March 4, 1985

GOVERNMENT ORDERS

OIL SUBSTITUTION AND CONSERVATION ACT


The House resumed from Thursday, February 28, consideration of the motion of Mr. Wise (for the Minister of Energy, Mines and Resources) that Bill C-24, an Act to amend the Oil Substitution and Conservation Act and the Canadian Home Insulation Program Act, be read the second time and referred to the Standing Committee on National Resources and Public Works.


NDP

John Edmund Parry

New Democratic Party

Mr. John Parry (Kenora-Rainy River):

Mr. Speaker, it is a pleasure to speak today on Bill C-24. However, it is a pleasure which I would rather forgo, because in a sense I am an alumnus of the energy conservation programs which were established in 1981. I lived in a house which had been reinsulated under CHIP by the previous owner. I also took advantage of the program to upgrade a second house. I have a warm feeling for the program which dissipates when I look at the proposal to eliminate these programs.

CHIP provided for the upgrading of insulation in homes. It was an effort to conserve the precious resources of oil and petroleum products which have done so much to contribute to the economic development of Canada, and to our comfort, both in the home and in the workplace. Of course, those resources have Finite limits and must be conserved if our children and our children's children are to benefit from those resources.

The Canadian Oil Substitution Program is one of which I have not been able to take advantage. At one point my wife and I thought about taking advantage of the program, but we realized that an election would be held in a matter of months and, therefore, conserved our Financial resources. Nevertheless, I feel in a sense that I am an alumnus of the program, the termination of which we are now debating.

What were the benefits of the Canadian Oil Substitution Program and the Canadian Home Insulation Program? According to the Department of Energy, Mines and Resources, Canada is saving approximately 42,000 barrels of oil per day, or 15.3 million barrels per year, as a result of

COSP. That is enough oil to heat 650,000 homes a year. It represents an energy saving of approximately 2.8 per cent of the country's total oil consumption.

Under COSP, a household which converts from oil can expect a return on the investment in a period of two to three years. However, the benefits of COSP were not limited to the saving of oil. Naturally, there was a reduction in the oil bill, but there was a stimulative effect on the awareness, consciousness and understanding of people in the country with respect to energy conservation.

I must take issue with the Hon. Member for Nepean-Carle-ton (Mr. Tupper) who seemed to believe that this particular egg preceded the chicken. I know from my own experience that until the federal Government established these programs and the Financial incentives and information which were included with the application packages, I was not aware of the potential for energy saving which they have promoted and realized. Of course, it is all very well for those who were professionally engaged in that field to say that the knowledge always existed. However, the communication of the knowledge to the people who were making the decisions-in this case, the home owners of Canada-was crucial. That knowledge was given a real impetus with the introduction of COSP and CHIP.

The effects of the elimination of COSP and CHIP will be considerable. I was surprised to hear some Members of the House addressing this matter without raising the effects that the elimination of the programs will have on employment in Canada. In terms of 1979 dollars, for every $1 million spent on the Canadian Oil Substitution Program, 30.5 person-years of employment were created. As a result of the grants alone, 16,750 person-years of employment were created between 1981 and 1985. If that figure is combined with the expenditures by householders and home owners, the figure comes to over 50,000 person-years of employment for the same period. OfFicials at the Department of Energy, Mines and Resources, have stated that if COSP had lasted for its planned duration through 1990, S650 million would have been spent on the program and a rough estimate of the employment lost in that period by the elimination of the program would be 59,000 person-years.

[DOT] (mo)

These Figures, Mr. Speaker, are serious. They are serious in good times but they are doubly serious in times of rising unemployment when it is extremely difFicult for youth to get their First job and the necessary training. One of the advantages of this program which I saw at First hand was that it enabled young people to work as assistants to retroFitters and

March 4, 1985

Oil Substitution Act

upgraders and to learn some of the skills which were involved. By comparison with expenditures on oil exploration, the investment in the Canada Oil Substitution Program and the Canadian Home Insulation Program were vastly more productive in terms of the creation of jobs.

I am sure Hon. Members on the government side will say that I am suggesting that oil exploration should cease in Canada; far from it. We have to recognize that through such loopholes as superdepletion, the PetroCan presence in frontier areas and the subsidization and financing assistance given to some of the high rollers in that industry-which have now come a cropper-the federal Government was indeed heavily engaged in that area and certainly not to as good an effect as in the conservation programs which we debate today.

One of the things that concerns me most, and I believe should concern all Hon. Members of this House, is that the energy conservation and substitution industries in this country are being hit with a double-whammy by this Government. On the one hand, we have the elimination of the CHIP and COSP programs; on the other hand, what do we have in terms of the innovative alternative energy programs which were introduced during the last Government? We have the same picture, Mr. Speaker. We have the elimination of those programs so that those who are looking at this sector for their main means of employment and livelihood are going to find that the upgrading and retrofitting is being shrunk back and that it is far more difficult to get work in terms of alternate energy programs which were financed through the National Research Council.

I remember watching on television, I suppose, slightly over five years ago now, a former Minister of Finance of Canada saying that there was a necessity to inflict, or, shall we say, subject oneself to, short-term pain for long-term gain. By the elimination of the COSP and CHIP programs, we are indeed going to find ourselves in a position of accepting short-term gain for long-term pain. In my opinion, that is indicative of a reversal of policy by the Progressive Conservative Party over the years.

We must remember, after all, that oil is a finite resource; it isn't going to be there forever. We are taking it out of the ground and the more we take out the less there is left, no matter how fast we find it. We may indeed, Mr. Speaker, be reaching the end of what was known as the "elastic horizon". The observation was made as early as the 1930s in the U.S. Congress that every 10 years there was a cycle whereby the oil companies came to Congress and said that the reserves were running out and three years later the proven reserves had doubled. We have to recognize that, like the frog on the lily pad which doubles in area every second day, the lily pad will eventually cover the whole pond and the pool of Canadian oil reserves will eventually be depleted no matter how much is found through new exploration efforts. The National Energy Board, after all, predicts that production of conventional oil 20 years from now will have declined to 28 per cent of the current level.

[DOT] (IM5)

Let us look at what that means. Does it mean, for example, that each of us is only going to do one quarter as much driving? Does it mean that we are going to heat our homes to an average of 45 degrees Fahrenheit instead of the average 68 degrees we heat them to today? Certainly there will be new oil discovered in the frontier areas and certainly we are going to see further technological advances in the upgrading of oil sands and heavy oil deposits, but in many cases the production costs of those resources are prohibitively high and they are located in highly environmentally-sensitive areas.

The Canadian Oil Substitution Program and the Canadian Home Insulation Program represented common sense investments by the Government in Canada's future energy security, and I think it would be a great shame if they were entirely eliminated. I would also like to mention a few of the effects of the deadlines set in the elimination of those programs. My belief is that those deadlines were set simply by a reference to a calendar and with very little consideration of what was going to happen to Canadians as a result. The deadline of March 31, 1985, for large parts of this country-not, of course, the most intensively inhabited parts but the large geographical areas of this country where many Canadians live-means it would be impossible for a person to do in-ground installation and get in the program under the deadline. If that was a calculation on the part of the Government, and I hope it was not, then it was a cynical move.

I wonder, in looking at the elimination of this program, how much of it is owned to the pressure and influence of Canada's oil-producing provinces. I wonder if indeed we are seeing the effects of powerful interests in the Progressive Conservative Party which view conservation as a competitor for the resources which fill their slush-I am sorry, heritage-funds, and which give them the funds to make their governments go the way they want them to. We should look at evaluating the effect of the elimination of these programs on the world energy supply situation. The beauty, of course, of refined petroleum products as an energy source is their portability, their extreme flexibility. They cannot indefinitely or infinitely be substituted for by hydro-electric resources which this country is better endowed with. Thus the need to conserve them, because, after all, the countries which can supply the shortfall which Canada will inevitably have can also supply the shortfalls that other countries are experiencing, and which they may be better able to finance than Canada as we begin the 21st century.

[DOT] (1120)

There was no evaluation done on the Canadian Oil Substitution Program. There have been suggestions that middle and upper middle-income Canadians benefited disproportionately from this program. The figures indeed suggest that that is not the case. The total CHIP grant money given to low-income households was higher than that given to middle and high-income groups; 24.3 per cent of CHIP dollars were given to the 21.1 per cent of eligible home owners earning less than $15,000 annually. Of course, when we consider the tax effects,

March 4, 1985

we find that an even higher proportion went to eligible home owners in the low-income range. Therefore, it was certainly not a discriminatory program in the sense of favouring the wealthy rather than the less well off.

From 1977 to 1982 insulation activities under CHIP constituted 43 per cent of all retrofitting work done. It is said that 65 per cent of the work done would not have been done if it were not for CHIP and that 75 per cent of all dollars would not have been spent without the CHIP Program.

What will the effect on our country be if these programs are simply eliminated as the Government proposes? I think a large part of the effect will be what is known as the shuffle down, of which we have seen far too much in Canadian society over the past few years. This is where a program is instituted at one level of government, is abandoned, and the levels of government below the level which instituted it find that program to be so necessary that they decide to carry on a replica of the program at their own level of government.

I can see, for example, that with the elimination of this program many provinces, municipalities and utilities will bring in similar programs to encourage conservation. In the sense that the torch of conservation will not be dropped and extinguished, which this legislation envisages, that is good. In the sense that Canadians will end up paying, because of the fragmentation of the program, a higher price for the very laudable, legitimate and essential objectives of these two programs, that will be a loss to Canada.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Jim Hawkes (Calgary West):

Mr. Speaker, it is a pleasure to be back in the House on a Monday morning and to start off our debate with the Member for Kenora-Rainy River (Mr. Parry). I must deal with one of his comments about powerful influences in the Conservative Party and its impact on conservation. The Member may be new to the House, but I suspect he is not new to some understanding of the world-wide situation over the past decade as it affects oil and gas. The Member really should be aware of the fact that conservation, as it affects the use of oil, is clearly a function of price. World-wide patterns in terms of the consumption of oil show a very steady and clear decline in the world. That decline exists in Canada, the United States of America and around the world.

The clearest-cut indication of a reduction in the use of oil comes from Europe. In Europe, OPEC raised the price of oil. Furthermore, governments implemented punitive taxation so that the consumption of oil included not only the price of the product but the taxation. The effects were predictable: the consumption of that commodity dropped.

What did the Liberals and the New Democrats do in this country? When faced with that reality they regulated the price of that commodity so that it was less than the market value. The Hon. Member for Kenora-Rainy River says that he and his Party are concerned about conservation, yet his Party

Oil Substitution Act

supported the abolition of a basic principle that would have led to conservation.

The most important principle related to the conservation of oil is the price, because if it is raised the use of oil goes down and the commodity is preserved. However, we sat in this Chamber during the last five and one-half years and watched the implementation of the National Energy Program, the basic principle of which was to regulate the price of oil at less than 75 per cent of the market price. If that is not a principle to encourage use, I don't know what is. Surely one would expect greater use of that product when it is subsidized to the tune of 25 per cent of its value. Moreover, Canada did not even produce enough of that commodity for our use at that time, which meant that its greater use encouraged the importation of oil from other countries. Of course, the importation of oil from other countries means the export of Canadian jobs. That is the substance of the program that was put in place.

At the same time that Canadian jobs were being exported, inflation was being caused.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Stanley J. Hovdebo

New Democratic Party

Mr. Hovdebo:

You voted for it.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

The Hon. Member says that we voted for it. It will be a very frosty day when any Member of Parliament from the Province of Alberta, Saskatchewan, British Columbia or Quebec votes for a program like that. It will never happen in his lifetime or mine.

Once the former Government set in place its national energy policy which exported Canadian jobs, increased inflation and the indebtedness of the nation, it then established the CHIP and COSP Programs. These were programs which gave grants to home owners who wished to convert from oil to another kind of energy. However, there was no money to Finance these programs and the Government had to borrow money which ultimately must be paid back by our children and our children's children.

Were these programs made available to all Canadians? No. Studies conducted by the Department of Energy, Mines and Resources show that only 29 per cent of the expenditures for the CHIP Program encouraged people to insulate their homes. What does that say, Mr. Speaker? It says that 71 per cent of the money spent did not even do that. The Liberals as a government must have said, because they had no money and had to go to the market-place to borrow to give to someone, that this was a priority, that we have made oil 25 per cent cheaper than it should have been to encourage its use, and then borrowed the money to give to people to insulate their homes so they would use less. It was a transfer from oil to some other kind of fuel so people might use less fuel.

Can I suggest to this House, Mr. Speaker, that at that time it was an insane package. It was absolutely insane. If Canada at that particular point in its history had been less interfering, had let the true value of a commodity rise to its true value, the differential cost for someone to heat his home with oil or transfer to some other energy commodity, of which there is an

March 4, 1985

Oil Substitution Act

abundance in Canada, would have been so massive, the saving so enormous, that home owners could have quite easily gone to the bank, borrowed money, put in the insulation, made the transfer and had more money in their pockets. That was the potential reality of encouraging Canadians to transfer from this commodity called oil to something else called wood, electricity, coal, or whatever. That would have happened. It would inevitably have happened if one had simply left the market-place alone.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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LIB

Don Boudria

Liberal

Mr. Boudria:

How can you possibly prove that?

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

If a person were paying $500 to heat his home in the cold winter months, and that person found out he could heat it for $200 or $250, he would have an enormous monthly saving. It is certainly an adequate amount of money to enable a person to go to the bank, borrow and do the sensible economic thing. But no, Mr. Speaker, we had a government that did not believe Canadians were sensible people. Instead we capped the price of oil, exported the jobs out of the country to Mexico, Saudi Arabia or wherever, and borrowed money which our kids will have to pay back. And this was done to give to whom?

The Hon. Member for Kenora-Rainy River, by educational and economic background, is someone we would call a middle-income Canadian. He is probably on the upper edge in terms of income and on the upper edge in terms of educational level, yet he stands in this House today and says: "I like this program. I took two houses. I got two grants". That, I suggest, Mr. Speaker, is an anecdotal piece of proof positive of who benefited. That is the New Democratic Party. It was not one grant but two grants that he had. That makes the program twice as valuable.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

John Edmund Parry

New Democratic Party

Mr. Parry:

No way. Read the blues.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

He insulated two houses. Where does that money come from, Mr. Speaker? It comes from your children, and your children's children way into the future. That is borrowed money that was used to insulate the Member's two houses.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

John Edmund Parry

New Democratic Party

Mr. Parry:

I have a point of order, Mr. Speaker. My reputation for the ability to absorb provocation must have spread to the Government benches. If the Hon. Member cares to check the record, he will find that I purchased one house that had already been insulated under a grant and I insulated the second one myself.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

I thank the Hon. Member for the correction, Mr. Speaker. He lived in two houses that were supported by federal grant money. He took advantage of it with lower fuel bills in two situations because of a federal Government program. It is incredible.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

Cyril Keeper

New Democratic Party

Mr. Keeper:

I have a point of order, Mr. Speaker. The Member seems to be indicating that my colleague is the only person in this country who lives in a house that is supported by

federal grant money. Does he not know that housing in this country-

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Marcel Danis (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Progressive Conservative

Mr. Deputy Speaker:

The Hon. Member will have a chance to reply after the Member's speech.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

We heard statistics from the Hon. Member. They boggled my mind. Canadian home owners were eligible for this program and I thought, from sitting in this House for five and a half years, that the New Democratic Party cared a lot about renters. We have a large number of renters. Were they eligible for COSP? Were they eligible for CHIP? No, Mr. Speaker. Were all the senior citizens who live in lodges and public housing of one kind or another eligible for CHIP or COSP?

Would the federal Government, if it went into the marketplace to borrow funds, have given the funds to the Hon. Member for Kenora-Rainy River or to the senior citizens in my riding, some of whom live very near starvation without funds to buy sufficient food? That is the business of governing, Mr. Speaker. That is really what governing is all about. There is not enough in the way of resources for us to do everything that we think we would like to do. We must make the hard choices. I suggest to the House that the only problem with this piece of legislation before us today from my perspective is that the deadline dates we are putting in are too far into the future. I would like to see them shortened. I would like to see today as the day the programs are ended. I have a sense of certitude today that in the month of March, 1985, federal taxpayers are paying 36 cents out of every dollar on interest on the public debt. When I came here almost six years ago that amount was 17 cents. We had 83 cents to spend on useful programs for senior citizens, children, family and health care. Six years later we have 64 cents, because 36 cents goes to pay interest on the public debt.

I think it is close to a crime that we have borrowed that kind of money-

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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LIB

Herbert O. Sparrow

Liberal

Mrs. Sparrow:

It is a crime.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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PC

Frederick James (Jim) Hawkes

Progressive Conservative

Mr. Hawkes:

I have spoken in the House before about the social costs of increased unemployment and the reality that a 1 per cent increase in unemployment will bring about an approximate 5 per cent increase in stress-related diseases, including suicide, alcoholism, spousal battery and child battery. These things come as the natural consequence of bad economic policy in a country. When we make a mistake in this Chamber, the ripple effects and the consequences of that mistake can be enormous for individual Canadians. We have made nothing but mistakes in the last five or six years in terms of energy policy, nothing but mistakes. I feel proud and comfortable just to belong to a political Party which is moving as quickly as it can to rectify those mistakes and to turn the situation around.

I look forward to an energy agreement in the next few weeks which will say clearly to Canadians that we are returning to market-based pricing. We must have market-based pricing for the commodity called oil. We must move as quickly as we can to that market-based mechanism for the commodity called natural gas and for all other commodities within the energy field. In different parts of the country it will make sense to heat homes with one kind of fuel and in other parts of the country with different kinds of fuel. However, if we move artificiality into that system, we distort the market, our productivity and the long-term potential efficiency of the nation.

I spent the weekend in the Town of Oyen near the Saskatchewan border. It happened to be the fiftieth wedding anniversary of my aunt and uncle. On such an occasion there is time for reflection. When one tries to celebrate an event of that kind which spans a 50-year period of time, one looks back. We were sitting out there on the Prairies, on the Saskatchewan border, in the heart of wheat country. We noticed the snow. People were happy about the snow because they have been close to a drought situation for a couple of years and the presence of a great deal of snow augurs well for the potential of a good crop. When one looks back over that period of time, one realizes that this couple was married in an era when they travelled by horseback and transported grain in horse-drawn wagons. Now, 50 years later, we have jet airplanes, cars and highways. It provides one with a chance to reflect on how far the country has come, how far that particular region has come, in a period of 50 years.

Then one stops for a minute and says that one thing which was different 50 years ago is that government did not think it knew best. We did not have so many experts. We let people make their own decisions. We did not raise taxation to the point where we were taking money, great amounts of money, out of the pockets of people and letting bureaucrats and politicians decide how to spend it. We let people decide in their own wisdom how best to spend it. When it comes to the elimination of these two programs, all we are really saying to the Canadian people and to the House is: let the people decide; do not bribe them to make a decision which is not really in their best interests.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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?

Some Hon. Members:

Hear, hear!

Oil Substitution Act

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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NDP

John Edmund Parry

New Democratic Party

Mr. Parry:

Mr. Speaker, I welcome the opportunity to correct some of the fallacies and allegations inherent in the Hon. Member's speech, but with only 10 minutes to do it I will be put under some pressure. The Hon. Member used the term "insanity"-and indeed, if we listened to some of the comments this morning we must admit that he had some justification-to describe the legislation which the Government now plans to repeal.

In view of the fact that the Act implementing the Canadian Oil Substitution Program was passed in 1981, with second reading in one hour, referred to Committee of the Whole by unanimous consent and inside an hour read a third time and passed, does the Hon. Member think that that insanity was endemic in his Party at the time or that it was simply an aberration? Is he using the term "insanity" in a clinical or colloquial fashion?

Finally, I should like him to comment upon the observation of the Hon. Member for Qu'Appelle-Moose Mountain (Mr. Hamilton), who said at the time: "I want to conclude by congratulating the Minister again for bringing this legislation forward". Let us hear what the Hon. Member considers insanity to be.

Topic:   GOVERNMENT ORDERS
Subtopic:   OIL SUBSTITUTION AND CONSERVATION ACT
Sub-subtopic:   MEASURE TO AMEND
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March 4, 1985