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stored in the Reserve may be affected.

Barging of oil to the SPR

storage sites was used during 1977-1978 and was terminated when a pipeline transportation system from marine terminals to the SPR sites was completed. No oil has been barged to a SPR storage site since December 1978.

There have been tests of the oil in storage at the single cavern in question. These tests were conducted under the supervision of the investigative agencies. The results will be furnished to these agencies and then eventually to the SPR organization.

We have recently verified by standard oil specification tests the quality of crude oil in the other SPR caverns which have been filled with crude oil. In each case the tests demonstrate that the oil fully meets our specifications. Moreover, I am authorized by

the Department's Inspector General to state that no evidence has been found that suggests that any other facility has received substandard oil, and that there is no credible evidence that oil may have been stolen, substituted or otherwise compromised at any other facility.

We have reexamined our security procedures and our current methods for receiving and checking the quality of each load of crude oil purchased and delivered to the Reserve. We are absolutely confident that these procedures and test methods assure that the oil placed in the Reserve both meets our specifications and will be available to meet every requirement that may be placed on the Reserve in the future.

Secretary Edwards and I have every confidence in the integrity of the overall SPR program and the quality of the crude oil in the Reserve.

This concludes my remarks and I would be pleased to respond to the Committee's questions.

Senator NICKLES. Thank you very much, Mr. Vaughan.
Mr. Carr, Department of Justice.

STATEMENT OF HON. RONALD G. CARR, DEPUTY ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE, ACCOMPANIED BY PATRICK A. MULLOY, SENIOR ATTORNEY, ENERGY SECTION, ANTITRUST DIVISION

Mr. CARR. Thank you, Mr. Chairman. It is an honor to appear before this committee to testify on behalf of the Department of Justice in support of S. 2332.

My prepared statement to the committee outlines the reasons for the Department's support of the bill, which would extend the antitrust defense in section 252 of EPCA from June 1, 1982, to July 1, 1983.

In that prepared statement I noted that we see no competitive problems in granting a longer extension if that should prove desirable.

The agreement on an international energy program, which created the IEA in 1974, established a cooperative system among member countries to handle oil supply disruptions and an information system to enable governments to monitor the oil market on a continuing basis.

It was understood by the countries involved that it could be necessary to seek advice and assistance from the international oil industry in order to implement the agreement's allocation and information provisions.

In order to secure effective assistance from U.S. oil companies, Congress in 1975 provided participating companies a limited antitrust defense for certain actions taken in furtherance of the IEA's mission. This antitrust defense is limited in three important ways: First, actions by companies must be taken in the course of implementing only the allocation and information provisions of the IEP. Second, such actions must also be taken only in the context of developing or carrying out an approved voluntary agreement or plan of action.

And, third, such actions must not be taken for the purpose of injuring competition.

At that time, Congress also established procedural antitrust safeguards to govern the participation of U.S. oil companies in IEA activities. It also directed the Attorney General and the Federal Trade Commission to monitor activities under the antitrust defense in order to promote competition and to prevent anticompetitive practices and effects.

The Department has done that, and I am here to reiterate what we have stated on numerous occasions in the past, namely that we have found no adverse impact on competition from the conduct of meetings, the subjects discussed or any other oil company activities authorized under section 252 of EPCA.

I also want to briefly mention three proposed amendments to S. 2332. Two of these amendments deal with the strategic petroleum reserve drawdown plan and domestic contingency planning and do not relate to the antitrust defense. I defer to my colleagues from the Departments of State and Energy on those matters.

I do want to address the other amendment, number 1353, which provides that the section 252 antitrust defense shall not be effective with respect to IEA actions under the "Decision on Preparation for Future Supply Disruptions" adopted by the IEA's Governing Board on December 10 of last year.

That Decision concerned actions which governments, not companies, might take to deal with oil supply disruptions, that while creating market uncertainties, did not reach the 7-percent level required to trigger the IEA's emergency allocation system.

The Department of Justice participated in the formulation of the administration's position on the Decision. Nothing in it commits the U.S. Government or oil companies under its jurisdiction to take any actions not currently provided for within the allocation and information provisions of the IEP, which are, as I stated previously, the only activities covered by the section 252 defense.

I also do not believe the proposed amendment is necessary with respect to making the antitrust defense in applicable to questionnaire A and B submissions except when 7-percent level oil shortage that triggers the IEA's emergency allocation system is in effect.

The Department of Justice must approve the submission of company specific disaggregated data in QA's to the IEA Secretariat. It has been our consistent position that we will not extend the antitrust defense to such submissions except when an emergency has been triggered, or, for the purpose of determining whether a general or a selective emergency trigger needs to be pulled.,Z(UPDATE) No. Name Date-J. 96-771-Folio 91-106 Ext. A771A.006%000.0

The proposed amendment could be interpreted to interfere with the IEA's legitimate need to have access to such information in a period of oil shortages when the Secretariat has to determine whether to activate the sharing system.

Mr. Chairman, that concludes my prepared remarks. I would, of course, be happy to answer any questions you or members of the committee may have.

[The prepared statement of Mr. Carr follows:]

STATEMENT OF HON. RONALD G. CARR, DEPUTY ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE

Mr. Chairman and Members of the Committee.

It is an honor to appear before this Committee to testify on behalf of the Department of Justice in support of S. 2332, a bill to extend the expiration date of Section 252 of the Energy Policy and Conservation Act from June 1, 1982 to July 1, 1983. That section provides a limited antitrust defense to United States oil companies participating in voluntary agreements to assist in carrying out the allocation and information provisions of the Agreement on an International Energy Program (IEP).

As you know, this Agreement grew out of talks among a number of oil consuming nations in the aftermath of the 1973-74 Arab oil embargo. The United States and other industrialized nations decided that coordinated action aimed at minimizing the effects of potential oil supply disruptions was needed. Consequently, after lengthy negotiations, the United States and 15 other countries entered into the IEP Agreement in Paris on November 18, 1974. Since that time the total number of participating nations has increased to 21.

The IEP established the IEA as an autonomous institution within the Organization for Economic Cooperation and Development (OECD), which is an international organization headquartered in Paris and composed of mainly Western European countries, Canada, Japan and the United States. The IEA is responsible for coordinating the information gathering and emergency oil sharing systems created by the IEP. It is directed by a Governing Board

comprised of representatives of the IEA Member Governments, and maintains a multinational staff, the IEA Secretariat, which is responsible for the daily operations of the Agency.

The centerpiece of the IEP Agreement is a cooperative system to handle oil supply disruptions. Use of the system can be

triggered when either an individual nation or the IEP signatories collectively experience a shortfall in oil supplies that is equivalent to seven percent or more of a base period final consumption calculated under procedures agreed upon by member nations. When put into action, the system involves the equitable sharing of oil according to a carefully constructed formula set forth in the IEP. During supply uncertainties, a special emergency information system (the Questionnaire A & B system) is activated and oil companies and governments supply the IEA data on oil production, consumption, imports and exports. This information is used to determine whether to trigger the sharing system and, if triggered, how to allocate available oil. The initial responsibility for the fuller development of the

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Base period final consumption (BPFC), for shortfall measurement purposes, is calculated for the most recent four historical quarters for which data are available. A country's BPFC includes indigenous production, plus imports, less exports, plus or minus stock changes of crude oil, NGL, feedstocks, and products. Where a country has been building stocks over the base period, the stock change is subtracted in the equation. Conversely, where a country is drawing down stocks over the base period, the stock change is added.

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