Administrator, concluded that petroleum imports should not be permitted to enter the country in amounts sufficient to weaken the domestic petroleum producing industry and thus threaten our Nation's security. Soon after World War II Congress began to investigate and give extensive consideration to the status of the domestic petroleum industry and how imported foreign oil affected this industry. On January 31, 1947, the Special Committee Investigating Petroleum Resources, set up by the Senate, in Senate Report No. 9, 79th Congress, concluded as follows: In the final analysis, the reserves within our own borders are more likely than not to constitute the citadel of our defense. It follows that nothing should be done to weaken the productive capacity of domestic reserves, and that every possible step should be taken both to increase these reserves and continuously to develop them to such a degree as would occasion no regret in the event of war. * This Nation now faces two alternatives: 1. To await with hope the discovery of sufficient Or 2. To take steps to guarantee a domestic petroleum supply adequate for all eventualities by means of: (a) Incentives to promote the search for new deposits of petroleum within the boundaries of the United States and in the continental shelf; and (b) The continuation of the present program looking to the manufacture of synthetic liquid fuels to supplement our domestic crude supply. All the facts before us impel the choice of the second alternative. In the 1950's Congress continued to concern itself with the domestic petroleum industry and the matter of imports of foreign oil. In developing a national petroleum imports policy, Congress had the benefit of studies and conclusions of the executive branch, such as: The conclusions of the Defense Production Administration, established as a result of the Korean conflict, in January 1953, stated the results of its studies regarding defense matters in a report entitled "Background for Defense, Expanding Our Industrial Might," as follows: The machines of peace and war run on petroleum. A program to expand American industry substantially and keep it operating at top capacity requires constantly increasing quantities for fuel, for lubricants, and for many chemicals made from petroleum-everything from toluene for TNT to wax for packagings. Greater industrial activity and peak levels of employment demand more and more gasoline for The defense program will by 1953 boost our petroleum If we are to meet the needs, we shall have to drill more wells each year than ever before in our history. We shall have to expand the refineries where crude oil is made into gasoline and fuel oil and the other finished petroleum products. We shall have to enlarge our transportation facilities to move the crude petroleum to the refineries and the finished products to consumers. In May of 1953, the Secretary of the Interior McKay, in appearing before the House Ways and Means Committee, stated as follows: I recognize the importance of domestic petroleum production to national defense and the contribution it makes to the national economy and that of the oil-producing States. I also realize that the petroleum industry is unique in that discovery and development of new reserves constitute a major and vital activity of the industry. Oil and gas produced must be replaced by a vigorous and progressive search for new reserves or the Nation's ability to produce petroleum would rapidly deteriorate. I recognize how important it is that the strength of the domestic industry be maintained. To maintain this strength requires an economic climate that promotes the competition, progress, and technological development that has brought the industry to its present high degree of capability. The domestic industry today is undergoing a period of readjustment. The rate of growth in demand has leveled off after the rapid gains which followed the Korean outbreak. At the same time the expansion of supply has brought about a more normal reserve capacity. Demand is now dropping seasonally at the close of a warm winter. Domestic production has been reduced in recent months, and there should be a corresponding cut in imports. There is evidence that already the industry is effecting such adjustments. [Emphasis supplied.] However, imports of oil did not decrease, as was hoped, but continued to increase. In view of this continuing increase the President became concerned and took action. On July 30, 1954, the President established an Advisory Committee on Energy Supplies and Resources Policy. The Director of the Office of Defense Mobilization was designated as Chairman and the heads of the following agencies served as members: Departments of State, Treasury, Defense, Justice, the Interior, and Commerce and Labor. The White House directive respecting the Committee's assignment included the following specific statements: At the direction of the President the Committee will undertake a study to evaluate all factors pertaining to the continued development of energy supplies and resources fuels in the United States, with the aim of strengthening the national defense, providing orderly industrial growth, and The Committee will review factors affecting the require- gas. Upon conclusion of its work the President's Advisory Committee on Energy Supplies and Resources Policy recommended: CRUDE OIL IMPORTS AND RESIDUAL FUEL OIL IMPORTS An expanding domestic oil industry, plus a healthy oil industry in friendly countries which help to supply the U.S. market, constitute basically important elements in the kind of industrial strength which contributes most to a strong national defense. Other energy industries, especially coal, must also maintain a level of operation which will make possible rapid expansion in output should that become necessary. In this complex picture both domestic production and imports have important parts to play; neither should be sacrificed to the other. Since World War II importation of crude oil and residual fuel oil into the United States has increased substantially, with the result that today these oils supply a significant part of the U.S. market for fuels. The Committee believes that if the imports of crude and residual oils should exceed significantly the respective proportions that these imports of oils bore to the production of domestic crude oil in 1954, the domestic fuels situation could be so impaired as to endanger the orderly industrial growth which assures the military and civilian supplies and reserves that are necessary to the national defense. There would be an inadequate incentive for exploration and the discovery of new sources of supply. In view of the foregoing, the committee concludes that in the interest of national defense imports should be kept in the balance recommended above. It is highly desirable that this be done by voluntary, individual action of those who are importing or those who become importers of crude or residual oil. The committee believes that every effort should be made and will be made to avoid the necessity of governmental intervention. The committee recommends, however, that if in the future the imports of crude oil and residual fuel oils exceed significantly the respective proportions that such imported oils bore to domestic production of crude oil in 1954, appropriate action should be taken. The committee recommends further that the desirable proportionate relationships between imports and domestic production be reviewed from time to time in the light of industrial expansion and changing economic and national defense requirements. 98-356-68- -2 This report was released on February 26, 1955. As a result of this study the oil importing companies were requested to voluntarily restrict imports of petroleum into the United States on an individual company basis in conformity with the report of the President's Advisory Committee on Energy Supplies and Resources Policy. Meanwhile this whole matter of petroleum imports was being debated in Congress. As a result Congress wrote section 7 into the Trade Agreements Extension Act of 1955 (69 Stat. 162). This section, known as the national security amendment reads as follows: In order to further the policy and purpose of this section, whenever the Director of the Office of Defense Mobilization has reason to believe that any article is being imported into the United States in such quantities as to threaten to impair the national security, he shall so advise the President, and if the President agrees that there is reason for such belief, the President shall cause an immediate investigation to be made to determine the facts. If, on the basis of such investigation, and the report to him of the findings and recommendations made in connection therewith, the President finds that the article is being imported into the United States in such quantities as to threaten to impair the national security, he shall take such action as he deems necessary to adjust the imports of such article to a level that will not threaten to impair the national security. In adopting the National Security Amendment, the Senate Finance Committee (Rept. 232, 84th Cong., first sess.) stated: (9) The committee had before it several proposals dealing with specific commodities, namely petroleum, fluorspar, lead, and zinc. In lieu of specific action on each of these the committee adopted an amendment which specifies that the Director of the Office of Defense Mobilization shall report to the President when he has reason to believe that imports of a commodity are entering the United States in such quantities as to threaten to impair the national security; that the President shall cause an immediate investigation to be made if he feels there is reason for such belief; and that the President, if he finds a threat to the national security exists, shall take whatever action is necessary to adjust imports to a level that will not threaten to impair the national security. The committee believes that this amendment will provide a means for assistance to the various national defense industries which would have been affected by the individual amendments presented. The White House issued on February 26, 1955, a report based on a study by the President's Advisory Committee on Energy Supplies and Resources Policy which indicates the importance of a strong domestic petroleum industry. Congress has thus provided the necessary tools for the President to use in case the growing tide of petroleum imports did not subside. Imports of petroleum had been increasing during the years 1949 to 1955 and continued to increase during 1955. As a consequence of the increased level of imports during 1955 and the first half of 1956, as well as the projected increase in the level of imports scheduled for the last half of 1956, the Independent Petroleum Association of America (IPAA) filed a petition on August 7, 1956, requesting action under section 7, the National Security Amendment, of the Trade Agreements Extension Act of 1955 (69 Stat. 162). Pursuant thereto, the Director of Defense Mobilization held public hearings beginning on October 22, 1956. Early in December 1956, due to the changed conditions growing out of the Suez crisis, the Director of Defense Mobilization suspended action on the case. However, on April 23, 1957, upon further review of the oil import situation and projected increases in oil imports, the Director of ODM "advised the President pursuant to section 7 of the Trade Agreements Extension Act of 1955, that he had reason to believe that crude oil is being imported into the United States in such quantities as to threaten to impair the national security." The growing threat to the domestic petroleum industry as cited by congressional, industrial, and administrative studies, as well as the ODM certification, led to the establishment by the President of the United States on June 26, 1957, of a Special Čabinet Committee to Investigate Crude Oil Imports. This committee was made up of: Sinclair Weeks, Secretary of Commerce, Chairman; John Foster Dulles, Secretary of State; Donald A. Quarles, for Secretary of Defense; George M. Humphrey, Secretary of the Treasury; Fred A. Seaton, Secretary of the Interior, and James Mitchell, Secretary of Labor. The report of this Special Cabinet Committee To Investigate Crude Oil Imports, in part states: In summary, unless a reasonable limitation of petroleum imports is brought about, your committee believes that: (a) Oil imports will flow into this country in evermounting quantities, entirely disproportionate to the quantities needed to supplement domestic supply. (b) There will be a resultant discouragement of, and decrease in, domestic production. (c) There will be a marked decline in domestic exploration and development. (d) In the event of a serious emergency, this Nation. will find itself years away from attaining the level of petroleum production necessary to meet our national security needs. Your committee [the Special Cabinet Committee to Investigate Crude Oil Imports] recognizes that there are important foreign policy aspects to the problem of limiting petroleum imports. The oil reserves and production capacities of other free nations, as well as our own, are important to our national security. A number of countries inevitably depend in varying degree upon access to our domestic market for their petroleum exports and it must be recognized that it is also in the interest of our national security that our allies and friends have healthy and expanding economies. It is |