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Mr. BINGHAM. OK.

Now, let's look back. That agreement was signed by the United States on November 18, 1974. It has not been approved by the Congress, right?

Mr. MONTGOMERY. That is right.

Mr. BINGHAM. And has not been submitted by the Executive to the Congress for approval?

Mr. MONTGOMERY. That is right.

Mr. BINGHAM. The definition refers not only to the agreement but to related annexes and protocols. Are there such?

Mr. MONTGOMERY. There are not, to my knowledge, any such, but the State Department and the International Energy Section of FEA are more qualified to speak to that. Mr. Enders of the State Department has testified on a number of occasions, and I am pretty sure that as of his last testimony there were no such amendments.

Excuse me, sir. I stand corrected that there is an annex that is incorporated in the agreement, but there is nothing that has been agreed to subsequent to the agreement. The agreement itself however does have one annex to it.

Mr. BINGHAM. Well, if we don't have it we would like to have that for the record.

Mr. MONTGOMERY. All right, sir.
[The annex referred to follows:]

ANNEX TO THE AGREEMENT ON AN INTERNATIONAL ENERGY PROGRAM (1974) 1

1

Emergency Reserves

ARTICLE 1

1. Total oil stocks are measured according to the OECD and EEC definitions, revised as follows:

A. Stocks included:

crude oil, major products and unfinished oils held

-in refinery tanks

-in bulk terminals

-in pipeline tankage -in barges

-in intercoastal tankers

-in oil tankers in port

-in inland ship bunkers

-in storage tank bottoms

-in working stocks

-by large consumers as required by law or otherwise controlled by Govern

ments.

B. Stocks excluded:

(a) crude oil not yet produced

(b) crude oil, major products and unfinished oils held

-in pipelines

-in rail tank cars

-in truck tank cars

-in seagoing ships' bunkers

-in service stations and retail stores by other consumers

-in tankers at sea as military stocks.

2. That portion of oil stocks which can be credited toward each Participating Country's emergency reserve commitment is its total oil stocks under the above definition minus those stocks which can be technically determined as being absolutely unavailable in even the most severe emergency. The Standing Group on Emergency Questions shall examine this concept and report on criteria for the measurement of absolutely unavailable stocks.

1 The text of the Agreement on an International Energy Program may be found in “Legislation on Foreign Relations" a joint committee print of the Committees on International Relations (House) and on Foreign Relations (Senate), April 1976.

3. Until a decision has been taken on this matter, each Participating Country shall subtract 10 per cent from its total stocks in measuring its emergency

reserves.

4. The Standing Group on Emergency Questions shall examine and report to the Management Committee on:

(a) the modalities of including naphtha for uses other than motor and aviation gasoline in the consumption against which stocks are measured. (b) the possibility of creating common rules for the treatment of marine bunkers in an emergency, and of including marine bunkers in the consumption against which stocks are measured.

(c) the possibility of creating common rules concerning demand restraint for aviation bunkers.

(d) the possibility of crediting towards emergency reserve commitments some portion of oil at sea at the time of activation of emergency measures. (e) the possibility of increasing supplies available in an emergency through savings in the distribution system.

ARTICLE 2

1. Fuel switching capacity is defined as normal oil consumption that may be replaced by other fuels in an emergency, provided that this capacity is subject to government control in an emergency, can be brought into operation within one month, and that secure supplies of the alternative fuel are available for use. 2. The supply of alternative fuel shall be expressed in terms of oil equivalent. 3. Stocks of an alternative fuel reserved for fuel switching purposes may be credited towards emergency reserve commitments insofar as they can be used during the period of self-sufficiency.

4. Stand-by production of an alternative fuel reserved for fuel switching purposes will be credited towards emergency reserve commitments on the same basis as stand by oil production, subject to the provisions of Article 4 of this Annex.

5. The Standing Group on Emergency Questions shall examine and report to the Management Committee on (a) the appropriateness of the time limit of one month mentioned in paragraph 1,

(b) the basis of accounting for the fuel switching capacity based on stocks of an alternative fuel, subject to the provisions of paragraph 3.

ARTICLE 3

A Participating Country may credit towards its emergency reserve commitment oil stocks in another country provided that the Government of that other country has an agreement with the Government of the Participating Country that it shall impose no impediment to the transfer of those stocks in an emergency to the Participating Country.

ARTICLE 4

1. Stand-by oil production is defined as a Participating Country's potential oil production in excess of normal oil production within its jurisdiction

-which is subject to government control, and

-which can be brought into use during an emergency within the period of self-sufficiency.

2. The Standing Group on Emergency Questions shall examine and report to the Management Committee on

(a) the concept of and methods of measurement of stand-by oil production as referred to in paragraph 1,

(b) the appropriateness of "the period of self-sufficiency" as a time limit, (c) the question of whether a given quantity of stand-by oil production is of greater value for purposes of emergency self-sufficiency than the same quantity of oil stocks, the amount of a possible credit for stand-by production, and the method of its calculation.

ARTICLE 5

Stand-by production available to a Participating Country within the jurisdiction of another country may be credited towards its emergency reserve commitment on the same basis as stand-by oil production within its own jurisdiction,

79-124 O-76-3

subject to the provisions of Article 4 of this Annex provided that the Government of that other country has an agreement with the Government of the Participating Country that it shall impose no impediment to the supply of oil from that stand-by capacity to the Participating Country in an emergency.

ARTICLE 6

The Standing Group on Emergency Questions shall examine and report to the Management Committee on the possibility of crediting towards a Participating Country's emergency reserve commitment mentioned in Article 2, paragraph 2, of the Agreement, long term investments which have the effect of reducing the Participating Countries' dependence on imported oil.

ARTICLE 7

1. The Standing Group on Emergency Questions shall examine and report to the Management Committee regarding the reference period set out in Article 2, paragraph 1, of the Agreement, in particular taking into account such factors as growth, seasonal variations in consumption and cyclical changes.

2. A decision by the Governing Board to change the definition of the reference period mentioned in paragraph shall be taken by unanimity.

ARTICLE 8

The Standing Group on Emergency Questions shall examine and report to the Management Committee on all elements of Chapters I to IV of the Agreement to eliminate possible mathematical and statistical anomalies.

ARTICLE 9

The reports from the Standing Group on Emergency Questions on the matters mentioned in this Annex shall be submitted to the Management Committee by 1st April, 1975. The Management Committee shall make proposals, as appropriate, to the Governing Board, which, acting by majority, not later than 1st July, 1975, shall decide on these proposals, except as provided for in Article 7, paragraph 2, of this Annex.

Mr. BINGHAM. Then, the definition goes on to say, "as those documents may be amended from time to time in accordance with their terms." I notice that the Senate bill reported out by the Senate Interior Committee did not include that open-ended reference to future changes in the agreement. Do you have any comment?

Mr. MONTGOMERY. I think that that reflects some skepticism on the part of the Senate or the committee, that while the document in its present context may be acceptable, they would just as soon not have the possibility of having these authorities triggered on the strength of some subsequent amendments and I would say that if that is the view of the Congress as a whole, it doesn't represent a serious problem for

us.

I think this was just designed as an attempt to maintain a little more flexibility but I don't think that the State Department would find that to be a fatal change as far as they are concerned.

TRIGGER MECHANISM FOR EXPORT CONTROLS

Mr. BINGHAM. Now, specifically with reference to the export controls set forth in section 1316, are there provisions under the agreement that would require that the United States impose such a control? Mr. MONTGOMERY. No, sir.

Mr. BINGHAM. No reference to

Mr. MONTGOMERY. There is no direct reference. There are references to the maintenance of inventories, for example, and to the taking of

steps to be able to impose demand reduction measures which indirectly might involve the use of export controls. If, for example, the United States had to be in a position to maintain certain levels of stocks and one way of depleting those stocks was through export, then we would have to have some authority to restrict exports.

Mr. BINGHAM. Well, then, export control in that case could be imposed under that trigger.

Mr. MONTGOMERY. They could be, except there is no direct requirement. For example, if we could maintain inventories through some other means such as programs reducing domestic consumption, then we could offset any export drain and we would still be in a position to meet the requirements of the agreement.

Mr. BINGHAM. Yes, but if the administration found that it could not maintain stocks without export controls, then under that trigger

Mr. MONTGOMERY. That is right. I am sorry. I think I might have misunderstood your question because one of the reasons we have it in here is that we think, to be fully responsive to our obligations under the agreement, we might need them. I was really addressing myself to the more narrow question of whether the agreement specifically requires that each signatory country have export authority on the books.

CONGRESSIONAL REVIEW OF AGREEMENT

Mr. BINGHAM. I see. I don't want to get into an area that you are not particularly familiar with, but it does seem to me extraordinary that an agreement of this importance and which is going to be, if your proposals are going to be accepted, incorporated into the act by reference as providing the basis in which certain authorities could be exercised, that the agreement in itself doesn't in any way come before the Congress for review or approval.

Mr. MONTGOMERY. Well, I can certainly appreciate your feeling on that. I can't tell you precisely why the Secretary of State decided to enter this agreement as an executive agreement rather than a treaty, but I can suggest some possible reasons for that, and I think they make pretty good sense.

In the first place, the agreement itself was negotiated under very severe time concerns. It was originally initiated in the context of the embargo and the 2 or 3 months immediately thereafter when most consuming countries were in the most dire straits in terms of both supply and their financial drain. I think that Mr. Kissinger and the President felt that it was essential that we move very quickly to establish some kind of initiative in the area of consumer nation cooperation and that this was in their view the most effective way to go.

This agreement kind of pulled everybody together. It didn't necessarily commit anyone to any immediate actions that they were not prepared to take. but it provided a forum and an occasion for a joint view of the problem and elimination of the bidding between consuming nations that had helped to drive the price up so far during the embargo itself. So I think that possibly the submission of that kind of agreement to the Congress could have been viewed as a delay that wouldn't be acceptable.

The other thing is that, as you can see from this process that we are in right now, this agreement can't really be totally implemented without congressional action. Because of that, I think it is not an attempt to circumvent the legislative branch, but merely a two-step process whereby the agreement itself doesn't come to Congress but the Congress looks at the agreement very closely in the context of passing or not passing the implementing legislation.

Mr. BINGHAM. For the record, I perhaps should say that I think Mr. Enders has several times appeared before subcommittees of this committee and he has just recently briefed me on the conferences he was anticipating having in Europe the last week or two. As I understand it there are, in addition to this, other elements of the agreement that will require congressional action.

Referring to one of the points that Mr. Bonker raised, the Senate's bill in several cases does provide for possible congressional veto of action taken under the authorities provided for in title XIII. I must say they provide for a very limited amount of time, 10 calendar days in which to take action, but in view of the fact that Congress hasn't been involved other than in the proposing of this particular bill, doesn't that procedure seem reasonable?

Mr. MONTGOMERY. Well, I would say, Mr. Chairman, I don't think it seems unreasonable. In our view, it is not the most desirable approach and it has some serious defects. I think it is important to remember that we are talking about the exercise of these authorities in an emergency situation and that what that review procedure would amount to, it seems to us, is a very limited chance. As you emphasized, the number of days is minimal, a very limited kind of window during which the Congress under a kind of a crisis atmosphere would have to deal with a number of proposals.

Presumably, the President might be exercising various parts of his authority under this statute and the Congress would have to react. absorb what the proposal was, go through a hearing process, presumably, or do the kind of study and analysis that the Congress normally does and respond with some kind of an up or down vote under the most trying of conditions.

We don't believe that that kind of exercise is likely to be either very productive or very useful to the Congress. We think that the better approach is for the Congress to rely upon the Executive to deal with an emergency, as the Congress has so many times in the past when an emergency really exists, and then to use its authority which it has absent any such review provision in the bill, to correct any abuse or any mistake that it considers has taken place.

As I pointed out before, any action under this legislation by the President can be overturned by the Congress either by legislation or by a joint resolution.

Mr. BINGHAM. Well, as you pointed out. the joint resolution is legislation and requires the concurrence of the President unless it is passed over a veto, so that there is a great difference in what you say. Anything can be reversed by law certainly. But there is a great difference between that and having the Congress by concurrent resolution express disapproval.

Mr. MONTGOMERY. There is. It is a tough balancing question, you know. You want to have the Congress involved; the Congress clearly has the right to be involved and to express disapproval.

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