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On the other hand, you want to have a mechanism that is responsive to the needs of a crisis situation and, frankly, I think it is important to recognize that a lot of the things that the President might do under this bill could be unpopular with certain sectors of the economy. I think that it is important that a certain amount of caution and certain amount of inertia be built into this system so that in the name of dealing with some special interests we don't have actions taken on the part of the President overturned when that program really is in the overall interest of the Nation.

Mr. BINGHAM. Well, I suppose it is not reasonable to expect a representative of the executive branch to be enthusiastic about providing congressional veto over Executive action, but I think that the House is very likely to react somewhat the same as the Senate.


Let me ask you a question, if I may, about sections 1312 and 1313 which grant the President authority to authorize voluntary agreements by persons engaged in petroleum commerce with immunity to the antitrust laws.

The Emergency Petroleum Allocation Act of 1973 had certain safeguards with respect to such meetings and agreements which do not appear in these sections such as, for example, that representatives of the Antitrust Division of the Department of Justice should be present at any such meetings.

Are you familiar with that and would you care to comment as to why those weren't included in these proposals?

Mr. MONTGOMERY. Yes, I would.

I am familiar with that provision of the Allocation Act and we do function at FEA under that provision right now. We have since the act was passed. That provision really is a very unique and very limited provision which essentially says that no meeting of competitors in the industry at any level of the industry may be held unless it is held for the purpose of implementing the Allocation Act, and if it is held for that purpose it must be handled in a particular way with a representative of the Justice Department, a transcript, and so forth.

There is nothing in that provision that we take exception to. It is very, very limited. The immunity given by the provision is really limited to actions that would take place at that meeting and that meeting by definition has to be conducted at the instance of FEA with an FEA person there presiding, and so forth.

So we think that that is a satisfactory provision. It has served its purpose under the Allocation Act. But it is a very different matter from the provision that we have in section 1312 of the standby bill which envisages some form of antitrust immunity for competitors. of a particular kind where their cooperation, their joint action would be necessary to implement the international agreement. It is different in a number of respects. First of all the immunity is not only to immunize some actions taken at a meeting, but to allow them to move jointly to take what could be fairly elaborate actions to allocate crude oil, for example, in an emergency situation. In effect, this enables us to avoid having to have a kind of international allocation act.

In essence, during the embargo, the Allocation Act established a Federal authority and a mechanism for allocating crude oil and petroleum products. What we are envisioning now is that should we have another embargo and should it be required, we would have an allocation of oil internationally among nations without having any Government mechanism or at least the kind of in-depth comprehensive Government mechanism that we have on a domestic level. We would have the International Energy Agency, the IEA, and that would be the managing policymaking organ of this program, but the actual allocation and the mechanism for making this happen would be effected through the voluntary cooperation and action of the international oil companies.

If we were to answer your question, of why we don't have the very narrow safeguards of Justice Department representation at meetings, transcript and so forth, that are in the Allocation Act. I would say we really do in a much more elaborate way.

First of all, the provision in this bill provides that the participating parties must enter into an agreement and that agreement then governs everything they do. That agreement must be submitted to the Attorney General and to the Federal Trade Commission and we have constant involvement on the part of our antitrust agencies in the whole structure of the agreement. Mr. Goodwin here has been involved in the details of drafting this provision and perhaps he can elaborate on that.


Mr. GOODWIN. I might just add that the provision itself on its face contains certain requirements, including full notes or minutes of meetings and requirements such as that. And then we anticipate that any voluntary agreements which were entered into pursuant to this authority would follow the same pattern as voluntary agreements which are authorized by section 708 of the Defense Production Act, so that the kinds of protection and Justice Department review of various actions or proposed actions that currently exist under voluntary agreements under the Defense Production Act would be the same procedures that would be applied here.

One of the major reasons why there is a separate provision here rather than reliance on the Defense Production Act is simply our desire to pull together in this bill all the needed energy authorities for a 10-year period. The Defense Production Act expires this year so there is no certainty that section 708 of the Defense Production Act would be available for future voluntary agreements.

The administration, principally FEA, and the State Department have already gone through a procedure, working with the General Services Administration and the Justice Department, to promulgate a voluntary agreement under existing statutory authority of section 708 of the Defense Production Act and that agreement is currently being reviewed by the Justice Department for their approval. That particular agreement contains a number of safeguards of the types of

things that are mentioned here, including various stages of approvals by the Department of Justice.

We will be glad to send you a copy of the current draft of that agreement which is at the Justice Department for review and you can examine it and see the kinds of procedural protections that are built in, so that we are assured as much as practically possible that there are no predatory anticompetitive effects that result from the need to allocate petroleum internationally on a cooperative basis.

Mr. BINGHAM. Why shouldn't the minutes of some of these be available to the public as they are in other cases?

Mr. GOODWIN. Well, there is a very good reason for that. In certain circumstances when the international oil companies are meeting under the auspices of either the International Energy Agency or ourselves to develop an allocation plan, one of the thrust of the discussions would likely be the procedures and plans that best alleviate the problems cause by an embargo, and, to the extent possible, circumvent the restrictions that were imposed by oil producing countries.

To the extent that you make minutes and meetings public, you are operating in a fishbowl, which makes it impossible to take effective action to circumvent the embargo because, of course, members of the public include representatives of the various states which have imposed an embargo against you.

Mr. BINGHAM. If the agreements are to be subject to approval by the Attorney General, wouldn't that process be facilitated if he has the representative of the Antitrust Division present as provided in the other case?

Mr. GOODWIN. There is a difference between a requirement to that effect and an opportunity to be present. I certainly believe that any meeting should be open to the Attorney General, but whether or not in each and every circumstance he would feel it necessary to attend, will depend upon the agenda of the meeting and the subject matter under discussion.

Mr. MONTGOMERY. I would just say that I think the thrust of your question is shouldn't we have an express provision in here saying that at each meeting there at least may be a representative of the Attorney General if he wants to send one, and that certainly is perfectly all right.

The way this thing is structured, we do say in the statute, that full notes or minutes of any such meeting, conference, or communication shall be taken and deposited together with a copy of any agreement resulting therefrom with the President and the Attorney General, so we have the Attorney General getting a copy of the minutes and notes and everything.

We also say that the authorities granted in subsection (c) of this section shall be delegated only, first of all, to officials appointed by and with the consent and advice of the Senate; second, upon the condition that such official consult with the Attorney General and the Chairman of the FTC not less than 10 days before any request for a meeting, conference, communication, or agreement is made.

So there are straight forward and expressed requirements for keeping both the Attorney General and the Chairman of the Federal Trade Commission advised.

Now what is not expressly set out here is that they may attend meetings, but that would certainly be a satisfactory addition and it also is, as Mr. Goodwin was pointing out, a specific requirement in the voluntary agreement that we now have at the Justice Department, namely, the Justice Department be advised in advance of every meeting and have an opportunity to be represented.

Mr. BINGHAM. Well, I want to thank you on behalf of the subcommittee, Mr. Montgomery and Mr. Goodwin, for your participation today. It has been a very helpful hearing.

Thank you.

Mr. MONTGOMERY. Thank you, sir.

[Whereupon, at 3:30 p.m. the subcommittee adjourned, subject to the call of the Chair.]







SEC. 1301. This title may be cited as the "Standby Energy Authorities of Act of 1975".


SEC. 1302. (a) The Congress hereby finds that

(1) disruptions in the availability of imported or domestic energy supplies, particularly petroleum, pose a serious risk to national security, and the health and welfare of the American people;

(2) such energy shortages cause unemployment, inflation, and other severe economic dislocations and hardships and jeopardize the normal flow of interstate and foreign commerce;

(3) disruptions in the availability of imported petroleum supplies also have serious adverse effects upon other major oil consuming nations upon whose national security and economic well-being the national security and economic well-being of the United States in some measure depends, by virtue of mutual security arrangements and international trade and monetary relationships;

(4) because of the diversity of conditions, climate, and available fuel mix in different areas of the Nation, governmental responsibility for developing and enforcing appropriate authorities lies not only with the Federal Government, but with the States and with local government;

(5) the protection and fostering of competition and the prevention of anticompetitive practices and effects are vital during periods of energy shortages;

(6) existing legal authority and reliance upon voluntary programs to deal with shortage conditions on an emergency basis are inadequate to protect the public interests;

(7) new long-term standby legislative authority is needed to deal with conditions that may be created by disruptions in energy supplies and thereby to protect the American people and the economy from serious disruption and dislocation; and

(8) development of cooperative international programs to manage energy shortages will combat economic hardships and contribute to the national security of the United States and other oil-consuming nations.

(b) The purposes of this title are to grant specific standby authority to impose and end-use rationing and to reduce demand by regulating public and private consumption of energy, and to authorize certain other specific temporary emergency actions to be exercised, to assure that the essential energy needs of the United States will be met in a manner which, to the fullest extent practicable:

(1) enables the Federal Government to fulfill its responsibilities under the Agreement or an International Energy program.

(2) is consistent with existing national commitments to protect and improve the environment;

(3) minimizes any adverse impact on employment;


79-124 O 764

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