10 U.S.C. § 8730 — Disposition of products

(a) In running the naval petroleum reserves^* under this chapter, the Secretary^* must use, store, or sell the petroleum^* produced from the reserves and from lands covered by joint, unit, or other cooperative plans.

(b) (1) Despite any other law, and subject to paragraph (2), the Secretary must sell the United States' share of petroleum at a public sale to the highest qualified bidder. The Secretary decides the timing, amounts, and advertising for each sale, and does not have to follow federal, state, or local rules that would otherwise control how petroleum products are sold or allocated. Each sale can last no more than one year, except a natural gas sale can last longer. (2) The Secretary may not sell any of the United States' share of petroleum from Naval Petroleum Reserves Numbered 2 and 3 below the current market price of comparable petroleum in the same area, as the Secretary estimates that price. (3) For this rule, "petroleum" does not include natural gas liquids.

(c) The Secretary must never award a contract that would let any one person control, directly or indirectly, more than 20 percent of the estimated annual United States share of petroleum from Naval Petroleum Reserve Numbered 1.

(d) Every sale proposal must give all interested buyers — large and small oil producers and refiners alike — a full and equal chance to buy. If the Secretary, after consulting the Secretary of the Interior, decides it serves the public interest, the Secretary must set aside part of the produced petroleum for small refiners who don't have their own reliable supply. That set-aside is subject to these rules: (1) none of it may be resold unchanged; (2) it must be sold at no less than the prevailing local market price of comparable petroleum; (3) the set-aside cannot be more than 25 percent of the estimated annual United States share from all the producing naval petroleum reserves; and (4) despite subsection (b), the Secretary may, if the Secretary thinks it serves the public interest, divide this petroleum among the small refiners without competitive bidding, as long as the price is at least the prevailing local market price.

(e) Petroleum produced from the naval petroleum reserves is subject to all the limits and licensing rules of the Export Administration Act of 1979 (50 U.S.C. 4601 and following) — except petroleum exchanged in similar quantities, for shipping convenience or increased efficiency, with persons or the government of an adjacent foreign state, or petroleum temporarily exported for shipping convenience or increased efficiency across parts of an adjacent foreign state and then brought back into the United States. Before any covered petroleum can be exported under that 1979 Act's rules, the President must make a public finding that the exports will not reduce the total amount or quality of petroleum available to the United States, that the exports serve the national interest, and that they follow the Export Administration Act of 1979.

(f) While production continues under the extension authorized by section 8722(c), the consultation and approval requirements in section 8731(a)(3) do not apply.

(g) (1) Before issuing any rules, development plans or amendments, or contracts and operating agreements about developing, producing, or selling reserve petroleum, the Secretary must consult with and carefully consider the Attorney General's views on how it might affect competition. (2) No contract or operating agreement under this chapter can be made, issued, or signed until at least 15 days after the Secretary notifies the Attorney General about it, giving the Attorney General whatever information is needed to judge whether the deal might violate antitrust law. If, within that 15-day period, the Attorney General warns the Secretary that the deal might create or maintain an antitrust problem, the Secretary cannot go ahead with it.

(h) Nothing in this chapter gives anyone immunity from civil or criminal antitrust liability, or a defense against an antitrust claim.

(i) In this section, "antitrust laws" means: (1) the Sherman Act (15 U.S.C. 1 and following); (2) the Clayton Act (15 U.S.C. 12 and following); (3) the Federal Trade Commission Act (15 U.S.C. 41 and following); (4) sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9); and (5) sections 2, 3, and 4 of the 1936 Act commonly called the "Robinson-Patman Act" (15 U.S.C. 13a, 13b, and 21a).

(j) Any pipeline that accepts, carries, or transports petroleum from Naval Petroleum Reserves Numbered 1 or 3 must carry that petroleum without discrimination, at reasonable rates, acting as a common carrier. Every contract the Secretary signs to sell reserve petroleum must include this same rule if the buyer controls, or operates, a company running a pipeline that carries reserve petroleum, or is itself a pipeline operator. The Secretary may issue rules to enforce this, and the Secretary (or the Secretary of the Interior, where that authority applies) may declare forfeit any contract, operating agreement, right-of-way, permit, or easement held by anyone who breaks such a rule. This subsection does not apply to a natural gas pipeline regulated under the Natural Gas Act, or to a public utility regulated by a state or municipal agency that sets natural gas rates for consumers.

(k) (1) The President may direct the Secretary to (A) place all or part of the United States' share of reserve petroleum into the Strategic Petroleum Reserve, as allowed under sections 151 through 166 of the Energy Policy and Conservation Act, or (B) exchange that petroleum, directly or indirectly, for other petroleum to go into the Strategic Petroleum Reserve, on whatever terms and by whatever method the Secretary decides is appropriate, without having to follow the usual federal procurement laws and rules. (2) The reporting requirement in section 159 of the Energy Policy and Conservation Act does not apply to actions taken under this subsection.

(l) (1) Despite any other part of this chapter (but subject to paragraph (2)), while petroleum production is authorized from Naval Petroleum Reserves Numbered 1, 2, or 3, the Secretary, if the Secretary of Defense asks, may give part of the United States' share of that petroleum to the Department of Defense to use, exchange, or sell so it can meet its fuel needs. (2) Petroleum can go to the Department of Defense either directly or through an exchange the Secretary considers appropriate. The Secretary of Defense must reimburse the Secretary a fair market value for the petroleum provided. (3) Any exchange made under this subsection can skip the usual federal procurement laws and rules. (4) Paragraph (1) does not apply to petroleum already set aside for small refiners under subsection (d), or already placed in the Strategic Petroleum Reserve under subsection (k).