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fuels in a single notice of 'proposed rulemaking and issued a

single document containing its preliminary findings and

views related to the exemption.

However, as required by the

EPAA, FEA has determined separately for the No. 2 oils and

for the other middle distillate fuels that an exemption

should be adopted, and is today submitting separate exemption

amendments ("Energy Actions Nos. 3 and 4") for these product

categories for Congressional review of FEA's findings and

views supporting these exemptions.

The exemption amendment

contained in this document, to be submitted as Energy Action

No. 3, relates to No. 2 heating oil and No. 2-0 diesel fuel

as

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a single product category ("No. 2 oils"). "No. 2 heating oil" means heating oil grade No. 2 as defined in American

Society for Testing and Materials (ASTM) D396-71.

"No. 2-D

diesel fuel" means diesel fuel grade no. 2 as defined in

American Society for Testing and Materials (ASTM) D975-71.

One hundred forty-seven written and oral comments were

received in response to the notice of proposed exemption.

Those offering comments included major integrated refining

companies, small and independent refining companies, marketers,

ultimate consumers, state governments and trade associations.

Almost all of the parties commenting agreed with FEA

that No. 2 oils should be exempted from FEA's allocation and

price regulations.

This support was based generally upon

agreement with FEA's conclusions as to supply and demand

projections, competition, and other findings and views set forth in the preliminary Findings. Parties opposing the exemption of No. 2 oils generally based their opposition on the belief that the current surplus supply situation might

not continue through the upcoming heating season, that spot

shortages might occur, and that if such shortages were to

occur, independent marketers and consumers of No. 2 oils

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FEA has concluded that its initial view that No. 2 oils

should be exempted from regulations is correct.

No information or data were presented in this proceeding

which significantly alter FEA's preliminary findings and

views.

FEA does not anticipate that supply shortages will

occur in the future as predicted by some comments and in any

event FEA has standby authority under section 12 (f) of the

Emergency Petroleum Allocation Act of 1973 (EPAA) to reimpose allocation and price controls (on a temporary or permanent

basis) if necessary

to attain the objectives set forth in

section 4 (b) (1) of the EPAA.

Therefore, FEA hereby adopts

the proposed amendments exempting No. 2 oils from the Mandatory Petroleum Allocation and Price Regulations. Unless disapproved

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by either House of Congress under section 551 of the Energy

Policy and Conservation Act (EPCA), this exemption will be

effective either July 1, 1976 or the first day following the.

expiration of the 15 day period provided in section 551 for Congressional review, whichever is later.

Although FEA is adopting this exemption amendment based

on its firm conclusion that a supply shortage respecting No.

2 oils will not occur in the forseeable future, FEA recognizes

that unforseeable difficulties, unrelated to the exemption

amendment adopted today and confined to particular market

areas, could arise.

In order to further ensure that any such

possible supply problems following the removal of controls do not adversely affect independent marketers and their

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similar to the state set-aside program currently in effect

and in a manner similar to that by which supplier/purchaser

assignments are currently effected.

Findings and Views

In addition to this amendment to exempt No. 2 oils from

the Mandatory Petroleum Allocation and Price Regulations,

FEA has prepared its findings and views supporting the

amendment as required by section 12 of the EPAA based upon

its consideration of the comments of those persons who

73-1590-76 - 2

participated in the rulemaking and other information available

to FEA. These findings and views are set forth in a document dated June 15, 1976 and entitled "Findings and Views Concerning the Exemption of Middle Distillates from the Mandatory

Petroleum Allocation and Price Regulations" ("Findings and
Views"). These findings and views may be summarized, in

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adverse impact on the supply of any other oil or refined

product subject to the EPAA.

(3)

Competition and market forces are adequate to protect

consumers, following an exemption of No. 2 oils from

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The No. 2 oil market share of large, integrated

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effect on competition, in particular enhancing
the competitive viability of small and independent

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(4)

Exemption of No. 2 oils from regulation will not result

in inequitable prices for any class of No. 2 oil or

other product user.

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