higher energy sources should such a price cut occur. This cost must be compared, however, to the advantages of reduced dependence on and vulnerability to OPEC.

In conclusion, the 18-nation international energy program is in place, and its agency has shown considerable solidarity since its founding last November. Various issues still are pending within IEA, but there is a growing confidence in IEA's ability to defend against an embargo, though most countries including the United States will still require further legislation and more investment in security stocks to be fully effective.

LEGISLATION TO IMPLEMENT THE IEP

In your letter of invitation to testify, the committee asked that I address three specific questions related to title XIII of H.R. 2650, the administration's proposed Standby Energy Authorities Act.

The first issue deals with section 1313 and the limited antitrust immunity contained therein. Essentially, the bill contains provisions similar to those which are already contained in the Defense Production Act of 1950, relating to voluntary agreements. As you know, it is our intention that, in order to allocate oil internationally in accordance with the terms of the IEP, the most appropriate procedure for doing so is through the voluntary cooperation of the oil companies rather than through a governmentally mandated, international allocation system.

The cooperation of the oil companies in implementing the IEP allocation system would not be possible, however, without a limited immunity from the antitrust laws.

For example, in insuring that each country receives its appropriate share of oil, it might be necessary for international oil companies to exchange data on availability of supplies, or adjust tanker movements to insure the proper distribution of available supplies. I might just change the verb from "might be." It most certainly will be. That is the essence of the program.

Such activities might ordinarily raise antitrust questions. The concept behind the provisions in the administration's bill is that such activity would be necessary in emergency situations, but should be tightly controlled through Government supervision. Thus, the bill as drafted contains a number of requirements which will provide adequate supervision and review by the Department of Justice with respect to activities undertaken under the authority of the bill. A limited antitrust immunity would be provided with respect to such activities. The second question which I was asked specifically to address concerns section 1306 (a) (2) authorizing the President to control prices as a corollary to his allocation authority.

This authority is very similar to the price control authority currently contained in the Emergency Petroleum Allocation Act. It could only be used in periods of emergency, that is, when the very strict criteria contained in section 1302 (c) have been met. The price control authority contained in section 1306 could not be used to establish an oil price floor for two reasons.

First, the section 1306 authority is limited to emergency situations, that is, where the United States has been embargoed or where our supply of oil has been disrupted for other reasons.

Second, the concept of a price floor involves the ability of the Government to impose a tariff or fee in order to keep the domestic selling price of imported oil from falling below a certain level, should the world price drop precipitously. The price control authority contained in section 1306 would not authorize the establishment of fees or tariffs, but would only authorize imposition of controls to see that prices did not exceed certain levels, that is, price ceilings rather than a price floor.

The third question that I was asked to address concerns the authority for allocating oil internationally contained in section 1311 of the bill. As I have already noted, we plan to accomplish the international allocation goals of the IEP through the voluntary cooperation of the oil companies.

Should such voluntary cooperation fail, however, it is necessary to have the specific authority to mandate persons subject to U.S. jurisdiction to allocate oil in accordance with our obligations under the IEP.

The limitations on the scope of Presidential action with respect to international oil allocation are contained not in the statute, but in the IEP itself. That is to say, the statutory authorization grants authority only to the extent required to implement the IEP. Thus, the authority is clearly circumscribed and limited by the terms of that agreement, and the situations wherein the authority could be used are set forth in the agreement itself. In exercising these authorities, a Presidential determination would still be necessary.

Mr. Chairman, members of the committee, that completes my prepared statement. I would be happy to answer any questions you might have.

Thank you.

Mr. DIGGS. Thank you very much, Mr. Conant.

First of all, can section 1306 (a) (2) of H.R. 2650 be given as authority for the President to establish oil price floors domestically?

As you know, this section authorizes the President, "*** by rule, regulation, or order, to control the prices of petroleum."

STATEMENT OF JOSEPH BELL, ASSISTANT GENERAL COUNSEL FOR INTERNATIONAL CONSERVATION AND RESOURCE DEVELOPMENT, FEDERAL ENERGY ADMINISTRATION

Mr. BELL. I understand 1306 (a) (2), of course, is authority to allocate during an emergency period, as would occur under the ÏEP, and thus, it is limited by section 1302 of this section, which gives you this authority only during periods of actual emergency. During that period, of course, the problem is to set price ceilings which prevent prices from rising in the United States because of the shortage.

Once the embargo is ended, the IEP authority no longer exists, and there would be no authority under this section. So that, this section would not provide the kind of authority that would be required to establish a price floor to keep prices up over a long period of time. This is only authority during an emergency period to control prices, such as we have had under the Emergency Petroleum Allocation Act. Mr. DIGGS. Would you give us the citation, again, that will give the President the authority to establish an oil price floor?

Is it in existing law?

Mr. BELL. There is, in this title as such, no authority. Under section 232, at the moment

Mr. DIGGS. Of the existing act?

Mr. BELL. Of the Trade Expansion Act, the President could, of course, establish a system which would maintain prices in the United States at a particular level. That is under existing authority under section 232, and of course, as you know, that authority is now being looked at very closely by the House Ways and Means Committee. Its legislation, if adopted, would set up much more specific standards for the utilization of such authority.

Mr. DIGGS. So you do need new legislative authority to establish a price floor instead of seeking to use existing legislation, or to renew it? Mr. BELL. Well, let me say that if in fact section 232 were not amended, that authority could be used. In fact, the House has under consideration in the Ways and Means Committee legislation which would amend that authority very extensively. So that if there were no action whatsoever by the Congress, section 232 as it now stands would be available to establish some sort of floor if that were thought desirable.

Mr. DIGGS. All right. Well let's take the provision for waiver of antitrust laws-section 1313-for petroleum industry representatives who meet under the conditions in section 1312 of H.R. 2650. It is my understanding that provision is made in existing law in section 708 of the Defense Production Act, for such immunity if the President consults with and obtains the approval of the Attorney General.

If that is a correct interpretation, why has the administration therefore put forward new legislation rather than seeking to renew the authority under existing legislation?

Mr. BELL. Well, let me say you are correct that it would be possible for the President, and indeed we have already taken steps under section 708 of the Defense Production Act, to establish a voluntary agreement for the purpose of implementing the IEP. And the authority, this section is essentially drawn from that section and contains language which essentially tracks section 708, and I think it would be in fact possible for us to operate with present authority under section 708. I think, though, one should point out that section 708 too has been the subject of considerable scrutiny. Senate bill 622 has amended that section extensively and the House also has before it, before Chairman Dingel's subcommittee, legislation which would further modify it. Mr. DIGGS. Is there any Presidential authority requested in title 13 that is not already provided under existing law?

Mr. BELL. Well, yes.

Mr. DIGGS. Could you point it out to us?

Mr. BELL. Surely. First of all, if an emergency were to occur and it was necessary to limit prices, we would then need section 1306 authority if the Emergency Petroleum Allocation Act were not then in effect.

Currently we could do that through the Petroleum Allocation Act. If it were not in at that time we would need section 1306 authority. Second, to fill out our obligations we have provisions dealing with energy conservation plans in section 1307 which reflect certain planning obligations that we have.

There are other authorities in there that speak to particular questions, particular obligations which the United States may have under the IEP for which implementing legislation is needed. Much of what is there could be done at the moment pursuant to the Emergency Petroleum Allocation Act and the Defense Production Act. That is true.

Mr. CONANT. Mr. Chairman, I stand to be corrected, but I have the impression also, Mr. Bell, that one of the key provisions of the IEP agreement is to be able to respond not only when an emergency occurs, but in anticipation of an emergency. With the prospect of action being taken by a significant number of oil producing states, yet prior to the actual imposition of an embargo, it is an important aspect in the legislation we are now considering that the United States would be able to make the necessary commitments-legal and administrativebeforehand.

Mr. BELL. There is also authority that deals with exports and a number of other subjects that are specifically dealt with, and I would be glad to

Mr. DIGGS. Would you submit a fuller answer to the subcommittee after researching that matter?

Mr. BELL. Surely.

[The reply of the FEA follows:]

Question 1. What authorities does Title 13 of H.R. 2650 grant to the President which he does not already have under existing law?

Answer. Initially it should be noted that Title 13 is designed to give the President long-term (10 years) authority to take action in energy supply emergency situations. While some of the authorities contained in Title 13 already exist in present law, none of the current authorities is long-term in nature and, for the most part, they are insufficient for the purpose of adequately implementing the International Energy Program. The following is a selected list of the specific authorities contained in Title 13 and an analysis of existing statutory provisions in those areas:

1. CONTROL OVER STOCKS

Section 1304 of Title 13 would authorize the President to order private parties to maintain minimum inventories of petroleum in excess of normal business or operating requirements. This authority is necessary in order to insure that the provisions of the International Energy Program regarding minimum inventory levels can be fulfilled as well as to provide a clear basis for inventory controls should domestic allocation be necessary. With respect to existing law, no comparable authority exists, although limited inventory controls are permissible in the context of insuring the viability of the allocation program under the Emergency Petroleum Allocation Act.

2. FEDERAL ACTIONS TO INCREASE DOMESTIC PETROLEUM SUPPLIES

Section 1305 contains authority to take various actions to supplement domestic energy supplies. This authority does not exist under present law.

3. ALLOCATION AND RATIONING

Section 1306 provides authority to establish an allocation system, including price controls, and to promulgate regulations for the rationing of fuels. Although the Emergency Petroleum Allocation Act currently provides for allocation and price control authority, this authority is scheduled to expire on August 31, 1975, and, since it mandates allocation and price controls, is not appropriate as a standby authority in any event.

4. ENERGY CONSERVATION PLANS

Section 1307 authorizes the President to promulgate energy conservation plans in times of oil supply emergencies. No such authority exists under present law.

5. MATERIALS ALLOCATION

Section 1308 provides authority for the allocation of energy materials and facilities and for priority of performance under contracts with respect to energy research, development and production. Although similar authority exists in the Defense Production Act, the authority in that act relates principally to national defense requirements and could not be utilized in the broader context of insuring an increase in domestic energy supplies. Thus, section 1308 contains authorities not available under existing law.

6. INTERNATIONAL OIL ALLOCATION

Section 1311 would authorize the President to require United States' companies to allocate oil internationally if ordered by the President. Although the Trading With the Enemy Act and the Defense Production Act contain some authority to control certain business activities outside the United States, it is unclear whether such authority could be used to mandate the international allocation of oil. It is imperative that a clear and unambiguous authority exist so that the United States can be in a position to fulfill its obligations under the International Energy Program.

7. VOLUNTARY AGREEMENTS

Sections 1312 and 1313 relate mainly to voluntary agreements and antitrust immunity and are similar to authorities already existing under the Defense Production Act. Since that Act is scheduled to expire at the end of June this year, independent long-term authority with respect to this issue is appropriate.

8. EXCHANGE OF INFORMATION

Section 1315 would allow the executive branch to provide information and data to other countries in accordance with the requirements of the international energy program. Without the authority of section 1315, United States' authority to provide unaggregated data in the limited circumstances where it is required by the IEP is limited.

9. EXPORT'S

Section 1316 provides authority to restrict exports of energy related items. The Export Administration Act of 1969 authorizes export controls where there has been an excessive drain of scarce resources which causes a serious inflationary impact. The test for imposition of controls under section 1313 is different than that under the Export Administration Act in that, once the requisite finding was made that an energy supply shortfall existed or was impending, the President would have discretion to impose controls on exports. Under the Export Administration Act, however, it could be argued that such controls could not be imposed unless there were an actual shortage of the commodity itself, which might not be the case in the initial stages of a supply cutoff or embargo.

Question 2. What authorities does the administration propose with respect to establishment of a floor price for imported oil?

Answer. Title 13 of the proposed Energy Independence Act does not contain any authority with respect to establishment of a floor price for oil. Title 9 of the bill, the "Energy Development Security Act of 1975" specifically deals with the question of a floor price. The purpose of title 9 is to authorize and direct the President to adopt appropriate measures to prevent the prices of imported petroleum as marketed domestically from falling to such levels that continued importation and sale at such price levels would substantially deter the development and exploitation of domestic, petroleum resources, or would threaten to cause a substantial increase in petroleum consumption. Title 9 would authorize the imposition of import restrictions including tariffs, quotas, and variable fees to accomplish the purpose of the title.

Mr. CONANT. We also gave you a copy of the IEP agreement itself, Mr. Chairman. It is not always readily available.

Mr. DIGGS. How lengthy is that agreement?

Mr. CONANT. Oh, it is about 20 pages, I would guess.