537
SEC. 3403. SALE OF NAVAL PETROLEUM RESERVE NUM-
BERED 1 (ELK HILLS).
(a) SALE OF ELK HILLS UNIT REQUIRED.—Chapter
641 of title 10, United States Code, is amended by inserting
after section 7421 the following new section:
‘‘§ 7421a. Sale of Naval Petroleum Reserve Numbered
1 (Elk Hills)
‘‘(a) SALE
REQUIRED.—(1) Notwithstanding any
other provision of this chapter, the Secretary shall sell all
right, title, and interest of the United States in and to lands
owned or controlled by the United States inside Naval Pe-
troleum Reserve Numbered 1, commonly referred to as the
Elk Hills Unit, located in Kern County, California, and
established by Executive order of the President, dated Sep-
tember 2, 1912. Within one year after the effective date, the
Secretary shall enter into one or more contracts for the sale
of all of the interest of the United States in the reserve.
‘‘(2) In this section:
‘‘(A) The term ‘reserve’ means Naval Petroleum
Reserve Numbered 1.
‘‘(B) The term ‘unit plan contract’ means the
unit plan contract between equity owners of the lands
within the boundaries of Naval Petroleum Reserve
Numbered 1 entered into on June 19, 1944.
538
‘‘(C) The term ‘effective date’ means the date of
the enactment of the National Defense Authorization
Act for Fiscal Year 1996.
‘‘(b) EQUITY FINALIZATION.—(1) Not later than five
months after the effective date, the Secretary shall finalize
equity interests of the known oil and gas zones in Naval
Petroleum Reserve Numbered 1 in the manner provided by
this subsection.
‘‘(2) The Secretary shall retain the services of an inde-
pendent petroleum engineer, mutually acceptable to the eq-
uity owners, who shall prepare a recommendation on final
equity figures. The Secretary may accept the recommenda-
tion of the independent petroleum engineer for final equity
in each known oil and gas zone and establish final equity
interest in the Naval Petroleum Reserve Numbered 1 in ac-
cordance with such recommendation, or the Secretary may
use such other method to establish final equity interest in
the reserve as the Secretary considers appropriate.
‘‘(3) If, on the effective date, there is an ongoing equity
redetermination dispute between the equity owners under
section 9(b) of the unit plan contract, such dispute shall
be resolved in the manner provided in the unit plan con-
tract within five months after the effective date. Such reso-
lution shall be considered final for all purposes under this
section.
539
‘‘(c) TIMING AND ADMINISTRATION OF SALE.—(1) Not
later than two months after the effective date, the Secretary
shall retain the services of five independent experts in the
valuation of oil and gas fields to conduct separate assess-
ments, in a manner consistent with commercial practices,
of the fair market value of the interest of the United States
in Naval Petroleum Reserve Numbered 1. In making their
assessments, the independent experts shall consider (among
other factors) all equipment and facilities to be included
in the sale, the net present value of the reserve, and the
net present value of the anticipated revenue stream that the
Secretary determines the Treasury would receive from the
reserve if the reserve were not sold, adjusted for any antici-
pated increases in tax revenues that would result if the re-
serve were sold. The independent experts shall complete their
assessments within five months after the effective date. In
setting the minimum acceptable price for the reserve, the
Secretary shall consider the average of the five assessments
or, if more advantageous to the Government, the average
of three assessments after excluding the high and low assess-
ments.
‘‘(2) Not later than two months after the effective date,
the Secretary shall retain the services of an investment
banker to independently administer, in a manner consistent
with commercial practices and in a manner that maximizes
540
sale proceeds to the Government, the sale of Naval Petro-
leum Reserve Numbered 1 under this section.
‘‘(3) Not later than five months after the effective date,
the sales administrator selected under paragraph (2) shall
complete a draft contract for the sale of Naval Petroleum
Reserve Numbered 1, which shall accompany the invitation
for bids and describe the terms and provisions of the sale
of the interest of the United States in the reserve. The draft
contract shall identify all equipment and facilities to be in-
cluded in the sale. The draft contract, including the terms
and provisions of the sale of the interest of the United States
in the reserve, shall be subject to review and approval by
the Secretary, the Secretary of the Treasury, and the Direc-
tor of the Office of Management and Budget.
‘‘(4) Not later than six months after the effective date,
the Secretary shall publish an invitation for bids for the
purchase of the reserve.
‘‘(5) Not later than nine months after the effective date,
the Secretary shall accept the highest responsible offer for
purchase of the interest of the United States in Naval Petro-
leum Reserve Numbered 1 that meets or exceeds the mini-
mum acceptable price determined under paragraph (1).
‘‘(d) FUTURE LIABILITIES.—The United States shall
hold harmless and fully indemnify the purchaser of the in-
terest of the United States in Naval Petroleum Reserve
541
Numbered 1 from and against any claim or liability as
a result of ownership in the reserve by the United States.
‘‘(e) TREATMENT OF STATE OF CALIFORNIA CLAIM.—
After deducting the costs incurred to conduct the sale of
Naval Petroleum Reserve Numbered 1 under this section,
seven percent of the remaining proceeds from the sale of the
reserve shall be paid to the State of California, subject to
the conditions that—
‘‘(1) the State credit the payment to the Supple-
mental Benefits Maintenance Account within the
Teachers’ Retirement Fund; and
‘‘(2) all claims against the United States by the
State and the Teachers’ Retirement Fund are released
with respect to production and proceeds of sale from
the reserve.
‘‘(f) PRODUCTION ALLOCATION
FOR SALE.—(1) As
part of the contract for purchase of Naval Petroleum Re-
serve Numbered 1, the purchaser of the interest of the United
States in the reserve shall agree to make up to 25 percent
of the purchaser’s share of annual petroleum production
from the purchased lands available for sale to small refiners,
which do not have their own adequate sources of supply of
petroleum, for processing or use only in their own refineries.
None of the reserved production sold to small refiners may
be resold in kind. The purchaser of the reserve may reduce
542
the quantity of petroleum reserved under this subsection in
the event of an insufficient number of qualified bids. The
seller of this petroleum production has the right to refuse
bids that are less than the prevailing market price of com-
parable oil.
‘‘(2) The purchaser of the reserve shall also agree to
ensure that the terms of every sale of the purchaser’s share
of annual petroleum production from the purchased lands
shall be so structured as to give full and equal opportunity
for the acquisition of petroleum by all interested persons,
including major and independent oil producers and refiners
alike.
‘‘(g) MAINTAINING ELK HILLS UNIT PRODUCTION.—
Until the sale of Naval Petroleum Reserve Numbered 1 is
completed under this section, the Secretary shall continue
to produce the reserve at the maximum daily oil or gas rate
from a reservoir, which will permit maximum economic de-
velopment of the reservoir consistent with sound oil field
engineering practices in accordance with section 3 of the
unit plan contract. The definition of maximum efficient
rate in section 7420(6) of this title shall not apply to the
reserve.
‘‘(h) EFFECT ON EXISTING CONTRACTS.—(1) In the
case of any contract, in effect on the effective date, for the
purchase of production from any part of the United States’
543
share of Naval Petroleum Reserve Numbered 1, the sale of
the interest of the United States in the reserve shall be sub-
ject to the contract for a period of three months after the
closing date of the sale or until termination of the contract,
whichever occurs first. The term of any contract entered
into after the effective date for the purchase of such produc-
tion shall not exceed the anticipated closing date for the
sale of the reserve.
‘‘(2) The Secretary shall exercise the termination pro-
cedures provided in the contract between the United States
and Bechtel Petroleum Operation, Inc., Contract Number
DE–ACO1–85FE60520 so that the contract terminates not
later than the date of closing of the sale of Naval Petroleum
Reserve Numbered 1 under subsection (c).
‘‘(3) The Secretary shall exercise the termination pro-
cedures provided in the unit plan contract so that the unit
plan contract terminates not later than the date of closing
of the sale of reserve under subsection (c).
‘‘(i) EFFECT ON ANTITRUST LAWS.—Nothing in this
section shall be construed to alter the application of the
antitrust laws of the United States to the purchaser of
Naval Petroleum Reserve Numbered 1 or to the lands in
the reserve subject to sale under this section upon the com-
pletion of the sale.
544
‘‘(j) PRESERVATION OF PRIVATE RIGHT, TITLE, AND
INTEREST.—Nothing in this section shall be construed to
adversely affect the ownership interest of any other entity
having any right, title, and interest in and to lands within
the boundaries of Naval Petroleum Reserve Numbered 1 and
which are subject to the unit plan contract.
‘‘(k) CONGRESSIONAL NOTIFICATION.—Section 7431 of
this title shall not apply to the sale of Naval Petroleum
Reserve Numbered 1 under this section. However, the Sec-
retary may not enter into a contract for the sale of the re-
serve until the end of the 31-day period beginning on the
date on which the Secretary notifies the Committee on
Armed Services of the Senate and the Committee on Na-
tional Security and the Committee on Commerce of the
House of Representatives of the proposed sale.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by inserting after
the item relating to section 7421 the following new item:
‘‘7421a. Sale of Naval Petroleum Reserve Numbered 1 (Elk Hills).’’.
SEC. 3404. STUDY REGARDING FUTURE OF NAVAL PETRO-
LEUM RESERVES (OTHER THAN NAVAL PE-
TROLEUM RESERVE NUMBERED 1).
(a) STUDY REQUIRED.—The Secretary of Energy shall
conduct a study to determine which of the following options
regarding the naval petroleum reserves represents the most
cost-effective option for the United States:
545
(1) Retention and operation of the naval petro-
leum reserves by the Secretary under chapter 641 of
title 10, United States Code.
(2) Transfer of all or a part of the naval petro-
leum reserves to the jurisdiction of another Federal
agency.
(3) Lease of the naval petroleum reserves.
(4) Sale of the interest of the United States in
the naval petroleum reserves.
(b) CONDUCT OF STUDY.—The Secretary shall retain
an independent petroleum consultant to conduct the study.
(c) CONSIDERATIONS UNDER STUDY.—An examina-
tion of the benefits to be derived by the United States from
the sale of the naval petroleum reserves shall include an
assessment and estimate, in a manner consistent with com-
mercial practices, of the fair market value of the interest
of the United States in the naval petroleum reserves. An
examination of the benefits to be derived by the United
States from the lease of the naval petroleum reserves shall
consider full exploration, development, and production of
petroleum products in the naval petroleum reserves, with
a royalty payment to the United States.
(d) REPORT REGARDING STUDY.—Not later than De-
cember 31, 1995, the Secretary shall submit to Congress a
report describing the results of the study and containing
546
such recommendations as the Secretary considers necessary
to implement the most cost-effective option identified in the
study.
(e) NAVAL PETROLEUM RESERVES DEFINED.—For
purposes of this section, the term ‘‘naval petroleum re-
serves’’ has the meaning given that term in section 7420(2)
of title 10, United States Code, except that such term does
not include Naval Petroleum Reserve Numbered 1.
TITLE XXXV—PANAMA CANAL
COMMISSION
Subtitle A—Authorization of
Appropriations
SEC. 3501. SHORT TITLE.
This subtitle may be cited as the ‘‘Panama Canal
Commission Authorization Act for Fiscal Year 1996’’.
SEC. 3502. AUTHORIZATION OF EXPENDITURES.
(a) IN GENERAL.—Subject to subsection (b), the Pan-
ama Canal Commission is authorized to make such expend-
itures within the limits of funds and borrowing authority
available to it in accordance with law, and to make such
contracts and commitments without regard to fiscal year
limitations, as may be necessary under the Panama Canal
Act of 1979 (22 U.S.C. 3601 et seq.) for the operation,
maintenance, and improvement of the Panama Canal for
fiscal year 1996.
547
(b) LIMITATIONS.—For fiscal year 1996, the Panama
Canal Commission may expend from funds in the Panama
Canal Revolving Fund not more than $50,741,000 for ad-
ministrative expenses, of which not more than—
(1) $11,000 may be used for official reception
and representation expenses of the Supervisory Board
of the Commission;
(2) $5,000 may be used for official reception and
representation expenses of the Secretary of the Com-
mission; and
(3) $30,000 may be used for official reception
and representation expenses of the Administrator of
the Commission.
(c) REPLACEMENT VEHICLES.—Funds available to the
Panama Canal Commission shall be available for the pur-
chase of not to exceed 38 passenger motor vehicles built in
the United States (including large heavy-duty vehicles to
be used to transport Commission personnel across the isth-
mus of Panama). A vehicle may be purchased with such
funds only as necessary to replace another passenger motor
vehicle of the Commission.
SEC. 3503. EXPENDITURES IN ACCORDANCE WITH OTHER
LAWS.
Expenditures authorized under this subtitle may be
made only in accordance with the Panama Canal Treaties
548
of 1977 and any law of the United States implementing
those treaties.
Subtitle B—Reconstitution of Com-
mission as Government Corpora-
tion
SEC. 3521. SHORT TITLE.
This subtitle may be cited as the ‘‘Panama Canal
Amendments Act of 1995’’.
SEC. 3522. RECONSTITUTION OF COMMISSION AS GOVERN-
MENT CORPORATION.
Section 1101 of the Panama Canal Act of 1979 (22
U.S.C. 3611) is amended to read as follows:
‘‘ESTABLISHMENT, PURPOSES, OFFICES, AND RESIDENCE
OF THE COMMISSION
‘‘SEC. 1101. (a) For the purposes of managing, operat-
ing, and maintaining the Panama Canal and its com-
plementary works, installations and equipment, and of con-
ducting operations incident thereto, in accordance with the
Panama Canal Treaty of 1977 and related agreements, the
Panama Canal Commission (hereinafter in this Act re-
ferred to as the ‘Commission’) is established as a wholly
owned government corporation (as that term is used in
chapter 91 of title 31, United States Code) within the execu-
tive branch of the Government of the United States. The
authority of the President with respect to the Commission
shall be exercised through the Secretary of Defense.
549
‘‘(b) The principal office of the Commission shall be
located in the Republic of Panama in one of the areas made
available for use of the United States under the Panama
Canal Treaty of 1977 and related agreements, but the Com-
mission may establish branch offices in such other places
as it deems necessary or appropriate for the conduct of its
business. Within the meaning of the laws of the United
States relating to venue in civil actions, the Commission
is an inhabitant and resident of the District of Columbia
and the eastern judicial district of Louisiana.’’.
SEC. 3523. SUPERVISORY BOARD.
Section 1102 of the Panama Canal Act of 1979 (22
U.S.C. 3612) is amended by striking so much as precedes
subsection (b) and inserting the following:
‘‘SUPERVISORY BOARD
‘‘SEC. 1102. (a) The Commission shall be supervised
by a Board composed of nine members, one of whom shall
be the Secretary of Defense or an officer of the Department
of Defense designated by the Secretary. Not less than five
members of the Board shall be nationals of the United
States and the remaining members of the Board shall be
nationals of the Republic of Panama. Three members of the
Board who are nationals of the United States shall hold
no other office in, and shall not be employed by, the Govern-
ment of the United States, and shall be chosen for the inde-
pendent perspective they can bring to the Commission’s af-
550
fairs. Members of the Board who are nationals of the United
States shall cast their votes as directed by the Secretary
of Defense or a designee of the Secretary of Defense.’’.
SEC. 3524. INTERNATIONAL ADVISORS.
Section 1102 of the Panama Canal Act of 1979 (22
U.S.C. 3612) is amended by adding at the end the following
new subsection:
‘‘(d)(1) In order to enhance the prestige of the Commis-
sion in the world shipping community and allow for the
exchange of varied perspectives between the Board and dis-
tinguished international guests in the important delibera-
tions of the Commission, the Government of the United
States and the Republic of Panama may each invite to at-
tend meetings of the Board, as a designated international
advisor to the Board, one individual chosen for the inde-
pendent perspective that individual can bring to the Com-
mission’s affairs, and who—
‘‘(A) is not a citizen of Panama;
‘‘(B) does not represent any user or customer of
the Panama Canal, or any particular interest group
or nation; and
‘‘(C) does not have any financial interest which
could constitute an actual or apparent conflict with
regard to the relationship of the individual with the
Board of the Commission.
551
‘‘(2) Such designated international advisors may be
compensated by the Commission in the same manner and
under the same circumstances as apply under subsection
(b) with regard to members of the Board. Such designated
international advisors shall have no vote on matters pend-
ing before the Board.’’.
SEC. 3525. GENERAL AND SPECIFIC POWERS OF COMMIS-
SION.
The Panama Canal Act of 1979 (22 U.S.C. 3601 et
seq.) is amended by inserting after section 1102 the follow-
ing new sections:
‘‘GENERAL POWERS OF THE COMMISSION
‘‘SEC. 1102a. (a) The Commission, subject to the Pan-
ama Canal Treaty of 1977 and related agreements, and to
chapter 91 of title 31, United States Code, popularly known
as the Government Corporation Control Act—
‘‘(1) may adopt, alter, and use a corporate seal,
which shall be judicially noticed;
‘‘(2) may by action of the Board of Directors
adopt, amend, and repeal bylaws governing the con-
duct of its general business and the performance of the
powers and duties granted to or imposed upon it by
law;
‘‘(3) may sue and be sued in its corporate name,
except that—
552
‘‘(A) its amenability to suit is limited by
Article VIII of the Panama Canal Treaty of
1977, section 1401 of this Act, and otherwise by
law;
‘‘(B) an attachment, garnishment, or simi-
lar process may not be issued against salaries or
other moneys owed by the Commission to its em-
ployees except as provided by section 5520a of
title 5, United States Code, and section 459, 461,
and 462 of the Social Security Act (42 U.S.C.
659, 661, 662), or as otherwise specifically au-
thorized by the laws of the United States; and
‘‘(C) it is exempt from the payment of in-
terest on claims and judgments;
‘‘(4) may enter into contracts, leases, agreements,
or other transactions; and
‘‘(5) may determine the character of, and neces-
sity for, its obligations and expenditures and the
manner in which they shall be incurred, allowed, and
paid, and may incur, allow, and pay them, subject to
pertinent provisions of law generally applicable to
Government corporations.
‘‘(b) The Commission shall have the priority of the
Government of the United States in the payment of debts
out of bankrupt estates.
553
‘‘SPECIFIC POWERS OF COMMISSION
‘‘SEC. 1102b. (a) Subject to the Panama Canal Treaty
of 1977 and related agreements, and to chapter 91 of title
31, United States Code, popularly known as the Govern-
ment Corporation Control Act, the Commission may—
‘‘(1) manage, operate, and maintain the Pan-
ama Canal;
‘‘(2) construct or acquire, establish, maintain,
and operate docks, wharves, piers, shoreline facilities,
shops, yards, marine railways, salvage and towing fa-
cilities, fuel-handling facilities, motor transportation
facilities, power systems, water systems, a telephone
system, construction facilities, living quarters and
other buildings, warehouses, storehouses, a printing
plant, and manufacturing, processing, or service fa-
cilities in connection therewith, recreational facilities,
and other activities, facilities, and appurtenances
necessary and appropriate for the accomplishment of
the purposes of this Act;
‘‘(3) use the United States mails in the same
manner and under the same conditions as the execu-
tive departments of the Federal Government; and
‘‘(4) take such actions as are necessary or appro-
priate to carry out the powers specifically conferred
upon it.’’.
554
SEC. 3526. CONGRESSIONAL REVIEW OF BUDGET.
Section 1302 of the Panama Canal Act of 1979 (22
U.S.C. 3712) is amended—
(1) in subsection (c)(1) by striking ‘‘and subject
to paragraph (2)’’;
(2) by striking paragraph (2);
(3) by redesignating paragraph (3) as para-
graph (2); and
(4) by amending subsection (e) to read as fol-
lows:
‘‘(e) In accordance with section 9104 of title 31, United
States Code, the Congress shall review the annual budget
of the Commission.’’.
SEC. 3527. AUDITS.
Section 1313 of the Panama Canal Act of 1979 (22
U.S.C. 3723) is amended—
(1) by striking the heading for the section and
inserting the following:
‘‘AUDITS’’;
(2) in subsection (a) by striking ‘‘Financial
transactions’’ and inserting ‘‘Subject to subsection
(d), financial transactions’’;
(3) in subsection (b) in the first sentence by
striking ‘‘The Comptroller General’’ and inserting
‘‘Subject to subsection (d), the Comptroller General’’;
and
555
(4) by adding at the end the following new sub-
sections:
‘‘(d) At the discretion of the Board provided for in sec-
tion 1102, the Commission may hire independent auditors
to perform, in lieu of the Comptroller General, the audit
and reporting functions prescribed in subsections (a) and
(b).
‘‘(e) In addition to auditing the financial statements
of the Commission, the independent auditor shall, in ac-
cordance with standards for an examination of a financial
forecast established by the American Institute of Certified
Public Accountants, examine and report on the Commis-
sion’s financial forecast that it will be in a position to meet
its financial liabilities on December 31, 1999.’’.
SEC. 3528. PRESCRIPTION OF MEASUREMENT RULES AND
RATES OF TOLLS.
Section 1601 of the Panama Canal Act of 1979 (22
U.S.C. 3791) is amended to read as follows:
‘‘PRESCRIPTION OF MEASUREMENT RULES AND RATES OF
TOLLS
‘‘SEC. 1601. The Commission may, subject to the pro-
visions of this Act, prescribe and from time to time
change—
‘‘(1) the rules for the measurement of vessels for
the Panama Canal; and
556
‘‘(2) the tolls that shall be levied for use of the
Panama Canal.’’.
SEC. 3529. PROCEDURES FOR CHANGES IN RULES OF MEAS-
UREMENT AND RATES OF TOLLS.
Section 1604 of the Panama Canal Act of 1979 (22
U.S.C. 3794) is amended—
(1) in subsection (a) in the first sentence by
striking ‘‘1601(a)’’ and inserting ‘‘1601’’;
(2) by amending subsection (c) to read as fol-
lows:
‘‘(c) After the proceedings have been conducted pursu-
ant to subsections (a) and (b) of this section, the Commis-
sion may change the rules of measurement or rates of tolls,
as the case may be. The Commission shall, however, publish
notice of such change in the Federal Register not less than
30 days before the effective date of the change.’’; and
(3) by striking subsections (d) and (e) and redes-
ignating subsection (f) as subsection (d).
SEC. 3530. MISCELLANEOUS TECHNICAL AMENDMENTS.
The Panama Canal Act of 1979 is amended—
(1) in section 1205 (22 U.S.C. 3645) in the last
sentence by striking ‘‘appropriation’’ and inserting
‘‘fund’’;
557
(2) in section 1303 (22 U.S.C. 3713) by striking
‘‘The authority of this section may not be used for ad-
ministrative expenses.’’;
(3) in section 1321(d) (22 U.S.C. 3731(d)) in the
second sentence by striking ‘‘appropriations or’’;
(4) in section 1401(c) (22 U.S.C. 3761(c)) by
striking ‘‘appropriated for or’’;
(5) in section 1415 (22 U.S.C. 3775) by striking
‘‘appropriated or’’; and
(6) in section 1416 (22 U.S.C. 3776) in the third
sentence by striking ‘‘appropriated or’’.
SEC. 3531. CONFORMING AMENDMENT TO TITLE 31, UNITED
STATES CODE.
Section 9101(3) of title 31, United States Code, is
amended by adding at the end the following:
‘‘(P) the Panama Canal Commission.’’.
Amend the title so as to read: ‘‘A bill to authorize
appropriations for fiscal year 1996 for military activities
of the Department of Defense, for military construction,
and for defense activities of the Department of Energy,
to prescribe personnel strengths for such fiscal year for
the Armed Forces, and for other purposes.’’.