you accepted the responsibility for what was done. Now, obviously, that wasn't a direct answer to my question.

Mr. FLEMMING. Mr. Chairman, so that we are clear here, you are now talking about the voluntary agreement as amended on May 8, 1956?

Senator O'MAHONEY. Now I am talking about the August 10 docu

ment.

Mr. FLEMMING. You are talking about the plan of action that was presented to us on August 10. The Department of the Interior prepared it, and submitted it to us.

Senator O'MAHONEY. I just wanted to fix the responsibility. And we have taken it off of your shoulders now, and put it on the Depart

ment

Mr. FLEMMING. To a certain extent you have. I approved it.

Mr. McHUGH. I wonder if you could tell us, Dr. Flemming, when that plan was submitted to the Attorney General for his approval? Mr. FLEMMING. Mr. Chairman, the Attorney General and his representatives began to partiticpate in the discussions involving this plan of action the latter part of July, I would say the last 2 or 3 days of July 1956, and was kept fully apprised of all developments in connection with the consideration of the plan of action, and I am sure that his representatives would testify that they made suggestions relative to the plan of action which were incorporated in it. The formal letter from me to the Attorney General was transmitted, as well as the formal letter to the Chairman of the Federal Trade Commission, on August 10, 1956. And I received on the same day a letter from the Attorney General approving the plan.

Mr. McHUGH. Does that mean that the Attorney General on that same day had to study and analyze this plan to determine whether or not the needs of national defense outweighed the consequences from a competitive point of view?

Mr. FLEMMING. It does not, Mr. Chairman, because I have very clearly pointed out that the Attorney General was in on this matter dating back toward the latter days of July, and was a full participant in what was going on from that time until the time that there was the formal exchange of letters. In other words, this was a case where the Government decided to do its consulting by a method other than writing a lot of letters back and forth-which I found to be a pretty good way of operating anyhow-and then when you finally enter into a formal exchange of letters you have already had a pretty good meeting of minds on the part of the interested parties.

Mr. McHUGH. In this connection, I wonder if you could furnish for the benefit of the committees here the various letters that you have received from the Attorney General approving the plan of action, and approving the previous agreements relating to petroleum?

Mr. FLEMMING. I would be very happy to. We will give you the

whole file on that.

(The material referred to may be found in the appendix.)

Senator O'MAHONEY. Have you completed your statement?

Mr. FLEMMING. I do not have anything further. I am prepared to respond to questions.

Senator O'MAHONEY. Do you intend to respond to the question of Senator Neely now about imports?

Mr. FLEMMING. If you would like to have me, I would be very happy to at this point.

Senator O'MAHONEY. You may proceed.

OIL IMPORTS

Mr. FLEMMING. Mr. Chairman and Senator Neely, I might make just a preliminary comment on the oil-import situation. I will say very frankly that I don't have all of my dates, and so on, here with me, of the various communications that I issued to the oil companies, because I wasn't aware we were going to go into this at this time. But I can tell you the story, I think, without that technical information. The chairman read into the record the provisions of section 7 of the Trade Agreements Act. And I am acquainted with the legislative history back of section 7.

As you recall, Senator Neely, some time prior to the Senate's consideration of section 7, a Presidential Advisory Committee on Energy, Supplies, and Resources had issued a report. It was my privilege to serve as the Chairman of that Committee. It was in reality a Čabinet Committee. It was a committee that was set up to take a look at the whole energy field, and they considered not only the question of oil but also the question of gas and coal, and so on. But we did spend a great deal of time on the oil-import problem. And as a committee we arrived at the conclusion that the oil-import situation was moving in a direction which presented a very serious issue as far as national defense was concerned. We felt that if it continued to move in that direction that it would remove the incentive for exploration and discovery in this country, or certainly seriously undermine that incentive. And so we said that we felt that the oil imports should be related to the domestic production, and we suggested that the proportionate relationship that existed in 1954 should be the goal and the objective of the Government and of the industry.

We appreciated the difficulties that are involved in taking a historical base for approaching a problem of this kind, but after considering a great many other approaches we decided that this would be the best. We urged the companies to accept this on a voluntary basis. We said, however, that if companies did not accept it on a voluntary basis, we felt that the Government would be under obligation to consider what appropriate action could or should be taken.

Senator NEELY. May I interrupt you?

Mr. FLEMMING. Surely.

Senator NEELY. You doubtless recall that such outstanding administration spokesmen as Senator Millikin, of Colorado, and Senator Carlson, of Kansas, said in response to inquiries on the floor of the Senate when the amendment was under consideration, that if the oil companies did not reduce their imports, in accordance with the law We were then endeavoring to pass, they were certain that the administration would take vigorous action in behalf of reduced importations. Mr. FLEMMING. I think, Senator Neely, that that is an accurate Summary of the views that were expressed on the floor of the Senate when this amendment was under consideration.

Senator NEELY. It may not be important, but may I add that if it had not been for this assurance given in behalf of the administration,

in my judgment my amendment, which would have very definitely reduced these imports would have been adopted.

Mr. FLEMMING. If I might, Senator, complete the account of this Cabinet Committee report, there is just one other point I want to make on it. In the report we did say that we felt that this question of the proportionate relationship between imports and domestic production should be reviewed from time to time. But nevertheless we were very firm in our conclusion and in our conviction that there was a definite relationship between the oil import problem and the national defense. I think we ought to point out at this time, because this is a matter that is oftentimes misunderstood by people-we didn't recommendand I don't know of anyone who has recommended this-we didn't recommend that imports should be held at the 1954 level. We said that the proportionate relationship that existed in 1954 between imports and domestic production should be maintained. And of course we know that domestic production has been moving up, and therefore, of course, that recommendation made provision for oil imports to move up. This wasn't an effort to freeze the oil imports at a particular level.

Now, after the passage of section 7 of the Trade Agreements Act, you will recall that I took various steps in an effort to determine whether or not we could obtain voluntary action on the part of the oil companies that would result in maintaining that proportionate relationship. The chairman in his opening statement referred to the fact that we had a voluntary agreement. I am afraid I will have to say that I never obtained an agreement on the part of the oil companies in this particular instance. But we did start on what we thought was an orderly procedure.

First of all, we issued a letter stating that we were going to ask them to file reports with us regularly so that we would have the basic information on which we would determine what action should be taken.

In the second place, after getting some of those, or getting the initial reports, we wrote to them and indicated that their reports indicated that they were not going to achieve this objective of the 1954 proportionate relationship. We made specific suggestions as to what they could do to reach that particular objective. We asked them to let us know whether or not they would do that.

Senator NEELY. Did they make any commitments in response to that letter?

Mr. FLEMMING. Well, some of the companies, Senator Neely-and I certainly want to be perfectly fair about this-some of the companies did respond very quickly and very promptly, and indicated a willingness to follow the suggestion made by the Government.

Senator NEELY. Would you object to stating how many of the 15 companies listed by the chairman this morning, and also by others here responded to that appeal?

Mr. FLEMMING. If I might, I would like to have the opportunity of checking my records on this so that I would be absolutely accurate in responding to your question. But I will be very glad to furnish it for the record at this particular point. As I say, some of them have been very cooperative right along the line in connection with requests that we have made of this nature.

(The information referred to is as follows:)

The various letters from the Director of the Office of Defense Mobilization to oil importers concerning the rate of importation were sent to varying mailing lists, one of them to as many as 48 companies. Of the total companies to which any letter was sent, eight are members of the MEEC. Of these, the reports from five indicated positive cooperation with the request for limitations on imports.

Senator O'MAHONEY. May I ask you if any of the conferences were held with Standard of New Jersey?

Mr. FLEMMING. Mr. Chairman, I did not confer with any of the companies. I did this by correspondence.

Senator O'MAHONEY. Were any of these letters addressed to Standard of Jersey?

Mr. FLEMMING. Oh, yes, they were addressed-I would have to refresh my memory as to just what response I received from it.

Senator O'MAHONEY. The record of your answers now makes it clear that the Chairman of the Middle East Emergency Committee is a vice president of Standard of New Jersey, which did not make a satisfactory answer to your plea about imports.

Mr. FLEMMING. Mr. Chairman, I didn't say that.

Senator O'MAHONEY. I know you didn't, but I interpreted it. Mr. FLEMMING. Well, Mr. Chairman, I am afraid that that would not be a correct interpretation. I would hope that the committee would let me refresh my memory on the individual companies, but in view of the fact that this has come in, my recollection is distinctly that Standard of New Jersey has cooperated with us completely on the oil import problem. Now, again, I would like to check the record to make sure of the accuracy of my statement. But that is my distinct recollection, that Standard of New Jersey is one of the companies that cooperated with us in this particular area.

Senator O'MAHONEY. The committees, of course, and the chairmen want only the facts.

Mr. FLEMMING. That is right. And so if you will give me a chance to dig into the files on that I will give you the facts on it, I assure

you.

Well, without trying to indicate the exact dates, one or two other communications of a similar nature were sent to the oil importing companies.

Finally, however, the response was such that I decided to hold a formal hearing under the provisions of section 7 of the Trade Agreements Act on the oil import problem.

As you appreciate, Senator Neely, the amendment does not require me to hold a formal hearing, or to hold a hearing-I won't call it formal in the sense of an administrative proceeding, but a public hearing. I have decided, however, that it is just good public policy in situations of this kind before I take any action to hold a public hearing so that anyone who wants to appear and express a point of view can do so. That public hearing was held in November 1956. And representatives of both sides of this particular issue did appear, and we have a very voluminous record. However, soon after that hearing closed, the Suez crisis developed. And obviously the factual information which had been presented to us at the hearing was out of date-I mean, as soon as we knew

26

Senator NEELY. What, if any, cooperation have you had from the Independent Oil Operators Association, which is headed by Mr. Walter Hallanan, a very distinguished man from West Virginia?

Mr. FLEMMING. Mr. Robert Wood is the head of the Independent Association. Mr. Hallanan is the present Chairman of the National Petroleum Council, Senator Neely.

I would say, speaking as a Director of the Office of Defense Mobilization, that my relationships with the independent domestic producers have been very fine.

Senator NEELY. They have been very cooperative in this matter? Mr. FLEMMING. They have been cooperative. They have been willing to let the Government attempt to work this out on a voluntary basis. But it is only when they arrived at the conclusion that the response to our efforts was not sufficient or not adequate that they filed a petition under section 7. And it was in response to the petition that they filed under section 7 that we held the public hearing.

I think, just to round it out, I should say this, that because of the fact that the factual situation changed completely as a result of the loss of the Suez Canal and the loss of the Iraq pipeline, I suspended action on the petition in December, but indicated very clearly that as soon as the situation began to settle down again we would again call for information and determine whether or not the plans of the importing companies were in harmony with our objective, and if not, we would be prepared to take appropriate action under section 7. Senator NEELY. Thank you very much, Mr. Flemming. Senator O'MAHONEY. Are there any questions?

Senator BARRETT. I would like to ask a question.

Senator O'MAHONEY. Senator Barrett.

Senator BARRETT. Dr. Flemming, you indicated that you had no authority to require these various producers to increase their production. Do you have any authority insofar as refining is concerned, as relating to refined products?

Mr. FLEMMING. Mr. Chairman and Senator, in our judgment the Defense Production Act does give us authority as far as refinery runs are concerned and I am speaking now simply of the legal situation and not touching on the policy issue involved. I stated that, and that is the best judgment of my general counsel and of others who are acquainted with the Defense Production Act and the history of that

act.

Senator BARRETT. Now, having in mind

Mr. FLEMMING. Mr. Chairman, if I might, I would like to have the opportunity at this point of inserting in the record the relevant provision of the Defense Production Act which I feel gives us that authority.

Senator O'MAHONEY. It is so ordered.

(The provision of the Defense Production Act referred to may be found on p. 49.)

Senator BARRETT. Having in mind your authority in that regard, nevertheless you attempted to work out this plan on a voluntary basis with the producers of the company; did you not?

Mr. FLEMMING. Yes, sir. Every step that has been taken up to the present time has been on a voluntary basis.

Senator BARRETT. Now, I did understand you to say that the producers themselves based the application for relief under the provisions