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as an exemption, I think we should not lose sight of the fact that it does require an environmental assessment very quickly after taking action and it is not a true exemption.

The administration's proposal would allow a determination down the road as we are moving down the road in an emergency as to whether or not the action would exceed a 6-month period or a 1-year period as is the case with the administration bill, and thus is somewhat more flexible to deal with, and I think that is an appropriate way to handle the matter.

I will defer any other comments I have until the question and answer period and also until the staff meeting tomorrow.

Senator JOHNSTON. Thank you.

Secretary Wakefield.


Secretary WAKEFIELD. Mr. Chairman and members of the committee, I think the current Mideast situation highlights our energy problems and makes the need for action even more urgent, but I think, as you all recognize, the deterioration of our energy position was apparent long before the current embargoes. Prior to the embargoes, we had been projecting that we would have some very significant shortages of home heating oil for this winter, largely as the result of the natural gas shortage and inadequate refinery capacity in this country.

I mention this to point out that even if the embargoes should end today, and, of course, we all hope they will, or end very soon, we are, nevertheless, going to face very serious fuel shortages in the months ahead. Inventories will be drawn down; Governor Love indicated, there is a gap in the pipeline.

I think there is much further action that is needed by the legislative and executive branches and most particularly by industry to resolve both our short-term and long-term problems that we have in the energy area. But for the immediate problem, the problem we face today and in the months ahead. I believe that it is necessary that we have legislation similar to S. 2589 that will permit us to deal with this problem.

I have several comments which I won't give at this time, but I will give them during the markup on the bill. I do want to specifically point out, though, along the Clean Air Act variance problem, it is true that Mr. Train can and will act very expeditiously to grant variances. But the difficulty is. as I understand the law, that the States must come in at the present time and seek such a variance, the Federal Government has no authority to initiate the granting of variances. The States were asked in September by Governor Love, by Mr. Train, to very seriously consider coming in and asking us to grant variances, and it was pointed out to the State Governors at that time that it does not do any good to come in in December and say it is cold and we need variances. That action must be taken most expeditiously.

So I think the flexibility of procedures that language similar to this act would give us is very necessary to enable us to move quickly to resolve these problems. I would only point out that the language in here which prohibits not only violations of the national primary standards but also granting of any variance that would have any adverse pact on public health, safety, or welfare sounds to me like ·

declaration and one that would vitiate any attempt to grant variances or could be so interpreted by the courts.

Senator JOHNSTON. Thank you, Secretary Wakefield.

Do any other members of the panel care to make further comments? Gentlemen, if it is agreeable with the committee, in order that each member of the committee can have additional questioning, would a 7-minute rule be suitable?

Senator BARTLETT. I would like to restrict myself to about the same degree that everyone else has restricted themselves.

Senator JOHNSTON. We will restrict Senator Bartlett to your own reasonable conscience, which I hope is a better exercise than some of us other members of the committee.

Senator BARTLETT. Mr. Train, Governor Love, if I understood him correctly, in section 205 suggested that the proviso, the language after the "provided," be deleted, and I assume, from what you said, that you support that?

Mr. TRAIN. Yes, sir, I do.

Senator BARTLETT. Thank you. Secretary Wakefield, following up on the line of questioning that Senator McClure asked of Governor Love, am I correct that if the weather is cold in the East particularly and if the exports from the Arab nations to this country are not resumed right away, the shortage could amount in barrels to about 3.1 million barrels and that this would be about 17 percent of our current use of petroleum?

Secretary WAKEFIELD. There are obviously so many variables, including weather factors and the extent to which we are able to reduce demand and conservation practices and our ability to switch to coal, it is hard to put an exact number on it. The current amount that we can see in the next month or two that has been interrupted from Arab sources, both direct and indirect, is in the area of 2 million.

On top of that you would have to add the shortages that we would have had anyway, particularly in the cold weather, and also the increased competition for oil from non-Arab sources that is going to be present if in fact the European embargoes become more severe, and so the number could very well, after the first of the year, reach shortage proportions of 3 million barrels a day or more. It would not necessarily all be due to the Arab embargo. We could be short that amount, yes, sir.

Senator BARTLETT. If the 3 million barrels is an accurate figure, it would amount to about 17 percent, and they would be presumed to be maximum figures?

Secretary WAKEFIELD. I would certainly hope that would be a maximum figure.

Mr. TRAIN. Let me expand my answer to your question to me. In looking back at the bill before you. in taking out all the language after the proviso, that would seem to me to be no balancing provision at all. I fully agree that we could not prohibit variances to cut into primary standards, because I think if you do that you may lock yourself into a situation where you can't really take effective action.

However, as the President said last night, in acting on a case-by-case basis, we could permit a balancing of environmental and energy needs. So I think that the committee would wish to write in some balancing authority of that sort and specifically, for example, one would not move as rapidly to grant a variance that cut into the primary health

standards as one that just cut into secondary standards. So there should be that kind of weighing opportunity.

Senator BARTLETT. Mr. Train, could you furnish the committee with the language that you would suggest?

Mr. TRAIN. It is my understanding that we have been invited to participate in the drafting and assist the committee in the markup, so that during that process we will be glad to work with you on that. I doubt whether there is time to prepare a formal amendment and submit it.

Senator JOHNSTON. If the Senator would yield on that point. I was going to say we do not have an official administration draft. All we have had has been a draft, a confidential print, which has not been spread on the record.

Senator HANSEN. It has been leaked to the papers.

Senator JOHNSTON. I think the papers have probably received part of it. But we do not have the official print. We would like to have any suggestions in written form by 10 a.m. tomorrow, so if we can get these provisions in written form by today or tomorrow

Senator BARTLETT. Another question for Secretary Wakefield. As I understood Governor Love, he did not agree with provisions of this bill empowering the Federal Government to supersede the regulatory agencies as far as the MER's are concerned. Are you concerned that if this were done, it could lead to rather large waste and losses of oil and gas?

Secretary WAKEFIELD. I think, Senator, there is definitely that possibility. The Louisiana Conservation Commission and the Texas Railroad Commission have literally hundreds of employees who have scores and scores of years' experience as petroleum engineers, reservoir engineers, and are initimately familiar with the fields that they regulate. We have no one in the Federal Government who has this experience at all, and I don't know how the Federal Government could try to supersede State agencies with that much experience, as technical and esoteric an area as this is, and not do, as you suggest, damage to the MER of the reservoirs.

Senator BARTLETT. It would seem to me, since this bill is a conservation bill in part, that we would not want to force the violation of historic conservation practices and cause considerable waste of our energy.

We would also create, I think, the problem of compensating the owners of that oil and gas for the loss that they incurred. Whether this would be done by business or whether it be done by Government, I don't know. But I think if this provision would persist in the bill, which I oppose, it should be taken into consideration that there will be losses and that these will be losses of real value to the people who own the resources.

Secretary Brinegar, I know you are very well aware that the rate of drilling wildcat wells 20 years ago compared to today was about double today's rate, and that the demand today for oil products is double that of 20 years ago, and, therefore, if the rate of wildcat drilling today were in relationship to demand, as it was 20 years ago, and we did have a 2- or 3-main-barrel-per-day cushion in shut-in reserves, would you agree that a first step goal in increasing the supply that you stressed is important, and which I agree, this first step goal,

reasonable goal, would be to double the current rate of wildcats or double the current rate of total wells?

Secretary BRINEGAR. I certainly believe that there are a great many drilling opportunities for oil and gas in our country that have not been-we are not drilled up in the sense of saying we have run out of places. There have been a number of studies of geologic potential. Certainly it is not as good as it was 20 years ago. But the National Petroleum Council, which is a group that works for the Secretary of the Interior, has looked at the geologic basins in great detail and basically it is a function of price.

When the price of oil rises, as it has abruptly as the Middle East. has put on the squeeze, all sorts of new drilling prospects come into play.

I suspect right now the oil companies are going to be limited by their access to capital and their access to drilling equipment, which is not in any great surplus, to bring about what we need in a hurry. Nothing is going to happen in a year.

So we are really dealing, as this committee knows, with how to get through the next 12 months and then how to make the right moves over the next decade, and you are basically right, in my opinion, that we can do a great deal more. But I call your attention to the fact that the existing production of total production in the country, including natural gas liquids, about 11 million barrels a day, is falling. So we have to start drilling more to hold that level.

Senator BARTLETT. Do you agree that doubling the present rate of drilling would be a pretty good goal?

Secretary BRINEGAR. It would be if it were done economically, so that companies were making money while they are doing it, yes.

Senator BARTLETT. To achieve that goal, would it make sense to, as you pointed out—and I know you are aware that the current rate of drilling compared to last year is up about 13 or 14 percent, so we have not achieved too much of that goal.

Secretary BRINEGAR. I don't think we can double that in the short run, because the geologic leadtime would decide where to drill. The time to arrange the drilling equipment, all of this takes a long time.

Senator BARTLETT. Nonetheless, you are saying, are you not, that the steps necessary to bring this about are more capital and this would necessitate decontrol of natural gas prices, both old and new, and also decontrol of the oil, and also you mentioned a shortage of drilling equipment and casing and tool joints. Would it also not require a removal of price controls on steel and steel products that are involved in the drilling process and producing process?

Secretary BRINEGAR. This must be done ultimately and I hope very soon. I recognize that some of the things the Cost of Living Council is trying to balance, but fairly soon we must recognize that these steps must be taken, yes.

Senator BARTLETT. Do you consider solving the shortage problem by increasing supplies just as important as taking the steps to allocate in order to conserve?

Secretary BRINEGAR. Yes. In terms of our living standards and employment levels, the only thing that will enable us to sustain and grow will be more energy per capita. There is no way we can squeeze it

down to more than 3 million barrels per day without starting to hurt. The supply increases are the things we must look to. The President said that last night.

His Project Independence was recognizing exactly that.

Senator BARTLETT. In order to achieve his Project Independence goal of self-sufficiency by 1980, and I assume he means of an emergency nature where imports would be cut off, because I assume he would still be importing, would it be necessary and just as urgent for this committee to make, and for this Congress and administration, to immediately take steps to deregulate the price of natural gas, deregulate and remove controls on oil and steel products connected with the oil industry?

Secretary BRINEGAR. The word "immediate" is one that I would like to not quite say. I recognize that there are some other very tough problems right now, and we have not yet controlled inflation completely. Very soon I would favor those steps, because we are looking at how to deal with a decade of problems.

Senator BARTLETT. Mr. Secretary, are we kidding ourselves into thinking we are going to solve this problem of supplies if we do not remove price controls on energy?

Secretary BRINEGAR. I believe we are, yes.

Senator BARTLETT. Mr. Chairman, thank you very much.
Senator JOHNSTON. Senator Kennedy.

Senator KENNEDY. I'd like to yield to Senator Church.

Senator CHURCH. Thank you very much, Senator.

I'm not going to ask the panel further questions, but I did want to make public before leaving this morning's hearings that I will have two amendments to offer to this bill. One amendment would add a section that would provide for development of research in the field of geothermal energy which I think should be a part of this emergency act. The other relates to the work of the special committee on termination of the national emergency, and I would like to call the attention of the committee to the fact that as this bill now stands there is no termination date. There is no method whereby the Congress could recapture the emergency authority that it proposes to delegate to the President. I think this has been a great fault. Congress has been guilty of throwing great gobs into the President's lap over the years with no method of retrieving that power and I don't think we should again act in a crisis situation in that manner. So I will be offering amendments that will enable the Congress to exercise tenuous surveillance and make a determination on its own when it thinks this emergency has passed and I hope that amendment will have the support of the committee.

Senator JACKSON. May I say that I share that same concern and we do propose that it will terminate in 1 year automatically. And then we have a provision, too, that will require where the House and we have a provision, too, that will require where the House and Senate disagree by a simple majority Congress may veto an administration program.

Senator CHURCH. I appreciate it. Knowing that, I would want to work with the chairman in modifying the bill in that regard. Thank you. Senator Kennedy.

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