II

104TH CONGRESS

2D SESSION S. 1530

To create a Government corporation to own and operate the Naval Petroleum

Reserves, and Naval Oil Shale Reserves, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 26, 1996

Mr. BUMPERS introduced the following bill; which was read twice and referred

to the Committee on Armed Services

A BILL

To create a Government corporation to own and operate

the Naval Petroleum Reserves, and Naval Oil Shale Reserves, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be referred to as the ‘‘Naval Petroleum

5 Reserves and Naval Oil Shale Reserves Corporatization

6 Act of 1996’’.
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1 TITLE I—ESTABLISHMENT OF THE NAVAL

2 PETROLEUM RESERVES CORPORATION

3 SEC. 101. ESTABLISHMENT OF THE CORPORATION.

4 (a) There is established a body corporate to be known

5 as the ‘‘Naval Petroleum Reserves and Naval Oil Shale

6 Reserves Corporation’’ (referred to in this Act as ‘‘the

7 Corporation’’).

8 (b) The Corporation is a for-profit, wholly owned

9 Government Corporation subject to chapter 91 of title 31,

10 United States Code (the Government Corporation Control

11 Act). The Corporation is an agency of the United States,

12 subject to annual apportionment under section 1512 of

13 title 31, United States Code.

14 (c) JURISDICTION AND CONTROL.—The Corporation

15 has exclusive jurisdiction and control over all of the Naval

16 Petroleum Reserves and Naval Oil Shale Reserves.

17 SEC. 102. CORPORATE OFFICES.

18 The Corporation shall maintain an office for the serv19 ice of process and papers in the District of Columbia, and

20 is considered, for purposes of venue in civil actions, to be

21 a resident of the District of Columbia. The Corporation

22 may establish offices in any other place it determines nec23 essary or appropriate in the conduct of its business.
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1 SEC. 103. GENERAL POWERS AND FUNCTIONS OF THE COR2 PORATION.

3 The Corporation—

4 (1) may adopt, alter, and use a corporate seal,

5 which shall be judicially noticed;

6 (2) may settle and adjust claims, sue and be

7 sued in its corporate name, and be represented by

8 its own attorneys in all administrative and, with

9 prior approval of the Attorney General, judicial pro10 ceedings, including appeals from decisions of Federal

11 courts;

12 (3) shall adopt and may amend and repeal by13 laws, and may adopt, amend and repeal corporate

14 orders and directives, governing the manner in which

15 its business may be conducted and the powers grant16 ed to it by law may be exercised and enjoyed;

17 (4) may acquire, purchase, lease, and hold the

18 real and personal property it considers necessary to

19 conduct its business;

20 (5) may sell, lease, grant, and dispose of prop21 erty as it considers necessary to conduct its busi22 ness;

23 (6) with the consent of the agency concerned,

24 may utilize or employ the services, records, facilities,

25 or personnel, of any Federal, State, or local govern26 ment agency;
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1 (7) may enter into contracts and incur liabil2 ities;

3 (8) may retain or use up to $250 million annu4 ally of its revenues, without further appropriation,

5 for reasonable capital and operating expenses of the

6 Corporation;

7 (9) shall have the priority of the United States

8 with respect to the payment of debts out of bank9 rupt, insolvent, and decedents’ estates;

10 (10) may request from the Administrator of

11 General Services the services the Administrator is

12 authorized to provide agencies of the United States,

13 and the Administrator shall furnish the requested

14 services to the Corporation on the same basis those

15 services are provided agencies of the United States;

16 (11) may accept gifts or donations of services

17 or of real, personal, mixed, tangible, or intangible

18 property to conduct its business; the Corporation

19 shall establish written rules setting forth the criteria

20 to be used in determining whether the acceptance of

21 gifts or donations of real, personal, mixed, tangible,

22 or intangible property to conduct its business under

23 this subsection would reflect unfavorably upon the

24 ability of the Corporation or any employee to carry

25 out its responsibilities or official duties in a fair and
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1 objective manner, or would compromise the integrity

2 or appearance of integrity of its programs or any of3 ficial involved in those programs;

4 (12) may execute all instruments necessary or

5 appropriate in the exercise of its powers;

6 (13) may acquire liability insurance or act as

7 self-insurer;

8 (14) shall pay any settlement or judgment en9 tered against it from the Corporation’s own funds

10 and not from the judgment fund established under

11 section 1304 of title 31, United States Code; section

12 1346(b) and chapter 171 of title 28, United States

13 Code, do not apply to claims against the Corpora14 tion; and

15 (15) may request the Secretary of the Treasury

16 to invest monies of the Corporation in public debt

17 securities having maturities suitable to the needs of

18 the Corporation, and bearing interest at rates deter19 mined by the Secretary of the Treasury, taking into

20 consideration current market yields on outstanding

21 obligations of the United States of comparable ma22 turity.

23 SEC. 104. SPECIFIC POWERS AND FUNCTIONS OF THE

24 CORPORATION.

25 The Corporation—
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1 (1) shall explore, prospect, develop, use,

2 produce, and operate the Reserves to maximize the

3 economic value of these properties to the Nation;

4 (2) may enter into joint, unit, or other coopera5 tive plans, leases, or other agreements and trans6 actions as may be necessary in the conduct of its

7 business;

8 (3) subject to section 109(c) shall administer

9 and may amend existing contracts, including the

10 Unit Plan Contract, and other agreements trans11 ferred to the Corporation under section 109(a) of

12 this subtitle;

13 (4) may construct, acquire, or contract for the

14 use of storage and shipping facilities, and pipelines

15 and associated facilities, on and off the Reserves, for

16 transporting petroleum from the Reserves to the

17 points where the production from the Reserves will

18 be refined and shipped;

19 (5) may store, for appropriate reimbursement

20 reasonably reflecting fair market value, petroleum

21 owned or managed by other Federal agencies and in22 strumentalities and may store petroleum owned or

23 managed by non-Federal entities at rates consistent

24 with subsection (j) of this section;
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1 (6) may acquire privately owned lands and

2 leases inside the Reserves, or outside those Reserves

3 on the same geologic structure, by exchange or con4 tract, and in order to protect the Reserves from

5 drainage, and if unable to arrange an exchange or

6 contract, by purchase or condemnation;

7 (7) may acquire any pipeline in the vicinity of

8 the Reserve not otherwise operated as a common

9 carrier by condemnation, if necessary, if the owner

10 refuses to accept, convey, and transport without dis11 crimination and at reasonable rates any petroleum

12 produced at the Reserve;

13 (8) may acquire a right-of-way for new pipelines

14 and associated facilities by eminent domain under

15 the Act of February 26, 1931 (40 U.S.C. 258a–

16 258e), and the prospective holder of the right-of-way

17 is ‘‘the authority empowered by law to acquire the

18 lands’’ within the meaning of that Act; new pipelines

19 shall accept, convey, and transport any petroleum

20 produced at the Reserves at reasonable rates;

21 (9) may use, store, or sell its share of the petro22 leum produced from the Reserves and lands covered

23 by joint, unit, or other cooperative plans;
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1 (10) shall establish prices for products, mate2 rials, and services on a basis that will allow it to

3 maximize the financial return to the Government;

4 (11) shall give priority to assisting in national

5 security matters when requested by the Secretary of

6 Defense; and

7 (12) shall transfer annually to the Treasury all

8 revenues in excess of that needed for reasonable cap9 ital and operating expenses of the Corporation, but

10 in no event may the revenues retained or used for

11 those purposes in any fiscal year exceed $250 mil12 lion.

13 SEC. 105. CHIEF EXECUTIVE OFFICER.

14 The powers and functions of the Corporation are

15 vested in a Chief Executive Officer to be appointed by the

16 Secretary. The Chief Executive Officer serves at the pleas17 ure and under the supervision of, and may be removed

18 at the discretion of, the Secretary. The Secretary shall set

19 the compensation of the Chief Executive Officer, not to

20 exceed Executive Level III.

21 SEC. 106. EMPLOYEES.

22 (a) APPOINTMENTS.—

23 (1) The Chief Executive Officer may appoint of24 ficers and employees of the Corporation without re25 gard to the provisions in title 5, United States Code,
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1 governing appointments in the competitive service,

2 and may fix compensation without regard to chapter

3 51 and subchapter III of chapter 53 of title 5,

4 United States Code, governing general schedule clas5 sifications and pay. In appointing officers of the

6 Corporation and setting their compensation, which

7 may not exceed Executive Level IV, the Chief Exec8 utive Officer shall consult with the Secretary. Any

9 officer or employee of the Corporation may be re10 moved at the discretion of the Chief Executive Offi11 cer except as specified in subsection (b) of this sec12 tion.

13 (2) Section 3132(a)(1) of title 5, United States

14 Code, is amended by adding at the end the follow15 ing:

16 ‘‘(E) the United States Naval Petroleum

17 Reserves and Naval Oil Shale Reserves Cor18 poration;’’.

19 (b) TRANSFER OF FUNCTIONS.—An officer or em20 ployee of the Department who the Secretary determines

21 is performing functions vested in the Corporation by this

22 subtitle is transferred to the Corporation under section

23 3503 of title 5, United States Code. Such an officer or

24 employee retains the compensation in effect immediately

25 prior to the transfer to the Corporation until changed by
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1 the Chief Executive Officer, and may not be separated in2 voluntarily by reason of the transfer (but may be sepa3 rated for cause) for a period of one year from the date

4 of the transfer to the Corporation.

5 (c) PAYMENTS FOR EMPLOYEE BENEFITS.—

6 (1) The Corporation shall make those payments

7 to the Employees’ Compensation Fund which are re8 quired by section 3147 of title 5, United States

9 Code.

10 (2) The Corporation shall pay to the Civil Serv11 ice Retirement and Disability Fund—

12 (A) those employee deductions and agency

13 contributions which are required by sections

14 3334, 3422, and 3423 of title 5, United States

15 Code.

16 (B) those additional agency contributions

17 which are determined necessary by the Office of

18 Personnel Management to pay, in combination

19 with sums under paragraph (2)(A) of this sub20 section, the normal cost (determined using dy21 namic assumptions) of retirement benefits for

22 the employees of the Corporation who are sub23 ject to subchapter III of chapter 83 of title 5,

24 United States Code; and
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1 (C) those additional amounts, not to ex2 ceed two percent of the amounts under para3 graphs (2)(A) and (2)(B) of this subsection,

4 which are determined necessary by the Office of

5 Personnel Management to pay the costs of ad6 ministering retirement benefits for the Corpora7 tion’s employees and retirees and their survi8 vors (which months shall be available to the Of9 fice as provided in section 3343(a)(1)(B) of

10 title 5, United States Code).

11 (3) The Corporation shall pay to the Employ12 ees’ Life Insurance Fund—

13 (A) those employee deductions and agency

14 contributions which are required by sections

15 8707 and 8708(a) of title 5, United States

16 Code; and

17 (B) those amounts which are determined

18 necessary by the Office of Personnel Manage19 ment under paragraph (5) of this subsection to

20 reimburse the Office for contributions under

21 sections 8708(d) of title 5, United States Code.

22 (4) The Corporation shall pay to the Employees

23 Health Benefits fund—
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1 (A) those employee payments and agency

2 contributions which are required by section

3 8906 (a)–(f) of title 5, United States Code; and

4 (B) those amounts which are determined

5 necessary by the Office of Personnel Manage6 ment under paragraph (5) of this subsection to

7 reimburse the Office for contributions under

8 section 8708(d) of title 5, United States Code.

9 (5) The Corporation shall pay to the Employees

10 Health Benefits fund—

11 (A) those employee payments and agency

12 contributions which are required by section

13 8906 (a)–(f) of title 5, United States Code; and

14 (B) those amounts which are determined

15 necessary by the Office of Personnel Manage16 ment under paragraph (5) of this subsection to

17 reimburse the Office for contributions under

18 section 8906(g)(1) of title 5, United States

19 Code.

20 (6) The amounts required under paragraphs

21 (3)(B) and (4)(B) of this subsection are the Govern22 ment contributions for retired employees who retire

23 from the Corporation after the date of transfer, the

24 survivors of those retired employees, and survivors of

25 the employees of the Corporation who die after the
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1 date of the transfer, prorated to reflect the portion

2 of the total civilian service of such employee and re3 tired employees that was performed for the Corpora4 tion after the date of transfer.

5 (7) The Corporation shall pay to the Thrift

6 Savings Fund those employee and agency contribu7 tions that are required by section 8432 of title 5,

8 United States Code.

9 (d) SEPARATION INCENTIVE PAYMENTS.—The Cor10 poration shall pay any voluntary separation incentive pay11 ment authorized, but not yet paid, by the Department

12 prior to the transfer of functions under subsection (b) of

13 this section.

14 SEC. 107. EXEMPTION FROM TAXATION.

15 The Corporation, including the Reserves and all other

16 corporate property, all corporate activities, and all cor17 porate income are exempt from taxation in any manner

18 or form by any State or local government entity.

19 SEC. 108. APPLICABILITY OF OTHER LAWS.

20 (a) FEDERAL LAWS GOVERNING ACQUISITION AND

21 DISPOSAL.—The Corporation shall not be considered to

22 be a department, agency, establishment, or instrumental23 ity of the United States for purposes of Federal laws, reg24 ulations, or other requirements concerning acquisition of

25 services and supplies, and the acquisition, use, and dis-
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1 posal of real and personal property, including the Federal

2 Property and Administrative Services Act (40 U.S.C. 471,

3 et seq.), except that the Corporation shall be considered

4 to be a department, agency, establishment, or instrumen5 tality of the United States for the purposes of the Davis6 Bacon Act (40 U.S.C. 276a–276–277), the McNamara7 O’Hara Service Contract Act (41 U.S.C. 351, et seq.), the

8 Contract Work Hours and Safety Standards Act (40

9 U.S.C. 327, et seq.), and civil rights laws and regulations

10 applicable to Federal contractors and subcontractors.

11 (b) EXEMPTION FROM ADMINISTRATIVE PROCE12 DURAL PROVISIONS.—Chapter 5 of title 5, United States

13 Code, does not apply to the Corporation.

14 SEC. 109. TRANSFERS TO THE CORPORATION.

15 (a) TRANSFER OF ASSETS.—Subject to subsection

16 (c) of this section, the Secretary shall transfer to the Cor17 poration the contracts, records, unexpended balance of ap18 propriations and other monies available to the Department

19 (including funds set aside for accounts payable and all ad20 vance payments), accounts receivable, and all other assets

21 that are related to the powers and functions vested in the

22 Corporation by this subtitle.

23 (b) TRANSFER OF LIABILITIES AND JUDGMENTS.—
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1 (1) All liabilities attributable to the operation of

2 the Reserves by the Department are transferred to

3 the Corporation.

4 (2) Any judgment entered against the Depart5 ment imposing liability arising out of the operation

6 of the Reserves by the Department is considered a

7 judgment against and is payable solely by the Cor8 poration.

9 (c) UNIT PLAN CONTRACT DISPUTE RESOLUTION.—

10 The Secretary shall retain, and shall not transfer, dispute

11 resolution authority under section 9 of the Unit Plan Con12 tract.

13 (d) PAYMENT OF INTEREST TO THE TREASURY.—

14 From time to time, and at least at the close of each fiscal

15 year, the Corporation shall pay into the Treasury as mis16 cellaneous receipts interest on any Federal financial cap17 ital utilized by the Corporation, as determined by the Di18 rector of the Office of Management and Budget. The rate

19 of such interest shall be determined by the Secretary of

20 the Treasury, taking into consideration prevailing market

21 yields, during the month preceding each fiscal year, on

22 outstanding obligations of the United States with remain23 ing periods to maturity of approximately one year.
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1 TITLE II—PRIVATIZATION OF THE

2 CORPORATION

3 SEC. 201. STRATEGIC PLAN FOR PRIVATIZATION.

4 (a) Within 5 years after the establishment of the Cor5 poration, the Corporation shall prepare a strategic plan

6 for transferring ownership of the Corporation to private

7 investors. The Corporation shall revise the plan as needed.

8 (b) The plan shall include consideration of alternative

9 means for transferring ownership of the Corporation to

10 private investors, including public stock offering, private

11 placement, or merger or acquisition. The plan may call

12 for the phased transfer of ownership or for complete trans13 fer at a single point of time. If the plan calls for phased

14 transfer of ownership, then—

15 (1) privatization shall be deemed to occur when

16 100 percent of ownership has been transferred to

17 private investors;

18 (2) prior to privatization, such stock shall be

19 nonvoting stock; and

20 (3) at the time of privatization, such stock shall

21 convert to voting stock.

22 (c) The plan shall evaluate the relative merits of the

23 alternatives considered and the estimated return to the

24 Government’s investment in the Corporation achievable

25 through each alternative. The plan shall include the Cor-
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1 poration’s recommendations on its preferred means of pri2 vatization.

3 (d) The Corporation shall transmit copies of the stra4 tegic plan for privatization to the President and Congress

5 upon completion.

6 SEC. 202. PRIVATIZATION.

7 (a) Subsequent to transmitting a plan for privatiza8 tion pursuant to section 101, and subject to subsections

9 (b) and (c), the Corporation may implement the privatiza10 tion plan if the Corporation determines, in consultation

11 with appropriate agencies of the United States, that pri12 vatization will result in a return to the United States at

13 least equal to the net present value of the Corporation.

14 (b) The Corporation may not implement the privat15 ization plan without the approval of the President.

16 (c) The Corporation shall notify the Congress of its

17 intent to implement the privatization plan. Within 30 days

18 of notification, the Comptroller General shall submit a re19 port to Congress evaluating the extent to which—

20 (1) the privatization plan would result in any

21 ongoing obligation or undue cost to the Federal Gov22 ernment; and

23 (2) the revenues gained by the Federal Govern24 ment under the privatization plan would represent at

25 least the net present value of the Corporation.
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1 (d) The Corporation may not implement the privat2 ization plan less than 60 days after notification of the

3 Congress.

4 (e) Proceeds from the sale of capital stock of the Cor5 poration under this section shall be deposited in the gen6 eral fund of the Treasury.

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