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With respect to those agreements that were in effect prior to the enactment of the Defense Production Act Amendments of 1955, the Congress said this:

The Attorney General shall review each of the voluntary agreements and programs comered by this section and the activities being carried on thereunder, and if he finds, after such review and after consultation with the Director of the Office of Defense Mobilization, and other interested agencies, that the adverse effects of any such agreement or program on the competitive free enterprise system outweigh the benefits of the agreement or program to the national defense, he shall withdraw his approval in accordance with subsection (d) of this section. This review and determination shall be made within ninety days after the enactment of the Defense Production Act Amendments of 1955.

Acting pursuant to those amendments to the Defense Production Act, the Attorney General did review the basic agreement relating to the oil industry. He did consult with the Director of Defense Mobilization. He suggested certain basic fundamental amendments be made to that plan, and those amendments were incorporated in the basic plan of action. After they were incorporated in the basic plan of action, the Attorney General then certified that in his judgment the adverse effects of this particular agreement and the program on the competitive free enterprise system outweighed the benefits of the agreement or program-he certified the other way around; sorry, Mr. Chairman. He certified that the interests of national defense were such as to make it possible for him to approve the agreement, even though he recognized, as all of us do, that, of course, there is a calculated risk involved as far as the antitrust policy of the Congress and of the Government is concerned.

Senator WILEY. What is the date of the certification?

Mr. FLEMMING. Senator Wiley, it was August 19, 1956. But that was some time prior to this particular crisis developing.

Now, as I will point out, and as the chairman in fact has already pointed out in his opening statement, certain procedures took place under this basic agreement in connection with the Middle East crisis, and those started back in August, as the chairman's statement indicated, and there were subsequent steps taken later on.

Senator O'MAHONEY. May I ask, Mr. Flemming, if you care to be interrupted by questions?

Mr. FLEMMING. It is perfectly all right, Mr. Chairman, if that will facilitate it.

Senator O'MAHONEY. Sometimes we follow the procedure of letting the witness make his statement and then submit to questions afterward.

VOLUNTARY AGREEMENT

Mr. FLEMMING. Mr. Chairman, I am perfectly willing, if you so desire, to submit to questions at any point in connection with my statement. If I plan to cover a point later on in my statement, I will say so very frankly; otherwise I think it is probably helpful to me, as well as the committee, for me to be interrupted because in that way I will determine the matters which are of vital concern to the members of the committees.

Senator O'MAHONEY. Then let me ask you this question:

Have you made a decision for yourself that this voluntary plan was essential to the national defense?

Mr. FLEMMING. I did, and so indicated to the Attorney General.

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Senator O'MAHONEY. When was the plan submitted to you? Mr. FLEMMING. Mr. Chairman, just so that we are clear on this: Are you talking now about the basic plan under which this particular plan of action was finally developed ?

Senator O’MAHONEY. Yes. The original plan, the one that was approved August 10, 1956. Mr. FLEMMING. Mr. Chairman, I have here a document which is entitled “Voluntary Agreement Relating to Foreign Petroleum Supply, as Amended," and that is dated May 8, 1956.

In other words, that was approved some months prior to this crisis developing

Senator O MAHONEY. Was that the original, or an amendment of the original ?

Mr. FLEMMING. This is the basic voluntary agreement relating to foreign petroleum supply, but as amended in accordance with the suggestions of the Attorney General, acting under the authority of this particular amendment to which I have referred.

In other words, Mr. Chairman, I think it is probably important for us to understand that there is, first of all, a basic voluntary agreement relating to foreign petroleum supply.

Senator OʻMAHONEY. You are obviously not talking about the agreement of August 10, 1956?

Mr. FLEMMING. That's right, because this is the basic agreement which was approved on May 8, 1956.

Now, under this basic agreement a plan of action to deal with this particular situation was worked out in August, as you have indicatedI mean August 10, I think.

Senator O'MAHONEY. Who prepared the document that you have in vour hand ?

Mr. FLEMMING. The document that I have in my hand was an agreement recommended by the Department of the Interior, and was, in effect--I mean a basic plan of this kind was in effect prior to the passage of the Defense Production Act of 1955. As a result of the passage of those amendments, it became necessary for the Attorney General, under the law, to review this basic voluntary agreement relating to foreign petroleum supply. He did review it. He consulted with the Director of Defense Mobilization

He said, “I'm not in a position to approve this unless certain amendments are made," and as you recall, under the law if he didn't approve it, the agreement would automatically have collapsed. Senator O'MAHONEY. That's right.

Mr. FLEMMING. So, he presented to us, or he presented to the Department of the Interior, certain amendments which he felt should be made. We consulted with the Department of the Interior, with the Attorney General, and we finally arrived at an agreement as to those amendments. The amendments were incorporated in the basic agreement, and after they were incorporated in the basic agreement, the Attorney General made the certification required by law.

Senator O'MAHONEY. You have testified that this basic agreement that you have in your hands was prepared before the one of August 10, 1956, was prepared ? Mr. FLEMMING. That's right.

90507-57-pt. 1-5

Senator O'MAHONEY. And before the amendments of the Defense Production Act were written, that it was in effect prior to that time, am I right?

Mr. FLEMMING. That is right. The basic agreement was in effect prior to that time.

Then, acting under the amendments to the Defense Production et of 1955, the Attorney General proposed some amendments to the basic agreement. Those amendments were incorporated with the basic agreement, and after they were incorporated the Attorney General gave the basic agreement the approval required by the law. That approval came on May 8, 1956.

Senator O'MAHONEY. Will you for the record state the date on which this one became effective and by whom it was prepared ?

Mr. FLEMMING. You are talking now, Mr. Chairman-
Senator O'MAHONEY. About this basic one.
Mr. FLEMMING. This one that I am talking about?
Senator O'MAHONEY. Yes.
Mr. FLEMMING. This was approved as of May 8, 1956, by-

Senator O’MAHONEY. I think this was called the Foreign Petroleum Supply Agreement?

Mr. FLEMMING. It is entitled “Voluntary Agreement Relating to Foreign Petroleum Supply, as Amended."

Senator O’MAHONEY. What was the date and by whom was it prepared!

Mr. FLEMMING. It was approved on May 8, 1956; and the responsibility for originating it, in fact the responsibility for originating any matter in this particular area was, of course, the responsibility of the Department of the Interior. But the Office of Defense Mobilization participated with the Attorney General in the consideration of the matter.

Senator O'MAHONEY. I am a little vague about my recollection of what had been reported to me previously. I would like to have you clear my mind.

Mr. FLEMMING. Yes, surely.

Senator O'MAHONEY. I regard this document as an amendment of an original document that antedated it.

Mr. FLEMMING. You are correct, Mr. Chairman.
Senator O’MAHONEY. What was the date of the original?
Mr. FLEMMING. The original document, Mr. Chairman, was dated
May 1, 1953, and it was amended on April 15, 1954 and then again on
May 8, 1956.

Senator O’MAHONEY. That is according to my recollection.
Mr. FLEMMING. Right-right.

Senator OʻMAHONEY. Would you be good enough to supply for the appendix of the record, properly marked, these several documents?

Mr. FLEMMING. I will be very happy to do that.
(Discussion off the record.)
Mr. McHugh. Mr. Flemming ?
Mr. FLEMMING. Yes?

Mr. McHugh. I wonder if you would explain the effect of these amendments that the Attorney General recommended, to which you have just referred in your statement.

Mr. FLEMING. Mr. Chairman, Mr. Bicks, the representative of the Assistant Attorney General in charge of these matters is here, and he could give you, I am sure, a much more detailed response to that particular question.

If you so desire at this time, or at some later point in the hearings

Senator O'MAHONEY. I think it would be better, unless some member of the committee feels otherwise, for you to proceed with your statement and we will come to the Department of Justice later on.

Mr. FLEMMING. Mr. Chairman, I would simply be recalling from memory some of the changes that were made. Mr. Bicks can give them to you one right after another.

Senator OʻMAHONEY. I have observed on many occasions that your memory is very good.

Mr. FLEMMING. Thank you, sir, I appreciate it; but, for example, I will give you one illustration, I mean, of the type of amendment that was suggested by the Attorney General, and that is that this Committee would operate - I'm not thinking now about an emergency situation, but I meant outside of an emergency situation, it should be chaired by a Government official, instead of by a representative of the industry and that some of the work of the Committee should be carried on by Government officials, rather than by employees of the oil companies. It was that type of an amendment that was incorporated in the document which is dated May 1956.

Senator OʻMAHONEY. That, of course, brings us to the question of how much work is done by Government and how much work is done by industry in the Committee. Mr. FLEMMING. That's right, and we will come to that later on.

Mr. Chairman, I'm sure that the Department of the Interior will be in position to give you detailed information on that.

Senator O MAHONEY. You understand, Mr. Flemming, that what I am trying to do now, in the interest of clarity, is to have the legal differentiations and qualifications brought up at another time.

Mr. FLEMMING. Right.
Senator O’MAHONEY. Because they can get to be very complex.

Mr. FLEMMING. They certainly can, I agree with you; but I do think that it is very helpful at this point to identify these varions basic documents so that we know just what we are talking about.

Senator Wiley. The May 8, 1956, agreement was the final one. Were there any amendments after that?

Jr. FLEMMING. No amendment to this basic agreement relating to foreign petroleum after that date.

Senator Wiley. The first step was May 1, 1953; the second one, April 15, 1954 ; and that was all finalized by May 8, 1956 ?

Mr. FLEMMING. That is correct, Senator. Now, then, of course, in August we began the development of the plan of action under which this Middle East situation is being handled. That is a different document, but it is a document that is worked out in conformity with this May 8, 1956, document.

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PLAN OF ACTION

Senator Wiley. That is why I asked you what I did. So, really, there was a plan of action of August 10, 1956, that carried out the intent of May 8, 1956!

Mr. FLEMMING. That is right. The May 8, 1956, document, Senator Wiley, provides for bringing into existence plans of action to deal with particular situations. The document that came into existence in August was a plan of action to deal with the Middle East situation and worked out in harmony with that May 8, 1956, document, or worked out under the May 8, 1956, document.

Senator Wiley. It implemented but did not, in a sense, modify the agreement ?

Mr. FLEMMING. That is right; that is right. It implements. It is one plan of action designed to implement this basic May 8, 1956, agreement.

Senator WILEY. Thank you.

Mr. McHugh. Dr. Flemming, can you tell us whether or not the August 10 plan of action, which was put into effect to carry out the purposes of the voluntary agreement, contained these amendments which the Attorney General had recommended as antitrust safeguards?

Mr. FLEMMING. Well, when we come to that I think it will be clear that, in working out the plan of action, the Attorney General approved a plan under which, for example, a representative of industry is serving as Chairman of the Middle East Emergency Committee, but the overall committee that is brought into existence by this May 8, 1956, document must be chaired by a Government official.

As far as the Middle East Emergency Committee is concerned, the Committeee that came into existence to deal with this plan of action, the Attorney General approved the plan of action under which an industry member does serve as Chairman of the Committee, and the Department of the Interior can certainly, or will be in a position to, present the practical operating reasons for making that suggestion, and the Attorney General will be in a position to indicate why he felt that those practical operating considerations should control, as far as putting the Middle East plan into operation is concerned.

Mr. McHugh. I believe you stated the Attorney General had recommended certain amendments to the original voluntary agreement and they were adopted on May 8?

Mr. FLEMMING. That is correct.
Mr. McHugh. They provided for certain antitrust safeguards?
Mr. FLEMMING. That is right.

Mr. McHugh. Those amendments were accepted by the various companies participating in the foreign petroleum supply agreement. Now, my question is: Were any of those recommendations by the Attorney General included and made a part of the plan of action which was put into effect on August 10, 1956, when the Middle East Emergency

Committee was created ? Mr. FLEMMING. I think it is fair to respond to the question in this way: That, when the Attorney General reviewed the plan of action under which the Middle East Emergency Committee has been set up, he had in mind identically the same objectives that he had in mind in suggesting the amendments to the May 8, 1956, document, and I am sure that he, or his representatives, would be in a position to testify that they feel that they built into the Middle East Emergency Committee provisions designed to achieve those objectives and which they believe will achieve those objectives.

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