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given a share of that business. So we roughly maintained the status quo throughout that time period.

Mr. BINGHAM. If it were only for petroleum products wouldn't this authority be adequate without the addition of the standby authority?

Mr. MONTGOMERY. Well, sir, if the Export Administration Act were extended beyond 1976 in its present form, it arguably might be adequate. The problems are those that we raised in the statement that first of all the trigger mechanism that is provided for there is really not at all relevant to the kind of emergency that we envision taking place and with respect to which the standby bill is directed.

The standby bill is a piece of legislation directed toward a major energy shortage of national dimensions, something that is caused by an embargo or something of that magnitude. The finding required by the President under the standby bill is a very tough finding in our opinion. It could only be made if there were a serious across-theboard interpretation of imports. But it doesn't have any particular focus on one product.

For example, we might very well, for some strange reason, have plenty of one particular product and yet we would under that bill have authority to control exports generally. Now, the Export Administration Act, the trigger there focuses on the particular product and on the existence of a severe drain, presumably something that has happened over a period of time. I think that part of our problem with that test is that it envisions some period of observation of a level of exports, a determination by the Department of Commerce that the level of exports that it is seeing happening, experiencing, is a severe drain and that it has an inflationary impact.

Absent a congressional finding such as we had in the Allocation Act which made it reasonably easier for Commerce Department last time to find that there was a short supply situation, it is not at all clear to us that the Commerce Department under the Export Administration Act would be able to say that the drain was severe and that it had an inflationary impact.

We might want to control imports to prevent that very drain from happening and that very inflationary impact from happening.


Mr. BINGHAM. Is it your thought that the controls envisaged under section 1316 would be implemented through your agency or through the Trade Division of the Department of Commerce?

Mr. MONTGOMERY. t is our thought that the bill gives the authority to the President. It specifically, in subsection (b) recognizes that the President may direct the Secretary of Commerce to impose restrictions pursuant to the Export Administration Act and we really don't have a thought as to what he would do where the legislation is designed to give him flexibility.

FEA might not even exist at that point. In fact, FEA is a limited-life agency so there is no interest here in the kind of transferring the authority from Commerce to FEA. It is simply that we are dealing with a package of authorities here in an omnibus bill, all of which to my knowledge-there may be an exception somewhere-are to be given to the President. So it is even envisioned that should a

renewed emergency arise, at that time, depending on which of the authorities he was implementing and what the organizational situation was in the executive branch, he would have the flexibility to delegate the authority to the appropriate agency.


Mr. BINGHAM. In view of the fact that we have substantial coal exports and they contribute mightily to our exports and therefore help achieve a favorable balance of trade, what is the need for including the authority of controlling exports of coal?

Mr. MONTGOMERY. I would say that the need is strictly a need in our view to provide a tool that can be used flexibly in any eventuality. It is correct that today we have plenty of coal and we do export substantial quantities of coal. On the other hand, this last winter we went through a time period during which a major coal strike looked very likely and we were under a great deal of pressure to consider at least restricting exports.

I think, from the FEA standpoint, we see the Nation on the verge of a major shift to coal. We see more and more emphasis on coal in terms of power generation and we think that this is the only way we are ever going to achieve any relative degree of security from the kind of oil interruption we are talking about. So somewhere in the 5- to 10-year range it may very well be that coal is in short supply and that in the event of an interruption of energy imports of some kind or another or a major crisis, would need to restrict coal exports. I agree under present facts it doesn't seem very likely.


Mr. BINGHAM. It seems to me that in some respects your triggering conditions may be too tough. For example, might there not be a time-might it actually not now be desirable to have export controls on scarce energy producing equipment which is in short supply in this country and which we need very badly to develop our energy resources?

Mr. MONTGOMERY. It is true that some energy-related equipment is in short supply. We have, along with the Commerce Department, been monitoring for a number of months the situation with regard to such things as rigs and tubular goods, and I think it is our position and I hesitate to speak completely without qualification because, you know, the Commerce Department is a major figure in this and they would have to give their own answer, but certainly I think it is FEA's position that the levels of exports of the materials involved do not at the moment constitute a serious impairment of our capability to conduct the kind of exploration activities and increased production that we are trying to foster.

We think that if the levels of exports of those products were to increase substantially that it would probably be necessary to look carefully at direct export controls. But we think we have the authority right now to deal with that kind of a problem, because that again is the kind of a problem where you have a continuous drain of some critical material and it seems to fall almost squarely within the scope of the Export Administration Act.

Mr. BINGHAM. It does? Could you refer me to a section on that? Mr. MONTGOMERY. With the assistance of my expert, I will. Section 3, subparagraph 2.

Mr. BINGHAM. Might "excessive drain of scarce materials" cover the matter of equipment exports?

Mr. MONTGOMERY. Yes, sir.

Mr. BINGHAM. Well, it seems to me that you are in a slightly odd posture here, that you are suggesting a permanent, long-range standby authority which is triggered really only in a virtual state of crisis. Mr. MONTGOMERY. Yes, sir.

Mr. BINGHAM. And you rely for what may be very necessary authority under less stringent conditions on a bill which, as you point out, is not by an means satisfactory. You are not proposing a change, in other words, in the authority to meet something less than crisis conditions.

Mr. MONTGOMERY. Well, let me put it this way: We are not at this time. Now, I frankly confess to you that in preparing for this hearing I was focusing on the standby bill, the questions of what authorities are we asking for, why are we asking for them, and I didn't do the job I might have done in analyzing our present authority under the Export Administration Act to deal with the present problem.

It is my belief on the basis of everything I have observed and the discussions that I have had that that authority is adequate. Whether or not at the time that act expires we would seek to have it amended or changed, I think is a very good question, and I think we may very well have proposals of that kind, but I didn't come here today prepared to address that question.

I think, if possible, I would like to separate the two things into two separate boxes and not ask you not to discuss the other box, but just have an understanding that what I am really urging the committee to approve and to look favorably on is a set of authorities that we definitely do not view as having any relevance to the present situation, but which we are strictly proposing as contingency measures to be viewed as a package to give the President and the Nation the necessary tools to deal with another embargo if we have one.

Now that doesn't mean that you haven't focused on a very real problem and that is if at the moment, absent such a crisis, we should have additional authority. We may very well need it. I don't believe we do. It is my impression that we have it. We haven't exercised it, not because we don't have it, but because we don't think the problem is severe enough to warrant it.

Mr. BINGHAM. Thank you.

Mr. Bonker.


Mr. BONKER. Well, Mr. Chairman, you have asked most of the questions that I was interested in. I am reluctant to see why you need what you refer to as a package of authorities that would give the Executive even further authority in this area. We are primarily concerned about petroleum, but you include coal, natural gas and petroleum products, petrochemical feedstocks-it goes on-supply of materials and equipment which he, the President, determines to be necessary to maintain or further exploration, production, refining,

transportation, and conservation of domestic energy supplies and for the construction and maintenance of energy facilities within the United States.

That is a rather broad sweep of authorities. It covers a broad range of resources and activities. And then you say in rather general terms, that these are the tools to be used flexibly in any eventuality, and you do not see the present circumstances as constituting a severe crisis of this nature, and so forth. I am very reluctant to see authorities given on such weak grounds. Do you really feel that a crisis could be so eminent and so severe that the President would need this kind of authority to act immediately?

Mr. MONTGOMERY. We certainly hope it is not, but I think that having lived through the first and only such embargo in our country's history just a year ago and having been involved in the attempt that we had to make to deal with that, I think that it is very difficult to overestimate the shock to the economy, industry, and consumers of petroleum, that that kind of interruption can constitute.

That embargo we had last year was an embargo that took about 22 million barrels a day out of the total consumption levels of 18 million barrels a day. At the rate we are increasing our consumption of petroleum and our imports, our vulnerability to that kind of embargo will be drastically increased just over a period of 5 to 10 years. So I think that I can sympathize with, and I really understand what you are saying when you say this looks like very broad, very flexible authority, but I think you have to weigh that against the fact that, as the chairman observed, it can only be exercised in conditions of extreme shortage.

While I don't think it is likely, and I certainly hope it doesn't come to pass that we need to use that authority, I do think it is appropriate that the President have that kind of broad authority should he need it. And I would point out that most of this provision, not every word of it but most of it, was actually in the bill that Congress passed last year, the Emergency Energy Act of 1974 which was vetoed by the President because there were some other things in there that were unacceptable. The reason for mentioning it is that at that time when we were in the embargo the Congress didn't stop for a second, didn't hesitate to give the President this kind of authority.


Mr. BONKER. I am just wondering, though, if another crisis were to occur whether Congress wouldn't be up to the challenge and act as it has in the past?

Mr. MONTGOMERY. Unfortunately, it hasn't acted in the past with the kind of dispatch that was necessary, and I think that is the problem. I think we need to do a little contingency planning here and to make sure that these authorities are there, and then to make sure that the trigger mechanism is sufficiently strict and tough so that no President will be able to abuse these authorities. The Senate bill that has just come out of the Senate Interior Committee has a comparable provision with a much looser trigger, and that concerns us. In testifying before the Dingell subcommittee of the House Commerce Committee, the chairman and other members of the committee said they

didn't think our trigger was tight enough. They sympathized with the need for these authorities but didn't want the President to be able to exercise them unless it was absolutely clear that they were needed. We are very sympathetic to that view and now are working with the staff to tighten up the test so that we don't have this authority subject to abuse, and make sure that there is a genuine emergency before it can be used.

Mr. BONKER. On this question of abuse, are there any provisions that are in title XIII that would provide for congressional review of abuse or misuse of such authorities?

Mr. MONTGOMERY. Are there any, Mr. Goodwin?

Excuse me, not on the export control provisions but-there are a number of cases in which the President has to make findings. Of course, all the operating provisions of the title are covered by the section that I referred the chairman to. It says prior to exercising any of the listed authorities the President has to make findings and transmit them to Congress, and there are other provisions that require reports.

Mr. BONKER. Now, these are findings. They don't relate to the exercise of those authorities but just findings.

Mr. MONTGOMERY. That is right. They relate to the need to exercise the authority. He has to demonstrate and submit to Congress a statement of the problem.

Mr. BONKER. And then we assume that he is going to act after those findings are made available or concurrently, or is this something that occurs after the fact?

Mr. MONTGOMERY. After those findings have been made he may then exercise any of the authorities provided in the statute for a period of time. It says in the act as presently written that no finding shall be in effect longer than 18 months, so at the end of that time, assuming that Congress, as it could very well by joint resolution or by a statue, either denied him the authority to act or changed the law

Mr. BONKER. Congress could deny by joint resolution, couldn't they?
Mr. MONTGOMERY. Sure, but that would have the force of law.
Mr. BONKER. I think that is all that I have, Mr. Chairman.
Mr. BINGHAM. Thank you.


Let's look for a minute at the triggering mechanism as it has to do not with the crisis situation but with the exercise of the powers that are required to fulfill obligations of the United States under international agreement.

First of all, is that a mistake to say an international agreement? Mr. MONTGOMERY. It is not a mistake. It is an unusual usage in the definition section on page 140——

Mr. BINGHAM. Yes, I see that, but

Mr. MONTGOMERY. We actually define international agreement to mean the IEP. I think it would have been more appropriate to say the international agreement as defined.

Mr. BINGHAM. That is what you intend?
Mr. MONTGOMERY. That is what we intend.

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