(b) This subpart provides for the mandatory allocation of crude oil produced in or imported into the United States other than the first sale of crude oil exempted pursuant to the provisions of § 210.32 of this chapter. (c) This subpart also provides a program for refinery yield control.

§ 211.62 Definitions.

For purposes of this subpart

"Adjusted crude oil receipts" means the crude oil receipts of a refiner in a particular month the composition of which has been adjusted to reflect any invoice which is received in that month for domestic crude oil (including crude oil sold under § 211.65) delivIered to that refiner in any previous month (excluding, however, months prior to November 1974), and which has the effect of increasing or decreasing the volume of old or upper tier crude oil reported by that refiner under § 211.66(h) for such previous month, in cases where such previously reported volume was based on either a prior invoice or a good faith estimate (based on that refiner's past experience as to the old and upper tier crude oil content of domestic crude oil of the same origin) as to the old and upper tier crude oil content of that crude oil delivery.

"Alaska North Slope (ANS) crude oil" means crude oil transported through the trans-Alaska pipeline. For purposes of this subpart, such crude oil shall not be considered as upper tier crude oil, as that term is hereinafter defined.

"Allocation period" means a consecutive six-month calendar period commencing either on April 1 or October 1 of each year. The first allocation period shall be the six-month period from October 1, 1977 through March 31, 1978.

"California lower tier crude oil" means crude oil produced in California (or produced from federal lands off the shore of California) that is subject to the lower tier ceiling price rule set forth in § 212.73 of Part 212 of this chapter.

"California upper tier crude oil" means crude oil produced in California (or produced from federal lands off the shore of California that is subject

to the upper tier ceiling price rule set forth in § 212.74 of Part 212 of this chapter.

"Crude oil receipts" means, as to a particular refiner, the volume of crude oil (a) booked into its refineries in accordance with accounting procedures generally accepted and consistently and historically applied by the refiner concerned, for its own account or for the account of a firm other than a refiner or (b) if not previously so booked into its refineries, delivered by that refiner for its account to another refiner pursuant to a processing agreement with that other refiner. Crude oil receipts shall not include crude oil received by a refiner for the purpose of processing at its refineries for the account of another refiner. A particular crude oil receipt shall be deemed to have occurred when the related cost is booked into refinery inventory in accordance with accounting procedures generally accepted and consistently and historically applied by the refiner concerned, whether or not such crude oil has been actually received by that refiner, except that crude oil delivered by one refiner to another refiner pursuant to a processing agreement will be deemed to have been delivered by the delivering refiner to the other refiner when the risk of loss passes to the other refiner under the particular processing agreement or when the crude oil is received at the refinery of the other refiner, whichever occurs first. Crude oil which has been added by a refiner to its inventory and which is thereafter sold or otherwise disposed of without processing for the account of that refiner shall be deducted from its crude oil receipts at the time when the related cost is deducted from refinery inventory in accordance with accounting procedures generally accepted and consistently and historically applied by the refiner concerned. The volume of domestic crude oil inIcluded in a refiner's crude oil receipts shall be evidenced by and consistent with invoices received with respect to such crude oil receipts.

"Crude oil runs to stills" means, in the case of a refiner other than a petrochemical producer, the total number of barrels of crude oil input to distillation units processed by a refiner and

measured in accordance with Bureau of Mines Form 6-1300-M and, in the case of a petrochemical producer, the total number of barrels of crude oil input to processing units for conversion into petrochemicals.

"East coast market" means the geographical area coextensive with the Bureau of Mines East Coast Petroleum Refining District: Provided, That, for the period July 1, 1978 through June 30, 1979, the east coast market shall also include the State of Michigan.

"Eligible firm" means any firm that imports an eligible product into the East Coast market for sale or use in that market area, that is the importer of record under a license issued pursuant to Part 213 of this chapter and that owns the eligible product at the time of importation thereof pursuant to that license. Importation for the purpose hereof shall be as defined in paragraph (j) of § 213.27 of Part 213 of this chapter.

"Eligible product" means residual fuel oil imported into the east coast market, except that an import of residual fuel oil into United States customs territory which has been processed in the U.S. Virgin Islands shall not be considered an eligible product: And provided, That for the period July 1, 1978 through June 30, 1979, Canadian residual fuel oil imported into the State of Michigan will also qualify as an eligible product.

"Entitlement" means, for a particular month, the right of the refiner owning the entitlement to include one barrel of deemed old oil (as provided in § 211.67(b)), in its adjusted crude oil receipts in that month. The issuance and transfer of entitlements shall be evidenced on records maintained by the DOE.

"ERA" means the Economic Regulatory Administration of the Department of Energy established by Pub. L. 95-91 (August 4, 1977).

"Independent refiner" means a refiner which (a) obtained, directly or indirectly, in the calendar quarter which ended immediately prior to November 27, 1973, more than 70 percent of its refinery input of domestic crude oil (or 70 percent of its refinery input of domestic and imported crude oil)

from producers which do not control. are not controlled by, and are not under common control with, such refiner, and (b) marketed or distributed in such quarter and continues to market and distribute a substantial volume of gasoline refined by it through independent marketers.

"Naphthas" means petroleum frac tions made up predominantly of hydrocarbons whose boiling points fall within the temperature range of 85° to 430°F. This definition does not include specific hydrocarbon constituents such as hexane or special naphthas (solvents) as defined in § 211.182.

"National domestic crude oil supply ratio" means, for a particular month, the volume of deemed old oil (as defined in § 211.67(b)) included in the ag gregate adjusted crude oil receipts of all refiners, decreased by a number of barrels of deemed old oil equal to the number of entitlements issuable to small refiners under § 211.67(e) and the number of entitlements issuable under § 211.67(a)(4) and § 211.67(a)(5), and § 2111.67(a)(6), divided by the sum of the total volume of the crude oil runs to stills for all refiners for that month and thirty percent (30%) of the total volume of imports of eligible products by eligible firms for that month: provided, that, for the period July 1, 1978 through June 30, 1979, the reference herein to thirty percent (30%) shall read fifty percent (50%). The calculation of the national domestic crude oil supply ratio for each month shall take into account entitlement purchase or sale requirements resulting from the correction of reporting errors pursuant to paragraph (j) of § 211.67.

"No. 2 heating oil" means heating oil grade No. 2 as defined in American Society for Testing and Materials (ASTM) D396-71.

"Old oil" means old crude oil as defined in §§ 212.72 and 212.75 of this chapter, except that old oil included in a refiner's adjusted crude oil receipts shall not include condensate recovered at the inlet side of a gas processing plant.

"Petrochemical producer" means a person who manufactures petrochemicals in a petrochemical plant by processing petrochemical feedstock.

a

"Petroleum substitute" means (a) a liquid produced from oil shale found in the United States and used as a feedstock or fuel in a domestic refinery, and (b) such other liquid synthetic fuels as are designated pursuant to orders issued by the ERA. Applications for such orders may be submitted to ERA under Subpart G of Part 205 of this Chapter. In order to be designated a petroleum substitute, liquid synthetic fuel must be found by the ERA to be derived from domestic biomass, coal, oil shale, solid waste materials or tar sands, and used in the United States as a feedstock to a refinery, a blending feedstock or as a boiler fuel in a refinery or elsewhere. The ERA may, in its discretion, deny such designation if it determines that the liquid synthetic fuel in question does not result in a net gain of energy, considering the fuel consumption involved in its production, or requires the consumption of substantial quantities of a relatively scarce fuel for its production.

"Plant condensate" means a natural gas plant product, mostly pentanes and heavier hydrocarbons, recovered and separated as a liquid at gas inlet separators or scrubbers in processing plants or field facilities and which is not suitable for blending with natural gasoline or refinery gasoline.

"Processing agreement" means any agreement pursuant to which an owner of crude oil agrees to have that crude oil processed or refined by another person and retains ownership in some or all of the petroleum products so processed or refined from the crude oil.

"Refinery" means an industrial plant, regardless of capacity, processing crude oil feedstock and manufacturing refined petroleum products, residual fuel oil or petrochemicals, and shall include a petrochemical plant.

"Refiner" means a firm which owns, operates or controls the operations of one or more refineries.

"Refiner-buyer" ineans any small refiner which is determined to be eligible for an allocation of crude oil pursuant to § 211.65 of this subpart.

"Refiner-seller" means a refiner which is not a small refiner or independent refiner as defined in this sec

tion: Provided, That a refiner which is not a small refiner or an independent refiner, and all of the refining capacity of which has been constructed after January 1, 1974, shall not be classified as a refiner-seller: And provided further, That, for the allocation period commencing October 1, 1977, the refiners considered to be refinersellers for purposes of § 211.65 of this subpart shall include only those firms classified as refiner-sellers in the allocation quarter commencing June 1, 1977.

"Refining capacity" means, for each refinery, the capacity thereof as certified by the DOE. Any capacity of a refinery which has ceased to be operated continuously in the normal course of business shall be deducted from refining capacity.

"Small refiner" means a refiner, the sum of the capacity of the refineries of which (including the capacity of any person who controls, or is controlled by, or is under common control with such refiner) does not exceed 175,000 barrels per day.

"Upper tier crude oil" means, (i) for the period February 1 through August 31, 1976, new crude oil as defined in §§ 212.72 and 212.75 of this chapter and crude oil produced and sold from a stripper well lease as defined in § 212.74 of this chapter, and (ii) effective September 1, 1976, new crude oil as defined in §§ 212.72 and 212.75 of this chapter, except that upper tier crude oil included in a refiner's adjusted crude oil receipts shall not include condensate recovered at the inlet side of a gas processing plant.

(Emergency Petroleum Allocation Act of 1973, 15 U.S.C. 751, et seq., Pub. L. 93-159, as amended, Pub. L. 93-511, Pub. L. 94-99, Pub. L. 94-133, Pub. L. 94-163, and Pub. L. 94-385; Federal Energy Administration Act of 1974, 15 U.S.C. 787et seq., Pub. L. 93-275, as amended, Pub. L. 94-332, Pub. L. 94-385, Pub. L. 95-70, and Pub. L. 95-91; Energy Policy and Conservation Act, 42 U.S.C. 6201, et seq., Pub. L. 94-163, as amended, Pub. L. 94-385, and Pub. L. 95-70: Department of Energy Organization Act, 42 U.S.C. 7101, et seq., Pub. L. 95-91; E.O. 11790, 39 FR 23185; E.O. 12009, 42 FR 46267)

[39 FR 35511, Oct. 1, 1974, as amended at 39 FR 42247, Dec. 4, 1974; 40 FR 14738, Apr. 2, 1975; 41 FR 13903, Apr. 1, 1976; 41 FR 30323, July 23, 1976; 41 FR 48323, Nov. 3, 1976; 42 FR 41568, Aug. 17, 1977; 42 FR

42774. Aug. 24. 1977; 42 FR 62902, Dec. 14, 1977; 43 FR 21432, May 18, 1978: 43 FR 26545. June 20, 1978; 43 FR 49684, Oct. 24, 1978: 44 FR 31165, May 31, 1979]

NOTE: The provisions of this section may be affected by Standby Regulation 211-1. Standby Regulation 211-1 appears in Appendix A to Part 211. For the convenience of the user, a table listing all Standby Regu iations and sections affected appears in the Finding Aids section of this volume.

§ 211.63 Domestic crude oil supplier/purchaser relationships.

(a) Scope. This section provides for the allocation of crude oil produced in the United States other than crude oil which is the subject of (1) purchases and sales made to comply with § 211.65 of this subpart; (2) sales of crude oil made pursuant to Parts 225 and 225a, Chapter II of Title 30 of the Code of Federal Regulations; (3) the first sale of crude oil under 10 U.S.C. 7430(b), as amended by section 201 of the Naval Petroleum Reserves Production Act of 1976; and (4) the first sale of any domestic crude oil produced and sold from a property from which domestic crude oil was not produced and sold prior to January 1, 1976.

(b) General rule. (1) All supplier/ purchaser relationships in effect under contracts for sales, purchases and exchanges of domestic crude oil on January 1, 1976 shall remain in effect for the duration of this program; Provided, however, That any such supplier/purchaser relationship to which this section is applicable may be terminated as provided in paragraph (d) of this section.

(2) Once any first sale, purchase or exchange of domestic crude oil is made which is exempt from this rule pursuant to paragraph (a)(4) of this section, or once the sale, purchase or exchange of any domestic crude oil that has at any time been the subject of a supplier/purchaser relationship under paragraph (b)(1) of this section is made in accordance with this section to a firm that was not the purchaser thereof on January 1, 1976, or has not continued to purchase that crude oil without interruption since December 31, 1975, a supplier/purchaser relationship between the seller and purchaser shall be established thereafter under this

section as though it had been in effect on January 1, 1976.

(3) The provisions of this paragraph (b) shall not (i) operate to validate any supplier/purchaser relationship in effect on January 1, 1976 where the purchaser of the domestic crude oil involved was not the lawful purchaser thereof under the provisions of this section as in effect at any time prior to February 12, 1976, or (ii) impair any purchaser's rights under this section as in effect prior to February 12, 1976, including a purchaser's right to continue to receive the volumes of domestic crude oil flowing to it on December 1, 1973 or such later date at which its supplier/purchaser relationship was established under this section as in effect prior to February 12, 1976.

(c) Supply obligations and purchase rights. (1) Obligations and rights incident to supplier/purchaser relationships under this section applicable to domestic crude oil production from a property (as defined in Part 212) in a given month shall not exceed the actual production of that property for the month.

(2) Where the volume of domestic crude oil produced by a property in a given month is below December 1975 levels, the supply obligations under this section for that production shall be reduced for that month as to each January 1, 1976 purchaser of that production on a pro rata basis, based on the respective volumes purchased by each such purchaser in December 1975.

(3) Increased production of domestic crude oil from a property over December 1975 production levels shall be sold proportionately to the same purchaser or purchasers that are entitled to purchase the December 1975 levels of domestic crude oil production of that property under this section.

(4) In the event that a property which produces crude oil subject to this section is transferred to a new owner, the obligation to supply the January 1, 1976 purchasers of that property's crude oil production shall attach to the new owner and new supplier/purchaser relationships subject to this section shall be established on that basis.

chaser relationships. (1) Any supplier/ purchaser relationship established under paragraph (b) of this section may be terminated as follows:

(i) At the option of the purchaser, as evidenced by its written consent thereto together with notice of the termination date given to the producer, provided all subsequent purchasers of the crude oil involved have consented to such termination in writing;

(ii) By a producer with respect to any crude oil produced from a stripper well lease (as defined in § 212.74 of Part 212 of this chapter), provided that the production from a stripper well lease is upon termination immediately sold or sold for resale to any small refiner and continuously thereafter supplied to that small refiner purchaser for processing by that small refiner; and

(iii) By a producer (as defined in Part 212 of this chapter), if the present purchaser as to any old, new or stripper well lease crude oil (as defined in §§ 212.72 and 212.74 of Part 212 of this chapter) refuses, within a fifteen day period after receipt of written notice as to that offer from the producer, to meet any bona fide written offer made by another purchaser to purchase such crude oil at a lawful price above the price paid by the present purchaser.

(iv) By a producer (as defined in Part 212 of this chapter) as to a reseller purchasing crude oil from that producer: Provided, That:

(A) At least thirty days in advance of any termination under this subdivision (iv), the producer shall give to the reseller purchasing from it whose supplier/purchaser relationship is proposed to be terminated a written termination notice stating the date of termination, the source, quality, and estimated volume of crude oil involved

(including the portions of that volume that are priced as lower tier crude oil, upper tier crude oil and uncontrolled crude oil under Part 212 of this chapter), and the name and address of the new seller to which such crude oil is proposed to be sold.

(B) Any reseller that has received a termination notice from a producer as provided in subclause (A) of this subdivision, which proposed termination would effect a reduction in deliveries of crude oil by that reseller, either directly or through exchanges, to any refiner or other reseller shall:

(1) Within 10 days of receipt of the termination notice, provide a copy of the termination notice, together with a statement as to the volume, quality, and price level of crude oil involved for the particular purchaser, to the purchasers of the crude oil subject to such termination notice. To the extent that such reseller has any option in deciding which of its customers is to be regarded as the purchaser of the crude oil subject to such termination notice, the following priorities shall apply:

(i) To the refiner other than a small refiner purchasing the greatest volume of crude oil subject to the termination notice, but only to the extent of the lesser of such purchaser's purchases or 1,000 barrels per day;

(ii) If the proposed termination would affect crude oil deliveries to crude oil refiners by more than the amount determined under subclause (B)(1)(i), of this subdivision, to additional refiners other than small refiners in the order determined under the criteria set forth in subclause (B)(1)(i), of this subdivision;

(iii) If the proposed termination would affect crude oil deliveries beyond that which could be accounted for as provided above in sales to refiners other than small refiners, to any reseller receiving crude oil subject to the termination notice. (Any reseller receiving such notice shall, in turn, comply with the requirements of this § 211.63(d)(1)(iv)(B); and

(iv) If only small refiners remain as purchasers of the crude oil subject to the termination notice, to such small refiners in the same order as provided in subclause (B)(1)(i) and (B)(1)(ii), of

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