QUESTIONS SUBMITTED BY SENATOR AKAKA

on 8 Mr. Gentile, what are the problems associated with assembling tanker fleet on short notice to serve the U.S. in the event of major oil supply disruption?

wer:

The availability of sufficient tankers to support an SPR drawdown is a function of the oil supply disruption scenario in terms of time of year, military requirements, size of disruption, lost source(s) of supply, etc. The principal difficulty associated with obtaining sufficient suitably sized tankers is the "Jones Act" requirement to use only U.S.-flag tankers in transporting oil between U.S. ports. These vessels are normally fully employed in the Alaskan crude, foreign and coast-wise trades, or are under charter to the military; thus, their availability depends on the extent this normal business is curtailed at the time of an oil supply disruption. This problem can be avoided with respect to an SPR drawdown, however, by the Secretary of the Treasury's granting a general waiver to the requirement, and allowing the participation of more readily available foreign-flag tankers, as was done during the recent SPR drawdown.

Question 9:

Answer:

QUESTION FROM DANIEL AKAKA

Mr. Gentile, identify the estimated dependence on foreign oil in the Petroleum Administration for Defense District V (PADD V) for each of the following years: 1990, 1995, 2000, 2005, 2010.

Although the Department has made projections of levels of imports for the whole of the United States, none of the major studies which we have published are supported by projections of imports broken down by PADD. However, for purposes of the SPR expansion study, forwarded to Congress on April 4, 1991, and working from Energy Information Administration projections of imports for the whole country, the Office of Strategic Petroleum Reserve estimated that in the year 2000, PADD V would import approximately 20

percent of its total petroleum requirements.

On March 11, 1991, Robert H. Gentile, Assistant Secretary for Fossil Energy testified before your committee on Titles VII and VIII of S. 341.

At the time of my last letter to you dated April 17, 1991, we explained that the remaining question for the record was not available and that it would be forwarded to you. Enclosed is the answer to that question.

If we can be of further assistance to you or your staff, please contact our Congressional Hearing Coordinator, Renee Wilhite, on (202) 586-4277.

QUESTION FROM MALCOLM WALLOP

Question 3.b:

Answer:

Under such circumstances why do you consider this
a "taking" of property in the Constitutional
sense? Would you provide a legal brief for the
record?

The Department of Energy and its predecessor
agency, the Federal Energy Administration,
analyzed somewhat similar issues in the late
1970's in connection with proposal to implement an
"Industrial Petroleum Reserve" pursuant to section
156 of the 1975 Energy and Policy Conservation Act
(EPCA). In response to your request, we are
providing the analyses prepared at that time.
These analyses reflect an assessment, during a
previous Administration, of the risks that a
program implemented under EPCA section 156 might
effect a compensable taking of property; they also
contain recommendations on how to minimize those
perceived risks. Of course, the provisions of
title VII of S.341 differ in significant respects
from those of EPCA section 156, and it would be
necessary to analyze specific plans for the
implementation of title VII in the light of the

law as it has developed since the 1970's, in order
to assess the risks that a compensable taking

would result from such implementation.

On August 4, 1976, I sent you the answers to the
questions concerning the Industrial Petroleum Reserve
(IPR) which you had asked us to address. Subsequently,
Michael Carosella of your staff asked that we address
the legal issues reflected in a memorandum of July 22,
1976, from Stuart Rosenblum to Michael Carosella.
following are the answers to those questions.

1. What is the impact of the "taking" question on
the PR?

The

This is the most basic question affecting the IPR,
since if the program leads to a "taking," and the govern-
ment is required to compensate participants, then FEA
Bust determine whether the costs of such compensation still
justify proceeding with the program. To a considerable
extent, the amount of compensation would depend on the
actual features of the program giving rise to industry
expense.
However, since we can find no decided case
involving circumstances similar to those of the IPR, many
questions, if litigated, would be novel and their outcome
unpredictable.

Assuming that a taking does occur, it would be in the
government's interest to reduce any industry expense
directly caused by the taking.