The Department of Commerce (DOC) has the authority to change its regulations and allow condensate exports, according to a report released Wednesday by U.S. Sen. Lisa Murkowski (R-AK), the ranking Republican member of Senate Energy and Natural Resources Committee.
In a 63-page report, "License to Trade: Commerce Department Authority to Allow Condensate Exports," Murkowski says DOC has changed its regulations several times since the 1970s, and derided the regulations that currently govern condensate exports "convoluted."
"DOC has often modified its regulations without either congressional intervention or presidential finding, during both Republican and Democratic administrations," Murkowski said. "In so doing, DOC has cited inefficiencies, warned of risks to production and supply, encouraged access to international markets, and described anomalies that require special action.
"The ban on condensate exports, based on a definition of crude oil inserted into the regulations nearly 30 years ago, is just such a case where DOC can act on its own to resolve a challenge unforeseen by regulators and legislators alike."
Murkowski cited several examples of DOC changing its regulations. Those included:
DOC's Office of Industrial Resources Administration issuing an advance notice of a proposed rulemaking governing crude oil and petroleum products, in 1985;
DOC's Office of Export Administration publishing a final rule that created a "supplementary quota" for butane exports, in 1978;
A final ruling from 1981 that expanded specialty naphtha exports;
A final rule removing several "petroleum-based chemical commodities" from the list of prohibited exports from the Naval Petroleum Reserves;
Allowing the export of linear alpha olefins, through a final rule in 1985;
Issuing a final rule in 1978 to allow the export of residual fuel oil from California; and
Allowing the general licensing of petroleum coke exports in 1979.
Murkowski was scheduled to testify before the House Foreign Affairs Committee's Subcommittee on Terrorism, Proliferation, and Trade on Wednesday. According to her office, the stated reason for the hearing was to evaluate U.S. energy trade policy, specifically with crude oil.
Last month, Murkowski urged the U.S. Energy Information Administration to conduct an economic analysis for lifting the U.S. crude oil export ban (see Daily GPI, March 4). She also issued a 51-page white paper, urging the Obama administration to streamline regulations on condensate exports.
Murkowski called for an end to restrictions on crude oil and condensate exports in January (see Daily GPI, Jan. 7). Oil export restrictions were imposed during the 1973 oil embargo and became law in 1975, but some exceptions have since been adopted to allow crude to be transported to Canada from Alaska and California (see Shale Daily, Jan. 23).