Under Threat of Lawsuit, Energy Dept. to Release Deferred $152 Million

The Energy Department, under threat of a lawsuit by the General Accounting Office, announced Friday that it will release $152 million it previously had withheld from construction of Strategic Petroleum Reserve storage facilities.

Although Congress had appropriated the funds, the Reagan Administration had refused to spend them, citing its request--almost certain to be denied by Congress--to impose a moratorium on filling the reserve as a means of reducing the deficit.

The GAO had issued an opinion that the Energy Department action, which is technically known as a deferral, was illegal and threatened to sue if the funds were not released by Friday.

Spending Deferrals

Existing law allows the Administration to defer spending to give it some flexibility in managing its finances. However, many in Congress have complained that the White House has increasingly turned to deferrals as a means of implementing President Reagan’s spending priorities over those of Congress.

White House spending deferrals have affected a wide variety of politically sensitive federal programs, including housing and urban development.

In announcing his decision to release the Strategic Petroleum Reserve funds, Energy Secretary John S. Herrington did not cite the threat of a lawsuit. Instead, he noted that the reserve is the “first line of protection” against an interruption in oil imports and said that releasing the funds to continue construction would be a “prudent course of action.”

Most of the money will go toward construction of the Big Hill storage facility in Texas. It is designed to hold 140 million barrels of oil, which would bring the overall strategic reserve to the 750-million-barrel level that Congress mandated.

“Secretary Herrington made an extremely wise decision in releasing these funds,” said Sen. James A. McClure (R-Ida.), chairman of the Senate Energy and Natural Resources Committee and a leading critic of the Administration deferral. “This additional construction gets us back on track to completion of Big Hill in the next five years.”

Congress had insisted that filling the reserve, which was established after the international oil shocks of the 1970s, is a prudent move at a time when oil prices are lower than they have been for years. However, the Administration had said that ample supplies of energy had made the need for the reserve less urgent.