 
of this provision. In the absence of information which persuades the 
Contracting Officer that the purchaser's failure to accept the 
delivery line item was excusable, the fact of such failure may be 
the basis for the Contracting Officer determining the purchaser to 
be in default, without first determining under paragraphs (b)(2) and 
(b)(3) whether such failure was excusable under the terms of the 
contract. The Contracting Officer shall promptly give the purchaser 
written notice of such determination.
    (3) Any immediate termination other than one determined to be a 
termination for default in accordance with paragraph (a)(2) and 
paragraph (b) of this provision shall be a termination for the 
convenience of DOE without liability of the Government.
    (b) Termination for Default.
    (1) Subject to the provisions of paragraphs (b)(2) and (b)(3), 
the Contracting Officer may terminate the contract in whole or in 
part for purchaser default, without liability of DOE, by written 
notice to the purchaser, effective upon its being deposited in the 
U.S. Postal System, addressed to the purchaser as provided in 
Provision C.31 in the event that:
    (i) The Government does not receive payment in accordance with 
any payment provision of the contract;
    (ii) The purchaser fails to accept delivery of petroleum in 
accordance with the terms of the contract; or
    (iii) The purchaser fails to comply with any other term or 
condition of the contract within 5 business days after the purchaser 
is deemed to have received written notice of such failure from the 
Contracting Officer.
    (2) Except with respect to defaults of subcontractors, the 
purchaser shall not be determined to be in default or be charged 
with any liability to DOE under circumstances which prevent the 
purchaser's acceptance of delivery hereunder due to causes beyond 
the control and without the fault or negligence of the purchaser as 
determined by the Contracting Officer. Such causes shall include but 
are not limited to:
    (i) Acts of God or the public enemy;
    (ii) Acts of the Government acting in its sovereign or 
contractual capacity;
    (iii) Fires, floods, earthquakes, explosions, unusually severe 
weather, or other catastrophes; or
    (iv) Strikes.
    (3) If the failure to perform is caused by the default of a 
subcontractor, the purchaser shall not be determined to be in 
default or to be liable for any excess costs for failure to perform, 
unless the supplies or services to be furnished by the subcontractor 
were obtainable from other sources in sufficient time to permit the 
purchaser to meet the delivery schedule, if:
    (i) Such default arises out of causes beyond the control of the 
purchaser and its subcontractor, and without the fault or negligence 
of either of them; or
    (ii) Such default arises out of causes within the control of a 
transportation subcontractor, not an affiliate of the purchaser, 
hired to transport the purchaser's petroleum by vessel or pipeline, 
and such causes are beyond the purchaser's control, without the 
fault or negligence of the purchaser, and notwithstanding the best 
efforts of the purchaser to avoid default.
    (4) In the event that the contract is terminated in whole or in 
part for default, the purchaser shall be liable to DOE for:
    (i) The difference between the contract price on the contract 
termination date and any lesser price the Contracting Officer 
obtained upon resale of the petroleum; and
    (ii) Liquidated damages as specified in Provision C.27 as fixed, 
agreed, liquidated damages for each day of delay until the petroleum 
is delivered to a purchaser under either a resolicitation for the 
sale of the quantities of oil defaulted on, or an NS issued after 
the date of default that specifies that it is for the sale of 
quantities of oil defaulted on. In no event shall liquidated damages 
be assessed for more than 30 days.
    (5) In the event that the Government exercises its right of 
termination for default, and it is later determined that the 
purchaser's failure to perform was excused in accordance with 
paragraphs (2) and (3), the rights and obligations of the parties 
shall be the same as if such termination was a termination for 
convenience without liability of the Government under paragraph (c).
    (c) Termination for convenience.
    (1) In addition to any other right or remedy provided for in the 
contract, the Government may terminate this contract at any time in 
whole or in part whenever the Contracting Officer shall determine 
that such termination is in the best interest of the Government. 
Such termination shall be without liability of the Government if 
such termination arises out of causes specified in paragraphs (a)(1) 
or (b)(1) of this provision, acts of the Government in its sovereign 
capacity, or causes beyond the control and without the fault or 
negligence of the Government, its contractors (other than the 
purchaser of SPR crude oil under this contract) and agents. For any 
other termination for convenience, the Government shall be liable 
for such reasonable costs incurred by the purchaser in preparing to 
perform the contract, but under no circumstances shall the 
Government be liable for consequential damages or lost profits as 
the result of such termination.
    (2) The purchaser will be given immediate written notice of any 
decrease of petroleum deliveries greater than 10 percent, or of 
termination, under this paragraph (c). The termination or reduction 
shall be effective upon its notice being deposited in the U.S. 
Postal System unless otherwise specified in the notice. The 
purchaser is deemed to have received a mailed notice on the second 
day after its dispatch and an electronic or express mail notice on 
the day after dispatch.
    (3) Termination for the convenience of the Government shall not 
excuse the purchaser from liquidated damages accruing prior to the 
effective date of the termination.
    (d) Nothing herein contained shall limit the Government in the 
enforcement of any legal or equitable remedy that it might otherwise 
have, and a waiver of any particular cause for termination shall not 
prevent termination for the same cause occurring at any other time 
or for any other cause.
    (e) In the event that the Government exercises its right of 
termination, as provided in paragraphs (a), (b), or (c)(1) of this 
provision, the Contracting Officer may sell any undelivered 
petroleum under such terms and conditions as he deems appropriate.
    (f) DOE's ability to deliver petroleum on the date on which the 
defaulted purchaser was scheduled to accept delivery, under another 
contract awarded prior to the date of the contractor's default, 
shall not excuse a purchaser that has been terminated for default 
from either liquidated damages or the difference between the 
contract price and any lesser price obtained on resale.
    (g) Any disagreement with respect to the amount due the 
Government for either resale costs or liquidated damages shall be 
deemed to be a dispute and will be decided by the Contracting 
Officer pursuant to Provision C.32.
    (h) The term ``subcontractor'' or ``subcontractors'' includes 
subcontractors at any tier.

[[Page 39379]]

C.26 Other Government Remedies

    (a) The Government's rights under this provision are in addition 
to any other right or remedy available to it by law or by virtue of 
this contract.
    (b) The Government may, without liability on its part, withhold 
deliveries of petroleum under this contract or any other contract 
the purchaser may have with DOE if payment is not made in accordance 
with this contract.
    (c) If the purchaser fails to take delivery of petroleum in 
accordance with the delivery schedule developed under the terms of 
the contract, and such tardiness is not excused under the terms of 
Provision C.25, but the Government does not elect to terminate that 
item for default, the purchaser nonetheless shall be liable to the 
Government for liquidated damages in the amount established by 
Provision C.27 for each calendar day of delay or fraction thereof 
until such time as it accepts delivery of the petroleum. In no event 
shall such damages be assessed for longer than 30 days. No purchaser 
that fails to perform in accordance with the terms of the contract 
shall be excused from liability for liquidated damages by virtue of 
the fact that DOE is able to deliver petroleum on the date on which 
the non-performing purchaser was scheduled to accept delivery, under 
another contract awarded prior to the date of default.

C.27 Liquidated Damages

    (a) In case of failure on the part of the purchaser to perform 
within the time fixed in the contract or any extension thereof, the 
purchaser shall pay to the Government liquidated damages in the 
amount of 1 percent of the contract price of the undelivered 
petroleum per calendar day of delay or fraction thereof in 
accordance with Provision C.25(b) and Provision C.26(c).
    (b) As provided in (a) of this provision, liquidated damages 
will be assessed for each day or fraction thereof a purchaser is 
late in accepting delivery of petroleum in accordance with this 
contract, unless such tardiness is excused under Provision C.25. For 
petroleum to be lifted by vessel, damages will be assessed in the 
event that the vessel has not commenced loading by 11:59 p.m. on the 
second day following the last day of the 3-day delivery window 
established under Provision C.5, unless the vessel has arrived in 
roads and its Master has presented a notice of readiness to the 
Government or its agents. Liquidated damages shall continue until 
the vessel presents its notice of readiness. For petroleum to be 
moved by pipeline, if delivery arrangements have not been made by 
the last day of the month prior to delivery, liquidated damages 
shall commence on the 3rd day of the delivery month until such 
delivery arrangements are completed; if delivery arrangements have 
been made, then liquidated damages shall begin on the 3rd day after 
the scheduled delivery date if delivery is not commenced and shall 
continue until delivery is commenced.
    (c) Any disagreement with respect to the amount of liquidated 
damages due the Government will be deemed to be a dispute and will 
be decided by the Contracting Officer pursuant to Provision C.32.

C.28 Failure To Perform Under SPR Contracts

    In addition to the usual debarment procedures, 10 CFR 625.3 
provides procedures to make purchasers that fail to perform in 
accordance with these provisions ineligible for future SPR 
contracts.

C.29 Government Options in Case of Impossibility of Performance

    (a) In the event that DOE is unable to deliver petroleum 
contracted for to the purchaser due either to events beyond the 
control of the Government, including actions of the purchaser, or to 
acts of the Government, its agents, its contractors or 
subcontractors at any tier, the Government at its option may do 
either of the following:
    (1) Terminate for the convenience of the Government under 
Provision C.25; or
    (2) Offer different SPR crude oil streams or delivery times to 
the purchaser in substitution for those specified in the contract.
    (b) In the event that a different SPR crude oil stream than 
originally contracted for is offered to the purchaser, the contract 
price will be negotiated between the parties. In no event shall the 
negotiated price be less than the minimum acceptable price 
established for the same or similar crude oil streams at the time of 
contract award.
    (c) DOE's obligation in such circumstances is to use its best 
efforts, and DOE under no circumstances shall be liable to the 
purchaser for damages arising from DOE's failure to offer alternate 
SPR crude oil streams or delivery times.
    (d) If the parties are unable to reach agreement as to price, 
crude oil streams or delivery times, DOE may terminate the contract 
for the convenience of the Government under Provision C.25.

C.30 Limitation of Government liability

    DOE's obligation under these SSPs and any resultant contract is 
to use its best efforts to perform in accordance therewith. The 
Government under no circumstances shall be liable thereunder to the 
purchaser for the conduct of the Government's contractors or 
subcontractors or for indirect, consequential, or special damages 
arising from its conduct, except as provided herein; neither shall 
the Government be liable thereunder to the purchaser for any damages 
due in whole or in part to causes beyond the control and without the 
fault or negligence of the Government, including but not restricted 
to, acts of God or public enemy, acts of the Government acting in 
its sovereign capacity, fires, floods, earthquakes, explosions, 
unusually severe weather, other catastrophes, or strikes.

C.31 Notices

    (a) Any notices required to be given by one party to the 
contract to the other in writing shall be forwarded to the 
addressee, prepaid, by U.S. registered, return receipt requested 
mail, express mail, or electronic means as provided in the NS. 
Parties shall give each other written notice of address changes.
    (b) Notices to the purchaser shall be forwarded to the 
purchaser's address as it appears in the offer and in the contract.
    (c) Notices to the Contracting Officer shall be forwarded to the 
following address: U.S. Department of Energy, Strategic Petroleum 
Reserve, Project Management Office, Acquisition and Sales Division, 
Mail Stop FE-4451, 900 Commerce Road East, New Orleans, Louisiana 
70123.

C.32 Disputes

    (a) This contract is subject to the Contract Disputes Act of 
1978 (41 U.S.C. 601 et seq.). If a dispute arises relating to the 
contract, the purchaser may submit a claim to the Contracting 
Officer, who shall issue a written decision on the dispute in the 
manner specified in 48 CFR 1-33.211.
    (b) ``Claim'' means:
    (1) A written request submitted to the Contracting Officer;
    (2) For payment of money, adjustment of contract terms, or other 
relief;
    (3) Which is in dispute or remains unresolved after a reasonable 
time for its review and disposition by the Government; and
    (4) For which a Contracting Officer's decision is demanded.
    (c) In the case of dispute requests or amendments to such 
requests for payment exceeding $50,000, the purchaser shall certify 
at the time of submission as a claim, as follows:

    I certify that the claim is made in good faith, that the 
supporting data are current, accurate and complete to the best of my 
knowledge and belief and that the amount requested accurately 
reflects the contract adjustment for which the purchaser believes 
the Government is liable.

Purchaser's Name
Signature
Title

    (d) The Government shall pay to the purchaser interest on the 
amount found due to the purchaser on claims submitted under this 
provision at the rate established by the Department of the Treasury 
from the date the amount is due until the Government makes payment. 
The Contract Disputes Act of 1978 and the Prompt Payment Act adopt 
the interest rate established by the Secretary of the Treasury under 
the Renegotiation Act as the basis for computing interest on money 
owed by the Government. This rate is published semi-annually in the 
Federal Register.
    (e) The purchaser shall pay to DOE interest on the amount found 
due to the Government and unpaid on claims submitted under this 
provision at the rate specified in Provision C.24 from the date the 
amount is due until the purchaser makes payment.
    (f) The decision of the Contracting Officer shall be final and 
conclusive and shall not be subject to review by any forum, 
tribunal, or Government agency unless an appeal or action is 
commenced within the times specified by the Contract Disputes Act of 
l978.
    (g) The purchaser shall comply with any decision of the 
Contracting Officer and at the direction of the Contracting Officer 
shall proceed diligently with performance of this contract pending 
final resolution of any request for relief, claim, appeal, or action 
related to this contract.

[[Page 39380]]

C.33 Assignment

    The purchaser shall not make or attempt to make any assignment 
of a contract that incorporates these SSPs or any interest therein 
contrary to the provisions of Federal law, including the Anti-
Assignment Act (4l U.S.C. 15), which provides:
    No contract or order, or any interest therein, shall be 
transferred by the party to whom such contract or order is given to 
any other party, and any such transfer shall cause the annulment of 
the contract or order transferred, so far as the United States is 
concerned. All rights of action, however, for any breach of such 
contract by the contracting parties, are reserved to the United 
States.

C.34 Order of Precedence

    In the event of an inconsistency between the terms of the 
various parts of this contract, the inconsistency shall be resolved 
by giving precedence in the following order:
    (a) The NA and written modifications thereto;
    (b) The NS;
    (c) Those provisions of the SSPs made applicable to the contract 
by the NS;
    (d) Instructions provided in the Crude Oil Sales Offer Program; 
and
    (e) The successful offer.

C.35 Gratuities

    (a) The Government, by written notice to the purchaser, may 
terminate the right of the purchaser to proceed under this contract 
if it is found, after notice and hearing, by the Secretary of Energy 
or his duly authorized representative, that gratuities (in the form 
of entertainment, gifts, or otherwise) were offered by or given by 
the purchaser, or any agent or representative of the purchaser, to 
any officer or employee of the Government with a view toward 
securing a contract or securing favorable treatment with respect to 
the awarding, amending, or making of any determinations with respect 
to the performing of such contract; provided, that the existence of 
the facts upon which the Secretary of Energy or his duly authorized 
representative makes such findings shall be in issue and may be 
reviewed in any competent court.
    (b) In the event that this contract is terminated as provided in 
paragraph (a) hereof, the Government shall be entitled (1) to pursue 
the same remedies against the purchaser as it could pursue in the 
event of a breach of the contract by purchaser, and (2) as a penalty 
in addition to any other damages to which it may be entitled by law, 
to exemplary damages in an amount (as determined by the Secretary of 
Energy or his duly authorized representative) which shall not be 
less than three nor more than 10 times the cost incurred by the 
purchaser in providing any such gratuities to any such officer or 
employee.
    (c) The rights and remedies of the Government provided in this 
clause shall not be exclusive and are in addition to any other 
rights and remedies provided by law or under this contract.

Exhibits:

A--SPR Crude Oil Comprehensive Analysis
B--SPR Delivery Point Data
C--Offer Standby Letter of Credit
D--Payment and Performance Letter of Credit
E--Strategic Petroleum Reserve Crude Oil Delivery Report--SPRPMO-F-
6110.2-14b 1/87 REV. 8/91

EXHIBIT B--SPR DELIVERY POINT DATA

SEAWAY FREEPORT TERMINAL

(Formerly Phillips Terminal)

    LOCATION: Brazoria County, Texas (three miles southwest of 
Freeport, Texas on the Old Brazos River, four miles from the sea 
buoy)
    CRUDE OIL STREAMS: Bryan Mound Sweet and Bryan Mound Sour.
    DELIVERY POINTS: Seaway Terminal marine dock facility number 2.
    MARINE DOCK FACILITIES AND VESSEL RESTRICTIONS:
    TANKSHIP DOCKS: 2 Docks: Nos. 2 and 3.

MAXIMUM LENGTH

    OVERALL (LOA): Docks 2 and 3--820 feet (up to 900 feet with 
pilot approval) during daylight and 615 feet during hours of 
darkness.
    MAXIMUM BEAM: Docks 2 and 3--145 feet.
    MAXIMUM DRAFT: Docks 2 and 3--42 feet salt water; subject to 
change due to weather and silting conditions.
    MAXIMUM AIR DRAFT: None.
    MAXIMUM DEADWEIGHT TONS (DWT): Dock Nos. 2 and 3 can accommodate 
up to 120,000 DWT if they meet other port restrictions. Maximum DWT 
is theoretical berth handling capability; however, purchasers are 
cautioned that varying harbor and channel physical constraints are 
the controlling factors as to vessel size, and they are responsible 
for confirming that proposed vessels can be accommodated.
    BARGE LOADING CAPABILITY: None.
    OILY WASTE RECEPTION FACILITIES: Facilities are available for 
oily bilge water and sludge wastes. Purchasers are responsible for 
making arrangements with the terminal and for bearing costs 
associated with such arrangements.
    CUSTOMARY ANCHORAGE: Freeport Harbor sea-buoy approximately 4.5 
miles from the terminal.

SEAWAY TEXAS CITY TERMINAL (Formerly ARCO Texas City)

    LOCATION: Docks 11 and 12, Texas City Harbor, Galveston County, 
Texas.
    CRUDE OIL STREAMS: Bryan Mound Sweet and Bryan Mound Sour.
    DELIVERY POINTS: Marine Docks (11 and 12) and connections to 
local commercial pipelines.
    MARINE DOCK FACILITIES AND VESSEL RESTRICTIONS:
    TANKSHIP DOCKS: 2 Docks: Nos. 11 and 12.

MAXIMUM LENGTH

    OVERALL (LOA): 1,020 feet. Maximum bow to manifold centerline 
distance is 468 feet.
    MAXIMUM BEAM: Dock 11--180 feet; Dock 12--220 feet.
    MAXIMUM DRAFT: 39.5 feet brackish water; subject to change due 
to weather and silting conditions.
    MAXIMUM AIR DRAFT: None.
    MAXIMUM DEADWEIGHT TONS (DWT): 150,000 DWT each. Terminal 
permission is required for less than 30,000 DWT or greater than 
150,000 DWT. Vessels larger than 120,000 DWT are restricted to 
daylight transit. Purchasers are cautioned that varying harbor and 
channel physical constraints are the controlling factors as to 
vessel size, and they are responsible for confirming that proposed 
vessels can be accommodated.
    BARGE LOADING CAPABILITY: None.
    OILY WASTE RECEPTION FACILITIES: Facilities are available for 
oily bilge water and sludge wastes. Purchasers are responsible for 
making arrangements with the terminal and for bearing all costs 
associated with such arrangements.
    CUSTOMARY ANCHORAGE: Bolivar Roads (breakwater) or Galveston 
sea-buoy.

SUNOCO LOGISTICS TERMINAL

    LOCATION: Nederland, Texas (on the Neches River at Smiths Bluff 
in southwest Texas, 47.6 nautical miles from the bar).
    CRUDE OIL STREAMS: West Hackberry Sweet and West Hackberry Sour.
    DELIVERY POINTS: Sun Terminal marine dock facility and Sun 
Terminal connections to local commercial pipelines.
    MARINE DOCK FACILITIES AND VESSEL RESTRICTIONS:
     TANKSHIP DOCKS: 5 Docks: Nos. 1, 2, 3, 4 and 5.

MAXIMUM LENGTH

    OVERALL (LOA): 1000 feet.
    MAXIMUM BEAM: 150 feet.
    MAXIMUM DRAFT: 40 feet fresh water.
    MAXIMUM AIR DRAFT: 136 feet.
    MAXIMUM DEADWEIGHT TONS (DWT): Maximum DWT at Dock No. 1 is 
85,000 DWT. Dock Nos. 2, 3, 4 and 5 can accommodate up to 150,000 
DWT. Vessels larger than 85,000 DWT, 875 feet LOA, or 125 feet beam 
are restricted to daylight transit. Maximum DWT is theoretical berth 
handling capability; however, purchasers are cautioned that varying 
harbor and channel physical constraints are the controlling factors 
as to vessel size, and they are responsible for confirming that 
proposed vessels can be accommodated.
    BARGE LOADING CAPABILITY: 3 Barge Docks: A, B and C. Each is 
capable of handling barges up to 25,000 barrels capacity.
    OILY WASTE RECEPTION FACILITIES: Facilities are available for 
oily bilge water and sludge wastes. Purchasers are responsible for 
making arrangements with the terminal and for bearing costs 
associated with such arrangements.
    CUSTOMARY ANCHORAGE: South of Sabine Bar-Buoy. There is an 
additional anchorage at the Sabine Bar for vessels with draft of 39 
feet of less.

SHELL 22-INCH/DOE LAKE CHARLES PIPELINE CONNECTION

    LOCATION: Lake Charles Upper Junction, located in Section 36, 
Township 10 South, Range 10 West, Calcasieu Parish, (Lake Charles) 
Louisiana.
    CRUDE OIL STREAMS: West Hackberry Sweet and West Hackberry Sour.

[[Page 39381]]

    DELIVERY POINT: Shell 22-Inch/DOE Lake Charles Pipeline 
Connection.
    MARINE DISTRIBUTION
    FACILITIES: None.

SHELL SUGARLAND TERMINAL

    LOCATION: St. James Parish, Louisiana (30 miles southwest of 
Baton Rouge on the west bank of the Mississippi River at mile-marker 
158.3).
    CRUDE OIL STREAMS: Bayou Choctaw Sweet and Bayou Choctaw Sour.
    DELIVERY POINTS: Sugarland Terminal marine dock facility and 
LOCAP and Capline Terminals (connections to Capline interstate 
pipeline system and local commercial pipelines).
    MARINE DOCK FACILITIES AND VESSEL RESTRICTIONS:
    TANKSHIP DOCKS: 2 Docks: Nos. 1 and 2.

MAXIMUM LENGTH

    OVERALL (LOA): 940 feet.
    MAXIMUM BEAM: None.
    MAXIMUM DRAFT: 45 feet fresh water.
    MAXIMUM AIR DRAFT: 153 feet less the river stage.
    MAXIMUM DEADWEIGHT TONS (DWT): 100,000 DWT. Maximum DWT is 
theoretical berth handling capability; however, purchasers are 
cautioned that varying harbor and channel physical constraints are 
the controlling factors as to vessel size, and they are responsible 
for confirming that proposed vessels can be accommodated.
    BARGE LOADING CAPABILITY: Dock 1.
    OILY WASTE RECEPTION FACILITIES: Facilities are available for 
oily bilge water and sludge wastes. Purchasers are responsible for 
making arrangements and for bearing all costs associated with such 
arrangements. Terminal can provide suitable contacts.
    CUSTOMARY ANCHORAGE: Grandview Reach approximately 11 miles from 
the terminal.

UNOCAL BEAUMONT TERMINAL

    LOCATION: Beaumont Terminal, located downstream south bank of 
the Neches River, approximately 8 miles SE of Beaumont, Texas.
    CRUDE OIL STREAMS: Big Hill Sweet and Big Hill Sour.
    DELIVERY POINTS: Unocal Beaumont Terminal No. 2 Crude Dock and 
connections to local commercial pipelines.
    MARINE DOCK FACILITIES AND VESSEL RESTRICTIONS:
    TANKSHIP DOCKS: 1 Dock (No. 2).

MAXIMUM LENGTH

    OVERALL (LOA): 1,020 feet.
    MAXIMUM BEAM: 150 feet.
    MAXIMUM DRAFT: 40 feet fresh water.
    MAXIMUM AIR DRAFT: 136 feet.
    MAXIMUM DEADWEIGHT TONS (DWT): Maximum DWT at Dock No. 2 is 
150,000 DWT. Vessels larger than 85,000 DWT, 875 feet LOA, or 125 
feet beam are restricted to daylight transit. Maximum DWT is 
theoretical berth handling capability; however, purchasers are 
cautioned that varying harbor and channel physical constraints are 
the controlling factors as to vessel size and they are responsible 
for confirming that proposed vessels can be accommodated.
    BARGE LOADING CAPABILITY: None.
    OILY WASTE RECEPTION FACILITIES: Facilities are available for 
oily bilge water and sludge wastes. Purchasers are responsible for 
making arrangements with the terminal and for bearing costs 
associated with such arrangements.
    CUSTOMARY ANCHORAGE: South of Sabine Bar-Buoy. There is an 
additional anchorage at the Sabine Bar for vessels with draft of 39 
feet or less.

SHELL 20-INCH PIPELINE (SPL)

    LOCATION: Jefferson County, Texas, Seven miles west and one mile 
north of FM 365 and Old West Port Arthur Road.
    CRUDE OIL STREAMS: Big Hill Sweet and Big Hill Sour.
    DELIVERY POINT: SPL East Houston Terminal, Exxon Junction 
(Channelview), Oil Tanking Junction.
    MARINE DISTRIBUTION FACILITIES: None.

EXHIBIT C

SAMPLE--OFFER GUARANTEE STANDBY LETTER OF CREDIT

BANK LETTERHEAD

IRREVOCABLE STANDBY LETTER OF CREDIT

Date:------------------------------------------------------------------

To: Acquisition and Sales Division, Mail Stop FE-4451, Strategic 
Petroleum Reserve, Project Management Office, U.S. Department of 
Energy, 900 Commerce Road East, New Orleans, LA 70123

AMOUNT OF LETTER OF CREDIT:--------------------------------------------
U.S. $ (----------------------------------)
CONTRACTOR:------------------------------------------------------------
NOTICE OF SALE NO:-----------------------------------------------------
LETTER OF CREDIT NO:---------------------------------------------------
EXPIRATION DATE:-------------------------------------------------------
AMERICAN BANKERS ASSOCIATION (ABA) NO:---------------------------------

    Gentlemen:
    We hereby establish in the U.S. Department of Energy's favor our 
irrevocable standby Letter of Credit effective immediately for the 
account of our customer in response to the above U.S. Department of 
Energy's Notice of Sale, including any amendments thereto, for the 
sale of Strategic Petroleum Reserve petroleum. This Letter of Credit 
expires 60 days from the date set for receipt of offers.
    This letter of credit is available by your draft/s at sight, 
drawn on us and accompanied by a manually signed statement that the 
signer is an authorized representative of the Department of Energy, 
and the following statement:

    ``THIS DRAWING OF U.S. $-------------------- (------------------
--) AGAINST YOUR LETTER OF CREDIT NUMBERED --------------------, 
DATED --------------------, IS DUE THE U.S. GOVERNMENT BECAUSE OF 
THE FAILURE OF (CONTRACTOR) TO HONOR ITS OFFER TO ENTER INTO A 
CONTRACT FOR THE PURCHASE OF PETROLEUM FROM THE STRATEGIC PETROLEUM 
RESERVE, IN ACCORDANCE WITH THE U.S. GOVERNMENT'S NOTICE OF SALE NO. 
--------------------, INCLUDING ANY AMENDMENTS THERETO.''

    Drafts must be presented for payment on or before the expiration 
date of this Letter of Credit at our bank. The Government may make 
multiple drafts against this Letter of Credit.
    Upon receipt of the U.S. Department of Energy's demand by hand, 
mail express delivery, or other means, at our office located at ----
----------------, we will honor the demand and make payment, by 3 
p.m. Eastern Time of the next business day following receipt of the 
demand, by either wire transfer of funds as a deposit to the account 
of the U.S. Treasury over the Fedwire Deposit System Network, or by 
electronic funds transfer through the Automated Clearing House 
Network, using the Federal Remittance Express Program. The 
information to be included in each transfer will be as provided in 
the above referenced Notice of Sale.
    This Letter of Credit is subject to the Uniform Customs and 
Practice for Documentary Credits (1993 Revision, International 
Chamber of Commerce Publication no. 500) and except as may be 
inconsistent therewith, to the Uniform Commercial Code in effect on 
the date of issuance of this Letter of Credit in the state in which 
the issuer's head office within the United States is located.
    We hereby agree with the drawers, endorsers and bona fide 
holders that all drafts drawn under and in compliance with the terms 
of this Letter of Credit will be duly honored upon presentation and 
delivery of the above documents for payment at our bank on or before 
the expiration date.
    Address all communications regarding this Letter of Credit to 
(name and phone number).
    Very truly yours,
-----------------------------------------------------------------------
(Authorized Signature)

-----------------------------------------------------------------------
(Typed Name and Title)

Instructions for Offer Letter of Credit

    1. The depository institution must be an account holder with the 
Federal Reserve Banking System and a participant (on line) in the 
Fed's Fedwire Deposit System Network funds transfer system.
    2. Letter of Credit must not vary in substance from this 
attachment. Provide a copy of this attachment to your bank.
    3. Banks shall fill in blanks except those in the drawing 
statement. The drawing statement is in bold print with double 
underlines for the blanks. Do not fill in double underlined blanks.
    4. The information to be included and format to be used either 
for a wire transfer as a deposit over the Fedwire Deposit System 
Network or electronic funds transfer through the Automated Clearing 
House network, using the Federal Remittance Express Program, will be 
provided in the Contract.
    5. Type name and title under authorized signature.

[[Page 39382]]

EXHIBIT D

SAMPLE--PAYMENT AND PERFORMANCE LETTER OF CREDIT

BANK LETTERHEAD

IRREVOCABLE STANDBY LETTER OF CREDIT

Date:------------------------------------------------------------------

To: Acquisition and Sales Division, Mail Stop FE-4451, Strategic 
Petroleum Reserve, Project Management Office, U.S. Department of 
Energy, 900 Commerce Road East, New Orleans, LA 70123

AMOUNT OF LETTER OF CREDIT U.S. $:-------------------------------------
(----------------------------------)
CONTRACTOR:------------------------------------------------------------
CONTRACT NO:-----------------------------------------------------------
LETTER OF CREDIT NO:---------------------------------------------------
EXPIRATION DATE:-------------------------------------------------------
AMERICAN BANKERS ASSOCIATION (ABA) NO:---------------------------------

    Gentlemen:
    We hereby establish in the U.S. Department of Energy's favor our 
irrevocable standby Letter of Credit effective immediately for the 
account of our customer's above contract with the U.S. Department of 
Energy for the sale of Strategic Petroleum Reserve petroleum.
    This letter of credit is available by your draft/s at sight, 
drawn on us and accompanied by a manually signed statement that the 
signer is an authorized representative of the Department of Energy, 
and one or both of the following statements:
    a. ``I HEREBY CERTIFY THAT THE UNITED STATES GOVERNMENT HAS 
DELIVERED CRUDE OIL UNDER THE TERMS OF CONTRACT NUMBER ------------
-------- AND THAT (CONTRACTOR) HAS NOT PAID UNDER THE TERMS OF THAT 
CONTRACT, AND AS A RESULT OWES THE U.S. GOVERNMENT
U.S. $ --------------------.''
    b. ``I HEREBY CERTIFY THAT (CONTRACTOR) HAS FAILED TO TAKE 
DELIVERY OF CRUDE OIL UNDER THE TERMS OF CONTRACT NUMBER ----------
----------, AND AS A RESULT OWES THE U.S. GOVERNMENT
U.S. $ --------------------.''
    Drafts must be presented for payment on or before the expiration 
date of this Letter of Credit at our bank. The Government may make 
multiple drafts against this Letter of Credit.
    Upon receipt of the U.S. Department of Energy's demand by hand, 
mail express delivery, or other means, at our office located at ----
----------------, we will honor the demand and make payment, by 3 
p.m. Eastern Time of the next business day following receipt of the 
demand, by either wire transfer of funds as a deposit to the account 
of the U.S. Treasury over the Fedwire Deposit System Network, or by 
electronic funds transfer through the Automated Clearing House 
Network, using the Federal Remittance Express Program. The 
information to be included in each transfer will be as provided in 
the above referenced contract.
    This Letter of Credit is subject to the Uniform Customs and 
Practice for Documentary Credits (1993 Revision, International 
Chamber of Commerce Publication no. 500) and except as may be 
inconsistent therewith, to the Uniform Commercial Code in effect on 
the date of issuance of this Letter of Credit in the state in which 
the issuer's head office within the United States is located.
    We hereby agree with the drawers, endorsers and bona fide 
holders that all drafts drawn under and in compliance with the terms 
of this Letter of Credit will be duly honored upon presentation and 
delivery of the above documents for payment at our bank on or before 
the expiration date.
    Address all communications regarding this Letter of Credit to 
(name and phone number).
    Very truly yours,
-----------------------------------------------------------------------
(Authorized Signature)

-----------------------------------------------------------------------
(Typed Name and Title)

Instructions for Payment and Performance

Letter of Credit

    1. The depository institution must be an account holder with the 
Federal Reserve Banking system and a participant (on line) in the 
Fed's Fedwire Deposit System Network funds transfer system.
    2. Letter of Credit must not vary in substance from this 
attachment. Provide a copy of this attachment to your bank.
    3. Banks shall fill in blanks except those in the drawing 
statements. The drawing statements are in bold print with double 
underlines for the blanks. Do not fill in double underlined blanks.
    4. The information to be included and format to be used either 
for a wire transfer as a deposit over the Fedwire Deposit System 
Network or electronic funds transfer through the Automated Clearing 
House network, using the Federal Remittance Express Program, will be 
provided in the Contract.
    5. Type name and title under authorized signature.
BILLING CODE 6450-01-P

[[Page 39383]]

[GRAPHIC] [TIFF OMITTED] TR07JY05.002

[FR Doc. 05-12906 Filed 7-6-05; 8:45 am]
BILLING CODE 6450-01-C