E
Other U.S. Stockpiles

Below are descriptions of some other U.S. stockpiles—of both materials and other “usables”—with the idea that these other models might provide insights into how government can assure the supply of an item, a commodity, or a material.

STRATEGIC NATIONAL STOCKPILE PROGRAM AT THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

First established in 1999 as the National Pharmaceutical Stockpile Program, the Strategic National Stockpile (SNS) program1 has large quantities of medicine and medical supplies to protect the U.S. public in the event of a public health emergency—for example, a terrorist attack, a flu outbreak, or an earthquake. The SNS is designed to deliver medicines within 12 hours to any state in the United States once federal and local authorities agree that local supplies have run out and the SNS is needed. Each state has plans to receive and distribute SNS medicine and

1

In 1999 Congress charged the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) with the establishment of the National Pharmaceutical Stockpile (NPS). The mission was to provide a resupply of large quantities of essential medical materiel to states and communities during an emergency within 12 hours of the federal decision to deploy. The Homeland Security Act of 2002 tasked the Department of Homeland Security (DHS) with defining the goals and performance requirements of the SNS program as well as managing the deployment of assets. Effective March 1, 2003, the NPS became the Strategic National Stockpile (SNS) program, managed jointly by DHS and HHS. In 2004, with the signing of the BioShield legislation, the SNS Program was returned to HHS for oversight and guidance.



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E Other U.S. Stockpiles Below are descriptions of some other U.S. stockpiles—of both materials and other “usables”—with the idea that these other models might provide insights into how government can assure the supply of an item, a commodity, or a material. STRATEGIC NATIONAL STOCKPILE PROGRAM AT THE DEPARTMENT OF HEALTH AND HUMAN SERVICES First established in 1999 as the National Pharmaceutical Stockpile Program, the Strategic National Stockpile (SNS) program1 has large quantities of medicine and medical supplies to protect the U.S. public in the event of a public health emergency—for example, a terrorist attack, a flu outbreak, or an earthquake. The SNS is designed to deliver medicines within 12 hours to any state in the United States once federal and local authorities agree that local supplies have run out and the SNS is needed. Each state has plans to receive and distribute SNS medicine and 1 In1999 Congress charged the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) with the establishment of the National Pharmaceutical Stockpile (NPS). The mission was to provide a resupply of large quantities of essential medical materiel to states and communities during an emergency within 12 hours of the federal decision to deploy. The Homeland Security Act of 2002 tasked the Department of Homeland Security (DHS) with defining the goals and performance requirements of the SNS program as well as managing the deployment of assets. Effective March 1, 2003, the NPS became the Strategic National Stockpile (SNS) program, managed jointly by DHS and HHS. In 2004, with the signing of the BioShield legislation, the SNS Program was returned to HHS for oversight and guidance. 

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aPPendix e  medical supplies to local communities as quickly as possible. SNS medicines are delivered free. The SNS is designed to have enough medicines stockpiled to protect people in several large cities at the same time. The SNS program is operated by the Centers for Disease Control and Prevention (CDC) at the Department of Health and Human Services. The SNS holds supplies of antibiotics, chemical antidotes, antitoxins, life- support medications, intravenous administration devices, airway maintenance supplies, and medical/surgical items. The first line of support available from the SNS program is a supply of 12-hour Push Packages, each weighing up to 50 tons and comprising 130 containers (see Figure E-1). These are caches of pharma- ceuticals, antidotes, and medical supplies designed to provide rapid delivery of a broad spectrum of supplies in the early hours of an event. These packages are strategically located in secure warehouses for quick deployment to a designated site within 12 hours. They are constructed so that they can be loaded onto trucks or cargo aircraft without being repackaged. If the incident requires additional pharmaceuticals and/or medical supplies, follow-on vendor-managed-inventory (VMI) supplies will be shipped to arrive within 24 to 36 hours. VMI supplies are stored by major pharmaceutical vendors until shipment. FIGURE E-1 A single Push Package weighs 94,424 pounds and fills either one wide-body aircraft or seven tractor trailers. The Strategic National Stockpile program pledges to deliver the prepackaged supplies within 12 hours of the federal (DHS) decision to deploy. SOURCE: Centers for Disease Control and Prevention, Atlanta, Georgia. Available at http://www.bt.cdc.gov/stockpile/.

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m a nag i n g m at e r i a l s twenty-first century military  for a To receive SNS assets, the governor of an affected state or an appointed des- ignee, such as a state health official, can request the deployment of the SNS from the director of the CDC. Once the request has been made, the director has the authority, in consultation with the Surgeon General and the Secretary of Health and Human Services, to order the deployment of the SNS. The decision to deploy SNS assets may be based on evidence of an overt release of a biological or chemical agent or some other emergency that might adversely affect the public’s health. The SNS has been used twice. On September 11, 2001, Governor of New York, George E. Pataki, requested assistance of the SNS program. In response, the CDC delivered a 50-ton package of supplies to New York City within 7 hours of the federal deployment order and had a team on the ground to meet it. In October 2001, the SNS program delivered assistance by means of VMI packages to the health department in Palm Beach County, Florida, after a case of Bacillus anthracis (anthrax) had been diagnosed. The assistance included 100 doses of antibiotics, delivered by air. Medical materiel stock in the SNS program is rotated and kept within potency shelf-life limits by means of quarterly quality assurance and quality control checks, annual 100 percent inventory of 12-hour Push Package items, and inspections of environmental conditions, security, and overall package maintenance. STRATEGIC PETROLEUM RESERVE The Strategic Petroleum Reserve (SPR) is the world’s largest supply of emer- gency crude oil. The federally owned oil stocks are stored in huge underground salt caverns along the coastline of the Gulf of Mexico. Although the idea of a petroleum reserve had been around for some time,2 it was not established until 1975, following the 1973-1974 oil embargo. President Ford set the SPR into motion when he signed the Energy Policy and Conservation Act (EPCA) on December 22, 1975. The Act authorized the stockpiling of up to 1 billion barrels of petroleum. Today, the SPR can hold 727 million barrels.3 The facilities and crude oil represent an investment of about $22 billion in energy security ($5 billion for facilities and $17 billion for crude oil).4 The Energy Policy Act of 2005 directs the Secretary of Energy to fill the SPR to its authorized 1 billion barrel capacity, and this is now being done. 2 Secretary of the Interior Ickes advocated the stockpiling of emergency crude oil in 1944, and President Truman’s Minerals Policy Commission proposed a strategic oil supply in 1952. President Eisenhower suggested an oil reserve after the 1956 Suez Crisis. The Cabinet Task Force on Oil Import Control recommended a similar reserve in 1970. 3 For information on the current SPR inventory, see http://www.spr.doe.gov/dir/dir.html. Accessed May 2007. 4 For further information, see http://www.fossil.energy.gov/programs/reserves/spr/index.html. Accessed May 2007.

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aPPendix e  Decisions to withdraw crude oil from the SPR are made by the President under the authority of EPCA. In the event of an energy emergency, SPR oil would be distributed by competitive sale. It takes 13 days from the Presidential decision for the oil to enter the commercial market. The President can order a full drawdown of the reserve to counter a “severe energy supply interruption” or a limited drawdown. In addition, the Secretary of Energy is authorized to carry out test drawdowns and distribution of crude oil from the SPR. The SPR has been used under emergency circumstances only twice, during Operation Desert Storm5 in 1991 and after Hurricane Katrina6 in 2005. DOE has the authority to exchange oil from the reserve, and such exchanges have been used to replace less suitable grades of crude oil with higher-quality crudes and for lim- ited, short-duration actions to assist petroleum companies in resolving oil delivery problems. In 2000, crude oil from the reserve was exchanged for storage capacity and stocks to create the Northeast Heating Oil Reserve. During the fall of 2005, an exchange was conducted at the request of refineries in the Gulf region when Hurricane Katrina disrupted scheduled deliveries. During 2006, small exchanges occurred in January and June, when accidents in shipping channels disrupted marine deliveries to refiners. Since early 1999, the SPR has been filled by means of the joint DOE/Department of the Interior program Royalty-in-Kind. This program applies to oil owed to the U.S. government by producers who operate leases on the federally owned Outer Continental Shelf. These producers provide between 12.5 percent and 16.7 percent of the oil they produce to the U.S. government, which acquires either the oil itself or the equivalent dollar value. STRATEGIC HELIUM RESERVE Today, the federal helium reserve comprises over 1 billion cubic feet of helium gas stored at the Cliffside facility, about 12 miles northwest of Amarillo, Texas. The reserve goes back to World War I, when the task of establishing a domestic source of helium was given to the U.S. Bureau of Mines (BOM). Helium production in the United States evolved over the years that followed as natural gas fields that were good sources of helium came on line and then closed down. In 1960, Congress enacted the Helium Act Amendments (P.L. 86-777), which directed the Secretary of the Interior to (1) acquire and conserve helium and (2) buy commercial crude helium using funds borrowed from the Treasury. The law permitted private helium 5 For further information, see http://www.fossil.energy.gov/programs/reserves/spr/spr-drawdown. html#desertstorm. Accessed May 2007. 6 For further information, see http://www.fossil.energy.gov/programs/reserves/spr/spr-drawdown. html#katrina_sale. Accessed May 2007.

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m a nag i n g m at e r i a l s twenty-first century military  for a production—the BOM subsequently arranged for five private plants to recover helium from natural gas so that BOM would become a buyer of last resort. The reserve served as a supply of helium for the government, which, like private own- ers, sold it to users. In this regard the reserve was not a stockpile in the sense of the petroleum reserve or the government-sanctioned stockpile of medicines. By 1995, the reserve had collected 1 billion cubic meters of helium along with $1.4 billion in debt. In response, and given that more than 90 percent of domestic demand at the time was being satisfied from private sources, Congress acted to phase out the reserve. The Helium Privatization Act of 1996 (P.L. 104–273) directed the Department of the Interior (DOI) to commence the sale of 850 million scm of the federal helium reserve by January 1, 2005, completing the sale by January 1, 2015. The legislation also directed DOI to enter into appropriate arrangements with the NRC to study and report on whether such disposal of helium reserves would have a substantial adverse effect on U.S. scientific, technical, biomedical, or national security interests. In 2000, an NRC report7 found that given the trends in the helium supply market at that time, the proposed liquidation of the federal reserve would not have a substantial impact in the next two decades. But the com- mittee also recommended that a follow-up study be undertaken to ensure that the legislation would have no adverse long-term (beyond 2020) effects and that sufficient helium would continue to be available after 2020. The NRC report also recommended research into both enhanced helium conservation and exploration technologies. Unless helium is extracted from natural gas, it is lost to the atmo- sphere when the gas is burned. Helium in the atmosphere is eventually lost to space and is therefore unrecoverable. Sales from the helium reserve commenced in 2003 and at the time this report was being written, about one third of the helium had been sold in five sales on the open market. A sixth sale was planned for the fall of 2007, but this time against the backdrop of a helium shortage.8 The price for which the reserve is selling its stock is based on a formula in the authorizing legislation designed to pay off the reserve’s debt. The amount of helium that can be sold in each sale is limited by the capacity of the reserve’s delivery system. No releases other than the sales have been made in recent years. 7 NRC, 2000, The Impact of Selling the Federal Helium Reserve (Washington, D.C.: The National Academies Press). Available at http://books.nap.edu/openbook.php?isbn=0309070384. Accessed May 2007. 8 See http://www.theledger.com/apps/pbcs.dll/article?AID=/20070507/NEWS/705070369/1039. Accessed June 2007.

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aPPendix e  THE CIVILIAN RESERVE AIR FLEET: A STOCKPILE MODEL? One example of a U.S. government program that seeks to maintain surge capacity for military crises in ways broadly analogous to materials stockpiling is the Civilian Reserve Air Fleet (CRAF). The CRAF involves commitments by U.S. airlines (both passenger and cargo carriers) to provide airlift capacity (cargo, passenger, and medevac services) to the U.S. military on relatively short notice (24- 48 hours). Airline companies are required to convert their aircraft to meet specific military requirements within this period of time. Although the carriers continue to operate the aircraft, the Air Force Air Mobility Command (AMC) controls the aircraft during mobilization of the CRAF. The CRAF is organized into three broad segments: international, domestic, and aeromedical services. Airlines participating in the CRAF do not receive any direct payments for maintaining aircraft that can be converted on short notice to meet military require- ments. Instead, their participation is rewarded by eligibility for peacetime military air transportation contracts. For FY2005, CRAF carriers were guaranteed contracts worth $418 million by the Air Force, and the Air Force AMC estimated that an additional $1.5 billion in contracts for transportation services would be awarded to participating airlines, although these commitments were not guaranteed. CRAF has been activated only twice in its 54-year history: in the 1991 Desert Storm action (August 1990-May 1991) and during the U.S. military action in Iraq (February-June 2003). As of April 2005, 40 carriers and 1,126 aircraft were enrolled in CRAF, more than 1,000 of them in the international segment of the program. CRAF provides surge capacity for the military services at a much lower cost than they could provide it for themselves. Nevertheless, the financial instability that afflicts the U.S. airline industry and the growing military interest in transport aircraft that can operate in more primitive landing facilities (shorter runways, poor instrumentation, etc.) are leading the military to consider alternatives to CRAF for what is likely to be the larger surge capacity required for military airlift operations. For their part, carriers have complained about the occasional failure of the military services to use their aircraft once the equipment has been activated and converted to military specifications, because they are directly compensated only when their aircraft are used for airlift. They have also complained that the military services do not pay enough to fully compensate them for use of their equipment.