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As I have already indicated, the Attorney General did not, in connection with the plan of action, insist on a Government chairman for the Middle East Emergency Committee. He made that decision on the basis of a judgment to the effect that, from an operating point of view, an industry chairman was required.
Mr. McHugh. Doctor Flemming, isn't it true that that was one of the requirements of the May 8 amendment which the Attorney General had insisted upon—that there be a Government employee as chairman of these various committees?
Mr. FLEMMING. Not for a committee set up to put into effect a specific plan of action. In other words, let me answer your question this way: In my judgment, when the Attorney General approved the plan of action under which the Middle East Emergency Committee is operating, he did not do anything inconsistent with the basic foreign petroleum supply voluntary agreement document. In other words, the voluntary agreement relating to foreign petroleum supply is the basic document, and when the Attorney General approved the specific plan of action for the Middle East Emergency Committee, he approved a plan of action which rests within the framework of the voluntary agreement relating to foreign petroleum supply.
Mr. McHugh. Isn't it true that the May 8 agreement recommended by the Attorney General contained provisions for the appointment of Government employees as chairmen of the various committees, and, furthermore, provided for a staff of Government employees, and that in fact none of these recommendations are included and made a part of the plan of action as put into effect on August 10?
Mr. FLEMMING. As I have already said, it is true that the plan of action approved by the Attorney General in connection with the Middle East Emergency Committee does not call for a Government chairman, and does not contain specific provisions relative to Government employees functioning in connection with the staff work of the Committee. There is no question about that at all, because it is a fact that the Chairman comes from the industry and comes from one of the companies that serves as a member of the Committee. Senator O'MAHONEY. Can you name him?
Mr. FLEMMING. Yes, Mr. Stewart Coleman. And it is also a fact that a good deal of the staff work is being done by representatives of the various companies.
Senator O’MAHONEY. What position does Mr. Stewart Coleman have!
Mr. FLEMMING. Pardon me? Senator O’MAHONEY. Finish your reply, and then I will ask. Mr. FLEMMING. I was going to point this out: We are now getting down into the details of the plan of action, and it might possibly come a little later on, but let me say that a director of the Committee is a Government official, Mr. Ralph Fowler, who is an employee of the Oil and Gas Division of the Department of the Interior.
Senator O'MAHONEY. And who is Mr. Coleman, the Chairman?
Mr. FLEMMING. Vice president, Standard Oil Company of New Jersey. Senator O'MAHONEY. Thank you.
Senator NEELY. Mr. Flemming, is it not a fact that, since the Reciprocal Trade Agreements Act was extended in May 1955, the so
called oil cartel has not only disregarded but absolutely scoffed at every suggestion contained in the amendment that was written into the law for the purpose of restricting the importation of foreign oil, and entirely disregarded not only what Congress has done but everything the President and the various agencies under him have recommended in behalf of restricted importations?
Mr. FLEMMING. Mr. Chairman, Senator Neely, may I just raise the question of procedure? Senator Neely has asked me what I certainly regard as a very relevant question relative to oil imports. As the members of this committee know, I have had certain definite responsibilities in that area. I have taken certain definite steps in that area. I have certain convictions relative to that situation and its relation to national security. I would be very happy at this point to, in effect, kind of suspend my discussion of the Middle East situation and discuss the oil-imports situation just as briefly as I can.
Senator OʻMAHONEY. Let me say to Senator Neely that we intend to go fully into this import matter, and if you will permit Mr. Flemming to proceed with the Middle East
Senator NEELY. Gladly, and I withdraw my question, but will repeat it at a more appropriate time.
Mr. FLEMMING. Yes, sir.
Senator NEELY. I think you attempted to have the law obeyed, but the important companies ignored your appeals.
Mr. FLEMMING. Senator Neely, I will say that I have had some difficulties in that area, I can assure you, over the past few months, and I will be very happy to discuss them with the members of the committee.
Now, if I might just go back into the basis for the operation here, we do have in the record the fact that there is this basic voluntary agreement relating to foreign petroleum supply which was approved by the Attorney General under the Defense Production Act Amendments of 1955.
By an Executive order, Executive Order 10480, the function of approving agreements in the interest of national defense was delegated to the Director of the Office of Defense Mobilization, while other agencies of the Government were authorized to make recommendations to the Director with respect to agreements and programs within their spheres of defense activities.
The Department of the Interior was assigned this responsibility for petroleum.
With respect to oil agreements, these assignments of responsibility by statute and by Executive order or in order of executive use are as follows:
First, the Secretary of the Interior is directed to consult with industry to encourage the development of voluntary agreements for purposes of national defense and to make recommendations relative to such agreements.
Second, the Director of the Office of Defense Mobilization is, of course, directed to review the recommendations of the Department of the Interior, to consult with other interested defense agencies, and if he feels it is appropriate to do so, make a finding to the effect that the proposed agreement is in the interest of national defense.
The Attorney General, of course, as we have already noted, has the responsibility of reviewing the proposed agreements, and if he determines that the advantages to the national defense outweigh the adverse effects on the competitive free enterprise system, then he is authorized to approve the agreement.
Then if the Attorney General approves the agreement, the Director of the Office of Defense Mobilization is authorized to request the individuals to participate in the agreement, and to extend immunity from the antitrust laws and the Federal Trade Commission Act with respect to those actions authorized by the approved agreement.
And then, finally, it is the Secretary of the Interior who is to supervise the conduct of operations under the approved agreement.
Now, those are just briefly, Mr. Chairman, the responsibilities of the various parts of the executive branch in connection with an operation of this kind.
In my judgment-and I have already said this in response to your question, Mr. Chairman—there is no doubt about the importance to the national defense of the plan of action dealing with the Middle East situation which was developed under the agreement of longstanding dealing with foreign oil supply.
In connection with this particular agreement now—this is the plan of action under which the Middle East operations are functioningthe Government had before it the recommendations of the Department of the Interior and strong recommendations from the Department of Defense and the Department of State. And those, of course, are a matter of record, and I am sure you will have them incorporated in this record at an appropriate time. In fact, they have been publicized quite widely.
Representatives of the various agencies, of course, will tell you in some detail the considerations most concerned with their activities. But all I want to say is that I can assure the committee that very careful consideration was given to the substantive issue involved here on the part of all interested agencies. That really was my responsibility, to see to it that all interested agencies did have the opportunity of participation.
And then, as we have already indicated, the Attorney General concluded after consultation that the benefits to the national defense of the plan of action outweigh its possible adverse effects upon the competitive free enterprise system.
Senator O'MAHONEY. "You have referred, Dr. Flemming, to the recommendations of the Department of State and the Department of Defense and the Department of the Interior? Mr. FLEMMING. Correct.
Senator OʻMAHONEY. And correctly assumed that they would be made a part of the record. If anybody has them now, you may offer them-I want them offered from that side. I would like to have them put in the record and a notation made of their entry, and they can be printed in the appendix.
(The recommendations of the Department of State and the Department of Defense and the Department of the Interior referred to above were made a part of the record, and will be found in the appendix.)
Mr. FLEMMING. Mr. Chairman, I have here at this time a release from the White House at Augusta, Ga., dated November 30, 1956, stating that
The President today, after consultation with the Secretary of State and the Acting Secretary of State, authorized the Director of Defense Mobilization to
request the Secretary of Interior to permit the United States petroleum industryand so forth-in other words, to put this plan of action into effectand I think that might very well be made a matter of record.
I also have here a release issued by the Office of Defense Mobilization which deals with a request to the oil companies to participate in an amended plan of action. And I think that might very well go in at this point.
Then in connection with that release, there are a whole series of letters from the various departments concerned.
Senator O'MAHONEY. May I suggest that Mr. Kendall can file those and
not take your time. We will note their entry at this time.
(The release from the White House, Augusta, Ga., dated November 30, 1956, was made a part of the record, and will be found in the appendix.)
The release issued by the Office of Defense Mobilization dealing with a request to the oil companies to participate in an amended plan of action, referred to above, was made a part of the record, and will be found in the appendix.)
Mr. FLEMMING. Mr. Chairman, in my own mind there is little doubt but that the device of implementing this existing voluntary agreement is the best way under existing law to deal with the kind of situation that confronts us as far as the Middle East is concerned.
Because of the complexity of foreign oil operations and the necessity for coordination between the United States and foreign oil abroad, it is clear that the knowledge and skills to be found in the oil industry are essential under any plan that might be worked out to meet an emergency of this kind.
And it seems to me that this provides, this particular amendment to the Defense Production Act, a method for dealing with the situation which on the whole and on balance is probably the best way of dealing with it unless the Government wants to get much more deeply into the operation of the oil industry than it has ever been.
I think in this connection it is very important to keep this in mind, that this is a voluntary agreement, entered into on the part of these companies, calling for voluntary action. The Government is not in a position to direct these companies to do certain things, but the Government has said, if you propose to do certain things in order to deal with the emergency, you may submit your proposals to us——to the Government—and if the Government approves your proposals, then you are immune from prosecution under the antitrust laws.
This is not a carte blanche delegation of authority to this committee. The committee by itself cannot take any action whatever. All the committee can do is to recommend to the Government that certain steps be taken. And then it is up to the Government to determine whether or not those steps should be approved. If those steps are approved and carried out by the members of the committee, then of course under the law they are immune from prosecution under the antitrust law.
Mr. Chairman, that briefly is the way in which this particular plan of action came into operation. That briefly indicates the assignments of responsibilities to the various departments and agencies. And I have indicated in conclusion my own feeling that the Congress has given us a very good law here, and that if we operate under this law
carefully, that we can make a contribution to dealing with an emergency situation, and can do it at all times in such a way that the Government retains control of the operations.
Senator OʻMAHONEY. In that, I think, we are probably all in agreement. I know of no disagreement on the point that the Government should be in control all the time.
Mr. FLEMMING. That is right.
Senator O'MAHONEY. There will be references—I state it now not because I want to interrogate you about it, but because I want the record to show that it is not being overlooked by the committee—to the amendments to the Defense Production Act of 1955 containing this provision in the amendment of section 708, in defining the sort of voluntary agreements to be written:
Relating to equipment used primarily by or for the military which is being procured by the Department of Defense, or any department thereof, and the exchange of materials, equipment, and personnel to be used in the production of such equipment.
Now, obviously, the plan under which you are acting was not drawn under this section. Mr. FLEMMING. That is correct. Senator O’MAHONEY. It was drawn under the previous law of 1950.
Mr. FLEMMING. Well, it was approved under– I don't know whether this is subsection 2 or not-I mean, what follows right after the language that you have just read “2, to acts and omissions," and so on, it was approved under that. In other words, just briefly, as I understand it, just to summarize that particular part of the amendment, it said, if there was in existence prior to the passage of these amendments a voluntary agreement, it can continue to be—it can remain in existence provided the Attorney General makes the kind of certification called for.
Senator O’MAHONEY. Let me ask you, if in your opinion, or the opinion of your counsel, such a plan of action as is now operating could be put into effect now under the existing law. I wanted to avoid the legal debate at this time, to postpone that to the future when the Department of Justice will be here.
Mr. FLEMMING. Mr. Chairman, let me respond to it in this way, because it does go to my basic authority, and obviously I have had advice on this which I consider to be sound. If the Attorney General had refused to make the certification that he did make relative to the voluntary agreement relating to foreign petroleum supplies, as amended, that voluntary agreement would have lapsed, and there would be no authority under existing law to bring such voluntary agreement into existence.
Senator O'MAHONEY. There was another question I would like to ask you, Mr. Flemming—you have done well, you don't need to look at your counsel
Mr. FLEMMING. I want to be careful. I have got good counsel here.
Senator O'MAHONEY. I know it. And I congratulate you on having such good counsel; it is important.
Mr. FLEMMING. Thank you.
Senator O’MAHONEY. The other question is this: When I addressed an inquiry to you as to who prepared the agreement, you conferred with your excellent counsel. And then you said in your answer that