[Federal Register: July 7, 2005 (Volume 70, Number 129)]
[Rules and Regulations]
[Page 39363-39383]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy05-10]
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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
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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:
nancy.marland@hq.doe.gov.
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:
gary.landry@spr.doe.gov.
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: diane.stubbs@hq.doe.gov.
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