Mr. ENDERS. Yes, sir. This is why, for example, the Japanese suffered just as much from the last embargo as we did although the Japanese were not targeted. Mr. SOLARZ. I see. One last question and that has to do with my understanding of the Paris Agreement as one which binds the United States I gather only provisionally until such time as the Congress votes to enact the appropriate implementing legislation. Mr. ENDERS. The legal position I think is very close to that, but I think it is that the United States has adhered provisionally only, in fact all countries have adhered provisionally, only that this provi sional adherence is to be made an adherence for the whole term of the agreement subject to the takeout provisions that there are in the agreement later this year, provided that each country has sufficient implementing legislation to do so. At the present time we do not have sufficient implementing legislation to do so. Mr. SOLARZ. If, in fact, that is the case, do you think there is any problem with the wording in title XIII of the act which provides in section 1302 that this legislation-or, that is to say, title XIII enables the Federal Government to fulfill its responsibilities under the agreement? My question is if the effectuation of the agreement is contingent upon the legislative process, can it fairly be said that we have responsibilities prior to the enactment of the legislation itself? Mr. ENDERS. We have responsibilities, sir, only insofar as we have implementing authority to carry them out. So, under international law, if we go back and say we cannot do XYZ, then we are not bound by the provisional or eventual full adherence to do it. Mr. SOLARZ. Well, my point is that I don't Mr. ENDERS. We are bound by executive agreement legally to do everything that we have implementing legislation to do. Mr. SOLARZ. We have a responsibility to try to secure appropriate legislation. Mr. ENDERS. Yes. Mr. SOLARZ. But we don't have a responsibility to carry out the substantive components of the agreement itself until such time as it is approved by the Congress. Mr. ENDERS. No, sir. We have an obligation to carry out the substantive provisions of the agreement itself provided that we have implementing authority. In other words, if we have authority now to allocate, for example, in certain circumstances we are obliged to use that authority to carry out the agreement. But if there is authority which we do not have, such as to check the level of stocks, then we cannot carry out that part of the agreement and we are not thereby legally bound to do so. Mr. SOLARZ. What are the other countries that are part of the IEA? Mr. ENDERS. What are they? Mr. SOLARZ. Yes, the other countries. How many are there? Mr. ENDERS. There are 18 altogether. Canada, the United States, the European community countries less France that did not join, the three neutral countries-Switzerland, Austria, and Sweden-Spain, Turkey, New Zealand, and Japan. Norway is an associate member. Mr. SOLARZ. Has the agreement run into any domestic difficulties in any of the other countries? Mr. ENDERS. Not so far. Mr. SOLARZ. But they are all going through the implementation process? Mr. ENDERS. That is right. Well, some of them, I think, have been effectively completed. Switzerland has completed it. Mr. SOLARZ. None of the others? Mr. ENDERS. No. Mr. SOLARZ. Is there a time frame within which we have to complete the process? Mr. ENDERS. Yes. We are supposed to provide full implementation the 1st of May to move beyond the provisional nature of the agency. Mr. SOLARZ. So, by the 1st of May, if we are to adhere to the undertakings to which we agreed, we have to commence a conservation program designed to reduce our importation of oil by a million barrels a day? Mr. ENDERS. No; because that target is not in the underlying agreement. In the agreement there is only the emergency program and the setting up of the agency and a description of its general activities; the agency has in a separate action established conservation targets for each country but those are targets and they are not part of the legal obligations in the agreement. STATEMENT OF ROBERT GOODWIN, DEPUTY ASSISTANT GENERAL COUNCIL FOR INTERNATIONAL AND SPECIAL PROGRAMS, FEDERAL ENERGY ADMINISTRATION Mr. GOODWIN. I think we should be clear on the point that the proposed legislation is a standby authority and does not relate to implementation of the general decisions that might be taken by the IEA, for example; target levels of imports and those kinds of decisions. Mr. SOLARZ. What is the date you said by which it had to be approved? Mr. ENDERS. The 1st of May. Mr. SOLARZ. The 1st of May. Mr. ENDERS. By the 1st of May the countries will be requested to make a full adherence. Mr. SOLARZ. Has it received any action from the Senate yet? Mr. GOODWIN. It has been reported out by the Interior Committee and action is pending on the floor. The floor debate was begun but was postponed until after the Easter recess. Mr. SOLARZ. Perhaps the chairman could answer this question. I see from the title of the bill the various sections have been referred to various committees. As a newcomer to this town I am still trying to figure out exactly how the institution works. Mr. ENDERS. So are we. Mr. SOLARZ. Does this mean that each of the committees to which the different sections have been referred have to report out favorably to the House as a whole the section of the bill which has been committed to their jurisdiction? Mr. FRASER. Well, to my understanding the legal effect of the committee action is simply in the form of a recommendation. The physical bill will get to the floor one way or the other and then the committee recommendation may be for amendment or rejection of a title or some thing but it will be up to the floor to finally decide, so you would not have to have affirmative action out of every committee. The committee might recommend deletion. The committee by doing nothing could not stop the bill necessarily going through. Mr. SOLARZ. What would be the mechanism then under which the bill itself would come to the floor assuming that one or more of the respective committees declined to report favorably the section that had been referred to them? Mr. FRASER. I am not sure I know. Mr. INGRAM. I think it may be reported as separate bills rather than as one bill. That is what happened on the Senate side. The Senate broke out two titles and put them into S. 622. In this case I think the committee that did not favor a title would probably still report it out unfavorably because there is a lot of pressure to get all the titles on the floor for consideration. Mr. SOLARZ. Would they be considered simultaneously? Mr. INGRAM. Not necessarily. It could happen, but I doubt that all the committees would act at the same time. Mr. SOLARZ. Thank you, Mr. Chairman. Mr. FRASER. Just one last question. I am curious as to why we are not pursuing the strategic reserve thing at a more rapid rate. Mr. ENDERS. We need authority. Mr. FRASER. Let's say you get the authority. I was just trying to figure in my head a nickel a gallon tax would finance 400 million to 500 million barrels acquisition a year, apart from the cost of preparing the storage site. As we are now discussing, that is not a very large tax. Mr. ENDERS. I don't think you have to tie it to a given tax appropriation. Mr. FRASER. I understand. It would be easier to finance political consumption in a way which is visible. I think a lot of motorists would welcome the modest increase in tax for the purpose of giving them some protection against the embargo. Mr. GOODWIN. Mr. Chairman, the administration intends that the strategic reserves in the first instance would be financed through production of NPR No. 4. There are problems, as Mr. Conant mentioned, with capability in any event. If you were, for example, to attempt to increase your imports to fill the reserve, there are significant economic problems in doing that. Mr. FRASER. Would it be significant? Say you set a target of a million barrels a day additional. Given the world situation-as a matter of fact, this would be a very good time to do it because you would not put any real upward pressure, you might have a downward pressure. Mr. ENDERS. We would hope to do it, Mr. Chairman, I think at much lower prices than at the present prices. Mr. FRASER. It is a tradeoff. Once you have the strategic reserves, you have some important protection. Mr. ENDERS. You would have to do some of that but these are awfully high prices. Mr. GOODWIN. Facilities is the other side of that problem. Mr. FRASER. Even now the demand for steel is beginning to soften to the extent that you can have above-ground storage. It would be a good time to put people to work building storage capacity. You could afford to buy on the international market at the higher prices, but this kind of protection seems to me a lot more meaningful than some of the other objectives of the program. This is just my own personal reaction. Mr. ENDERS. I think it is a very meaningful kind of protection, Mr. Chairman. Like everything else in this program, that by itself does not do the trick. People have said why conserve, for example, because that by itself could not change the market price but it does give you protection. Why try to bring on shale oil because synthetics will probably account for 1 million barrels a day by the end of 1985 and at a very high cost. The answer to that is it does help you over the long term. You have to have all these things. Mr. FRASER. I agree. I am unimpressed, I guess, with reducing consumption in the long run. I don't figure it is worth very much at all because most of the conservation measures you can take in a short term, you can take at the time the embargo occurs, and then until the embargo occurs you are nowhere ahead of the game. Mr. ENDERS. I don't agree with that, Mr. Chairman, really. Take the case of the United States. If we don't do anything-say we adopt a very long-term program. It has no effect in the next 3 years on consumption or production. By the end of 1977 we are going to be importing somewhere close to 9 million barrels a day with what we hope to be a takeoff in the economy with decreased unemployment. You could lose 2 or 3 million jobs in an embargo. With a conservation program you can hold yourself reasonably steady from where you are now, and thereby your vulnerability is not increasing. Mr. FRASER. Short term. Mr. ENDERS. Three years. Mr. FRASER. My point is that the kind of conservation of lowering the thermostat, carpooling, all of these things are things that you can do in emergencies. You can go to rationing. I guess my main argument is that the best protection is that I don't think there is an expectation that we are going to have to be faced with long-term embargoes. Mr. ENDERS. Why do you say that, sir? Mr. FRASER. Well, it just seems to me the long-term embargo to be effective would have to be general, and once it is general it is not going to be long run. Mr. ENDERS. Why? This country's flow of money Mr. FRASER. They have money in the bank now. Mr. ENDERS. You get into the question of do they really need to produce? Most of these countries don't, they are earning these huge surpluses. The surpluses have made them, to a degree, invulnerable to that kind of problem. Mr. FRASER. You may be right. My political judgment is that a longterm general embargo against the industrial world just would not last very long. I would not see it lasting 3 or 4 months. Mr. ENDERS. The effect would be so devastating. Mr. FRASER. Our best protection is building a strategic reserve. Mr. ENDERS. I would hate to have to rely on that with all due respect to your political judgment, which I think may be good in all cases. Mr. FRASER. I guess my point is you are leaving us highly vulnerable to a short-term disruption of supplies. You are not moving very rapidly on the strategic reserve. Mr. ENDERS. I don't think even in the best of circumstances we could do much more in a year or two's time than to prepare to put the pumps in and lease the salt domes. That is 2 or 3 years. Mr. CONANT. Yes. Mr. GOODWIN. I don't want to leave the impression that the administration is not moving rapidly. Mr. FRASER. That is the impression I have. Mr. GOODWIN. I don't think that is an accurate impression. I think in Mr. Conant's testimony he made the statement that we should move as rapidly as possible. We have recognized a number of practical problems in doing that, so our time estimates are relatively conservative as are our estimates. Mr. FRASER. 1984. Mr. GOODWIN. But that is for the total buildup. Mr. FRASER. I understand. Mr. CONANT. Mr. Fraser, could I correct a statement that I gave you earlier? Mr. West advises me that Naval Petroleum Reserve No. 4 remains within the U.S. Navy and they alone have the authority to explore it. I suggested in my response that Mr. FRASER. Today. Mr. CONANT. Yes. Mr. FRASER. Could you supply for the record a description of what the other members of the IEA have done in the last 13 months with respect to conservation? I am particularly interested in their tax. The more specificity, the better. Not a general statement but actually penny to penny figures or marks or whatever it is on each category of oil.' Mr. ENDERS. As you say, they have done quite a lot and it makes us look not so hot. Mr. FRASER. I am very unimpressed with the attitude among my colleagues. We can see what other countries are doing, and at least other countries have looked at this and come to some judgment about what is the best thing to do. Mr. CONANT. Yes. Mr. FRASER. Well, there are a lot of things we have not covered. If it would be agreeable, we would like to submit some questions in writing; the staff will submit them to you.2 Mr. ENDERS. Yes; be glad to answer them. Mr. FRASER. The staff will submit them to you and you can answer them for the record. Mr. CONANT. Yes, sir. Mr. FRASER. Thank you. Mr. CONANT. Thank you. Mr. ENDERS It is a pleasure to be here. Mr. FRASER. The subcommittees are adjourned. [Whereupon, at 12:52 p.m., the subcommittees adjourned.] 1 See appendix, p. 52. 2 See appendix, p. 45. |