Pub. L. 94-258, tit. II, sec. 201

Sec. 201. Chapter 641 of title 10, United States Code, is amended as follows: (1) Immediately before section 7421 insert the following new section: “§ 7420. Definitions “(a) In this chapter— “(1) ‘national defense’ includes the needs of, and the planning and preparedness to meet, essential defense, industrial, and military emergency energy requirements relative to the national safety, welfare, and economy, particularly resulting from foreign military or economic actions; “(2) ‘naval petroleum reserves’ means the naval petroleum and oil shale reserves established by this chapter, including Naval Petroleum Reserve Numbered 1 (Elk Hills), located in Kern County, California, established by Executive order of the President, dated September 2, 1912; Naval Petroleum Reserve Numbered 2 (Buena Vista), located in Kern County, California, established by Executive order of the President, dated December 13, 1912; Naval Petroleum Reserve Numbered 3 (Teapot Dome), located in Wyoming, established by Executive order of the President, dated April 30, 1915; Naval Petroleum Reserve Numbered 4, Alaska, established by Executive order of the President, dated February 27, 1923 (until redesignated as the National Petroleum Reserve in Alaska under the jurisdiction of the Secretary of the Interior as provided in the Naval Petroleum Reserves Production Act of 1976); Oil Shale Reserve Numbered 1, located in Colorado, established by Executive order of the President, dated December 6, 1916, as amended by Executive order dated June 12, 1919; Oil Shale Reserve Numbered 2, located in Utah, established by Executive order of the President, dated December 6, 1916; and Oil Shale Reserve Numbered 3, located in Colorado, established by Executive order of the President, dated September 27, 1924; “(3) ‘petroleum’ includes crude oil, gases (including natural gas), natural gasoline, and other related hydrocarbons, oil shale, and the products of any of such resources; “(4) ‘Secretary’ means the Secretary of the Navy; “(5) ‘small refiner’ means an owner of a refinery or refineries (including refineries not in operation) who qualifies as a small business refiner under the rules and regulations of the Small Business Administration; and “(6) ‘maximum efficient rate’ means the maximum sustainable daily oil or gas rate from a reservoir which will permit economic development and depletion of that reservoir without detriment to the ultimate recovery,”. (2) Section 7421 (a) is amended— (A) by striking out “of the Navy”; (B) by striking out “and oil shale”; (C) by striking out “for naval purposes” and inserting in lieu thereof “for national defense purposes”; and (D) by striking out “section 7438 hereof” and inserting in lieu thereof “this chapter”. (3) The text of section 7422 is amended to reed as follows: “(a) The Secretary, directly or by contract, lease, or otherwise, shall explore, prospect, conserve, develop, use, and operate the naval petroleum reserves in his discretion, subject to the provisions of subsection90 STAT. 308 (c) and the other provisions of this chapter; except that no petroleum leases shall be granted at Naval Petroleum Reserves Numbered 1 and 3. “(b) Except as otherwise provided in this chapter, particularly subsection (c) of this section, the naval petroleum reserves shall be used and operated for— “(1) the protection, conservation, maintenance, and testing of those reserves; or “(2) the production of petroleum whenever and to the extent that the Secretary, with the approval of the President, finds that such production is needed for national defense purposes and the production is authorized by a joint resolution of Congress. “(c) (1) In administering Naval Petroleum Reserves Numbered 1, 2, and 3, the Secretary is authorized and directed— “(A) to further explore, develop, and operate such reserves; “(B) commencing within ninety days after the date of enactment of the Naval Petroleum Reserves Production Act of 1976, to produce such reserves at the maximum efficient rate consistent with sound engineering practices for a period not to exceed six year’s after the date of enactment of such Act; “(C) during such production period or any extension thereof to sell or otherwise dispose of the United States share of such petroleum produced from such reserves as hereinafter provided; and “(D) to construct, acquire, or contract for the use of storage and shipping facilities on and off the reserves and pipelines and associated facilities on and off the reserves for transporting petroleum from such reserves to the points where the production from such reserves will be refined or shipped. Any pipeline in the vicinity of a naval petroleum reserve not otherwise operated as a common carrier may be acquired by the Secretary by condemnation, if necessary, if the owner thereof refuses to accept, convey, and transport without discrimination and at reasonable rates any petroleum produced at such reserve. With the approval of the Secretary, rights-of-way for new pipelines and associated facilities may be acquired by the exercise of the right of eminent domain in the appropriate United States district court. Such rights-of-way may be acquired in the manner set forth in the Act of February 26, 1931, chapter 307 (46 Stat. 1421; 40 U.S.C. 258(a)), and the prospective holder of the right-of-way is ‘the authority empowered by law to acquire the lands’ within the meaning of that Act. Such new pipelines shall accept, convey, and transport, without, discrimination and at reasonable rates any petroleum produced at such reserves as a common carrier. Pipelines and associated facilities constructed at or procured for Naval Petroleum Reserve Numbered 1 pursuant to this subsection shall have adequate capacity to accommodate not less than three hundred fifty thousand barrels of oil per day and shall be fully operable as soon as possible, but not later than throe years after the date of enactment of the Naval Petroleum Reserves Production Act of 1976. “(2) At the conclusion of the six-year production period authorized by paragraph (1)(B) of this subsection the President may extend the period of production in the case of any naval petroleum reserve for additional periods of not to exceed three years each— “(A) after the President requires an investigation to be made, in the case of each extension, to determine the necessity for continued production from such naval petroleum reserve; “(B) after the President submits to the Congress, at least one hundred eighty days prior to the expiration of the current production period prescribed by this section, or any extension thereof,90 STAT. 309 a copy of the report made to him on such investigation together with a certification by him that continued production from such naval petroleum reserve is in the national interest; and “(C) if neither House of Congress within ninety days after receipt of such report and certification adopts a resolution disapproving further production from such naval petroleum reserve. “(3) The production authorization set forth in paragraph (1)(B) of this subsection, in the case of Naval Petroleum Reserve Numbered 1, is conditioned upon the private owner of any lands or interests therein within such reserve agreeing with the Secretary to continue operations of such reserve under a unitized plan contract which adequately protects the public interest: however, if such agreement is not reached within ninety days after the date of enactment of the Naval Petroleum Reserves Production Act of 1976 the Secretary is authorized to exercise the authority for condemnation conferred by section 7425 of this chapter.”. (4) The first sentence of section 7423 is amended by deleting “of the Navy” and “or products”. (5) Section 7424 is amended— (A) by deleting “of the Navy” in the text of subsection (a) preceding clause (1); (B) by deleting “and oil shale” in subsection (a)(1) in the text preceding subclause (A); and (C) by deleting “in the ground” in clause (1)(A) of subsection (a). (6) Section 7425 is amended by deleting “of the Navy”. (7) Section 7426(a) is amended by striking out “the Secretary of the Navy” and insetting in lieu thereof “Subject to the provisions of sect ion 7422 (c), the Secretary”. (8) The first and second sentences of section 7427 are amended by striking out “of the Navy”. (9) Section 7428 is amended by striking out “within the naval petroleum and oil shale reserves shall contain a provision authorizing the Secretary of the Navy” and inserting in lieu thereof “within Naval Petroleum Reserve Numbered 2 and the oil shale reserves shall contain a provision authorizing the Secretary”. (10) The first sentence of section 7429 is amended by deleting “of the Navy”, (11) The text of section 7430 is amended to read as follows: “(a) In administering the naval petroleum reserves under this chapter, the Secretary shall use, store, or sell the pet role produced from the naval petroleum reserves and lands covered by joint, unit, or other cooperative plans. “(b) Notwithstanding any other provision of law, each sale of the United States share of petroleum shall be made by the Secretary at public sale to the highest qualified bidder, for periods of not more than one year, at such time, in such amounts, and after such advertising as the Secretary considers proper and without regard to Federal, State, or local regulations controlling sales or allocation of petroleum products. “(c) In no event shall the Secretary permit the award of any contract which would result in any person obtaining control, directly or indirectly, over more than 20 per centum of the estimated annual United States share of petroleum produced from Naval Petroleum Reserve Numbered 1. “(d) Each proposal for sale under this title shall provide that the terms of every sale of the United States share of petroleum from the naval petroleum reserves shall be so structured as to give full and90 STAT. 310 equal opportunity for the acquisition of petroleum by all interested persons, including major and independent oil producers and refiners alike. When the Secretary, in consultation with the Secretary of the Interior, determines that the public interests will be served by the sale of petroleum to small refiners not having their own adequate sources of supply of petroleum, the Secretary is authorized and directed to set aside a portion of the United States share of petroleum produced for sale to such refiners under the provisions of this section for processing or use in such refineries, except that— “(1) none of the production sold to small refiners may be resold in kind; “(2) production must be sold at a cost of not less than the prevailing local market price of comparable petroleum; “(3) the set-aside portion may not exceed 25 per centum of the estimated annual United States share of the total production from all producing naval petroleum reserves; and “(4) notwithstanding the provisions of subsection (b) of this section, the Secretary may, at his discretion if he deems it to be in the public interest, prorate such petroleum among such refiners for sale, without competition, at not less than the prevailing local market price of comparable petroleum. “(e) Any petroleum produced from the naval petroleum reserves, except such petroleum which is either exchanged in similar quantities for convenience or increased efficiency of transportation with persons or the government of an adjacent foreign state, or which is temporarily exported for convenience or increased efficiency of transportation across parts of an adjacent foreign state and reenters the United States, shall be subject to all of the limitations and licensing requirements of the Export Administration Act of 1969 (83 Stat, 841) and, in addition, before any petroleum subject to this section may be exported under the limitations and licensing requirement and penalty and enforcement provisions of the Export Administration Act of 1969, the President must make and publish an express finding that such exports will not diminish the total quality or quantity of petroleum available to the United States and that such exports are in the national interest and are in accord with the Export Administration Act of 1969. “(f) During the period of production or any extension thereof authorized by section 7422(c), the consultation and approval requirements of section 7431(a)(3) are waived, “(g) (1) Prior to the promulgation of any rules and regulations, plans of development and amendments thereto, and in the entering and making of contracts and operating agreements relating to the development, production, or sale of petroleum in or from the reserves, the Secretary shall consult with and give due consideration to the views of the Attorney General of the United States with respect to matters which may affect competition. “(2) No contract or operating agreement may be made, issued, or executed under this chapter until at, least thirty days after the Secretary notifies the Attorney General of the proposed contract or operating agreement. Such notification shall contain such information as the Attorney General may require in order to advise the Secretary as to whether such contract or operating agreement may create or maintain a situation inconsistent with the antitrust laws. If, within such thirty day period, the Attorney General advises the Secretary that a contract or operating agreement may create or maintain a situation inconsistent with the antitrust laws, then the Secretary may not make, issue, or execute that contract or operating agreement. 90 STAT. 311 “(h) Nothing in this chapter shall be deemed to confer on any person immunity from civil or criminal liability, or to create defenses to actions, under the antitrust laws. “(i) As used in this section, the term ‘antitrust laws’ means— “(1) the Act entitled ‘An Act to protect trade and commerce against unlawful restraints and monopolies’, approved July 2, 1890 (15 U.S.C. 1 et seq.), as amended; “(2) the Act entitled ‘An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes’, approved October 15, 1914 (15 U.S.C. 12 et seq.), as amended; “(3) the Federal Trade Commission Act (15 U.S.C. 41 et seq.), as amended; “(4) sections 73 and 74 of the Act entitled ‘An Act to reduce taxation, to provide revenue for the Government, and for other purposes’, approved August 27, 1894 (15 U.S.C. 8 and 9), as amended; or “(5) sections 2, 3, and 4 of the Act of June 19, 1936, chapter 592 (15 U.S.C. 13a. 13b, mid 21a). “(j) Any pipeline which accepts, conveys, or transports any petroleum produced from Naval Petroleum Reserves Numbered 1 or Numbered 3 shall accept, convey, and transport without discrimination and at reasonable rates any such petroleum as a common earlier insofar as petroleum from such reserves is concerned. Every contract entered into by the Secretary for the sale of any petroleum owned by the United States which is produced from such reserves shall contain provisions implementing the requirements of the preceding sentence if the contractor owns a controlling interest in any pipeline or any company operating any pipeline, or is the operator of any pipeline, which carries any petroleum produced from such naval petroleum reserves. The Secretary may promulgate rules and regulations for the purpose of carrying out the provisions of this section and he, or the Secretary of the Interior where the authority extends to him may declare forfeit any contract, operating agreement, right-of-way, permit, or easement held by any person violating any such rule or regulation. This section shall not apply to any natural gas common carrier pipeline operated by any person subject to regulation under the Natural Gas Act or any public utility subject to regulation by a State or municipal regulatory agency having jurisdiction to regulate the rates and charges for the sale of natural gas to consumers within the State or municipality. “(k) The President may at his discretion, direct that all or any part of the United States share of petroleum produced from the naval petroleum reserves be placed in strategic storage facilities as authorized by sections 151 through 166 of the Energy Policy and Conservation Act or that all or any part of such share be exchanged for petroleum of equal value for the purpose of placing such petroleum in such strategic storage facilities.”. (12) Section 7431 is amended— (A) by inserting “ (a) ” immediately before “The Committees”; (B) by striking out “or oil shale” in clauses (1) and (2); (C) by striking out “and oil shale” in clauses (2) and (3); (D) by striking out “oil and gas (other than royalty oil and gas), oil shale, and products therefrom” in clause (3) and inserting in lieu thereof “petroleum (other than royalty oil and gas) ”; and (E) by adding at the end thereof the following new subsections: “(b) (1) During the period of production authorized by section90 STAT. 312 7422(c), the Secretary shall submit to the Committees on Armed Services of the Senate and the House of Representatives any new plans or substantial amendments to ongoing plans for the exploration, development, and production of the naval petroleum reserves. “(2) All plans or substantial amendments submitted to the Congress pursuant to this section shall contain a report by the Attorney General of the United States with respect to the anticipated effects of such plans or amendments on coin petition. Such plans or amendments shall not be implemented until sixty days after such plans or amendments have, been submitted to such committees. “(c) During the period of production authorized by section 7422(c), the Secretary shall submit annual reports as of the first day of the fiscal year to the Committees on Aimed Services of the Senate and the House of Representatives, and such committees shall cause such reports to be printed as a Senate or House document, as appropriate. The Secretary shall include in such reports, with respect to each naval petroleum reserve, an explanation in detail of the following: “(1) the status of the exploration, development, and production programs; “(2) the production that has been achieved, including the disposition of such production and the proceeds realized therefrom; “(3) the status of pipeline construction and procurement and problems related to the availability of transportation facilities; “(4) a summary of future plans for exploration, development, production, disposal, and transportation of the production from the naval petroleum reserves; and “(5) such other information regarding the reserve as the Secretary deems appropriate.“. (13) Section 7432 is amended to read as follows: “§ 7432. Naval petroleum reserves special account “(a) There is hereby established on the books of the Treasury Department a special account designated as the ‘naval petroleum reserves special account’. There shall he credited to such account— “(1) all proceeds realized under this chapter from the disposition of the United States share of petroleum; “(2) the net proceeds, if any, realized from sales or exchanges within the Department of Defense, of relined petroleum products accruing (o the benefit of any component of that department as the result of any such sales or exchanges; “(3) such additional sums as may be appropriated for the maintenance, operation, exploration, development, and production of the naval petroleum reserves; “(4) such royalties as may accrue under the provisions of section 7433; and “(5) any other revenues resulting from the operation of the naval petroleum reserves. “(b) Funds available in the naval petroleum reserve special account shall be available for expenditure in such sums as are specified in annual appropriations Acts for the expenses of— “(1) exploration, prospecting, conservation, development, use, operation, and production of the naval petroleum reserves as authorized by this chapter; “(2) production (including preparation for production) as authorized by this chapter, or as may hereafter be authorized; “(3) the construction and operation of facilities both within and outside the naval petroleum reserves incident to the production and the delivery of petroleum, including pipelines and shipping terminals; 90 STAT. 313 “(4) the procurement of petroleum for, and the construction and operation of facilities associated with, the Strategic Petroleum Reserve authorized by sections 151 through 166 of the Energy Policy and Conservation Act; and “(5) the exploration and study of the National Petroleum Reserve in Alaska as authorized in title I of the Naval Petroleum Reserves Production Act of 1976. “(c) The budget estimates for annual appropriations from the naval petroleum reserves special account shall be prepared by the Secretary and shall be presented to the Congress by the President independently of the budget of the Department of the Navy and the Department of Defense. “(d) Contracts under this chapter providing for the obligation of funds may be entered into by the Secretary for a period of five years, renewable, at the option of the Secretary, for an additional five-year period; however, such contracts may obligate funds only to the extent that such funds are made available in annual appropriations.”. (14) Section 7433(a) is amended by stinking out “of the Navy”. (15) Section 7433(b) is amended by striking out “and oil shale”. (16) Section 7434 is amended by striking out “and oil shale”. (17) Section 7435(b) is amended by striking out “of the Navy”. (18) Section 7436(a) is amended by deleting “of the Navy, subject to approval of the President,”. (19) Section 7438 is amended by striking out “Secretary of the Interior” wherever it occurs and inserting therefor “Administrator of the Energy Research and Development Administration”; and by striking out “of the Navy” wherever it occurs. (20) The table of sections at the beginning of such chapter is amended— (A) by inserting immediately before “7421. Jurisdiction and control.” the following: “7420. Definitions.” (B) by striking out: “7433. Expenditures; appropriations chargeable.” and inserting in lieu thereof the following: “7432. Naval petroleum reserve special account.”