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91st Congress 2d Session

COMMITTEE PRINT NO. 1

REPORT

ON

THE OIL IMPORT QUESTION

(TOGETHER WITH DISSENTING AND
SEPARATE VIEWS)

SUBCOMMITTEE ON MINES AND MINING

OF THE

COMMITTEE

ON

INTERIOR AND INSULAR AFFAIRS

OF THE

HOUSE OF REPRESENTATIVES

AUGUST 1970

Printed for the use of the Committee on Interior and Insular Affairs

48-467

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1970

PURCHASED Roy

DOC. EX PROJE

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NOTE. The chairman, Hon. Wayne N. Aspinall, and the ranking minority member, Hon. John P Saylor, are ex officio members of each subcommittee.

(II)

THE OIL IMPORT QUESTION

INTRODUCTION

The Subcommittee on Mines and Mining of the House Committee on Interior and Insular Affairs held hearings on the oil import-oil tariff question that was raised by the divergent views expressed in the report of the Cabinet Task Force on Oil Import Control. The task force report was released February 20 and subcommittee hearings commenced March 9 and extended through March 10, 16, and 17 and April 6, 7, 23, and 24, 1970. Represented at the hearings were major segments of the petroleum and natural gas industry, including both independent and major operators and producers, refiners, the coal industry, the petrochemical industry, research groups and others interested in either the production, distribution or consumption of coal, petroleum, and natural gas products.

In releasing the task force report, President Nixon commented that the members did not reach unanimous agreement on a set of recommendations. The President also recognized and stated that "The Congress properly has a vital interest in this program which affects every area of our country and many facets of our economy. Committees of both the House of Representatives and the Senate have indicated interest in holding hearings on the oil import program and any recommended changes in it. I expect that much additional valuable information will result from these congessional hearings, and I direct the Oil Policy Committee to carefully review all such information." The hearings held by this subcommittee are an indication of the congressional interest referred to by the President and were intended to provide a forum by which the findings and recommendations of the Cabinet task force could be reviewed.

Although extensive consideration was given to the matter of oil import quotas versus tariffs by the Cabinet task force, no open publie bearings were held and no opportunity was afforded for questioning or for cross examination of those individuals submitting material. In contrast to this, the subcommittee hearings were open public hearings and all witnesses were subject to questioning by members of the subcommittee.

Before proceeding further it appears appropriate to point out that this subcommittee held extensive hearings on the Mandatory Oil Import program in 1968 and submitted a report on its findings and recommendations in August of that year. Those hearings and the report. give much of the background and the operation of the Mandatory Oil Import from its inception in 1959 up to and including 1968. For that reason it appears unnecessary to repeat much of that information in the present report either as to the origin and operation of the program or as to the committee's findings and recommendations. Suffice it to say that the majority views of the committee, while recognizing some de

fects in the administrative operation of the Mandatory Oil Impor program, strongly recommended it be retained and strengthened. I that report it was stated as follows:

If a meaningful program is to be continued, it is imperative that a clear and definite policy be established under which the domestic petroleum industry and all others interested are fully informed as to the future of the program. If national security is of paramount consideration, and this Subcommittee firmly believes that it is, together with the preservation of the domestic petroleum industry, then no further exceptions should be granted. If, on the other hand, the program has outlived its usefulness or if considerations other than national security are to be given equal or greater weight, whetheer these be situations of hardship, price or temporary shortage, then the new criteria should also be clearly spelled out and defined in order that all may follow the newly established policy.

Upon completion of the recent hearings the subcommittee is no aware of anything that would substantially alter the above genera

conclusion.

TASK FORCE MAJORITY CONCLUSIONS

Careful reading of "The Oil Import Question"-the official report of the Cabinet Task Force on Oil Import Control-is sure to leave some confusion in the reader's mind regarding the "majority position" in the task force.

Most of the newspaper publicity commenting upon the report identifies Task Force Chairman (and Secretary of Labor), George Schultz: Office of Emergency Preparedness Director, George Lincoln; Secre tary of Defense, Melvin Laird; Secretary of the Treasury, David Kennedy; and Secretary of State, William Rogers as members of the task force "majority."

These officials, presumably, reported to the President in support of "a phased transition to a tariff system for controlling imports, to take initial effect no later than January 1, 1971, with the following principal features:

(1) Initial imposition of an increased tariff on nonpreferred crude oil at a level $1.35 per barrel above existing tariffs;

(2) Phaseout of special quota privileges over a 3-year transition period by means of a "tariff-free" quota;

(3) Deferment of decision on further tariff liberalization until January 1972, at which time the program managers may continue the process of liberalization if they are then persuaded on the basis of the best available evidence that indicated reserves in North American frontier areas will be sufficient to meet the aggregate 1980 production estimates set forth herein, or until January 1973 or January 1974 if the program managers are so persuaded by then;

(4) A comprehensive review of the program no later than 1975, including an in-depth study of the post-1980 situation, to determine whether it then appears consistent with the national security to continue-or, if need be, arrest or reverse-the process of tariff liberalization.

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