Energy legislation in the 94th Congress

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Title:
Energy legislation in the 94th Congress a summary report
Series Title:
Serial - Senate, Committee on Interior and Insular Affairs
Added title page title:
National fuels and energy policy study
Physical Description:
vii, 90 p. : ill. ; 24 cm.
Language:
English
Creator:
Library of Congress -- Congressional Research Service
Gulick, Frances
Gulick, Frances ( comp )
United States -- Congress. -- Senate. -- Committee on Interior and Insular Affairs
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U.S. Govt. Print. Off.
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Washington
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Energy policy -- United States   ( lcsh )
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bibliography   ( marcgt )
federal government publication   ( marcgt )
non-fiction   ( marcgt )

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Includes bibliographical references.
General Note:
CIS Microfiche Accession Numbers: CIS 77 S442-1
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Reuse of record except for individual research requires license from Congressional Information Service, Inc.
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At head of title: 94th Congress, 2d session. Committee print.
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Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
Statement of Responsibility:
prepared by the Congressional Research Service at the request of Henry M. Jackson, chairman, Committee on Interior and Insular Affairs, United States Senate, pursuant to S. Res. 45, a National fuels and energy policy study.

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University of Florida
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aleph - 022446774
oclc - 02731006X
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lcc - KF49
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AA00022462:00001

Table of Contents
    Front Cover
        Page i
        Page ii
    Memorandum
        Page iii
        Page iv
    Letter of transmittal
        Page v
        Page vi
    Table of Contents
        Page vii
        Page viii
    Abstract and introduction
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
    I. Measures to protect against interruptions in supply
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
    II. Measures to restrain and reshape energy demand
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
    III. New oil and natural gas management measures
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
    IV. Measures intended to encourage increased production of other energy supplies
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
    V. Reduced dependence on foreign imports of oil
        Page 63
        Page 64
        Page 65
        Page 66
        Page 67
        Page 68
        Page 69
        Page 70
    Conclusion: Issues confronting the 95th Congress
        Page 71
        Page 72
    Appendix I. Breakdown of Federal natural resources, environment and energy: Budget authority and outlays fiscal year 1976 and fiscal year 1977
        Page 73
        Page 74
        Page 75
        Page 76
    Appendix II. Comparison of three composite energy plans
        Page 77
        Page 78
        Page 79
        Page 80
        Page 81
        Page 82
        Page 83
        Page 84
    Appendix III. Selected energy related legislation in the 94th Congress
        Page 85
        Page 86
        Page 87
        Page 88
        Page 89
        Page 90
    Back Cover
        Page 91
        Page 92
Full Text



94th Congress ICOMITTEE PRINT 2d Session C



ENERGY LEGISLATION IN
THE 94TH CONGRESS


A SUMMARY REPORT
PREPARED BY THE

CONGRESSIONAL RESEARCH SERVICE
AT THE REQUEST OF

HENRY M. JACKSON, Chairman
COMMITTEE ON INTERIOR AND
INSULAR AFFAIRS
UNITED STATES SENATE
PURSUANT TO S. Res. 45
A NATIONAL FUELS AND ENERGY
POLICY STUDY
Serial No. 94-45 (92-135)

c F Lo41






Printed for the use
Committee on Interior and

U.S. GOVERNMENT PRINTING OFFICE 79-157 WASHINGTON : 1976







NATIONAL FUELS AND ENERGY POLICY STUDY

(SENATE RESOLUTION 45, 92D CONGRESS),

This publication is printed for the use of Senators participating in the National Fuels and Energy Policy Study, authorized by Senate Resolution 45 of the 92d Congress.
Senate Resolution 45, introduced by Senators Jennings Randolph and Henry M. Jackson, was amended and agreed to by the Senate on May 3, 1971. The resolution authorized the Senate Committee on Interior and Insular Affairs and ex officio members of the Committees on Commerce and Public Works and the Joint Committee on Atomic Energy to make a comprehensive study of programs and policies required to meet national energy needs.
Subsequently, the Senate approved the addition of ex-officio members from the Committees on Aeronautical and Space Sciences, on Finance, on Foreign Relations, on Government Operations, and on Labor and Public Welfare.

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

HENRY M. JACKSON, Washington, Chairman
FRANK CHURCH, Idaho PAUL J. FANNIN, Arizona
LEE METCALF, Montana CLIFFORD P. HANSEN, Wyoming
J. BENNETT JOHNSTON, Louisiana MARK 0. HATFIELD, Oregon
JAMES ABOUREZK, South Dakota JAMES A. MCCLURE, Idaho
FLOYD K. HASKELL, Colorado DEWEY F. BARTLETT, Oklahoma
JOHN GLENN, Ohio
RICHARD STONE, Florida
DALE BUMPERS, Arkansas
GRENVILLE GARSIDE, Special Counsel and Staff Director DANIEL A. DREYFUS, Deputy Staff Director for Legislation WILLIAM J. VAN NESS, Chif Counsel D. MICHAEL HARVEY, Deputy Chief Cvunsel OWEN J. MALONE, Senior Counsel W. 0. (FRED) CRAFT, Jr., Minority Counsel



Ex-OFFICIO MEMBERS FOR NATIONAL FUELS AND ENERGY POLICY STUDY

Committee on Senators
AERONAUTICAL AND SPACE SCIENCES FRANK E. MOSS, Utah, Chairman
BARRY GOLDWATER, Arizona
COMMERCE WARREN G. MAGNUSON, Washington,
Chairman
JAMES B. PEARSON, Kansas
FINANCE RUSSELL B. LONG, Louisiana, Chairman
PAUL J. FANNIN, Arizona
FOREIGN RELATIONS CLAIBORNE PELL, Rhode Island
CLIFFORD P. CASE, New Jersey
GOVERN MENT OPERATIONS ABRAHAM RIBICOFF, Connecticut,
Chairman
CHARLES H. PERCY, Illinois
LABOR AND PUBLIC WELFARE WILLIAM D. HATHAWAY, Maine
RICHARD S. SCHWEIKER, Pennsylvania

PUBLIC WORKS JENNINGS RANDOLPH, West Virginia,
Chairman
PETE V. DOMENICI, New Mexico
ATOMIC ENERGY [JOINT] JOSEPH M. MONTOYA, New Mexico
HOWARD H. BAKER, JR., Tennessee

*

RICHARD D. GRUNDY, Exec-ative Secretary and Professional Staff DAVID STANG, Deputy Directvr for Minority

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MEMORANDUM OF THE CHAIRMAN


To members and ex-ofleio members of the National Fuels and Energy
Policy Studly (S. Res. 4.5, 92d Cong.), Committee on Interior
and Insular Affairs:
This report undertakes to describe congressional activity in the field of energy policy during the 94th Congress.
During these 2 years, more committees in both House and Senate were grappling with complex and controversial energy issues than ever before. While the legislative record is far from complete, it is tdready clear that the 94th Congress has made valuable contributions to the work of developing new energy policies commenced in the 93d Congress, sufficient to mark this period as a major turning point in our Nation's energy history.
This report provides valuable background on energy-related legislation already enacted. I have, therefore, directed that it be published as a committee print for the use of Senators participating in the National Fuels and Energy Policy Study.
HEXRY M. JACKSOx. Chairman.
(III)












LETTER OF TRANSMITTAL


THE LIBRARY OF CONGRESS, CONGRESSIONAL RESEARCH SERVICE, Washington, D.C., October 30, 1976. Hon. HENRY M. JACKSON, U.S. Senate,
Washington, D.C.
DEAR SENATOR JACKSON: In response to your request, I am transmitting herewith a manuscript entitled: "Energy Legislation in the 94th Congress." This review of the progress of energy legislation was compiled by Dr. Frances Gulick. with the assistance of Dr. Warren Donnelly. Senior Specialist. Duane Thompson. Martin Lee. Joseph Biniek, Gary Pagliano, David Lindahl, and Carl Behrens, analysts in our Environment and Natural Resources Policy Division. Glenn Moore, and Dr. Martha Krebs-Leidecker, analysts in the Science Policy Division.
I am pleased that you have decided to issue this report as a committee print to bring it to the attention of the entire Congress.
Sincerely,
NORMAN BECKMAN, Acting Director.
(V)















CONTENTS

Page
Memorandum of the Chairman ---------------------------------------- in
Letter of transmittal ------------------------------------------------- v
Abstract and introduction -------------------------------------------- 1
Legislative actions ------------------------------------------------ 1
Three distinctive features ---------------------------------------- 3
1. Alea.sures to protect against interruptions in supply ---------------- 7
A. National strategic petroleum reserves ---------------------- 7
B. Gen-eral standby emergency authorities and responsibilities-- 8 C. Gasoline rationing contingency plan ------------------------ 9
D. Allocation of petroleum and petroleum products ------------ 10
E. Authorities with respect to international energy program ---- 10 111. Measures to restrain and reshape energy demand--_ --------------- 13
A. Automotive fuel economy ---------------------------------- 14
B. State energy conservation plans and consumer product conservation measures -------------------------------------- 15
C. Modification of buildings to conserve energy ----------------- 16
D. Industrial conservation measures -------------------------- I'd
E. Improved transportation systems --------------------------- IT
F. Recycling of solid waste and energy recovery --------------- 19
III. New oil and natural gas management measures -------------------- 21
A. Removal of the depletion allowance and changes in some
foreign oil tax credits ----------------------------------- 21
B. Contrast. ,,g positions on pricing policy ---------------------- 25
C. Oil pricing policy as enacted in Public Law 94-163 ---------- 26
D. Natural gas pricing policies -------------------------------- 29
H. Expediting a decision on Alaskan gas route ----------------- 30
F. Other oil and natural gas measures ------------------------ 31
IV. Measures intended to encourage increased production of other energy
supplies ------------------------------------------------------- 3.5
A. Conversion to coal to conserve oil and gas and incentives for
increased production ------------------------------------- 35
B. Nuclear power --------------------------------------------- 42
C. Solar and other nonnuclear energy research and development --------------------------------------------------- 56
D. ERDA 1977 Budget Authorization and Appropriations ------- 59
E. A national energy production board and other management
measures ----------------------------------------------- 60
V. Reduced dependence on foreign imports of oil ---------------------- 63
A. Oil import tariffs and other fees ----------------------------- 63
B. Quantitative oil import controls ---------------------------- 65
C. Import qnotas-a dual role --------------------------------- 66
Conclusion: Issues confronting the 95th Congress ------------------------ 71

APPENDIXES
Appendix T.-Breakdown of Federal Natural R(,sonrces. Environment and
Energy: Budget Authority and Outlays fiscal year 1976 and fiscal year
1977 -------------------------------------------------------------- 75
appendix II.-Comparison of three composite energy plan ------------------- 79
Appendix III.-Selected energy related legislation hi the 94th Congress_ 87
(VII)

















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ENERGY LEGISLATION IN THE 94TH CONGRESS
ABSTRACT AND INTRODUCTION
The 94th Congress has been deeply engaged in intensive consideration of a strategic national issue: What should be the size, substance, and shape of a comprehensive energy policy for the United States? The closing days of the 2d session of the 94th Congress found Congress and the Administration well along in the forging of a consensus on such a new energy policy, to a degree that was unexpected after months of Virtual deadlock that persisted down to the final weeks of December 1975.
The landmark legislation marking that emerging consensus is incorporated in Public Law 94-163, the Energy Policy and Conservation Act of 1975 (EPCA), signed December 22. 1975, and Public Law 94-385, the Energy Conservation and Production Act (ECPA) signed August 22, 1976, supplemented and extended by a dozen other energy enactments.
These laws mark the culmination of more than three and a half years of almost continuous debate by the 93d and 94th Congresses on legislation to provide standby energy emergency authorities as well as longer-run measures to conserve existing fuels and to increase the volume of domestic energy supplies. Although the cumulative enactments to date cannot be said to constitute a comprehensive new energy policy, the progress has nonetheless been substantial. Throughout the legislative record there are clear signs that Congress has both assumed authority and shared responsibility for the outcome of the rigorous tasks required to shape a new energy policy for the Nation's future.
This brief review of the 94th Congress and the energy record describes that progress as well as some of the remaining issues which the 95th Congress will confront.

LEGISLATIVE ACTIONS
As finally enacted, EPCA (Public Law 94-163) consolidates provisions of five major bills introduced in the 94th Congress: S. 622, the Standby Energy Authorities Act: S. 677, the Strategic Energy Reserves Act; S. 349, the Energy Labeling and Disclosure Act; S. 1882, the Automobile Fuel Economy Act; and H.R. 7014, the Energy Conservation and Oil Economy Act. In addition, it amends and substantially extends the provisions o~f the expiring Emergency Petroleum Allocation Act of 1973. The other multi-purpose law, ECPA (Public Law 94-385) strongly supplements and extends these measures, and itself incorporates the modified provisions of at least three other bills: H.R. 8650, the Energy Conservation in Buildings Act, S. 2932, a comprehensive Energy Conservation Act, and T.R. 12169/S. 2872, extending the Federal Energy Administration.
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The degree of the enlarging consensus between Congress and the Administration may be seen in the fact that these two new omnibus energy acts alone cover the substance of at least seven of the 13 titles of the Administration's original composite energy bill (S. 594/H.R. 2633 and H.R. 2650).
These and other energy-related laws enacted by the 94th Congress provide for the following:
Strategic Reserves.-Authorization to create a system of national strategic petroleum reserves, and development and civilian
use of naval petroleum reserves.
Emergency Authority.-A wide range of standby energy emergency legislation, including continuing authority for allocation of scarce materials and petroleum, as well as end-use rationing of
gasoline.
Oil Pricing.-Permits carefully monitored and moderated increases in domestic crude oil prices over a period of 39 months under new procedures ensuring close Congressional management, oversight and control. Stripper-well production is exempt from
the price ceilings, effective September 1. 1976.
Conversion from Oil and Gas to Coal.-Extended authority for
the FEA Administrator to force industrial conversion from oil
and natural gas to coal.
Energy Conserration.-A $2 billion loan guarantee program
to encourage industry and business to practice energy conservation; a $200 million grant program for a three-year weatherization assistance program administered by FEA; mandatory building standards and winterization assistance; mandatory labeling for energy.-using appliances: additional funding to promote mass transportation; and mandatory fuel economy standards for passenger automobiles.
Energy Research, Devrelopment and Demonstration.-Increased
funding for solar and other renewable fuels, continued work on the nuclear power breeder reactor, and a quite substantial research and development program to promote the commercialization of
electric vehicles.
Major appropriation bills committed most of the $11.6 billion assumed for natural resources, environment, and energy outlays in the first concurrent resolution on the budget for fiscal year 1976, although some uncertainty still surrounds the 1977 ERDA budget, now operating on six-months continuing resolution, through March 1977. OM1B has estimated that actual outlays for these categories during fiscal year 1976 will be $11,284,000 and on a current services base will be as high as $16,536,000 in fiscal year 1977. See Appendix I for details.
Remaining from the original composite packages and not enacted at adjournment are:
Clean Air Act revisions: The failure to reach consensus on the
attempted revisions left the stronger standards (as laid down in
the 1970 Act and amended by ESECA in 1974) still in place.
Changes in regulatory procedures and investment credits for
utilities.
Deregulation) of the Nwellhead price of natural gas.
A number of provisions designed to speed up State decisions
on siting and development of major nuclear, coal, and other energy
facilities.





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The appearance of a substantial consensus on the enacted measures, however, does not mean that in sum they add up to the equivalent of a comprehensive new national energy policy. On the contrary, the key issue of what relative priority is to be given to reliance on nuclear energy as compared with fossil fuels and development of alternate renewable fuels has not yet been fully joined, although the elements of a major debate are emerging and gaining increased attention nationwide. The related issue of how and through what agencies, both private and public, capital is to be mobilized also remains to be resolved. The Administration's proposed Energy Independence Authority, a $100 billion loan and investment guarantee agency (S. 2532/H.R. 10267), has run into strong opposition and the congressional majority's National Energy Production Authority (S. 740) and national petroleum and natural gas conservation and coal substitution bill (S. 1777) were not reported from committee before Congress adjourned. Major confrontations may be expected if and when these are eventually put to vote.
Nonetheless, the progress is substantial. already sufficient to identify the legislative actions of the 94th Congress as a major turning point in national energy policy.

THREE DISTINCTIVE FEATURES
Underlying this intensive activity and the resultant enlarging consensus are several distinctive features that uniquely mark the efforts and achievements of this Congress-among them the adoption of a composite approach to energy policy, the repeal of the depletion allowance for large oil and gas firms, and the emergence of the concept of using quantitative restrictions as major management tools in restraining and reshaping energy demand.
The composite approach to formulating energy policy.-Responding
to the Administration's omnibus legislative package announced January 15, 1975, the 94th Congress approached the complex collection of basic energy issues and their legislative options collectively, as a whole.
While the Senate had investigated the full range of energy issues over the five years of the National Fuels and Energy Study, the House had not engaged in a similar exercise, which now, in a foreshortened period of time, began. The House task force exercises, its characteristic omnibus energy legislation and comprehensive hearings permitted a much more direct confrontation and debate on opposing and conflicting policies and options which the earlier piecemeal approach had often deflected or disguised.
Among the several comprehensive congressional proposals, the most prominent were the Congressional Majority proposals, a joint House and Senate economy-energy statement issued by the Democratic majority leadership on February 27. 1975. and a similar composite energy program announced by the Democratic Members of the House Ways and Means Committee on March 3, 1975. These are summarized in Appendix II.
While these by no means represented a formal legislative agenda, they served constructively to keep before Congress the breadth and complexity of the energy-economy continuum within which energy enactments must find their place and roles.





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Repeal of the depletion allowan.e and vew oil price managennt ?nitiafti;es.-After sixty years in which this provision wasa key factor in the U.S. petroleum industry's exploration, production and pricing policies, Congress repealed the 22-percent depletion allowance in its entirety for all major oil and natural gas producers-identified as those producing more than 2,000 barrels of oil per day, or 12 million cubic feet of natural gas per day-postponing its abolition for independent companies which do not have retail outlets and produce less than these amounts, on a graduated schedule until 1984.
While a number of major companies announced that removal of the depletion allowance would require reconsideration and reduction in their capital investment plans, there is some indication that the reductions would take place in projected capital ventures other than exploration and investment in developing new energy supplies.
Whatever the role of the depletion allowafice has been in the past, its recent repeal has cleared the way for a fresh look at oil and other fossil fuel production incentives, the effectiveness of which as stimulants to increased domestic production can be more easily measured and identified.
Among such production incentives, energy pricing policy ranks high as a candidate for major reassessment. The oil pricing initiatives enacted in EPCA and ECPA represent the first stages of a basic reconsideration of how energy prices in general and crude oil prices in particular are to be managed in the future.
Quantitative restrctions as a major e ergy policy mndzgement approach.-A unique feature of the congressional energy initiatives during this period has been the emergence of the concept of using mandatory quantitative limits as management tools in conserving energy, redirecting demand and stimulating increased production. This approach is a distinctive alternative to the Administration's heavy reliance on a market-oriented approach.
Several key bills incorporated quantitative control concepts of this type: The House Ways and Means energy bill, H.R. 6860, approved by the House on June 19, 1975, would have placed quantitative limitssubject to some flexibility--on the volume of crude oil and oil products which could be imported. This provision, however, was dropped in the amended version reported to the Senate on August 27, 1976, and the bill itself did not receive Senate floor action before adjournment. A quantitative ceiling on the volume of gasoline which may be consumed, which was included in the Energy Policy and Conservation Act as it passed the House, was dropped in conference. However, the bill as enacted retained discretionary authority to impose direct controls on refinery operations to limit the production of gasoline. It also extended the authority of the Federal Energy Administrator to compel powerplants and other industrial fuel-burning installations to convert from oil and natural gas to the use of domestic coal, an authority which the Senate National Petroleum and Natural Gas Conservation and Coal Substitution bill, S. 1777, would have made mandatory with full conversion by 1985.
None of these measures were approved. S. 1777, although tagged initially as of high priority, was not even reported from Committee. However, distasteful as such measures are even in times of war, the






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fact that they could be seriously proposed is evidence of growing congressional recognition that energy problems still unresolved may eventually require different, stronger remedies.
These and other still controversial issues await further congressional consideration but the outlines of a new national energy position have already appeared. With the enactment of the two major multipurpose energYy laws and the accompanying additional legislation, a framework laid out in the early composite plans has been substantially converted to a base on which further energy policy and laws can continue to be built.
The following summary describes energy legislation enacted, vetoed or pending at adjournment by the 94th Congress, under the following general functional topics:
1. Measures to protect against interruptions in energy supply.
11. Measures to restrain and redirect the use of energy.
111. New oil and natural gas management measures.
IV. Measures, intended to encourage increased production of other
energy supplies.
V. Measures designed to reduce dependence on foreign oil.
since, as acknowledged by the President, the Energy Policy and Conservation Act now "puts into place the first elements of a comprehensive national energy policy,"' each section begins with the appropriate measures from that act, followed by other enactments and pending legislation. The enactments are also listed, together with the reference House and Senate report numbers and dates of passage, in Appendix III.
1PresidAential Statement on signing P.L. 94-1,63, Dec. 22, 1975.












I. MEASURES To PROTECT AGAINST INIERRUPTIONS IN SUPPLY
The continuing heavy dependence on imported oil coupled with declining domestic production has heightened the importance of reaching agreement on and enactment of special measures to protect against another interruption of imports such as that produced by the Arab embargo. The principal measures designed to provide such protectiondevelopment of a system of national strategic petroleum reserves and standby allocation, rationing and other emergency energy conservation measures-were enacted in the Energy Policy and Conservation Act. Public Law 94-163.
A. NATIONAL STRATEGIC PETROLEUM RESERVES
A logical counterpart to continued dependence on oil imports, even at a decreasing rate, is the creation of some kind of strategic reserve capability to lbe drawn on in the event of serious interruption or depletion of supply.
In developing a reserve capability, there are two basic options open: Oil can be bought and stored in salt domes and tanks or developed in place and shut in, to be drawn on when needed.
Both of these options are provided for in the new omnibus energy act.
Title I, part B of the Energy Policy and Conservation Act provides for a system of national strategic petroleum reserves.
A strategic petroleum reserve is to be established for storage of up to I billion barrels of petroleum products and not less than 150 million barrels within 3 years of enactment. The purpose of the reserve is to reduce the impact of petroleum product supply disruptions and to carry out obligations under the international energy program. An early shortage reserve is also to be established to meet near-term emergencies. The early storage reserve plan was submitted to Congress on April 22,1976.
A plan for the entire reserve is to be prepared and transmitted to Congress by December 15, 1976. Within 7 years the volume of crude oil in the reserve is to be equal to the total volume of crude oil imported during a base period, within 18 months 10 percent, within 3 years 25 percent, and within 5 years 65 percent. In this section the reference is to crude oil rather than to petroleum products. No limitation is placed on cost and siting of the reserve or related facilities, although this and several other considerations are to be included in the strategic petroleum reserve plan. The impact of the acquisition of such large amounts of petroleum on world market prices and on competition within the petroleum industry is to be taken into account.
An industrial petroleum reserve may also be established with up to 3 percent of the oil imported or refined being placed in storage. A regional petroleum reserve for each FEA region in which demand
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for residential f uel oil and other products exceeds 20 percent of the demand for the preceding 24 months is also established for each FEA region with such deficits. Authority is given to the Administrator of FEA to implement the reserve by storing crude oil produced from Federal lands including the naval petroleum reserves, royalty oil, and oil purchased or received in trade. Drawdowns would be permitted only in accordance with the distribution plan.
Section 162 of the Act, entitled "Coordination wit h Imnport Quota System," ant 'icipating future enactment of the import quota proposed in 11.1R. 6860, provides an exemption from any quantitative restrictions for petroleum products imported into the- United States f Or storage in the Strategic Petroleum Reserve.
For more than a half century, the United States has maintained Naval Petroleum Reserves in Elk Hills and Buena Vista, Calif.; in Teapot Dome, Wyo.; and in northern Alaska. These deposits of crude petroleum were designated for the use of the Navy in the time of national emergency when sufficient 'supplies of foreign or domestic petroleum products could not be assured. Both Houses were agreed that some production from these reserves, ought to begin.
The Naval Petroleum Reserves Production Act (H.R. 49/S. 2173) was signed as Public Law 94-258 'on April 5, 1976. It provides for the full exploration and development of the naval petroleum reserves and permits limited production of Naval Petroleum Reserves No. 1-Elk Hills in California, No. 2-Buena' Vista in California, and No. 3Teapot Dome in Wyoming, within 90 days. of enactment, under the authority of the Secretary of the Navy. It defines "national, defense" for the purposes of permitting such production in terms broad enough to permit production to. offset a situation such as the Arab embargo of 1973; provides that production will not. exceed the maximum efficient rate determined in accordance with sound oilfield engineering practices for a period of 6 years, with provision for 3 year extensions thereafter. It authorizes the President at his discretion -to direct that all or any -part of oil produced from the, naval petroleum reserves be placed in the strategic reserve or be exchanged for stored petroleum of equal value. It retains the requirement that the sale of oil be by competitive bidding for periods of not more than 1 year;. prohibits the sale of more than 20 percent of the 'estimated Federal share of petroleum produced from Elk Hills to any buyer in a single year. Pipelines and facilities at this reserve are to be capable of handling 350,000 barrels of oil a day not later than 3 years after enactment. A special account is to be established in the Treasury to offset outlay requirements for continued exploration and development, construction and filling of a strategic reserve and for operations in, the Alaska reserve.

D. GENERAL STANDBY EMERGENCY AUTHORITIES AND RESPONSIBILITIES
The new law requires the President to transmit to Congress, within 180 days after the date of, enactment. of this legislation, one
or mre nery conservation contingency plans and a ')asolimie rafloning contingency plan. Additional such plans could be submitted at any time. No such contingency plan could become effective unless it was approved by a resolution passed by each House of Congress





9

within t hefirst period of 60 calendar days of continuous session of Congress after such transmittal, in accordance with procedures for expedited congressional review. 'No such approved plan could be put into e fect unless (1) the President found that a severe energy supply interruption required such implementation, and he transmitted to Congress a request to put such plan into effect, and (2) neither. House of Congress disapproved such request within the first period 'of 15 calendar days of continuous session of Congress after such transmittal. Such an approved plan could be put into effect without such additional review by Congress if and to the extent that the President determined, during a "7-percent shortfall period" that such implementation was necessary to meet the obligations of the Vnited States under the international energy program. A "7percent shortfall period" was defined as a period commencing on a date When, the President determined countries who are parties to the international energy program have sustained a reduction in oil supplies equal to at least 7 percent of average daily consumption during the base period and ending 60 days after the date on which he finds this condition no longer exists.
An energy conservation contingency plan is defined as a plan which imposed retrictions on the public or private use of energy which were necessary, to reduce energy consumption. No such plan could provide for the imposition of gasoline rationing or any tax, tariff, user fee, or minium price for any petroleum product or for any credit or deduction in computing any tax. Energy conservation contingency plans could remain in effect for the period specified in the plan up to 18 months. States or political subdivisions could be exempted from an energy conservation contingency plan if the President determined that a. comparable program or special circumstances exist in that jurisdiction.
Energy conservation contingency plans were issued by FEA for public cmment on May 28, 1976.(41 F.R. 21908).

C. GASOLINE RATIONING CONTINGENCY PLAN
The new law requires the President to prescribe a gasoline rationing contingency plan, as part of the regulation under section 4(a) of the Emergency Petroleum Allocation Act of 1973. As amended by the bill such a plan must provide for the establishment of a program for the rationing and ordering of priorities among classes of end users of gasoline and for the assignment of rights entitling certain classes of end users to obtain gasoline in precedence of other classes. No gasoline rationing contingency plan could be put into effect unless
(1) theprerequisites for Implementation of an energy conservation contingency plan were satisfied, and (2) the President determined that, without such rationing plan, all other practicable and authorized methods to limit energy demand were inadequate to achieve the o1)jectives of section 4(b) of the Emergency Petroleum Allocation Act. The President is directed to make appropriate adjustments in the petroleum allocation program in furtherance of a gasoline rationing contingency plan which is in effect. The President is directed to provide for the use of local boards (whose composition reflected the comnmity as a whole) of States or their political subdivisions to receive petitions
79-157-76--2





10

from end users of gasoline and to order reclassification or modification of any determination made with respect to the end users' rationing priority or entitlement. No gasoline rationing contingency. plan could impose a tax, provide for a tax credit or deduction, or impose any user fee except to cover administrative costs. -A gasoline rationing plan could remain in effect for up to 18 months.
It is indicative of the extreme reluctance Congress has -shown in respect to authorizing consumer end user rationing that, although the President is permitted to order any other approved Icontingency plan to be put into'effect in the case of an extreme interruption in energy supply without again obtaining congressional 'consent, the gasoline rationing contingency plan is an exception to this authority and must be first resubmitted to offer Congress an opportunity to indicate disapproval.
The proposed contingency gasoline and diesel fuel rationing p lan was issued by FEA for public comment on Mlay 28, 1976 (41 FP.R. 21936).

D. ALLOCATION OF PETROLEUM AND PETROLEUM PRODUCTS
Title IV of the new act, which includes the revisions on pricing Ipolicy described in section III below, continues the entitlements'program and the allocation provisions of the old Emergency Petroleum Allocation Act of 1973, with a few additional provisions and authorizes conversion of the allocation authorities to standby status. Allocation authority, whether stand-by or not, is extended through September 30, 1981.
New discretionary authority is provided under which the President may "require adjustments in the operations of any refinery in the United States with respect to the proportions of residual fuel oil or any refined petroleum product" if this is necessary to assure adequate volume of any priority product in the event of shortages. The bill omits a House-passed mandatory ceiling that would have limited the consumption of gasoline to the level of 1972-74 and. would have further reduced consumption by 2 percent per year for each of the next 3 years.
He may also require maintenance of up to 90 days' 'inventory of crude or oil products at any stage from production through distribution, except that no one is required to make physical additions to their existing storage capacity in1 order to comply.

E. AUTHORITIES WITH RESPECT TO INTERNATIONAL ENERGY PROGRAM
international oil allocation and voluntary, ag'reement.-The President is authorized to require that the en ergy industry make arrangements to meet U.S. obligations in the, international allocation o~f petroleum products. Such action would be immune from the antitrust laws. The Attorney General and the Federal Trade Commission are to be involved in the development of agreements. and plans to propose alternatives which would avoid or minimize anticompetitive effects. Reports to Congress- are to be made by both agencies every 6 months. Authorization is also provided for the establishment of an advisory







committee. Exchanges of information are also authorized, except for material considered proprietary or trade secrets, unless the President certifies that it will not be disclosed because of adoption of adequate security measures by IEA. This information is to be transmitted only if other countries are supplying comparable data.
The Defense Production Act was amended early in 1976, by Public Law 94-220, to make the provisions relating to voluntary agreements developed in support of the national defense effort, of the International Agreement on an International Energy Program effective 120 days after the effective date of the Act (November 30, 1975) in order to afford certain agencies adequate time to prepare voluntary agreements which conform to the new provisions.












II. Mz&sris To RESTRAIN AND RESIRAr ENERGY DEMAND
So far, congressional energy conservation initiatives have been characterized by short-term action based primarily upon operational housekeeping-fixing leaks, reducing heat losses, smaller and lighter cars, for example. Longer-range initiatives dealing with equipment design, process selection, substitution of products with lower energy intensiveness (such as recycled glass bottles) for those with higher energy intensiveness (such as aluminum cans), and substitution of one behavior pattern (such as living near work) for another (such as hour-long commuting) remain, for the most part, in the study stage. Not enough is known about the effects of such actions on economic activity, distribution of income, and social attitudes to justify plunging ahead without extensive study.
'While various long-term alternatives are under study, the U.S. economy is in process of adapting to higher energy prices. Tihe current energy consumption picture shows essentially no growth for three years, far below the earlier 3.5 percent to,4.5 percent per year pattern. Economists are as yet unable to differentiate within this change those components that represent reduced economic activity and those resulting from conservation actions by consumers and by manufacturers. As the economic recovery continues over the next several months, the resulting change in energy consumption may shed additional light on this question.
The two omnibus energy bills enacted by the 94th Congress collectively launch a significant but largely short-term conservation effort aimed at reducing energy demand and improving the efficiency of energy usage. Public Law 94-163, enacted in December 1975, included programs and incentives designed to improve auto fuel economy, induce conservation in the use of other consumer products, and encourage industrial, state and federal energy conservation programs. Public Law 94-385, enacted in August 1976, augmented these provisions with programs providing for conservation standards for new buildings, insulation of low-income family housing, more rapid development of state energy conservation plans, initiation of a major new demonstration program to finance conservation and renewable resource measures in existing homes, and a $2 billion program of loan guarantees for conservation and renewable resource measures in commercial and public buildings and industrial plants.
The following sections summarize briefly the provisions of these laws and other actions to date on (a) improved auto fuel efficiency measures; (b) State energy conservation program assistance and other consumer product conservation measures; (c) modification of buildings to conserve energy; (d) industrial conservation measures;
(e) encouragement and improvement of mass transportation transit facilities to conserve gasoline; and (f) recycling of solid waste and energy recovery.
(13)






14

A. AUTOMOTIVE FUEL ECONOMY
The private automobile occupies a central place in the American lifestyle and economy. Consumption of gasoline to fuel that lifestyle accounts for almost 40 percent of the total demand for oil products in the United States and, prior tO the Arab embargo in October 1973, it was anticipated that gasoline consumption would probably continue to rise at the rate of more than 5 percent annually for the country as a whole. Measured in its equivalent of barrels of oil per day, motor gasoline was being consumed in February 1976, at the rate of 6.5 million barrels of oil per day and being consumed in cars which had been increasing in weight, air-conditioning and gadgetry and had decreased in fuel mileage efficiency. The 1958 model year cars averaged about 14 mi/gal. This had dropped to a low for the 1973 model year average of only 11.6 mi/gal.
A promising area for substantial gasoline savings without sacrificing mobility appears to be in retooling car designs to obtain greater mileage per gallon of gasoline. Allowing for gradual attrition and junking of old models--and no net increase in total number of cars or total miles travelled annually-a requirement that all new models be built to run 24 miles a gallon could cut gasoline consumption in half by 1985 without drastic change in lifestyles.
The Energy Policy and Conservation Act (Public Law 94-163) requires that the averag-e fuel economy for passenger automobiles manufactured after the 1977 model year must be no less than 18 mi! o.al in 1978, 19 mi/gal in 1979, 20 mi/gal in 1980 with future increases to be set by the Secretary of Transportation at the maximum feasible level. By 1985 the standard is to be 27.5 mi/gal. Each year the Congress is to review these levels and to determine the ability of the industry to meet the 1985 levels. Manufacturers of less than 10,000 automobiles per year may be exempted. Any manufacturer may apply for modification of its average fuel economy standard. Each manufacturer would be required to attach to each automobile a label indicating its fuel economy, the estimated annual cost of operation, and the fuel economy range of comparable automobiles. The law provides a system of civil penalties and credits under varying conditions of compliance and noncompliance.
The Electric Vehicle Research Development and Demonstration Act (H.R. 8800) passed the House September 5. 1975. the Senate June 14, 1976 and was signed over the President's veto on September 17, 1976, as P.L. 94413. This bill directs the Administrator of the Energy Research and Development Administration to initiate and provide for the conduct of research and development in areas related to electric and hybrid vehicles. A six year, $160 million program was authorized for programs in which evaluation and demonstration of some 7,500 vehicles will be made. The law authorizes a $60 million loan guarantee program to.aid small manufacturers. It also directs the Administrator to enter into contracts for the production of sig.ificant numbers of urban passenger and commercial vehicles which have electric propulsion systems on conv entional chassis'; and for the production of slgnificant numbers of urban passenger and commercial Vehlicles which are specifically designed for electric propulsion as the primary power souTe. Finally, this bill directs the U.S. Postal Service, General





15

Services Administration. Secretary of Defense and the heads of other Federal agencies to arrange for the introduction of electric and hybrid vehicles into their fleets as soon as possible. A Senate bill, S. 1518, approved as Public Law 94-364 on July 14, 1976 amends the Motor Vehicle Information and Cost Savings Act (Public Law 93-492) to incorporate within it "a concern ,for fuel efficiency of motor vehicles." This concern takes the form of authorizingfor appropriation $5 million for fiscal year 1976 and additional amounts totaling $12.500,000 in subsequent years through September 30, 1978, in order to set up diagnostic inspection demonstration projects with a capacity to determine a car's fuel efficiency capability as well as whether it meets emission standards.
B. STATE ENERGY CONSERVATION PLANS AND CONSUMER PRODUCT CONSERVATION MEASURES
Public Law 94-163, authorizes a $150 million Federal grant-in-aid program ($50 million in each of 3 years beginning in fiscal year 1976) to assist States in developing and administering State energy conservation programs. These programs will have as a target a 5-percent reduction in energy consumption by 1980 below levels projected for that time. The legislation identifies conservation measures to be implemented by the States, but calls for administration of the programs on the State and local levels, thus permitting States to establish conservation programs in a manner tailored to local economic geographic and climatological conditions. This legislation thus provides impetus, direction, and financial assistance for energy conservation while protecting the States interest in self-determination and local control.
The Energy Conservation and Production Act, PL 94-385, sets forth-guidelines for "supplemental state energy conservation programs" and provides that states may meet its requirements and receive federal funding whether or not they have filed an approved state energy conservation plan under EPCA. The law authorizes $105 million for the development of state energy conservation plans, with $25 million allowed in FY 1977 and $40 million in 1978 and 1979.
Undei' the expanded provisions, a state will have the option of continuing solely with the existing EPCA prograin (in which case it is eligible for assistance from the existing authorization), to meet only the requirements of the new program (in which case assistance is granted from the new authorization) or to meet the requirements of both programs (and receive funding from both authorizations).
To win funds under the new program, the following five requirements are mandated:
.A public education program to increase awareness of energy
conservation measures;
Procedures must be established for insuring Administration.
Developing procedures for encouraging and conducting energy
audits of buildings and industrial plant within the state: and
Any further programs which tlhe Administrator may impose.





16

Requirements which may be imposed at the discretion of the, Administrator include creation of a state energy conservation advisory committee, an adequate program within the tsate for preventing fraudulent practices relating to energy conservation measures, pr edures to verify the complete institution and actual cost of such measures, and assistance for energy conservation and, renewable-resource energy measures.
The Energy Policy and Conservation Act would also require test procedures for an energy efficiency labeling of major home appliances and certain other consumer products using more than 100 kwh per year. This information is essential to consumers in making an informed judgment in the purchase of appliances. The label must include representative annual operating costs associated with the use of these products unless the FEA determines that labeling would not be feasible or would not be likely to assist consumers in making purchasing decisions.
If the FEA prescribes a labeling rule for a class of major household appliances and then finds (1) that labeling will not suffice to induce manufacturers to produce (or consumers to purchase) products of that class which achieve the maximum energy efficiency which is technologically feasible, and (2) that the benefits of increased energy efficiency outweigh any increased consumer costs and any decrease in utility of the product, the FEA is authorized to prescribe an energy efficiency performance standard for that class of product. The FEA would be required to exercise this authority in certain cases where industry is unable to achieve energy efficiency improvement targets which would be set by the FEA for major home appliances. These targYets would be set at the maximum level which would be economically and technologically feasible, and would require at least a 20-percent overall improvement in energy efficiency for new major home appliances in 1980, in comparison to 1972 levels.

C. MODIFICATION OF BUILDINGS TO CONSERVE ENERGY
Almost coequal with transportation as a major consumer of total energy in the United States is space conditioning of residential and commercial buildings. About 12 percent of total energy is used for residential heating and cooling and 9 percent for similar commercial uses. When heating and cooling of industrial buildings is added, more than '25 percent of all the energy used in the United States is consumed in heating and cooling the buildings where people live and work.
The Energy Conservation and Production Act (Public Law 94-385) provides a strong thrust in a broadly designed program for energy conservation in buildings, residential, commercial and public. The new law provides for the following: Federal energy conservation performance standards for new residential and commercial buildings; a $200 million grant program to permit low-income persons to weatherize existing homes; a program at the State level designed to provide homeowners and owners of public and commercial buildings with reliable information regarding the costs, savings, and benefits of energy conservation related investments; a $2 billion loan guarantee program to encourage energy conservation related investments in public and





17

commercial buildings; and a $200 million demonstration program to identify incentives which encourage homeowners to make energy conservation related investments in home improvements.
Public Law 94-163 (Title III. part E) requires all Federal agencies to develop a 10-year plan for energy conservation. This plan would deal with lighting standards, construction guidelies, restrictions on hours of operation, thermostat settings and other conditions related to the operation of Federal buildings.
The Ways and Means bill, H.R. 6860, as reported on August 27, 1976 in the Senate. included several income and investment tax incentives designed to speed up the conservation of energy in this consumption sector but was not brought to vote in the Senate before adjournment.

D. INDUSTRIAL CONSERVATION MEASURES
The industrial sector consumes about 40 percent of the U.S. energy budget. Estimates of energy waste in the industrial sector range from 10 to 50 percent of energy consumed. However, industrial energy consumption patterns are extremely complex and are affected by choice and availability of fuel type costs, raw materials, state of the economy, and type of industrial processing. Because of these complexities within the industrial sector, it is difficult to reasonably define baseline energy consumption conditions on which to found regulatory or incentive measures considered in the building and transportation sectors.
The Energy Policy and Conservation Act, Public Law 94-163 (title III, part D), seeks to increase the national average industrial energy efficiency by the maximum feasible amount by January 1, 1980. The Energy Policy Act recognizes that industry must share responsibility for attaining the goals of energy independence and wise utilization of scarce resources.
Industrial energy efficiency targets would be set for the 10 mo-t energy -intensive industries. Each target would represent the maximum possible improvement in industrial efficiency which a particular industry could achieve by January 1, 1980. The 10 most energy-intensive industries would be required to report annually on their programs in attaining energy-efficiency targets.
The law also includes measures which would serve to conserve oil and natural gas by requiring certain industrial plants to convert to coal. For convenience, these are described along with other measures relating to coal in section IV-A below.
The Energy Conservation and Production Act, Public Law 94-385, enacted August 22, 1976, includes generous loan guarantee provisions to encourage energy conservation as well as the use of oil-saving alternative fuels. The law authorizes the Administlrator of the Federal Energy Administration to provide financial assistance in the form of loan guarantees which may total as much as $2 billion, to qualifying borrowers who undertake energy conservation measures.

E. IMPROVED TRANSPORTATION SYSTE-MS
Use of railroad and other mass transit facilities is recognized as a major potential source of fuel savings enabling conservation of gasoline otherwise used for personal transport use and more efficient use





18

of other motor fuels. However, it is also increasingly realized that until improved mass-transit is actually in place and available, it cannot serve to divert present auto users from reliance on personal transport
During the 94th Congress, the following potentially energy-saving transportation bills were either enacted into law or had passed one or both Houses:
Public Law 94-5, approved February 2, 19-75, authorizes an additional $347 million to insure the continuation of essential rail services in the Northeast and Midwest under the regional Rail Reorganization Act (Public Law 93-236) ; increases from $85 million to $282 million Federal grants to bankrupt railroads in the Northeast and Midwest to keep them in operation until a plan being developed by the U.S. Rail Association becomes effective; increases from $150 million to $300 million loan guarantees to bankrupt railroads to maintain and improve rail facilities until the new system is in operation and gives the Secretary of Transportation more flexibility in deciding how and: when the guarantees will be used.
An Amtrak Supplemental Authorization (S. 852/H.R. 4975), which passed the House April 24, 1975, and the Senate on May 13, 1975, provides a $63 million supplemental authorization for fiscal year 19M5 of which increased operating costs due to inflation accounted for about $50 million. It was signed as Public Law 94-25 on May 25, 1975.
H.R. 8365, making transportation appropriations for fiscal year 1976 and the transition period, totaling $10.8 billion and $12.7 billion respectively, passed the House on July 10 and the Sena te, amended, on July 25, and was signed November 24, 1975 as Public Law 94-134. Included in these amounts were $439 million for Amtrak, of which $110 million is for capital costs, which for the first time are being funded by a direct Federal grant.
The Rail Services Act of 1975 (S. 2718), a, comprehensive railroad rehabilitation program, was signed as Public Law 94-210 on February 5, 1976. It includes $6.1 billion in new funding for railroad assistance.
Also for the first time, the House voted to amend a provision of the Federal. Hiahway Act of 1973 (in H.R. 8235, enacted a~s Public Law 94-280 on May 5, 1976, that allows urban areas to use their interstate funds from the Highway Trut Fund for mass transit, to permit -those funds in the future to lbe used for other urban highways as well. By granting this new flexibility to urban areas. the bill promotes a more efficient urban transportation planning. In FY 1976, all $800 million of urban systems funds were available for either highway or mass transit pur-poses from the trust fund.
This legislation also gives Congress more flexibility in deciding future transportation policy with a view to possibly enaing or reducing the Highway Trust. Fund in favor of other transportation means.
The Senate tried. unsuccessfully, to add a $700 million allotment tov repair thousands of miles of railroad track, first, to the $5.3,billion eluerge-ncy jobs appropriations bill (H.R. 4481), and, second, to the 1iscal year 1975 supplemental appropriations. bill (H.R. 5899), losing out in conference.





19

The rationale-that of linking'a full-emnploymnent goal with increased energy savings and increased domestic energy productionis a key element in the longer term Senate proposal for a National Energy Production Board, described below.

F. RECYCLING OF SOLID WASTE AND ENERGY RECOVERY
Legislation was cleared during the final days of the 94th Congres creating a new ERDA energy recovery program for solid waste, as a key component in the new "Resource Conservation and Recovery Act of 19 76", signed as Public Law 94-580 on October 22, 1976.*
The new law is the product of three years of intensive legislative activity and an unusual degree of cooperation and coordination between the House and Senate on an approach in which growing environmental concerns over the cost and hazards of mounting solid wastes have been instrumental in po tigtheir use as a source of new energy supplies. Some 3 billion tons of waste material are currently being dumped on the land with little if any environmental planning or control cost. These are reported by some studies to provide potentially recoverable energy equivalent to 200 million barrels of oil per year or 500,000 barrels of oil per (lay. This vast accumulation of debris is generated from many sources: 1.8 billion tons from mining, 687 million tons from agriculture, 260 million tons from industry; 135 million from municipal waste and 7 million tons from sewage sludge. Nationally, some $3.5 billion is spent annually to collect and dispose of municipal waste alone.
The new law integrates the provsions of S. 21.50 and H.R. 14496 and includes, among other provisions, the following:
Bans open dumping, tinder a program to close all openi dumps
within 5 years.
Authorizes Federal aid to States and rural communities for
help on energy and other resource recovery facility planning, analyses of market needs, marketing and various costs for legal, technical, economic assistance. ($57.5 for fiscal year 1978 and $67.5 for fiscal year 1.979 are authorized for aid to States and rural
com-munities.)
Expands provisions for research and development and calls for
a number of additional studies, including small scale and low technology resource recovery systems to aid smaller cities, multihousehold and single household units, and sludge management, including resource recovery. ($8 million for fiscal year 1978 and fiscal
year 1979 are authorized for R. and D. studies.)
Calls for Federal procurement of reco-vered materials, incluiding energyv and requires recycling of wast-e Prodiiced by Federal
agencies.
Mandates ERDA-EPA cooperation on the energy recovery program and ensuires that final decisions on resource recovery are to rest with State and local governments, with EPA assistance on
request.





20

In a' related act-ion, EPA on September 21, 1976, announced new guidelines for' recovery of solid-waste energy-materials by federal agencies.- The 'guidelines, written under authority of the 1965 Solid Waste Disposal Act, apply to Federal agencies that are involved in the disposal of 100 tons or more per day of solid waste. Such agencies will be required to utilize resource recovery facilities to extract the energy. and materials that would otherwise be disposed of, from solid waste. Federal agencies subject to the guidelines also are urged to join f ,orces with nearby communities to construct resource recovery facilities for handling their combined wastes. (41 F.R. 41208-9)









111. NEW OIL AND NATURAL GAS MANAGEMENT MEASURES
Two major energy measures enacted in the 194th Congress were: (1) Removal of the depletion allowance for oil and gas and adjustment of selected foreign tax credits; and .(2) carefully monitored and moderated increases in domestic crude oil prices over a period of 39 months under new procedures ensuring close Congressional managemnent, oversight and 'control.
Abolition of the depletion allowance, which for 60 years has been a key feature in the U.S. petroleum industry's production and pricing policies, is a landmark event, the consequences of which for both energy investment and price have not yet been fully identified. Enacted as part of a tax reduction bill intended to stimulate the economy, removal of the depletion allowance eliminated what had traditionally been though'. of as a prime incentive to encourage increased investment in oil and natural gas while at the same time permitting reasonably low domestic prices for their end products-in the United States.
Higher prices as incentives to increase domestic production of oil and natural gas have been generally conceded as desirable for some timie-but the sudden escalation in prices for oil produced abroad precipitated a major national debate, not yet fully resolved, over what the levels of price should be .and under what formn of regulatory or other oversight controls.
The oil pricing provisions included in the new Energy Policy and Conservation Act, Public Law 94-163, which provide for phased and controlled upward revisions in domestic oil prices, represents the first major national decision on the still.vo0latile energy pricing issue. Similar difficult decisions and compromise will be required to reach. a national consensus- on the pending natural gas deregulation issue.
In addition to these two -still controversial moves, a number of measures were enacted or discussed which are intended to 'revise the terms on which oil and natural gas are leased -and developed on public lands, including the Outer Continental Shelf. These are also summarized inthis section.

A. REMOVAL OF THE DEPLETION ALLOWANCE ANDCILA NGES IN SOME FOREIGN OIL TAX CREDITS
Historicallyth primary congressionally endorsed stinmlus to domestic production of oil and natural gas was the depletion allowance. Beginning with the first income tax law in 1913 and modified as a flat percentage level in 1926, the depletion allowance permitted subtraction of 2-7.5 percent of gross income from production of oil and gas at the wellhead, in recognition of the fact that extraordinary capital costs and risks were involved in exploration and development of oil to replace that depleted by each year's production. The allowance was a flat deduction and did not include any mandatory requirement that it would in fact be invested in new exploration and development of oil.
(21)







22

Oil had quickly been realized to be a much more convenient and mobile substitute for coal and certainly a much more desirable fuel for military use, and successive Congresses developed supporters for continuing the allowance, which was claimed to be a strong incentive for further investment and production. Despite opposition to it in three ad(iinilstrations-Roosevelt's, Truman's and Kennedy's-except for 1969 when, it was reduced somewhat, to 22 percent, open support in Congress for its removal was not strong until last year.
The sudden sharp rise in the price of imported oil and the conseque nt astronomic increase in income and profits accruingr to the U.S& industry caused an equally sharp change in attitude. A re *asonably stiff bill-with a-three year phase out of the depletion allowance combined with a windfall profits and investment plow-back credit-was reported from the'House Ways and Means Committee May 4, 19741, but the 93d Congress adjourned before agreement could be reached on the rules under which the bill would be put to vote.
The 94th Congress came into Washington in'a a different mood.. A strong and vocal group of Congressmen overrode more senior colleagues in the House Democratic Caucus to insist that depletion repeal be included in the tax reduction bill and won. As finally enacted, the new law, Public Law .94-12 (H.IR. 2166), includes the following changes which grreatly reduce the hitherto alm ost untouchable oil and natural gas investment incentives:
On the crucial issue of oil and gas depletion, the new law:Repealed the 22 percent depletion allowance on oil and gas production retroactive to January 1, 1975.
Retained the 22 percent allowance until July 1, 1M76, for natural gas sold under federal price regulations (or until the controlled price was raised to take account of repeal of depletion).
Retained the allowance for natural gas sold under fixed-price contracts until the price was raised.
Retained a permanent small producer exemption that allowed independent oil companies to continue taking the depletion allowance on a basic output of oil and natural gas.
Allowed an initial small producer exemption retaining a 22 percent depletion allowance for producers with an average daily production of 2,000 barrels of oil or 12 million cubic feet of natural gas or an equivalent quantity of both oil and gas.
Reduced the daily production eligible for depletion by 200 barrels a day for each year between 1976 and 1980. leaving the small producer exemption at a Permanent level of 1,000 barrels of oil per day or 6 million cubic feet of natural gas.
Reduced the depletion rate available on the small producer exemption to 20) percent in 1981, 18 percent in 1982, 16 percent in 1983 and to a permanent 15 percent rate in 1984.
Kept the depletion rate at 22 percent until 1984 for production of up to 1,000 barrels a day through costly secondary or tertiary recovery methods used to extract remaining oil and gas from wells that were mostly pumped out.
Limited the deduction taken under the small producer exemption to 65 percent of the taxpayer's Income from all sources.
Denied the small producer 'exemption to any taxpayer that sold oil or gas through retail outlets or operated a refinery processing more than 50,000 barrels of oil a day.
Former tax breaks inIvolving foreign income were also changed. The new law:
Limited''the amount of foreign tax payments on oil-rela ted income that an oil company could take as a credit against U.S. taxes to 52.8 percent of its 1975 income from foreign oil operations. The limit would be reduced to 50.4 percent in 1976 and 50 percent thereafter.
Allowed use of excess credits within those limits only to offset U.S. taxes on foreign oil-related income, not on income from other foreign sources.





23
Denied oil companies after 1975 the use of the per country limitation option that allowed a company to compute its maximum foreign tax credits on a countryby-country basis.
Required recapture of foreign oil-related losses that were deducted from income subject to U.S. taxes by taxing an equivalent amount of subsequent foreign oilrelated profits as if earned in the United States (and therefore not eligible for deferral until transferred to the United States). The credit for foreign taxes on the subsequent profits also would be reduced in proportion to the amount treated as U.S. profits.
Denied the foreign tax credit for any taxes paid to a foreign country in buying or selling oil or gas from property that the nation had expropriated. Denied the investment tax credit for drilling rigs used outside the northern half of the Western Hemisphere.
Denied deferral of taxes on half of the profits from exports of natural resources and energy products by domestic international sales corporations (DISCs). Repealed, effective in 1976, certain existing exemptions from a 1962 law requiring current U.S. taxation of profits earned by subsidiaries set up by U.S. corpordttions in tax haven countries that imposed little or no taxes. Allowed deferral of U.S. taxes on all earnings by a foreign subsidiary if les.s than 10 percent of its income was defined as tax haven income.
The additional revenues which would accriue to the Treasury (and, at the same time, be withdrawn from the major oil producers' cash flow) are estimated at around $3.7 billion in 1975: About $1.7 billion by denial of the depletion allowance; some $1.5 billion by changes in thi foreign tax credits; and about $500 million by requiring that the foreign income of all multinational corporations, including the oil companies, be taxed in the year earned.
While these amounts are substantial, they are only a small fraction of the volume of capital investment in oil development in the United States which had been planned for 1975 by the oil companies before the tax changes were enacted: $26.2 billion for the oil industry as a whole, of which $8 billion was to be in drilling and exploration and $2.1 billion in production.' Industry claims of drastic negative effect on new domestic investment of the loss of up to $3.7 billion from these particular changes have not received much postenactment congressional sympathy, especially since there remain many writeoff and investment credit provisions under which actual development expenses can be and are being charged off as regular business costs.
An interesting aspect of the testimony and floor debate on removal of the depletion allowance was the argument that, although the intent of the original legislation providing generous percentage depletion allowances was to encourage increased exploration and development of new oil and gas supplies, in fact, the volume of such exploration over the years did not appear to be particularly related to the amount or to the level of the depletion allowance.
The total number of exploratory wells drilled annually in the United States has been declining since 1956, despite the existence of the depletion allowance.2 The first major cut took place in the tax revisions of 1969 when the depletion allowance was cut from 27.5 percent to 22 percent. However, the industry's capital expenditures in the United States have substantially increased since 1971. Actual capital expenditures in the United States by the oil industry in 1973 were estimated at $15.3 billion (with $6.6 billion for drilling exploration and $1.7 billion for production) ; $21.1 billion in 1974 (with $7.7 for exploration and $2 billion for Production) and, as mentioned above, $26.2 billion had been estimated as budgeted for 1975 with $8 billion tagged
I Oil and Gas Journal, Feb. 3, 1975, p. 37.
2 See chart on p. 24.








24


for drilling exploration and $2.1 billion for production. These figures do not include the hundreds of millions U.S. companies have also budgeted for projects abroad, and may be compared with total oil industry capital investment in development of oil in the United States of $7.7 billion in 1971 and $12.7 billion in 1972.3
While a number of major companies have announced that removal of the depletion allowance would require reconsideration and reduction in their capital investment plans, there is some indication that the reductions would take place in projected capital ventures other than exploration and investment.'


c . .

EXPLORATORY WEL.S OE L LLED N UNITED STATES .....-' A T HO RITY \ iAR (%AN P F.: O iU% N T T E 19 MI-74 (+-+, L+
S Tim T : "I 1:W '..15 %N D I(**I .V t T U T .. o o .1969
o ..,.P JAt. -T--T! A
z
'i sl.AND GA! jO RN.ti lid 84
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1958 3940 1945 1950 1955 156.0 .5r970 15 1980 18

Source: "Twentieth Century Petroleum Statistics, 1975," Degolyer and MacNaughton, p. 36.

"Oil and Gas Journal," Feb. 3, 1975, p. 37.
"Energy Notes," Feb. 24, 1975, Morgan Stanley & Co., Inc., reprinted in Congressional Record, Mar. 22, 1975, p. S4804 to 84807. See also Wall Street Journal, June 9, 1975, pp. 1, 25.
+,., (k -:- -- :+4 -: + +; :: > +I.++-+ + _i-+ -+ .... .. . ....: .. ++ +.+- -+ +-p i- + + . .. + :+ --: ,+ ++ + .. . ++ ....+ + -++ -;, + +-- -| -.-T
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Source-" "Tetit Cetr Perl Sttsis 195, Deole an M 'a ug ", o

Oi an Ga Jora, Feb 3, 195 P. 37.++
"Eeg Noe, Feb.I .. 1975 -, Mra Stne & Co. Inc.... ., rerite I- n Congress!+ional,Reco.0< Mar 22 1975 p. 40 to S407 Se als Wal Stee Jornl Jun 9, 1975+...'+
pp 1, 25.: + P + + + : + +" ; i





25

If industry capital investment decisions on domestic exploration programs made by the major oil firms have been based primarily on factors other than the level of the depletion allowance, its removal may not have any particularly depressant effect per se on future domestic exploration programs. In any event, 80 percent of the exploratory drilling in the United States is done by independents, for many of whom the 22-percent depletion allowance has been largely maintained for some time to come.
The 1976 Tax Reform bill, H.R. 10612, approved October 2, 1976, as Public Law 94-455, continued a few additional limits on tax benefits previously accorded U.S. oil and gas producers but these were of minor impact compared with the 1975 repeal of the depletion allowance.
Whatever the role of the depletion allowance has been in the past, its recent repeal clears the way for a fresh look at oil and other fossil fuel production incentives whose" effectiveness as stimulants to increased domestic production can be more easily measured and identified.

B. CONTRASTING POSITIONS ON PRICING POLICY
There are two important differences between the administration proposals and the congressional majority proposals in this energy policy field, on the face of it 1800 apart: The administration wanted an oil price policy which permitted a floor but no ceiling; 5 the majority wanted an oil policy which set a ceiling but no floor.
The administration's primary energy policy position was to rely on deregulation of the price of domestically produced oil and natural gas and its consequent effect within the domestic market to produce not only reduction in consumption of these products but also to provide the price incentive which the administration believes will result in increased supplies of oil and natural gas. Import tariffs on imported oil and oil products were intended to tilt domestic purchases of oil and natural gas toward domestically produced products and thus provide an additional stimulus for increasing domestic supplies from increasingly expensive exploration and development operations in continental and offshore U.S. sources.
In addition, it was anticipated that, as the deregulated prices approached the (at the time) concurrent costs of developing "new" energy supplies (that is, coal gasification, and/or liquifaction, oil shale, geothermal and solar) this would further encourage the shift away from oil and gas and stimulate increased private investment in these areas.
In contrast, the policy proposals backed by the Democrtic majority, "The Congressiona! Program of Economic Recov.'rv and Enery Sufficiency," issued February 27. 1975. stated on the question of price control:
We reject the fundamental premise of the President's program that the only way to achieve energy conservation is deliberatey to raise the price of a1l etroleum products to all American consumers by heavy indis(ciinnate addii'm i
S Secretary of the Trenisury Simon. in discussing a minimum long-term slpply price before the Ways and Meains Committee on Mar. 17. 1975. said that if the depletion allowance were re' ;oved he felt the "long-term supply price" would have to raise from a then estimated $7 to $8 per barrel to about $8.40 per barrel. Hearing, transcript, p. 165.
79-157-76 3






26

taxation. The $3 per barrel tariff on oil imports will not reduce imports; it Simply will make them more costly to Amerecan consumers.
As its goal the Administration seeks a reduction of energy consumption by one million barrels per day in 1975. To achieve it, energy prices would be greatly increased, first by taxing all crude oil and natural -as and then by removing the present controls on the market price of oil and gas.
The price of energy is not determined by free forces of supply and -demand but rather by the governments of the nations that produce energy. The policy Question is whether the U.S. or the OPEC governments will set energy prices in this country. The Administration wishes to decontrol old oil and new natural gas, giving the control of price to OPEC and lettincr U.S. energy prices follow the prices established by it.
The oil price control program should be modified also to create sufficient incentives to produce all oil that can be recovered economically through secondary and tertiary recovery, substantially increasing the amount of oil ultimately produced from the average field. Perhaps the most effective plan would be to include some decontrol treatment for secondary and tertiary recovery as 6'new" oil.
Exploiting fully natural gas potential is equally critical and the Federal Power Commission must be mandated to provide price certainty at levels high ,enough to reflect future costs and to eliminate' regulatory delays, reducing any incentive to withhold gas because of the uncertainty over government pricing policy.
The Congressional program therefore recommends measures to reform and ,simplify natural gas regulation, but continue interstate price controls on old natural gas, and establish a statutory formula ceiling that reflects cost of production. This should assure that the price is high enough to encourage maximum domestic production,'but still below the OPEC cartel level.
In support of its program, the administration made price deregulation proposals, both under Pxisting executive authority and as pro-posed in S. 594-/H.R. 2650. which included five interrelated measures:
(1) Increase the cost of imported oil by imposing tariffs and fees, to raise its price relative to domestic oil and encourage production of domestic oil; (2) spread-price increases on crude oil among all refiners by usi!ig the FEA "Old Oil Entitlements Program"; (3) decontrol the price of "old" oil; (4) decontrol the price of natural gas sold in interstate trade; and (5)'establish (or authorize establishment of) a floor price for oil to insure price stability over the longer run.
These are discussed in detail in the earlier report "Highlights of Energy Legislation in the, 94th Congress congressionall Research Service. It provides additional background and a description of much
i
of the intervening legislative action now culminated in the new Energy Policy and Conservation Act, and will not be repeated here."

C. OIL PRICING POLICY AS ENACTED IN PUBLIC LAW 94-163

The now compromise on oil pricing policy is included in title IV of the, Energy Policy and Conservation Act of 1975. Although now signed into law, they remain probably the most controversial provisions of the entire act, They are controversial not so much because of the still differing views over the quantitative levels of petroleum prices but because the basic confrontation has been and remains the far more fundamental one of public versus private management of those prices.
Two Congresses have been debating this issue now for more than 3 years: Should the management of petroleum prices be left to the priG For a narrative account of the first 7 months see the text of this report reprinted. In the Congressional Record, July 31, 1975, pp. 814487--8 and S14490.





27

vate producers and distributors of petroleum products an 'd their mutual adjustments in the market or should those prices be subject to regulation by the executive within criteria laid down by Congress and closely monitored for conformance? The new law provides an answer which, while clearly a compromise on levels of prices, accepts aInd asserts a public right and responsibility in management and monitoring of those prices in the market as a whole. Pr'ing and related provisions
Among the many specific provi .sions of EPCA's title IV which give effect to this substantive strengthening of 'public responsibility. for petroleum price management are the following:The previously floating uncontrolled price for "new"), "released" and "stripper well" oil which makes upaot4 percent of all domestically produced crude oil was replaced by a ceiling to be imputed from a "maximum weighted average first-sale price" for all domestic crude of $7.66 per barrel. As described'in the Conference report, this could be as high as $11.28 for all previously uncontrolled domestic oil provided that "old" oil prices were continued at present levels of $5.25. The old stripper well provisions were explicitly repealed. Old oil was redefined as that- volume of crude oil produced from a property in a month which is equal to or less than -the volume produced and sold from such property in the months of September, October and November of 1975.
The President is given authority to adjust whatever prices are promulgated upward under prescribed criteria and subject to Congressional veto by as much as 10 percent a year, of which no more than 3 percent can be justified as needed to encourage additional production from difficult and high cost properties. Upward adjustments for inflation are permitted within this formula, again subject to criteria which seek to prevent undue weighting in the inflation rate from increased energy costs themselves. Even these levels can, une ceti odiinb increased if Congress agrees to the Administration's arguments.
Formal endorsement is provided for continuing the "entitlements" program, under which the various domestic and imported prices are equalized among refiners with varying access to less expensive crude. (The program was launched by FEA in January 1975 and an earlier sple extension of the Emergency Petroleum Allocation. Act from February 1975 to August 15, 1975 had been premised on Congressional understanding that the entitlements program would be undertaken by FEA.)
Monitoring of prices at all levels of production and distribution would be tightened in timeliness and detail, and further audi1ted by the General Accounting Office.
Any regulations and changes proposed are subject to Congressional right of disapproval over a period of 15 days, rather than the 5-day period provided for in the old Emergency Petroleumn Allocation.2Act.
The President is directed to submit to Congress on Februtary 15, 1977, an analysis of energy supply, demand and import relationships that have evolved under the Act.
The President is required to submit to the Congress on April 15, 1977, a report on the impact of anticipated Alask~an oil production levels and prices on domestic, oil prices and on incentives to increase






28

and maintain production in the lower 48 states. The President may then propose, subject to Congressional review, the exclusion of up to two million barrels -per day of Alaskan production from the composite price ceiling and the establishment of a separate ceiling for this production not to exceed $11.28 per barrel as adjusted for inflation.
The bill permits conversion of allocation authority to standby status at an early stage if the President recommends and Congress agrees; converts the oil price control authority described in the Act to standby status at the end of 40 months;, provides that the standby authority terminates after five years.
The President is specifically prohibited from using any authority in this legislation to prescribe. minimum prices for crude oil, residual fuel oil, or any refined petroleum product. Establishment of a "floor" price for crude oil was a policy which the Administration has urged be adopted to encourage domestic production.
New discretionary authority is provided under which the U.S. government may exercise the exclusive right to import and purchase all or any part of the crude oil, residual fuel oil, and. refined petroleum products of foreign origin for resale in the United States.
In exercising this authority, the President is required to "endeavor to buy and sell without profit or loss," except that he may in individual cases sell on the basis of competitive bid any oil or oil product "at a price above or below the cost of such oil or product if, in the judgment of the President, such sales may result in progress toward a lower price for oil sold in international commerce."
The Energy Conservation and Production Act, Public Law 94.-385, signed Aug~ust 22, 1976 amended Public Law 94-163 with two major changes inthe price regulations:, Stripper. well production was made exempt from the price ceilings, effectiv 'e September 1, 1976, and a modification was made in the earlier limitation on annual-price in:creases to provide further incent, ive to stimulate production. The new Act also prohibits FEA from submitting combined petroleum pro-duct price and allocation exemptions to Congrress and called for submission by PEA of a proposal for the restructuring of electric 'utility rates within 6 months of enactment.
Effect of price level prov Msions
As enacted, the substantive provisions of ECPA produced little if any reduction in the composite acquisition costs for crude oil paid by 'domestic refiners, and consequently little if any reduction in prices to the end-use consumer.
Once the acquisition costs of imported oil (now running in excess of 4.9 mb/d of crude'as compared with slightly over 8 million barrel a day from domestic crude) are equalized. through the entitlements program, that averaged price could legally be $1 to $1.50 higher than the "weighted average first sale price"l for all domestic crude of $7.66 mandated as the initi al new domestic price.
The conference report included a~n explanation of why 'the full rollback of $1.09 in first sale average price of domestic crude, highlighted in the official summary, might not be reflected immediately in consumer prices and may be offset by passthroughs of banked costs, totalling at the time some $1.4 billion in price increases not yet





29
pasd through toconsumers. It does conclude that at least,"pie will
be less in future months than they otherwise would have been under the continuing of the present program."
Whatever level composite domestic-imported crude oil prices reach, the law did at least insure that domestic crude oil prices could be, maintained below the world market prices established by the OPEC cartel.
Using the price decontrol procedures allowed, in -EPCA (P.L. 94-163) FEA subsequently proposed, in a series of energy actions submitted to Congress, to exempt from mandatory price and allocation control the following petroleum products: residual fuel oil, Number 2 heating oil, Number 2-D diesel fuel, other middle distillates, naphthas and gas oils. Congress did not disapprove these actions andl these products are now decontrolled. FEA also announced that it intended to submit a similar energy action during the first week in January 1977 to decontrol the price of gasoline.
Effect of management provi8ion2
On the other hand, the new energy law reflects important and substantive changes which strengthen the authority for and mandate the participation of both the executive branch and Congress in oil price management over a period which would extend unill September 30, 1981. This does not mean that all allocation and all price controls would continue without change until that time. On the contrary, the bill provides for a shift from mandatory to discretionary authority in pricing regulations for the President 40 months after enactment, and for a much earlier shift from mandatory to standby authority for the continuing allocation regula tions, if the President so recommends and Congress does not disagree.
Nevertheless, the combined effect of the pricing and allocation provisions of title IV marks an assertion of the right of public regulation and surveillance of petroleum prices and responsibility fo r maintaining authority to correct 'inequities in both price and distribution of domestic and imported crude and refined petroleum products, which is unprecedented in peacetime, in the United States in a period not clearly identified as an emergency.

D. NATURAL GAS PRTCING ]POLICIES
During the first session, on October 28, 1975, the Senate passed a bill, S. 2310, which would under its emergency provisions allow certain hard-pressed interstate natural gas companies to buy gas from intrastate companies and other companies to meet the needs of highpriority consumers without regard to pricing and most other provisions under the Natural Gas Act until April 1976. It would also authorize the FEA to prohibit the use of natural gas as boiler fuel and give the President authority to allocate propane in emergencies. Under title 11 of the bill, effective after April, new onshore gras may be sold at market prices. New gas from offshore wells may be sold at prices increasing to market levels over 5 years,. and gas from wells now being sold under contract .may be sold at prices rising under a prescribed formula, but may not be totally deregula ted when the existing contracts expire.Z)






30.

The House, however, passed substantially different legislation (HARL 9464, on February 5, 1976) which ended natural gas price
control ~ ~ r oesmlgsprducers but enlarged regulation of major
companies. A compromise amendment (adopted i nitially by the narrow vote of 205 to 201, and by -a final vote of 205 to 194) would deregulate prices of natural gas sold by independent producers with sales of less than 100 billion cubic feet a year. The plan would free from price controls all gas that was not dedicated to interstate commerce before January 1, 1976, involving 5,000 to 7,000 independent producers, but keeping controls in place on 25 to 30 major gas producers. The proposal actually enlarges controls over the major companies, moreover, by extending Federal regulations to gas sold by those producers in intrastate markets not subject to the existing regulatory system. Uncontrolled intrastate gas currently is being sold at three to four times the 52 cents per thousand cubic feet price for interstate gas set by the FPC.
As passed, the bill would authorize the FPC to set a national average price for interstate and intrastate gas sold by these large producers using flexible procedures more favorable to the producers than existing regulations. The conflict in approach taken by the bills was significant.
In an effort to end the lengthening stalemate, on May 19, 1976, the Senate Commerce Committee, led by Senators Pearson and Stevenson, introduced and reported out S. 3422, as the natural gas compromise bill of 1976. It would have accomplished the following: Prohibit natural gas producers from charging at the wellhead more t han $1.60 per thousand cu. ft. for new gas produced from onshore lands for a period of 7 years from the bill's enforcement date. After such period, prices for onshore new gas would be deregulated. For offshore new gas, the FPC would establish a "base price," effective for 5 years (Jan. 1, 1976, through Dec. 31, 1980) and would have a c eiing of $1.35 per thousand cu. ft. On Jan. 1, 1981, and thereafter at 5-year intervals, the FPC -would be required to revise its base price. New gas is defined as in S. 2310 except the effective date is Jan. 1, 1976. For old gas, the cost-based regulation. would continue under the existing Natural Gas Act.
However, the compromises reflected in this version were unsatisfactory and,, as a result, both sides rejected the new bill. No further legislative action was taken before adjournment.
Meanwhile the Federal Power Commission on June 27, raised the. interstate ceiling price for natural gas discovered after January 1, 1975, from 52 cents to $1.42 per thousand cubic feet. For gas discovered between January 1, 1973, and December 31, 1974, the rate was increased to $1.01. The effect of the FPC actions is to do what S. 3422 could not do, and that is to placate or compromise both sides, and at the same time remove some of the pressure for legislated deregulation.

E. EXPEDITING A DECISION ON ALASKAN GAS ROUTE
Two, years -ago,, a, major decision had to be made concerning the pipeline route that would be used to transport oil from the Alaskan North Slope to the continental U.S. Of the competing proposals, one pipeline was to -cross Canada and the other was to cross Alaska and empty into tankers for transshipment to California. The Alaskan proposal won, but because of the opening of Elk Hills Naval Reserve to






31

production, slower than expected economic growth, and energy conservation attributable to price increases, the West Coast is not'expected to'be able to consume all of the Alaskan production. California, Citing the pollution problems that surround oloading tankers, has balked at the idea that it take the oil for further shipment to southwestern refineries that have pipeline connections with most of the rest of the country. Which leaves a potential problem of what to do with the oil when the trans-Alaska pipeline is completed next year.
Alaska also contains large reserves of natural gas and, like the oil, the gas must be transported to the contiguous U.S. Once again, the pipeline proposals are for trans-Canadian and trans-Alaskan systems. The three competing proposals are: (1) the El 'Paso system, which would run along the trans-Ala ka pipeline route to liquefaction plants at Valdez, where LNG would be transshipped to the U.S. by tanker;
(2) the Arctic Gas system, which would entail laying a pipeline through Canada to feed into the west and midwest; and (3) Northwest Pipeline, which would have the system running through the Fairbanks corridor (both Alaska and Canada) to a point conjunctive with the, Arctic proposal.
Congress undertook to speed up the process of reaching a decision on these alternatives by enacting the "Alaska Natural Gas Transportation Act of 1976." signed October 22, 1976 as P.L. 94-586. The Federal Power Commission, by law, must recommend its choice for a pipeline route by May 1, 1977. Other governmental entities and other interested parties may comment on the FPC recommendation by July 1, 1977, and the President must make some decision with respect to the pipeline question by September 1, 1977. The Presidential decision must then be affirmatively approved by Congress within 60 daysnot including adjournments of more than three days-of the date that the recommendation is submitted to the House and the Senate.
The law also directs the President to formulate a plan under which the "northern tier" states-Washington, Oregon, Idaho, Montana, North Dakota, Minnesota, Michigan. Wisconsin, Illinois, Indiana, and Ohio-will be allocated some of the oil produced in Alaska.
F. OTHER 0IL AND NATURAL GAS 31EASIYRES
EPCA (Public Law 94-163) includes provisions which prohibit certain lease bidding arrangements and authorize stepped up production on Federal lands.
Increased competition in the oil industry is the objective of the first provision. Joint venture bidding by major oil companies or their affiliates in the development of crude oil or natural gas on the Outer Continental Shelf is prohibited. A major oil company is defined as one producing in excess of 1.6 million barrels of crude oil, natural gas liquids, and natural gas equivalents per day. This restriction is quite similar to a rule recently made by the Interior Department on a temporary basis. The bill also requires a study to be made for similar limitations on crude oil, natural gas, natural gas liquids, coal, and oil shale on other Federal lands.
The President is authorized to require the production of crude oil and natural gas from designated fields at the maximum efficient rate of production or the temporary emergency production rate on Federal lands. The States would still set the MER and TEP for areas, except





32
for Federal lands, within their borders. During a severe energy supply interruption, the President may require that any field in any State be produced at the maximum levels allowed by those States. MER's and TEP's may be set by the Secretary of the Interior for fields on :State land that are unitized with Federal lands and in energy emer.gencies production levels may also be set.
Development of oil and gas on the Outer Continental Shelf (OCS) has been viewed by the 94th Congress as crucial in furthering U.S. energy independence. It is estimated that 3 million barrels of oil per day could be produced by accelerating OCS oil development.
Amendments to the 1954 Outer Continental Shelf Lands Act were voted by both the House and the Senate, but failed to be brought to final vote before adjournment. On July 30, 1975, the Senate passed S. 521 by a vote of 67 to 19 and, on July 21, 1976, the House passed its amendments to S. 521 by a vote of 247 to 140. The passage of these two versions was the culmination of the efforts of the Senate Committee on Interior and Insular Affairs and the special House Ad Hoc Committee on the Outer Continental Shelf.
Both the House and the Senate versions focus on authorizing new leasing systems, separating exploration from development, enhancing safety regulations, promoting research and development, handling citizen suits, providing for enforcement, executing baseline/monitoring studies, establishing regional boards, providing for new lease and royalty terms, and requring development plans. Each version would also have provided a Coastal State Fund for the purpose of compensating coastal States for any adverse socio-economic or environmental impacts caused by OCS operations. In addition, an offshore oil pollution settlements fund is provided for cases where damages result from oil or gas discharge. The House version would allow more than one bidding system to be used in a particular base area while the Senate version would provide for 50% of the new leasing systems to be unitized. in frontier areas. Both versions allow oil and gas to be taken in kind, as royalties.
Since July, the House and Senate conferees struggled to reach agreement on these major provisions and a conference report (H. Rept. 94-1632) was filed in the House September 20, 1976 but was recommitted September 28, 1976 and thus failed to pass before adjournment.
Meanwhile, the Department of Interior has stepped up leasing in the OCS. This year. the Department accepted bids on Gulf of Mexico tracts on Feb. 18, on Gulf of Alaska tracts on April 13 and on MidAtlantic tracts on August 13,1976.
Although these bills were not enacted, some of the provisions were included in the Coastal Zone Management Act amendments, in S. 586, signed as P.L. 94-370 July 26, 1976. That law includes the following among other energy related provisions:
Assistance in the form of grants or loans to coastal States from a new coastal energy facility impact fund, which is to be available to States receiving or anticipating impacts in their coastal zones ,from the exploration, development, and production of energy resources, or from the location, construction, expansion or operation of any energy facility requiring a Federal license or permit. It authorizes'roneys for the fund at $250 million per year for 3 fiscal years and the 1976 transi-






33

tion period;- provides that up to 20 percent of the moneys may be used for planning grants, with the balance to be used for efforts to reduce or ameliorate adverse impacts from energy exploration and development or to provide public facilities and services necessitated by such activity; requires as a condition of eligibility the provision of public facilities and services necessitated by such activity. The law requires as a condition of eligibility for assistance from the fund that the State must participate in a coastal zone management program and must experience or anticipate a temporary or net adverse impact or have experienced an adverse impact within the 3 years prior to enactment. It authorizes automatic grants payable from the general treasury to any State where OCS oil or natural gas is being directly landed (brought ashore) ; provides a Federal guarantee for State or local government bonds issued to pay for measures needed to reduce adverse coastal impacts; contains provisions to clarify that Federal leases must be consistent with approved coastal zone management programs of the affected States. The law raises the Federal share for coastal zone management funding from 662/ percent to 80 percent; amends the Mineral Leasing Act of 1920 to increase from 37 percent to 60 percent the amounts returned to the States as reclamation funds from royalties paid to the Federal Government by mining companies extracting federally-owned minerals.
The Interstate Oil and Gas Compact was extended through 1978 by S.J. Res. 126, passed by the Senate on May 3, 1976 and by the House on September 29, 1976. It was approved as P.L. 94-493. The Compact includes 30 oil and gas producing States and 6 associate member States whose purpose is to conserve oil and gas by prevention of physical waste from any cause. The resolution also calls for a special report from the Attorney General on the activities of advisory committees used in connection with activities related to the purposes of the Comnpact to determine consistency with the antitrust laws.
Because of rising concern over cutbacks and eventual cessation of ,oil deliveries of Chnadian oil to northern tier refiners, the Senate passed S. Res. 460 on June 29, 1976. The resolution requests the President to exercise the authority vested in him by law to carry out the intent and purpose of section 410 of Public Law 94-153, the Alaska Pipeline Act and to allocate an equitable share of North Slope and other crude oil resources and petroleum products to the Northern Tier region of the United States.
It is not clear what effect these various measures will have now or in the near term on the production of domestic supplies of oil and natural gas. Many producers argue that the combination of uncertainty of future policy, restraints on price and the complexity of the current regulations combine to reduce the inclination or incentives for the very large investments needed for enhanced recovery or for development of offshore and Alaskan wells.
However, it is clear that Congress is assuming both new authority and -shared responsibility for the outcome of a distinctly different
-new energy management policy, particularly in regard to the production and pricing of oil, where decisions for so many years had been delegated deliberately or by default to the producing *companies and the private sector.














IV. MEASURES INTENDED To ENCOURAGE INCREASED PRODUCTION Or OTHER ENERGY StUnLS
The 94th Congress has acted on a number of measures intended to increase domestic supplies of coal, nuclear power, solar and other non-nuclear energy supplies. A number of new institutional or regulatory measures have also been proposed, among them a National Energy Production Board, under Senate consideration, and the $100 billion Energy Independence Authority proposed by the administration. All of these are intended to step up the rate and volume of domestic energy supplies, as well as to reshape the relative priorities among the alternate fuels. These are described in the sections below.
A. CONERSION TO COAL TO CONSERVE OIL AND GAS AND INCENTIVES FOR INCREASED PRODUCTION
Energy measures relating to coal serve dual functions of both conservation and incentives to increase domestic supplies. Proposals directed at conserving oil and gas by encouraging or forcing conVersion to the use of coal would also have the effect of encouraging increased production of coal. In addition to these, agreement on the terms under which strip mining would take place has been considered of major importance in achieving this goal. For convenience both types of measures are considered jointly in this section.
Both the Administration and Congress have placed a high premium on rapidly stepping up the output of coal as a means of offsetting reductions in imports of oil and as a longer run substitute for oil and natural gas. The Administration's target is to double coal output in 10 years-from the present 600 million tons per year (TPY), a goal which would require opening up about 140 new two-million TPY eastern underground mines, some 30 new two-million TPY eastern surface mines, and 100 new 5-million TPY western surface mines. About half of present production is by the stripping process.
The congressional majority energy policy statement also endorsed increased use of coal but underscored its concern for an energy production policy fully compatible with environmental concerns. It recommended the adoption of the Surface Mining Control Act, legislation which recognizes the interests of States in energy facilities siting, and called for establishment of machineiy to recognize and resolve the concerns of coastal, Rocky Mountain States, and others concerned with damage to the quality of life from potential exploitation of their regions and to provide adequate funding to minimize detrimental secondary effects.
Forced conversion to coal
In 1974, some 35 percent of electric power generation and 80 percent of industrial energy supply were fueled by oil or natural gas. Only 44 percent of electric power and 20,percent of industrial energy sup(35)





36

ply were provided by coal. Yet the country has hundreds of years of coal supply and only 35 years or so of oil and gas reserves.
Over the past 10 years or so, and up to the oil embargo of 1973-4, coal was losing ground to oil and gas on the basis of both economics and environmental protection. Hundreds of existing coal-fired utility generators were converted to oil or gas, and essentially no new coalfired facilities for industry were built.
After the oil embargo, the 93rd Congress passed the Energy Supply and Enviromnental Coordination Act (ESECA, Public Law 93-319) requiring that electric power plants capable of burning coal on the date of passage be ordered to do so and that power plants "in the early planning stages" be required to have the capability of burning coal. ESECA also authorized but did not not require the Federal Energy Administration to order that industrial boilers with the appropriate capabilities burn coal. In the new Energy Policy and Conservation Act (Public Law 94-163) the authority of the Federal Energy Administrator is extended through June 30, 1977, to direct powerplants, and other major fuel burning installations, to convert to the use of domestic coal. All powerplants that have a coal-burning capability on June 22, 1974, or acquire it thereafter would be required to use coal. In many areas, however, particularly in large urban areas this requirement could conceivably conflict with air quality standards. Some plants, PEPCO's Anacostia plant, for example, have recently been ordered to shift from coal to oil.
Under these authorities, FEA has issued orders requiring as many as 74 power plants now burning oil to convert to coal, although none had taken effect before the 94th Congress adjourned.
Two other bills that were considered by the 94th Congress but not enacted included more stringent provisions designed to accelerate conversion to coal.
The Energy Conservation and Conversion Act (H.R. 6860), which passed the House on June 19, 1976, but was not Voted on by the Senate before adjournment, included several important measures designed to encourage coal production and require a shift away from oil and natural gas to other fuels in order to conserve oil and gas.
To encourage business conversion for greater energy conservation excise taxes on the business use of natural r-as. crude oil and other petroleum products would have been imposed, rising from 17 cents in 1977 to $1 in 1982 and thereafter. Five year amortization, in lieu of regular depreciation, would be provided for installation of energy saving equipment, including waste-using equipment, recycling, as well as for solar energy, shale oil conversion, and various coal mining, processing, coal slurry pipeline and railroad equipment. Investment credits would be extended for insulation and solar energy equipment installed before a stated date. An energy conservation and conversion trust fund would be set up, funding not to exceed $5 billion.
The Senate version. reported from the Finance Committee August 27, 1976, dropped the excise taxes on business use of oil and natural gas as well as the provision for a trust fund.
In the Senate, hearings were held on S. 1777, the National Petroleum and Natural Gas Conservation and Coal Substitution Act of 1975.
S. 1777 would rewlire that all new fossil fuel fired powerplants and major fuel burning installations be capable, after January 1, 1979, of






37

burning coal as their primary fuel, that existing fossil fuel fired powerplants and industrial boilers be burning coal by January 1, 1980, and that all new fossil fuel fired powerplants and industrial boilers be burning coal by January 1, 1985.
Clean air act constraints
Two major stationary source pollutants that must be controlled are sulphur oxides and particulates. The control of particulates has been a lesser concern because technology to trap particulates has long been available. The problem lies with sulphur oxide control, for which existing past-combustion technology is not as energy or cost effective. It should be noted that the Clean Air Act does not identify any particular means which should be used to achieve the mandated reduction in emissions. It simply states that there must be continuous reductions in emissions down to the numerical limits prescribed for every regulated pollutant and that these must be achieved within stated time limits. How this is to be achieved is left to the individual utility or industry to choose on its own.
Prior to 1973, major stationary polluters relied heavily on the use of low sulphur oil and on natural gas to meet the mandated continuous emission standards but this option is no longer attractive economically or it is foreclosed by the policy of encouraging or forcing conversion to coal or other non-oil fuels.
As part of the program to encourage or force a conversion to coal, there have been a number of efforts to reduce the standards or at least postpone the achievement deadlines. The 1974 ESECA authorized FEA and EPA to permit extensions of achievement deadlines under certain circumstances and the proposed amendments to the Clean Air Act (S. 3219) debated in the 94th Congress included additional relaxations of standards. However, the Senate adjourned without voting on the compromise conference version and the standards laid down in the 1970 act as amended by ESECA in 1974 remain in place.
About one-fifth of the coal currently being burned yields sulfur oxide emissions that violate the Clean Air Act and SIP requirements, and no plans to come into compliance exist. Over the next five years, coal-burning powerplants designed to burn over 200 million tons of coal per year will come on line---only about 10 percent have filed acceptable compliance plans. There is serious doubt about the ability of the coal mining industry to produce enough low sulfur coal to deal with the emission limitation requirements of those plants not scheduled to install flue desulfurization units. Strip mining
While only about 5 percent of the approximate 3 trillion tons of coal resources in the United States is close enough to the surface to lend itself to stripping, nevertheless the leadtime from opening up a new mine to delivery of coal is shorter than that of opening up new deep mines, working conditions are safer, it usually results in a more complete recovery of deposits (90 percent as compared with 55 percent recovery in deep mines), and is generally cheaper in terms of cost per unit of production.
Environmental costs of stripping, however, are high, and related costs of reclamation are also high. Water pollution occurs through acid drainage. There is loss ofcagrultural production on lands dis-





38

turbed by stripping as well as a long delay in return to arableI status unless thorough reclamation takes place, a process involving draining, grading and revegeta tion which would add frQm 5, to 60, cents per ton to the cost of mining, depending on terrain, soil, mining method and climate.
Both the Administration and Congress have sought to find an acceptable strip mining bill on which they could agree, and bills were introduced early in the first session of the 94th Congress seeking to resolve the differences which had prompted President'Ford to veto the bill which passed both houses late in 1974. S. 652 and H.R. 3119, were introduced for the Administration, S. 7 and H.R. 25 for the Congressional Majority.
The Administration had requested 27 changes in last year's vetoed bill and Congress claimed to have met most of the "critical" changes in the melded version of S. 7 and H.R. 25, which passed the Senate, on May 5, 1975 and the House by a vote of 293 yeas to 115 nays on May 7,1975.
Major provisions in the legislation as passed include: (1) Allowance of surface mining in alluvial valley floors, where such activities will not jeopardize irrigated agricultural activities. (2) Prohibition of surface mining in National forests. (3) Imposition of a tax in the amount of 35 cents/ton on surface-mined coal and 10 cents/ton on deep-mined coal, for the establishment of an abandoned mine reclamation fund. (4) Exemption of anthracite coal mines from the provisions of the bill. (5) Elimination of special unemployment compensation for persons dislocated from their jobs by the administration and enforcement of the bill's provisions.
On May 20, 1975, President Ford vetoed H.R. 25. the Surface Mining Control and Pteclamation Act of 1975. citing unacceptable levels of lost coal production, unemployment, and the fact that "since 1971, 21 states which produce over 90 percent of the nation's surface mined coal have either enacted new environmental legslation governing surface mining or have strengthened laws already on the books." as three of the primary reasons for returning the measure to Congress.
In the course of House hearings held on June 3. 1975 prior to the House vote on the veto on June 10. 1975, it became clear that the Administration was no longer prepared to support even its own bill as introduced four months earlier.
The President, in his veto message, repeated the Administration's claim that "a production loss of 40 to 160 million tons would result in 1977" and that "as many as 36.000 people would lose jobs," but he admitted that his own bill would also result in production losses-as much as 80 million tons-and loss of a substantial number of jobs, placed at about 18,000 by other Administration spokesmen.
He tied his veto not only to the fact that "Congress has yet to act on a comprehensive energy program capable of achieving goals on which we all agree," but to the fact that Congress had not enacted the program which the Administration had proposed.
He said :
The bill I sent to Congress in February would have also entailed production losses estimated between 33 and 80 million tons. Even though these losses would have been substantial, we could have accepted them if Congress had enacted the comprehensive energy program I proposed. But, now the potential losses of H.R. 25 are Intolerable.





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At a press conference on May 19, 1975, FEA Administrator Frank Zarb, reiterated this point. Citing as first among other factors the drop in domestic production of oil in the first quarter of 1975 to 8.5 million barrels a day, down half a million barrels from the same period in 1974, he replied as follows to the question "Does the President favor any surface mining at all?"
Mr. ZARB. The President sent up a bill in February, and for the most part, it had the elements of a bill that would be satisfactory to us. Even that bill had a penalty, but keep in mind two things that were somewhat different. When that bill went forward, there was some reasonable expectation that at this moment we would be looking at the possibility of a comprehensive piece of legislation in the total energy area having been completed. That certainly is not the case.
If a national energy program was in place, and if we were already underway in reducing our consumption levels of oil, and if we were already underway in putting those measures into place to get additional production between now and 1980. then perhaps this bill might have been examined differently.
And when the vote to override failed by 3 votes-278 yeas to 143 nays-it also became apparent that Congress itself was not yet prepared to insist on a definitive bill, for reasons at least in part aligned to those outlined by the Administration.
Two similar bills were reported in the House during the second session but were not put to vote before adjournment: H.R. 9725 (reported from the Committee on Interior and Insular Affairs March 12, 1976, H. Rept. 94-896) and H.R. 13950 (reported from the same committee August 31, 1976, H. Rept. 94-1445). Coal leasing and other mining regulations
On August 3 and 4., 19761 Congress overrode a Presidential veto of the Federal Coal Leasing Amendments Act of 1976 (S. 391/H.R. 6721). now enacted as Public Law 94-377.
Among other provisions, the bill, as approved:
Reduces to 10 years from 15 the period for which a lease could be held without development;
Protects lands within the national parks, wildlife refuges, wildernesses. trails and wild rivers systems from coal mining;
Allows a Governor to delay for 6 months issuance of a lease to allow strip mining within a national forest in his State; and
Expands the uses to which Colorado and Utah could put revenues received from Federal oil shale test leases.
Establishes strip mining regulations for Federal lands similar to those in the vetoed strip mining bill.
Raises the royalty on Federal coal from 54 per ton to 12.5 percent of the value of the coal.
Increases the States' portion of coal revenues from 36.5 to 50 percent.
Requires that all coal leases be awarded through a competitive bidding process.
The bill also includes a comprehensive Federal exploration progyrim, estimated to cost $1.2 billion during the first 5 years.
The President indicated in his veto message that, while he approved increasing the States' share of Federal coal revenues, he returned the bill to Congress because it restricted the "flexibility of the Secretary of the Interior in setting the terms of individual leases" and it contained many "rigidities, complications, and burdensome regulations".





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The override vote in the House and Senate was 316 yeas-85 nays and 75 yeas-17 nays respectively.
S. 2371, providing for regulation of mining within specified areas of the National Park System was approved as Public Law 94-109 on October 10, 1976 and could preclude future energy mineral development in these specified areas.
The areas to be closed are: Crater Lake National Park, Mount McKinley National Park, Death Valley National Monument, Coronado National Memorial, and Organ Pipe National Monument. Glacier Bay National Monument is also included with the exception of its westernmost portions. Although energy minerals development was not specifically mentioned as a concern, the bill contains no variances for allowing such development in the future. The Secretary of the Interior has been delegated the authority to allow expansion of existing mining operations, but since fossil fuel development is not underway in any of the selected areas, it would not be subject to this exception. Incentives for increased coal production
The new Energy Policy and Conservation Act, P.L. 94-163, includes incentives to develop underground coal mines. The legislation authorizes the FEA to guarantee loans to increase coal production by encouraging new market entry. The total guarantees to any person (or company) are limited to $30 million. The aggregate outstanding principal amount of loans guaranteed may not exceed $750 million and only 20 percent of that amount can be used to develop coal which is not low in sulfur content. Eligibility restrictions will limit the loans to very small operators. Maximum interest rates are not specified nor are provisions for them discussed. There is no provision for penalties in cases of nonpayment or for companies that already have financing problems. The cost of opening a new mine is so large and the cost of equipment so great that a loan of $30 million would be only a very slight incentive. Because participation is limited only to small operators of underground low-sulfur coal mines, the volume of new production that it might stimulate is automatically reduced.
Public Law 94-385, passed August 22, 1976, amended the provisions in P.L. 94-163 by defining the phrase "developing new underground coal mine" so as to include mines currently in operation and closed mines that can be reopened as eligible for the benefits of the loan guarantee program.
Synfuels comm ercialisation program
The conversion of a portion of the vast U.S. coal resources to gas and liquid fuel offers a significant potential for supplementing the nation's dwindling reserves of natural gas and oil. Commercially proven conversion processes for the manufacture of clean gas or liquids from coal have been available since the early 19th century. For the past decade, development has taken place on second-generation processes as well. But before any of these processes can be used commercially in the United States on a wide scale, many economic, equipment. and other problems must be resolved. Both the Administration and the Congress have recognized the importance of obtaining synthetic fuels from coal.'
See "Coal Conversion: Gasification and Liquefaction." issue Brief No. IB74053. by Dr. Martha Krebs-Leidecker. Science Policy, Congressional Research Service, 1976, for background and additional details.






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The development of a synthetic fuels commercialization program became an issue for Congress in the fiscal year 1976 ERDA Authorization bill. After receiving the bill ,from the House, the Senate added section 103 on July 31, 1975. The amendment provided $6 billion in loan guarantees for commercial development of solar energy, geothermal sources, and synthetic fuels. Of that amount, $2.5 billion was specifically set aside for high Btu gas from coal.
The House reaction to this amendment was critical. No provision had been made for cooperation with State and local officials. Coordination with Federal, State and local environmental regulations remained unspecified. No account was taken or provision made for social and economic impacts on local communities. There was no mechanism for congressional review; ownership of patents under such an arrangement was unclear. Further, attachment of such a loan guarantee amendment to an authorization seemed to many House Members an attempt to circumvent normal budgetary process.
Complicating House response to the Senate amendment was the administration's decision to support the Senate bill. This decision occurred at the same time as the President's proposal for an Energy Independence Authority (EIA), an independent financial agency with a 10-year lifetime. The EIA was to fund appropriate commercial energy ventures which would increase the Nation's energy supplies. The agency was to draw on total funds of $100 billion .from the Federal treasury.
Almost sinmultaneously with the ELA proposal, tli" President's Interagency Task Force for a Synthetic Fuels Commercialization Program. released its report in draft form.2 Although the task force was organized before ERDA was fully operational, ERDA, in lieu of an Energy Independence Authority, was given the responsibility for implementing the recommendations of the task force.
In order to expedite the commercialization program, ERDA chose to support section 103 in the amended House version of its authorization. Since it was but part of the recommended incentives program and since the draft version of the incentives program did not take social, economic, and environmental issues directly into account, ERDA's position was attacked as being piecemeal and lacking comprehensiveness.
All these events culminated in the defeat of an amended section 103 on the House floor on Dec. 11, 1975.
Soon after the beginning of the second session, two new loan guarantee bills were placed before the Congress. S. 2869, the Synthetic Fuels Act of 1976, was introduced in the Senate on Jan. 23, 1976. This bill essentially recapitulated the amended version of section 103, deleting only loan guarantees for the development of oil shale. H.R. 12112 was introduced in the House on Feb. 25, 1976. The major change in this bill initially was to authorize $2 billion in loan guarantees for the full range of technologies as a supplement to the FY76 authorization. It also put a time limitation beyond which no more guarantees could be furnished.
After extended hearings by three House Comm ittees-Banking, Currency and Housing, Interstate and Foreign Commerce and Ways
2-U.S. Energy Resources Council. Recommendations for a Synthetic Fuels Cominer(ialization Program. Vols. I. ii. III, IV. Prepared by Synftiels Interagency Task Force. Washington. U.S. Govt. Print. Off.. 1975.
79-1:57-76----4





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and Means-a compromise bill was finally submitted in the form of a substitute amendment on August 26, 1976. A significant aspect of the substitute was that an agreement was reached on funding. The compromise bill allowed $3.5 billion in loan guarantees, $300 million in community assistance loan guarantees and direct loans and $500 million in price supports. The bill was killed, on a procedural vote rather than on substantive issues, when it was brought to the floor on September 23,1976, losing by a single vote, 193 to 192.
The close vote is indicative of the doubts that remain over still unresolved economic and environmental issues as well as the more basic issue of the degree to which the federal government should intervene to promote commercialization of a program intended to rely primarily on private investment and development.
B. NUCLEAR POWER
Estimates and plans for future energy supplies for the United States anticipate major expansion of nuclear power, the technology for which has been developed over the past three decades with very large infusions of public funds through the Atomic Energy Commission (AFC) and now through the Energy Research and Development Administration (ERDA).
However, during recent Congresses, issues have been raised concerning the general presumption that nuclear power will supply an increasing part of the Nation's energy through the year 2000.
Included are such basic questions as the sufficiency of domestic supplies of low-priced uranium ore to fuel the anticipated expansion; the balancing of risks from possible catastrophic accidents or misuse of stolen nuclear material against the economic and environmental benefits of nuclear power; the long term isolation of nuclear wastes; the possible impacts on society of measures to keep risk of theft of nuclear materials or sabotage of nuclear facilities within acceptable bounds; a legislative decision whether the Government or private interests should finance, build, and operate missing parts of the nuclear fuel cycle, particularly enrichment of uranium and waste disposal; and control over nuclear exports to minimize prospects for further proliferation of nuclear weapons among the arsenals of nations of the world.3
Indications of these questions are to be found in hearings held by the Joint Committee on Atomic Energy on the breeder, chaired by Mr. McCormack; by the House Committee on Interior and Insular Affairs on the nuclear debate, chaired by Mr. Udall; by the Joint Economic Committee on the breeder, chaired by Senator Humphrey; by the Senate Committee on Government Operations on nuclear safeguards, chaired by Senator Glenn; and by the Senate Committee on International Relations on nuclear transfers, chaired by Senator Symington.
During the first session ERDA and NRC authorizations for fiscal 1976 were enacted as Public Law 94-187 and Public Law 94-79 respeca The Subcommittee on Energy and the Environment of the House Committee on InI, riur :iund lnsular Affairs held oversight hearings on nuclear energy April 28-29, May 1, 2. ,Jin 2, 5 nd ( 1975. See T1e:rings,. Part II, Nuclear breeder d development program, for a detailed discussion of estimates on uranium reserves and resources of the United States.





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tively and funds were appropriated in Public Law 94-180. signed December 26. 1975. Supplemental appropriations for NRC, to provide an additional $50 million for safety measures was provided in Public Law 94-18 during the first session, and a revised law providing for public remuneration in the case of a nuclear incident was also passed, as Public Law 94-197.
The NRC Fiscal 1977 authorization was signed August 9, 1976 (P.L. 94-79). Fiscal 1977 authorization bills for ERDA were passed by the House May 20, and the Senate June 25. but the Senate failed to clear the conference version before adjournment. The appropriations bill, however, was signed July 12, 1976 (Public Law 94-355), and in lieu of the authorization, both Houses agreed to a special continuing resolution which will allow ERDA to spend money through March 1, 1977 at the level which would have been allowed had the authorization passed. This allowed work to begin on the add-on to the Portsmouth. Ohio. enrichment facility. However, in consequence, the 95th Congress will have to debate ERDA authorizations-including the controversial breeder reactor funding-twice in 1977. once for fiscal 1977 and once for fiscal year 1978.
The following sections very briefly describe legislative activity and other events during this period involving: (1) ERDA and NRC organization and funding; (2) the breeder reactor; (3) plutonium revcycling; (4) exports of nuclear materials and technology, and related safeguards issues: (5) siting and licensing of nuclear plants; (6) nuclear insurance indemnification: The Price-Anderson Act; and (7) enriched uranium supplies.
Nuclear power and the presidential campaign
The party platforms of the Presidential election touched briefly on nuclear energy. That of the Democratic Party recommended minimum U.S. dependence on nuclear energy and called for stronger safety standards and more research for reactor safety, nuclear safeguards and nuclear waste disposal. The Republican Party platform called for government research on the use of nuclear energy to be expanded to include perfecting a long-term solution to the problem of nuclear waste.
Presidential candidate Carter in addressing a Public Citizen Form of Mr. Nader on August 9, 1976 said that nuclear development should be relegated to the last priority necessary to provide for the nation's energy, following after conservation, coal conversion and a strong shift of research and development in the direction of solar energy. In his nuclear remarks at San Diego on September 25, 1976, Mr. Carter said that the government had failed to explore non-nuclear alternative energy sources in the energy research and development budget and added that non-nuclear alternatives such as solar and geothermal power would not only relieve domestic pressure to increase reliance on nuclear power but would provide other nations which have not yet opted for nuclear energy- with a choice. President Ford in his nuclear )licy statement of October 28. 1976 announced as his objective the establshijng of a sound foundation for the continued and increased( use of nuclear energy in the United States and abroad in a safe and economic manner.







ERDA and NRC organization and fuindivg for nuclear power
On January 19, 1975, President Ford activated the Energy Research and Development Administration (ERDA) and the Nuclear Regulatory Commission (NRC). Both new agencies were created by the Energy Reorganization Act of 1974 which also abolished the old Atomic Energy Commission.
The NRC is, to carry out the licensing and regulatory functions formerly assigned to the AEC, and is to devote its full attention to assuring the safety as well as the reliability of nuclear power, Creation of the NRC should end the concern that some have expressed in the past when one agency, the AEC, had the dual and conflicting responsibilities for development and for regulation of civilian nuclear power.
The ERDA brings together in one agency the major Federal energy research and development programs and bears the responsibility for leading the national effort to develop the technology needed to assure the United States ample and secure supplies of energy at reasonable prices. ERDA consolidates major energy -research and development functions from the AEC, the Department of the Interior, National Science Foundation and Environmental Protection Agency. ERDA will also continue research and development for production of nuclear materials and for atomic weapons.
Public Law 94-187. sined Decemiber 31, 1975, provided authorizations for ERDA totaling about $5.7 billion, of which about $1.2 billion was for nonnuclear projects.
The appropriations bill for the Energy Research and Development Administration and the Nuclear Regulatory Commission (H.R. 8122) became Public Law 94-180 on December 26, 1975. It set ERDA appropriations at $3,130,765,000 for fiscal year 1976, and $941,507,000 for the transition period, July 1, 1976 through September 30, 1976. NRC appropriations totaled $215,423,000 for fiscal year 1976 while $51,425,000 was appropriated for the transition period.
While only $212 million of this amount (plus $58 million for the transition period) was earmarked for the liquid metal fast breeder reactor, the overall LMFBR program cost for the period through the year 2020 is now estimated at $10 billion, as compared with a late 1960's estimate in the range of $3 to $4 billion, and the estimated total program cost of the Clinch River demonstration Breeder Reactor Project, an essential element of the whole fast breeder program, has already escalated from $700 million to $1.7 billion, although it will not be operational until the year 1982.
The battle was repeated in 1976 regarding the Fiscal 1977 ERDA authorization bill. By that time, the estimated cost of the Clinch River program had increased to $1.9 billion. The breeder reactor
A major controversial issue of energy and nuclear power policy in the 94th Congress is the future of the breeder reactor and ERDA's program to further develop this technology and to build a larger breeder demonstration on the Clinch River at Oak Ridge, Tennessee. Compared with previous Congresses, more Members are now raising questions about and challenging this program than in the past, as the number of official reports on the topic provide a broadening informa-





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tion base for Congres and the public. Within the past year the GAO has reported on the cost of the program (May 22, 1975); the Joint Committee on Atomic Energy's ad hoc subcommittee issued a report (June 30, 1975); and ERDA's final environmental statement on the breeder was issued December 31, 1975.
In January 1975, an ERDA review group completed its report on the LMFBR program and confirmed the need to ". . proceed expeditiously to develop the LMFBR at this time to assure the continued availability of the nuclear power option to meet the Nation's future energy needs." The report deemed prudent the objective of achieving commercial breeder availability by the early 1980's, although it noted some risk that this timing may be late in relation to need.4
The report also found that known economically recoverable domestic uranium reserves would be committed to converter reactors within a few years; that the LMFBR program contained the essential eleminents for success and was in reasonable balance: and that foreign LMFBR programs would contribute important data and information, but that it would be impractical to substitute foreign reactor experience and technology for critical elements of the U.S. program.
In March 1975, ERDA proposed realignment of management of the fast breeder reactor project. The change would have ERDA assume direct management of the demonstration project in order to recognize the Government's expanded financial commitment and to assure that the project has single lines of authority and that its objectives are met.5
At about the same time, the National Resources Defense Council issued a report sharply criticizing the breeder project and proposed bypassing the breeder and moving directly into using solar, geothermal, and fusion energy and energy conservation. The real LMFBR debate, according to NRDC, will center around whether it is possible to make this leap. NRDC believes the leap can be made and recommended that the Federal Government delay the LMFBR program for a decade as premature and because they see no penalty in such delay. Funds freed by the LMFBR cutback could finance accelerated development of solar, geothermal, fossil, fusion, and conservation technologies.
The postponement would also provide time for data to be gathered and assessed which bears critically on the future desirability of the LMFBR program. Such data would include: (1) More accurate information on uranium availability and future energy demands; (2) information on the potential of solar. geothermal, and fusion energy (which should increase "dramatically" with appropriate funding) : and (3) information to answer critical health and safety problems of the LMFBR with more certainty than is now present.6
The Joint Economic Commifttee. chaired by Senator Humphrey, held hearings on the LMFBR program on April 30 and May 8, 1975. In June, the Subcommittee on Energy and the Environment of the
4 U.S. Energy Research and Development Aduinistration. "Report of the Liquid Metal Fast Breeder Reactor Program Review Group." January 1975, 59 p., report ERDA-1. 'Cf.. ERDA press release No. 73-32. Mar. 1973. SThomas B. Cochran. .1. (Gustave Speth and Arthur R. Tamin. lBypassin the breeder. A report of misplaced Federal energy priority. Washington, D.C.: Natural Resources Defense Council, March 1975, If 1).





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House Committee on Interior and Insular Affairs and the Ad Hoc Subcommittee to Review the National Breeder Program of the Joint Committee on Atomic Energy began hearings on the national breeder reactor program and related issues.
Secretary of Commerce Morton and Federal Energy Administrator Zarb told Washington newsmen that the breeder program should not be undertaken on a crash basis.7
On June 30, 1975, ERDA Administrator Seamans issued a finding on the preliminary final environmental statement for the breeder that in essence supported further development. When he released the final environmental impact statement on December 31, 1975, Administrator Seamans said:
At this stage of LMFBR technology development we do not have all the answers necessary to determine the environmental acceptability, technical feasibility and economic competitiveness of LMFBR technology for widespread commercial deployment. It is to find these answers that ERDA is continuing the research, development, and demonstration program.
He added that at least one additional programmatic environmental statement will be prepared and considered, probably in 1986, prior to any future ERDA decision on the commercialization of the LMFBR.
ERDA has announced that it has commissioned the National Academy of Sciences to conduct an 18-month independent analysis of all the risks and benefits associated with alternative conventional and breeder reactors as sources of power."
Bills concerning the breeder thus far in the 94th Congress have been limited to the ERDA authorizations. In the Senate, Senator Tunney on June 10 proposed an amendment to the ERDA authorization for fiscal year 1976 to eliminate funds for onsite construction of the breeder demonstration and to require an assessment and report to Congress by the Office of Technology Assessment on the breeder within a year.9 In the House, the ERDA authorization was passed on June 20, after attempts to amend the bill to reduce or delay the breeder had not succeeded.'0
The Clinch River project was subject to renewed debate when the Fiscal 1977 ERDA Authorization bill came before the House in May 1976 and the Senate in June 1976. The most significant House amendment offered to the bill was by Mr. Coughlin and Mr. Moorhead of Pennsylvania, requiring that any costs over $2 billion for the programs be shared half by industry and half by the Government. The amendment was defeated by 173-209. A similar amendment offered by Mr. Haskell was defeated in the Senate by a 31-50 vote.
lThe breeder also was an issue in the Presidential campaign. Presidential candidate Carter on August 9, 1976 said to a Public Citizen Forum that the LMIFBR program was a substantial waste of money and proposedd to reduce the U.S. breeder program. President Ford did not mention the breeder in his nuclear policy statement of October 28.
'T Victor K. 'McElheny, "Morton and Zarb *join In suggesting a slowdown on nuclear breeder reactors and call for more research." The New York Times, June 10, 1975, p. 25. s Nucleonics Week. June 12, 1975, p. 4. Ths newsletter attributed the origins of the study to a letter from NAS President Philip Handler to Senator Tunney.
Congressional Record. June 10, 1975. p. 810(175.
Co Congressional Record, June 20, 1975, pp. 11833-587.





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Pbutonium recycle
Whenever nuclear fuel containing uranium-238 is exposed to neutrons, which is the condition within a nuclear reactor, some of the U-238 is transformed into plutonium. If more atoms are so transformed into plutonium than are fissioned to energize the reactor, then the reactor is called a breeder. Conventional nuclear powerplants do transform U-238 into plutonium, which in principle can be recovered and used as a nuclear fuel in the reactors by mixing it with ordinary uranium. Over the years, the AEC has funded some research and development to perfect this idea, known as plutonium recycle. In August 1974 the AEC published in draft an environmental statement on use of such fuels in light-water reactors.11 The issue addressed is a method of operation of the nuclear power industry, including nuclear reactors and associated fuel cycle facilities and operations. If plutonium recycle is authorized for commercial practice, then the plutonium produced in conventional nuclear powerplants will extend the nuclear fuel resources of the Nation and also provide new income for the nuclear industry and reduce the amount of plutonium held in storage. If plutonium recycle is not authorized, then the energy recoverable from uranium reserves with present nuclear powerplants will not be increased, there would be less reason to process used fuelswhich would reduce opportunities for theft or diversion of recovered plutonium, a new source of income for the nuclear industry would be foregone, but the chances of dangerous releases of plutonium to the environment would be substantially reduced.
The National Resources Defense Council in its analysis of plutonium cycles strongly opposed the concept as dangerous and unnecessary. 2 The Nuclear Regulatory Commission addresed plutonium recycle early in 1975. On May 8, the NRC announced that before making a decision as to whether recycled plutonium may be used widely in fuel for light water reactors, it would ask for public comment regarding possible courses of action for evaluating the safeguards issue.3
On November 12, 1975, the Nuclear Regulatory Commission
announced its procedures for deciding-possibly by early 1977whether to permit widescale use of plutonium mixed with uranium to fuel nuclear powerplants. It also issued procedures for related interim licensing activities pending that decision.14
The Joint Committee on Atomic Energy in reporting the NRC's authorization for fiscal year 1976 noted that undue delay by NRC will inevitably result in expensive inefficiencies and postponement of related (commercial) decisions. The Joint Committee urged the NRC to expedite its decisions on plutonium recycling and safeguards ... to the maximum extent without reducing the necessary scope and
IT U.S. Atomic Energy Commission. "Draft generic environmental statement mixed oxide fuel (recycle plutonium in lightwater-cooled reactors)," August 1974. 4 vols., report No. WASH-1327 (known as the GESMO report).
'" J. Gustave Speth, Arthur R. Tamplin and Thomas B. Cochran. "The putonium decision. A report on the risks of plutonium recycle." Washington, D.C.: Natural Resources Defense Council. September 1974, 29 p.
1 NRC press release No. 75-115. May S. 1975.
14 NRC press release No. 75-270, Nov. 12, 1975.





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depth of its inquiry, regardless of its decision as to the separability of these two issues." 15
On August 31, 1976, NRC announced that it had found no safety or environmental reasons for prohibiting recycle of plutonium. The NRC announcement left open the question of developing adequate safeguards to protect plutonium from theft or hijacking, about which hearings were expected to be held later in the year.
Plutonium recycle has attracted legislative attention. In February 1975, Mr. Aspin introduced a Plutonium Recovery Control Act, to prohibit the licensing of certain activities regarding plutonium until expressly authorized by Congress and to require a comprehensive study of plutonium recycling by the Office of Technology Assessment.'"
In the Senate, Senator Tunney introduced a Plutonium Recovery Control Act to likewise prohibit licensing of plutonium recycle except for military or research and development purposes, and to require OTA to undertake a 3-year assessment.'7
Plutonium recycle also was an issue in the presidential campaign. Mr. Carter in his remarks on nuclear policy at San Diego on September 25, 1976, said that as President he would: ". . seek to withhold authority for domestic reprocessing until the need for, the economics, and the safety of this technology is clearly demonstrated. If we should ever decide to go forward with commercial reprocessing, it should be on a multinational basis." President Ford in his statement of nuclear policy on October 28, 1976, announced his policy decision that "reprocessing and recycling of plutonium should not proceed unless there is sound reason to conclude that the world community can overcome effectively the associated risks of proliferation." 1Also he announced his direction to the ERDA Administrator to change his agency's policies and programs which have been based on assumptions that reprocessing would proceed, encourage prompt action by industry to expand spent fuel storage facilities, and identify research and development needed to investigate the feasibility of recovering energy value from used nuclear fuel without separating plutonium. He has directed the Administrator of ERDA to immediately begin to
define a reprocessing and recycle program consistent with U.S. international objectives which should complement the NRC's on-going evaluation of reprocessing and recycle. Dealing With nuclear proliferation
Many Members of the 94th Congress have shown an increasing interest in the risks to national and world peace and security from further spread among nations, or proliferation, of the ability to pro17 S. Rept. 94-174, to accompany s. 1716. June 4, 1975. p. 6. 'I1I.R. 3618, Feb. 25. 1975, and H.R. 4945 and I.R. 4946. Mar. 14, 1975. Referred to
the Joint Committee on Atomic Energy. Mr. Aspin was joined by 4S cosponsors on the se\ral bills. Cf. Mr. Aspin's statement in the Congressional Record of Feb. 26. 1975, pp. E1'7,R-738 and Mar. 14. 1975. p. E11 5.
17 S. 1197. Mar. 17, 1875. Referred to the Joint Committee on Atomic Energy. The bill would require the OTA to conduct and complete within 3 years a comprehensive study of the recycling of plutonium for the purposes of determining the extent of the dangers to the public health and safety and the environment of such recycling. The study would Include: (1) Investigation of the toxicity and carcinogenic characteristics of plutonium:
(2) Investigation of the risks of unauthorized diversion or theft of plutonium; and (3) Consideration of the development of systems for the use of plutonium which will assure the protection of 'the public health and safety of the environment. Cf. Senator Tunney's remarks in the Congressional Record of Mar. 17. 1975. p. S3963.





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duce nuclear-explosive materials and to make them into nuclearexplosive devices or weapons. That interest was sparked by the test of a nuclear explosive by the Government of India in May 1974; by efforts of France and West Germany to sell technical assistance and equipment to some non-nuclear-weapons countries to build factories to recover plutonium from irradiated nuclear fuels; by President Nixon's proposal that the U.S. nuclear industry supply large nuclearpower reactors to Egypt and to Israel as part of his effort to reduce tensions in the Middle East; and by outcries from public interest groups over requests to the Nuclear Regulatory Commission for licenses to export nuclear-power reactors and research-reactor fuel containing highly enriched uranium to South Africa, a nuclear steam generator to Spain, and slightly enriched uranium to India.
Many bills and amendments to other legislation dealing with one or another aspect of nuclear proliferation have been introduced in the 94th Congress. Of these, a few were passed, some defeated, and one vetoed. None of the most comprehensive bills were enacted.
The range and variety of these proposals for non-proliferation legislation shows that in many ways congressional thinking and analysis of nuclear proliferation issues has run ahead of that visible in the executive branch. To date, the ideas embodied in legislative proposals which have reached the point of hearings have been generally opposed by the executive branch as unnecessary or for other reasons.
Amendment to the Foreign Assistance Act 18
Public Law 93-329, the International Security Assistance and Arms Export Control Act of 1976, approved June 30, 1976, adds a new Section 669 to Chapter 3 of Part III of the Foreign Assistance Act of 1961. Section 669 provides that no funds authorized or appropriated under the Act or the Arms Export Control Act may be used for the purpose of:
(1) providing economic assistance(2) providing military or security-supporting assistance or
grant military education and training; or
(3) extending military credits or making guarantees; to any
country which:
(A) delivers nuclear reprocessing or enrichment equipment,
materials, or technology to any other country; or
(B) receives such equipment, materials, or technology from
any other country; unless before such delivery:
(i) the supplying country and receiv-in country have
reached agreement to place all such equipment, materials, and technology, upon delivery, under multilateral
auspices and management when available, and
(ii) the recipient country has entered into an agreement with the International Atomic Energy Agency to place all such equipment, materials, technology, and all nuclear fuel and facilities in such country under the safeguards system of such Agency.
"'For a discussion of the purpose Of thiz amendment and the relevant text from the SenRte report on the legislation (S. ReT)t. 94-917), cf., remarks of Senator Symington, Congressional Record, July 19, 1976, pp. 811784-5.

79-157--76-5





50

The Act gives the President some limited flexibility, provided he makes certain determinations and certifications to the Congress. It provides also that the Congress terminate or restrict such assistance.
Section 669 (b) (1) authorizes the President by Executive order, effective not less than 30 days following promulgation, to furnish assistance which would otherwise be prohibited if he determines and certifies in writing to the Congress that:
(A) the termination of such assistance would have a serious
adverse effect on vital United States interests; and
(B) he has received reliable assurances that the country in question will not acquire or develop nuclear weapons or assist other
nations in doing so.
Such certifications are to set forth the reasons supporting each determination.
The Act also provides that Congress, by joint resolution, may terminate or restrict assistance mentioned in the Act with respect to a country to which the prohibition applies or take any other action with respect to such assistance for such country as it deems appropriate.
House Advice to the President
Concurrent Resolution 570 was introduced by Mr. Zablocki, Chairman of the Subcommittee on International Security and Scientific Affairs of the House Committee on International Relations.19 It was passed on May 3, 1976. The principal purposes of the resolution are as follows:
(1) To urge the prompt embodiment in an agreement of the
understandings contained in the Vladivostok Accord. It also expressed support for immediate negotiation of reduction in the number of strategic delivery vehicles equipped with MIRVs, as well as achievement of approximate equality in total strategic nuclear destructive capability of nuclear weapons as measured by
number, yield, throw-weight, and accuracy;
(2) To urge a verifiable comprehensive agreement ending underground nuclear explosions; and
(3) To urge a halt on further transfers of nuclear fuel, technology and equipment.20
The halt of further transfers of nuclear fuel, technology and equipment is urged as a means of reinforcing international actions to prevent the proliferation of nuclear weapons and other nuclear explosive devices. The recommended halt in transfers would apply to any country which had not taken either one of two actions: First, accepted on all its nuclear programs the safeguards of the IAEA; or second, become a party to the Treaty on the Non-Proliferation of Nuclear
*Weapons (NPT). The Committee's intent here is to urge prompt ratification of the NPT by the largest possible number of countries.
The Committee recognized that, in order to be effective, this proposed halt would have to be supported by other major nuclear suppliers, so it would be conditional upon agreement of other major nuclear suppliers to a similar halt on transfers. The Committee feels
1% Cospniisors were MNr. Bingham. Mr. Findley and Mr. Solarz.
0 U.S. congress House, Committee on International Relations, Nuclear proliferation: Fi.-ire TT.,. for(,in oliev implications. Report to accompany H. Con. Res. 570. April 28, 1976, H. Rept. No. 94-1051. p. 5.








that a common supply policy among all nuclear-weapons states should be reached as soon as possible, although this is not included in the language of the bill.
Senate Advice to the President
On July 6, 1975, Senator Pastore and four cosponsors introduced Senate Resolution 220 21 to urge the President to, take the leadership in seeking international cooperation in strengthening safeguards of nuclear materials. The text of the resolution follows:
Resolved, That the Senate of the United States strongly requests and urges the President to seek through the highest level of consultation in the United Nations and with other leaders of the world community, an intensive cooperative international effort to strengthen and improve both the scope, comprehen.siveness, and effectiveness of the international safeguards on peaceful nuclear activities so that there will be a substantial and immediate reduction in the risk ,of diversion or theft of plutonium and other special nuclear materials to military
-or other uses that would jeopardize world peace and security; be it further
ResRolved, That the President seek, through consultation with suppliers of
-nuclear equipment and technology, their restraint in the transfer of nuclear technology and their cooperation in assuring that such equipment and technology only is transferred to other nations under the most rigorous, prudent, and safeguarded conditions designed to assure that the technology itself is not employed for the production of nuclear explosives; and be it further
Resolved, That the Secretary of the Senate is directed to transmit copies
-of this resolution to the President of the United States and to the Secretary of 'State.
The Resolution was passed by the Senate on December 12, 1975'.
A additional Funds for IA EA Safeguards
Appropriation of additional funds for safeguards of the International Atomic Energy Agency was proposed by Senator Glenn in an amendment to the Foreign Assistance and Related Programs Appropriations of 1976, HMR. 12203, on MNarch 23, 1976. His amendment provided that not less than $1 million of the appropriation should be available only for the International Atomic Energy Agency to be used for the purpose of strengthening safeguards and inspections relat.ingy to nuclear fissile facilities and materials.22 The amendment passed and appears in Title I of Public Law 94-330, the Foreign Assistance and Related Programs Appropriations Act, 1976, approved June 30, 1976.
Concurrent resolutions have been passed which expressed congressional approval of proposed additional amounts of special nuclear material which may be distributed to the International Atomic Energy ,Agency 23 and the European Atomic Community 21 pursuant to the Atomic Energy Act, and the proposed 2-year extension of the 1955 Agreement for Cooperation between the United States and Israel
-concerning the civil uses of atomic energy.25 Hearings were held on
"The cosponsors were Senators Mondale, Tnonye, Montoya and Symington.
22 Congresslonal Record,' Mar. 23, 1976, p. 84801.
28 S. Con. Res. 13, Feb. 11. 197W; -,and H. Con. Res._115, Feb. 10, 1975. Approved by the
-Sen~qte Feb. 19, 1975. and tabled In Houge Matr. 17. 1975.
24 S. Con. Res. 14, Feb. 11, 19751; and H. Con. Res. 116, Feb. 10, 1975. Passed by Senate Feh. 19. and tabled in the Houise on Mar. 17. 197-5.
M S. 'Con. Reg. 15, Feb. 11, 1975, Mr. Pastore; and H. Con. Res. 114, Feb. 10, 1975. Passed by Senate Feb. 19, 1975, and in the House Mar. 11, 1975.






52

these proposals on February 6, 1975, by the Subcommittee on Agreemnents for Cooperation of the Joint Committee on Atomic Energy.26
Proliferation and the presidential campaign
What to do about controlling proliferation, became a campaign is.sue on May 13, 1976 in Mr. Carter's address at the United Nations on U.S. nuclear policy. There he warned of the hazards of further proliferation and noted the limitations of international safeguards. Nu,clear energy, he said, must be at the very top of the list of global challenges that call for new forms of international action. He suggested that new lines for such action should be considered in three main areas: action to meet the energy needs of all countries while limiting reliance on nuclear energy; action to limit the spread of nuclear weapons; and action to make the spread of peaceful nuclear power less dangerous. Later, in his San Diego remarks on nuclear policy of September 25, 197-6, Mr. Carter reemphasized his view that the continuing global proliferation of nuclear weapons is a. dangerous and unacceptable barrier to world peace and warned that any country possessing nuclear fuel reprocessing plants could recover thie plutonium needed to make an atomic bomb from spent fuel. He said that as President:
1. 1 will call upon all nations to adopt a voluntary moratorium on
-the national sale or purchase of enrichment or reprocessing plants-a moratorium which should apply retroactively to the recent GermanBrazilian and the French-Pakistan agreements.
2. I will make no new commitments for the sale of nuclear technologyv or fuel to countries which refuse to forego nuclear explosives, to remain from national nuclear reprocessing, and to place their nuclear facilities under IAEA safeguards.
3. 1 will seek to withhold authority for domestic commercial reproc-essing until the need for, the economics, and the safety of this techmiology is clearly demonstrated. If we should ever decide to go forward with commercial reprocessing, it should be on a multinational basis.
4. 1 will call, for -an international Conference on Energy, to provide a forum in which all nations can focu-s on the non-proliferation issue. Such a Conference must also explore non-nuclear means of meeting energy demands of other nations so that no state is forced into a premature commitment to atomic power.
5. 1 Will support a strengthening of the safeguards and inspection authority of the IAEA and place- all of our own peaceful domestic nuclear facilities under those, safeguards.
6. T will seek to renegotiate our existing agreements as a nuclear supplier, many of which were entered into before we began insisting on reprocessing sa feguards and which are now inadequate.
7. 1 will take steps to ensure that the U.S. is once again a reliable supplier of enriched uranium--the fuel for civilian reactors which is unsuitable for weapons-by supporting enlargement of our government-owned facility.
8. 1 will explore intern ational initi atives such as multinational enrichment plants and multinational spent fuel storage areas which
'6 U.S. Congress. Joint committee on Atomic Energy. Subcommitteee on Agreements for Cooperation. 'Proposals for International cooperation In nuclear energy." Hearings, 94th Cong., 1st sees., Feb. 6, 1975. Washington, Govt. Print. Off., 1975, 16 p.






53

could provide alternatives to the establishment of enrichment or reprocessing plants on a national basis.
9. 1 will redirect our own energy research and development efforts to correct the disproportionate emphasis which we have placed on nuclear power at the expense of renewable energy technologies. Our emphasis on the breeder reactor must be converted into a long term, possibly multinational effort.
10. Finally, I will follow through on my belief that the United States can and should negotiate a comprehensive test ban treaty with the Soviet Union, and reduce, through the S ALT talks, strategic nuclear forces and technologyr.
11. 1 will encourage the Soviet Union to join us in a total ban of all nuclear explosions for at least five years. This ban would include so-called "peaceful nuclear devices."
President Ford in his nuclear policy statement of October 28, 1976 announced three policy decisions and eight sets of actions to carry out U.S. nuclear policies. The principal policy decisions were:
1. Reprocessing -and recycling of plutonium should not proceed unless there is sound reason to, conclude that the world community can overcome effectively the associated risks of proliferation.
2. Avoidance of proliferation must take precedence over economic interests.
3. U.S. and other nations can and should increase their use of nuclear power for peaceful purposes even if reprocessing and recycle of plutonium are not found acceptable.
The specific decisions to implement the overall policy positions were to:
Change domestic policies to conform with the decision to defer
commIIIIercialiZation of chemical reprocessing.
Call upon all nations to avoid transferring or making commitments to transfer reproc-essingy and uranium enrichment technology and facilities for at least three years.
Call upon supplier nations to take new cooperative steps to
help assure an adequate and reliable supply of fuel for customer nations that forego reprocessing and uranium enrichment capability to accept strengthened and effective proliferation controls.
Maintain U.S. role as a major and reliable supplier of nuclear
reactors and fuel services (e.g., uranium enrichment) for peacef ul purposes.
Takle new steps to urge all nations to join in a full-scale international cooperative effort to develop effective proliferation
controls.
Take new steps with respect to U.S. exports, to control proliferatic whle sekig tstrengrthen multilateral guidelines.
Sponsor a program to evaluate reprocessing in support of the
new international policies.
Take new steps, to assure that long1--term nuclear waste storage
or disposal facilities are in place when needed both in the U.S.
and around the world.
Siting and licensing of nuclear plants,
President Ford in his State of the Union 'Message of January 15, 1975, spoke of nuclear pow-er in the context of beginning to restore






54

the Nation's surplus capacity in total energy. He mentioned a number of actions to energize the Nation's nuclear power program andt said he would submit legislation to expedite nuclear licensing and the rapid selection of sites. He also rec omminended that the 1-year investment tax credit of 12 percent be extended an additional 2 years to speed the construction of powerplants that do not use natural gas or oil, and proposed selective reform of State utility commission regulations. His program envisions that within the next 10 years there will be 200 major nuclear powerplants in the United States.2
The Energy Reorganization Act of 1974 required that the Nuclear Regulatory Commission make a national survey to locate and identifypossible nuclear energy center sites defined as an area, niot limited to land, large enough to support all the facilities used in the whole nuclear fuel cycle-uranium enrichment, fuel reprocessing, waste storage and other processes, in addition to the generating plant itself. M
The act also authorizes the NRC to adopt policies which will encourage the location of nuclear power reactors and related fuel cyclefacilities on nuclear energy center sites insofar as practicable.
The study issued January 19., 1976, concluded that depending on. location, it can be feasible" and practical to construct powerplant centers of up to 20 nuclear power reactors, fuel cycle centers and combined centers. There is not any great unequivocal advantage or compelling need for such centers. Dispersed siting of nuclear facilities, remains a feasible and practical, and even desirable option for many locations. Based on the study, the NR-C recommended that nuclear energy centers neither be made mandatory nor be excluded.
Legislation to improve nuclear licensing procedures and to provide for siting include H.R. 3995, introduced by Mr. McCormack on Feb-, i'uary 25, 1975; S. 894, introduced by Senator Jackson and 26 cosponsors on March 6., 1975: H.LR. 7002, introduced by Mr. Price on May 14, 1975; and 5.'1717, introduced by Senators Pastore and Baker on May 12, 1975. 5. 894 would authorize the Secretary of the Interior to assist the States to develop and implement State land resource programs and, among other things, to encourage expeditious energy siting decisions. The other bills would improve licensing and siting in various ways.
Nuclear insurance/in demniflcation:- The Price-Anderson Act
The Price-Anderson Indemnity Act provides financial protection to both the public and the nuclear industry in the event of a catastrophic nuclear accident. It was first enacted in 1,957 and has been extended three times, most recently in December 1975.
The Federal Energy Administration on July 11, 1975 submitted draft legislation to extend the Price-Anderson Act for 10 years past its expiration (late of Augulst 11., 1977. This mneasuire beca-me House Resolution 8631 and 5. 2568.28, 29 The Joint Committee on Atomic Energy held hearings on the, bills', in September, October, and November 1975. Both Houses passed the measure in December and it
27 Aq of June .30, 1976, ERDA reported 60 operating nuclear generating unit,;, 74 being built, 19 with site work authorized, 61 with reactors ordered, 24 planned, for a total of 238 nuclear generating units.
8 H.R. 8631, July 14, 1975, Representatives Price and Anderson. Referred to the Joint lCommitte-e on Atomic Energy.
2S. 2568, Senator Pastore. Referred to the Joint Committee on Atomic Energy.





55

was signed by the President on December 31, 1975, becoming Public Law 94-197.
The extended act provides for the phasing out of Government indemnification to cover liability for a nuclear accident. Prior to passage of the extension, the Government provided indemnification in the amount of $425 million, which, added to $125 million in a private nuclear assurance pool, totaled $560 million, the statutory limitation on any single accident. The extension provided that each reactor owner would be liable to a "retroactive premium" of between $2 million and $5 million per reactor, to be paid only in the event of an accident totaling more than the $125 million private insurance. The retroactive premiums will replace Government liability; as more reactors become operable, the amount available in premiums increases until all Government liability is replaced. After that, the $560 million limitation will be raised to the maximum amount available through both private insurance and retroactive premiums. Enriched uranium
Enriched uranium is the fuel used in U.S. types of nuclear power plants. The Energy Research and Development Administration (ERDA) is the principal domestic and world source of enriched uranium. However, in 1974, the enrichment capacity of ERDA factories became fully committed and no additional long-term enrichment orders can be accepted.
Without the addition of at least one major new plant, a severe shortage in his nuclear fuel is expected in the early 1980's. There is little opposition to expansion of U.S. enrichment capacity to fill the demand in both domestic and foreign markets, except from those who oppose nuclear power in general. Among the arguments for continued U.S. participation are:
The revenues from sales of enrichment services is considerable,
and
Without an assured supply of enriched fuel, foreign customers
are reluctant to buy U.S.-built nuclear reactors, and may also try to secure other sources of enrichment services, including national facilities. This could harm U.S. efforts to halt the proliferation of nuclear weapons capabilities, because enriching facilities can be
used to produce the necessary fissionable material.
At issue is who should finance, build, and operate the new capacity: ERDA or a private venture. The administration favors private construction and operation, and has proposed legislation to establish incentives for private financing. Some Members of Congress favor direct Government construction and operation, or creation of a special Government corporation to do so. The Administration propo al, the Nuclear Fuel Assurance Act,3', a3 would allow the Government to:
Supply and warrant Government inventions and discoveries in
enrichment technology;
Sell certain materials and supplies available only from the Government;
S 2035, July 8, 1975. Mr. Pastore. Referred to the Joint Committee on Atomic Energy. H.R. 8401, July 8, 1975.






56

Buy enrichment services from private producers or sell Government enriching services to the private producers;
Assure the delivery of uranium enrichment services to customers who have placed orders with the private firms;
Assume the assets and liabilities of a private enrichment firm
if it threatens to fail.
The Joint Committee on Atomic Energy has held extensive hearingson the enrichment question, most recently in April 1976.
On May 4, 1976, the Committee reported out the bill, with two major changes. First, any arrangement between a prospective enrichment facility builder and ERDA would have to be approved by the Congress through a concurrent resolution passed by both Houses. Second, it would require EiRDA to build an "add-on" facility to its present gaseous diffusion plant at Portsmouth, OH, regardless of whether private enrichment plans went forward.
The bill came up for debate in the House on July 30, 1976 at which time an amendment by Mr. Bingham, deletingr all sections of the bill except the provision for the Portsmouth "add-on"l facility, was narrowly adopted. On reconsideration Aug. 4, 1975, however, the Bingham amendment was defeated by a vote of 192-193, and the bill was subsequently approved. Another amendment, offered by Mr. Anderson, and adopted by the House, limited "future contingent liability for which the Government would not be fully reimbursed" to "the assurance that the Government- furnished technology and equipment will work as promised by the Government."
Several attempts were made to bring the bill to a vote in the Senate,. but all failed, and the Congress adjourned without passing an enrichment bill. Authorization for ERDA to proceed with an add-on facility at Portsmouth, Ohio, was however, approved.

C. SOLAR AND OTHER NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT~
Continuing a congressional initiative for greater Federal support for solar energy begun in the 93d Conaress, during the 94th Congressboth the H-ouse and the Senate pushed for additional resources in this field.
EGPA -Pal)lie Law 94-385
The "Energy Conservation and Production Act" (Public Law 94385), which authorized appropriations for FEA and extended the duration of authorities under the FEA Act of 1974, includes two major solar energy provisions: First, FEA is given authority to continue to, carry out policy and planning functions related to solar energy comimercialization. FEA is required to prepare a national plan for the accelerated commercialization of solar energy to include workable options for achieving on the order of one million kirrels per day of oil equivalency in energy savings by 1985 from a combined total of all solar technology. The agency is authorized $500,000 for the remainder of fiscal year 1976 and -$2.5 million for fiscal year 1977 to carry out solar commercialization programs.
A second major provision authorizes FFA and WTD to imndertnke a national demonstration program to test the feasibility and effectiveness of various incentives for encouraging the use of approved energy






57

conservation and renewable-resource energy measures, including solar energy systems, in existing dwellings. Under this provision HUD is authorized to make financial assistance available in the form of grants, low-interest loans, interest subsidies, loan guarantees, and other appropriate forms of assistance. With respect to approved renewableresource energy measures, the amount of any grant shall be $2000 or 25 percent of the cost of installing or otherwise implementing such measures, whichever is less. A total of $200 million is authorized to carry out both the conservation and renewable-energy incentives dem,onstration programs.
It is noted that FEA appropriations were provided under H.R. 14231 which was approved July 31, 19T6 (Public Law 94-373). Since funds were not appropriated for either the solar commercialization or incentives programs, implementation of these programs will require either a supplemental appropriation or the reprogramming of funds appropriated for other purposes.
Fiscal year 1977 E RDA funding for solar energy
For fiscal year 1977 the Administration requested $162.5 million for solar energy research, development and demonstration programs within ERDA. The House bills authorized $345.3 million and appropriated $309.0 million for ERDA solar programs; the Senate bills authorized $278.3 million and appropriated an identical sum. A compromise appropriation of $290.4 million was agreed to by both Houses on June 29, 1976 and approved by the Administration on July 12, 1976 (Public Law 94-355). As noted earlier, the continuing resolution passed in lieu of the fiscal year 1977 EIRDA authorization bills authorized expenditures at these levels through March 1, 1977, at which time further action on the 1977 solar energy program must be considered. The W~ays and Means bil-Hi?. 6860
A tax credit of up to $2,000 (25'percent of the first $8,000 cost) for converting homes to solar heat was approved by a vote of 244 to 132 on June 13, 1975, in the course of debate on the Ways and Means energy bill, H.R. 6860. The residential solar energy credits were permitted for installation 'of equipment meeting "interim" rather than "..definitive" HUD standards and could be provided for solar equipment shared by several houses.
On August 26, 1976, more than one year after the House approved the bill, the Senate Finance Committee reported H.iR. 6860 with an amendment in the nature of a substitute incorporating a solar tax credit and other energy-related provisions which had earlier passed the Senate as title XX of"H.Rh 10612, the "Tax Reform Act of 1976," but was dropped from HR. 10612 in' conference as an economy me asure and for other considerations.
The solar tax credit provided by the Senate substitute was similar to the credit approved in the House-passed version of H.R. 6860. The substitute offered a credit of 40 percent on the first $1,000 of qualified solar equipment expenditures for residential and commercial users,. plus 25 percent on the next $6,400 for a maximum tax credit of $2,000. The substitute also extended the investment credit to solar equipment installed for use in a trade or business as part of a facility held for the production of income. The amount of the -credit was to be 20 percent of






58

the qualified solar energy equipment investment beginning January 1,. 1977, through 1981. After that time the credit would be reduced to 10 percent through 1986. However, the measure died when H.R. 6860 failed to reach the floor of the Senate prior to the adjournment of Congress on October 1, 1976.
A dditio'nal activities
The Senate Select Committee on Small Business held hearings, extending over a period of several months,: on "Solar Energy: How Much? How Much From Small Business: How Soon? Why Not More?~ Why Not Sooner?" At the first of these hearings, held Mfay 13 and 14, 1975, witnesses from private sector testified who urged inclusion of heatin-and-cooling systems contractors in the projected solar demonstration projects to be financed under Public Law 93-409, and provided examples of discrimination against small business in the. emerging solar energy industry.
A staff study prepared as background for the hearings tabulated a large number of estimates by Government agencies and private research firms, prepared between 1972 and 1975, on U.S. energy consumption projected for estimated solar -energy contributions, by technology, 1980-2020.S32 A preliminary finding was that official estimates of contribution which can be provided by solar technologies appear to have begun to go up quite rapidly. The joint NSF/NASA solar energy panel, which in 1972 had estimated that by the year 2000 only 5 percent of total national electricity supply would be generated by solar energy (including wind, ocean thermal differences, and other solar induced energy sources), in 1975 reportedly had raised this estimate tol as- much as 50 percent of projected electric power generation, made up of 25' percent wind generated, 9 percent photovoltaic, and 163 percent from ocean thermal differences, assuming, however, no limit on capital availability for concurrent development of all three technologies.
The NSF/NASA projection assumed that a little more than 40 percent of total U.S. energy would come from electricity in 2000, and' would add up to an estima 'ted 76 quads, or a little more than the equivalent of 30 million barrels of oil a day. About half of this could come from solar energy.
Meanwhile, FE A has contracted with Florida Technological University for a study to provide regulatory and legislative recommendations designed to expand the market for solar water heating equipment, Florida law already requires new single family homes to be constructed in such a manner as to be adaptable to th installation of solar water heating equipment, and further State and local ordinances may result from the study. Before the introduction of cheap natural gas as an energy source, more than 25,000 solar water heaters were in use in the Southeastern States, including Florida.
On April 7, 1975, ERDA and the Department of Housing and Urban Development, in compliance with Public Law 93-409, submitted to Congress an interim report for conducting a nationwide solar heating
22Congressional Record, May 8, 1975, pp. S7730-40.






59

and cooling' demonstration program. The report, "National Plan for Solar Healring and Cooling (ERDA-iS) ," calls for the demonstration of solar heating by late 1977, and the demonstration of combined solar heating an~d cooling by late 1979. Hearings on this report were held by the Subcommittee on Energy Research, Development and Demonstration of the House Science and Technology Committee on May 13, 14, and 15, and the Report was released in October 1975. This subcommittee also held hearings on a second important solar ,energy policy document, "Preliminary Definition Report. National Solar Energ Research, Development and Demonstration Program (ERDA-49)." A draft of this report was released by ERDA in early July in compliance with provisions of Public Law 93-473 which requird ERDA to. develop a comprehensive plan for a national solar energy program in all solar research areas. The final ERDA-49 was released in August 1973.

D. ERDA BU-DGE T-FiISCAL YEAR 19 77 AUTHO0RIZATIONS AND APPROPRIATIONS

In August 1976, ERDA issued a 13-page "fact sheet" summarizing the fiscal year 1977 Executive request and the congressional appropriation for ERDA funding. The fact sheet is expressed both in terms of "budget authority," defined as the authority provided by law to enter into obligations, and "budget out lays," which represent the (estimated) expenditures or payments to be made to liquidate obligyations. The sun-mary tables are reproduced below:Z!

ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION, FISCAL YEAR 1977 BUDGET [In millions of dollars

Request Appropriation
Authority Outlays Authority Outlays

1. Energy research, development, and demonstration:
Direct energy programs ---------------------- 2, 437 2, 010 2, 636 2, 146
Supporting research------------------------- 429 403 456 425
Subtotal------------------------------- 2, 866 2, 413 3, 092 2, 572
11. Basic research, space technology and other -----265 237 26924
111. Uranium enrichment activities:
Uranium enrichment------------------------- 1, 489 1, 257 1, 488 1, 257
'Revenues -----;---------------------------- -630 -630 -662 -240
Subtotal--------------------------------- 859 627 826 595
IV. National security:
Weapons activities-------------------------- 1, 203 1,154 1, 185 1, 142
Weapons materials production----------------- 540 446 554 455
Naval reactor development-------------------- 200 220 200 220
Subtotal------------------------------- 1, 943 1, 820 1, 939 1, 817
V. Program support-------------------------------- 293 226 297 175
VI. General reduction 1------------------------------------------------------------0-------------Total --------------------------------- 6, 226 5, 323 6, 333 5, 398

1 Adjustment for authority unused in 1976.






60

ERDA BUDGET DETAILS, FISCAL YEAR 1977 BUDGET
(in millions of dollars]

Request Appropriation
Program Authority Outlays Authority Outlays

Fossil energy --------------------------------------- 447.3 441.7 493.1 446.0
Conservation --------------------------------------- 120.0 91.0 160.9 124.9
Solar energy ---------------------------------------- 160.0 116.0 290.4 178.8
Geothermal energy:
Research and development ----------------------- 50.1 45.5 54.7 49.0
Loan guarantee program ------------------------- 50.0 4.4 30.0 4.4
Subtotal ------------------------------------- 100.1 49.9 94.7 53.4
F sion power R. & D ------------------------------- 392.1 304.5 427.9 332.5
Fission power reactor development -------------------- 789.7 694.3 787.7 682-4
Nuclear fuel cycle R. & D ---------------------------- 178.8 147.1 184.7 151.9
Environmental research and safety -------------------- 260.2 243.8 273.8 254.4
Basic energy sciences -------------------------------- 226.5 204.4 240.1 215.7
High energy physics -------------------------------- 220.3 197.4 223.8 199.8
Space nuclear systems ------------------------------- 34.2 32.3 34.2 32.3
Nuclear explosives application ------------------------ 1.3 1.0 1.3 1.0
Uranium enrichment activities:
Uranium enrichment ----------------------------- 1,587.8 1,327.6 1,581.5 1, 326. 2
Advanced isotope sep ---------------------------- 43.8 39.2 43.8 29.2
Enrichment revenues ---------------------------- -629.9 -629.9 -661.9 661.9
Subtotal ------------------------------------- 1 001.7 736.9 963.4 703.5
National security ------------------------------------ 1:743.2 l,599. 3 1,738.7 1,597.0
Naval reactor development --------------------------- 200.1 220.5 200.1 220.5
Nuclear materials security and safeguards -------------- 28.1 27.3 31.4 29.4
Program support ------------------------------------ 292.5 226.2 296.9 174.5
General reduction --------------------------------------------------------------- 90.0 -------------Total ---------------------------------------- 6,226.1 5,323.4 6,333.4 51398.1


E. A NATIONAL EN 7ERGY PRODUCTION BOARD AND OTBEER MANAGEMENT MEASURES

The Democratic Majority proposals issued February 27,1975, recogUY I e
nized the iniport-ance of an "orderly but accelerated development o greater and more diversified domestic sources of supply." As described in the published report, "'rho Congressional Program of Economic I'ecovery and Energy Self Sufficiency":

The overall objective of national energy sufficiency recognizes the enormous undertaking involved in terms of capital investment and incentives, in terms of environment protection and national security. Switching from oil and gag to coal and other sources is just one aspect of the program although a most critical one and it alone will require a substantial commitment of national resources. A national program of this magnitude requires the establishment of an instrumentality at the highest level of government to make certain that the program Is successful. Therefore at the core of the recommendations is the creation of a National 'Energy Production Board as an independent agency of the government. It would mobilize unutilized and under-utilized private and public resources to increase domestic energy production on an urgent basis. The National Energy production Board would be patterned after the War Production Board of World War Il and, subject to Congressional review, would have authority and funding to break energy bottlenecks, and to take all actions necessary to accelerate the production of and conversion to domestic energy sources. Much of the cost would be funded out of an Energy Trust. * *
As thefinancial base for this trust, a 5 cent tax on gasoline at the pump would be imposed 30 days after enactment. This revenue would begin to pay for the urgent program, of conservation and production.
Additional revenues for the Trust would be derived from energy taxes on inefficient uses of energy and by dedication of part of the funds paid for leases covering the Outer Continental Shelf.
it was anticipated that Trust fund receipts should and would be $1 billion in 1976 and $2 billion thereafter through fiscal year 1984.






61

S. 740, A N ational ESnergy Production Board
S. 740, introduced. February 18, 1975 (by Senators Jackson, Magnusonl, Stevenson, Bayh and Leahy), provides the proposed legislative authority and administrative framework through which this broad objective would be carried out. Hearings were held -March 20 ,April 14 and 15. and July 14 and 21, 1975.
As introduced, the bill would establish a "National Energy Production Board to assure early development of energy resources on the public domain and other Federal lands and on the'Outer Continental Shelf to overcome the dependence of the United States on foreign nations for energy supplies which are essential to national security, commerce, and a fulfl-employment, economy."' The bill was not reported f roin committee before adjournment.
An interesting progrraill included in the bill which would not require establishment of a National Energy- Production Board in order to be pursued, involves a Federal facilities energy program. As described in title 111, section 303 of the bill, it would be based on and would include:
(1) an inventory of federally owned and federally controlled industrial and manufacturing plants and installations, including but not limited to naval shipyards, ship repair facilities, depots, arsenals, and other facilities and installations of the Department of Defense and industrial and manufacturing facilities of other departments, agencies, and instrumentalities of the Federal Government.
(2) an inventory and assessment of the capacity of various departments, agencies, and instrumentalities of the Federal Government, including but not limited -to the Corps of Engineers of the Department of the Army, the Naval Ordnance Command of the Department of the Navy, the Bureau of Reclamation of the Department of the Interior and the General Services Administration to participate in the management of Federal energy exploration, development and production programs;
.(3) the identification and designation of idle, underutilized, or surplus Federal facilities and installations capable of, or capable of being adapted to, at reasonable cost, the production of materials and equipment essential for the production of energy and fuels, including but not limited to drilling platforms, drilling rigs, pipe for drilling operations and pipelines, and mining and transportation equipment, goods, and supplies;
(4) estimates of the cost of equipping, reequipping, tooling, or retooling such facilities and installations for the production of energy-related materials, goods, and equipment;
(5) estimates of the availability of the manpower required to staff such Federal installations and facilities;
(6) a plan for the conversion of designated appropriate Federal facilities and installations for production of energy-related materials and equipment;
(7) a schedule for the conversion of designated Federal facilities and installations for the production of energy-related materials and equipment. An energy independence authority
The Administration has proposed, in S. 2532/H.R. 10267, submitted October 10, 1975, a new Energy Independence Authority (EJA). In his energy message to Congress, February 26, 1976,1 the President summarized its functions as follows:
A new government corporation to assist private'sector financing of new facilities. It would be able to provide up to $100 billion for financial assistance to projects to develop, transport, or conserve energy; for commercializing new technologies; for technologies essential to the production of nuclear power; for conventional technologies involving production and distribution of electric power generated by sources other than oil or gas; and for conventional technologies involving projects of unusual size or scope, or projects which represent novel institutional or regulatory arrangements, in the production or transportation of energy.

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EIA. would also expedite the regulatory process at the Federal level for projects deemed critical for energy development. It would establish the FEA as the coordinator of a streamlined permit process for all new facilities which require Federal licensing.
Other eiwrgy management measures, Puhlic Law 94-163 and Public
Law 94-385
in addition to the important pricing and allocation measures which are included in the new Energy Policy and Conservation Act and described earlier in this section, additional management authority is provided in title V of that new act.
Materials allocation: An important provision amends the Defense
Production Act to authorize the President to require allocation or priority performance on contracts relating to supplies of materials and equipment needed to maximize domestic energy r supplies. The
authority may be used only if such supplies are scarce, critical, and essential to energy production, processing, distribution, conservation, or the construction and maintenance of energy facilities. This authority expires December 31, 1984. The bill provides that this special authority would continue even if the Defense Production Act of 1950 were otherwise to expire.
The President is given the authority to restrict exports of coal, petroleum products, natural gas, or petrochemical feedstocks as well as equipment necessary for further exploration, production, refining, or transportation of energy supplies. Exceptions are allowed for exchanges, for increased transportation efficiency, and for the historical trading relations with Mexico.
The expanded data collection authority, which is included among the general provisions, provides one of the most important of the new energy policy management measures included in the bill. The authority of, the Federal Energy Administration to gather information under thel Energy Supply and Environmental Coordination Act of 1974 is extended until December 31, 1979. The Comptroller General is authorized to conduct detailed verification audits of books and records of any person or corporation in the energy industry who is required by this or other laws to furnish such information or if requested to do so by a full congressional committee with legislative or oversight jurisdiction. Furthermore, the Comptroller General may conduct verification examinations of financial information relating to energy resources and products of any vertically integrated petroleum company. A civil penalty o~f up to $10,000 is imposed for failure to comply with an inspection order, and each day of failure to comply will constitute a separate violation.
The Energy Conservation and Production Act, Public Law 94-385 also includes a number of additional management measures. Title I, among other provisions, creates an Office of Energy Information and Analysis within FEA to improve both primary data collection and ifs analysis in conjunction with other economic trends. The office is also to serve as lead agency in reducing duplicative reporting.
Among the many lessons of the Arab oil embargo, and the subsequent experience of coping with the serious petroleum shortages which developed was the recognition of the difficulty of shaping and executing new policies in the absence of any reliable and current energ~_y data base other than that supplied by the industry itself
It is t)e ititent of the 94th Congress that this weakness be corrected under the authority provided in these acts.











V. REDUCE DEPENDENCE ON FOREIGN IMPORTS OF OIL
During the 3 years since the Arab oil embargo in mid-October 1973, a consensus has been reached within Congress and the administration that the country's growing dependence on imports of foreign oil is undesirable, that it should be curbed and, hopefully, reduced.
This consensus on the broad objective, however, has not yet been matched with a concensus on means. The administration's position has been that oil imports can and should be reduced through impositionof import tariffs, fees, and/or excise taxes, coupled with removal of price controls on domestic oil and gas, relying on the higher prices to lower imports through lowered consumption. Higher prices would also serve, it is argued, to stimulate increased domestic production of not only oil and gas but alternative energy sources as well.
The Democratic position in general placed more reliance on quantitative controls, through various types of import quotas and other energy management measures. Decontrol of oil and gas prices is to be permitted, but only gradually and at a slower rate than the administration desired.
During the 94th Congress there was a great deal of legislative activity and debate on import tariffs and quantitative oil import controls.
During this period, while the debate over how to reduce dependence on imports escalated, so did oil imports: By the end of the first week in October 1976, foreign oil imports reached a level of 7,622,000 barrels per day (5,988,000 b/d in crude and 1,634,000 b/d in oil products). This was 1,695,000 b/d higher than in October 1975 and already exceeds the levels stipulated in the House-passed Ways and Means bill, H.R. 6860, of 6 million b/d for 1976 and 6.5 million b/d for 1977.
Furthermore, domestic production of crude oil declined during the same- period, from 8,311,000 b/d during the first week of October 1975 to 8,040,000 b/d in the week of October 1976, creating additional pressures to increase imports.
The debate on limiting oil imports therefore is of prime significance.
A. OIL IMPORT TARITTS AND OTHER FEES
Following up on the administration's comprehensive energy plan, formally announced. January 15 1975, and introduced as S. 594 and H.R. 2633 and H.R. 2650 on February 5, 1975, President Ford imposed a $1 a barrel tax on imported oil, effective February 1, to rise to $3 in two additional $1 increases scheduled for March 1 and April 1, 1975.
At the same time he stated that "I am prepared to use Presidential authority to limit imports, as necessary, to guarantee success" in reducing imports. Title IX of the administration bill, directed at insuring price stability should foreicn prices fall, wouldprovide specific authority to use tariffs, quotas, and variable fees to control imports as well as to establish a floor price for domestic oil.
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Congress responded immediately with a bill, H.R. 1767, introduced in the House on January 20, 1975, to suspend for a 90-day period the authority of the President under section 232 of the Trade Expansion Act of 1962, or any other provision of law, to increase tariffs or to take any other import adjustment action with respect to petroleum or petroleum products and to negate any such action which may be taken by the President after January 15, 1975.
The bill passed the House by a vote of 309 to 114, February 5, and was approved by the Senate February 19, by a vote of 66 to 28.
It was vetoed by the President on March 5, 1975, but only after he announced that in the interests of accommodation and to provide additional time for congressional action he would postpone. the additional $2 tariff on oil imports until May 1.
On April 30, he again announced a further delay in import fees until June 1 to give Congress further time to develop its alternatives. Subsequently, on May 27, 1975, after Congress had recessed without agreement on, comprehensive legislation, the President announced the imposition of the next $1 fee on imported crude oil and $0.60 on imported refined products, effective June 1, 1975.
On July 30, 1975, the FEA Administrator announced that FEA was prepared to eliminate the 60-cents-per-barrel tariff on refined oil products imported into the United States. However it was apparent that this offer was contingent on congressional agreement to the administration's price decontrol plan and congressional disapproval of that plan, on the same day, left the outcome of the offer to drop the tariff in imported refined products in doubt.
Meanwhile, a vote to attempt to override the veto was postponed while intensive committee review of the Democrati 'c alternative programs went forward in both the House and Senate.
The House included an ad valorem tariff in its first major composite energy bill, H.R. 6860, which passed the H-ouse on June 19, 1975. and was reported by the Senate Finance Committee on August 27, 1976, but not put to floor vote before adjournment.
The bill imposes a tariff on oil imports of 2 percent ad valorem for crud e oil and 5 percent ad valorem for petroleum products. These are approximately the levels of the import license fees that were in effect in January 1975 under the national security provision of the Trade Expansion Act. The authority of the President to impose oil import tariffs or quotas under that act (except in the case of -war) is terminated, but the President is given the authority to increase the oil import tariff to 10 percent ad valorem or $1 per barrel, whichever is higher. For a 2-year period, however, the tariff on residual and distillate fuel oil is 'limited to 5 percent.
These and other measures using import fees were overtaken and,, for the time being, superseded with the signing of the Energy Policy and Conservation Act, Publ ic Law 94-163.
In a statement and fact sheet isued when he sig-ned the bill, on December 22, 1975, the President announced the removal of the $2 per barrel import fee, whichi was made effective Ps of the same dlay, and stated that while he believed the price decontrol provisions which were included might permit "imports to increase by approximately 150,000 barrels per day by the end of 1976,1 imports probably will be






630

about 200,000 per day less after 3 year's, dlue to future price increases allowed by the bill,"'and at th, end of 410 mnonthls whilen price controls end entirely, should "reduce. imports by about 3 million barrels per day.''
(It is important to keep in mind that the administration's estimates of reductions in imports have, to date, been mea-sured against an otherwise anticipated rapid rise, to 12 million barrels a day by 1985 if no new actions are taken.)

B3. QUANTITATIVE OML IMP-ORT CONTROLS
Two major omnibus alternative energy policy approaches -we, e announced by members of the Democratic majority 6 weeks after the administration's program was announced. One entitled "The Congressional Program of Economic Recovery and Energy Sufficiency," was announced by the majority leaders of both House and Senate, February 27, 1975; and the other was prepared by eight task forces made up of the Democratic members of the House Ways and Means Committee, issued March 3,1975.
The two proposals, although favoring quantitative controls as preferable to increased import tariffs, differed on how, when and to what degree such controls would be applied.
The most specific active legislative proposal mandating quantitative oil import controls was included in H.IR. 6860, a clean bill reported from the Ways and Means Committee by the fairly close vote of 19 to 16, on May 15, 1975, after a marathon, almost nonstop series of hearings and open markup sessions, beginning March 3, 1975. The bill passed the House 'on June 19,1975.
With quantitative import control provisions stronger than those included in H.R. 5005, originally introduced March 17, 1975, the proposed legislation would impose ma ndatory quotas on oil imports. These were set at 6 million barrels per day in 1975 and 1976, 6.5 million barrels per day in 1977, 6 million barrels per day in 1978, and 5.5 million barrels per day thereafter. These levels are lower than the level of imports prevailing prior to the oil embargo and, together with a civilian strategic reserve and a program for standby emergency conservation measures, would, it was beieved, provide adequate protection against an oil embargo.
As described in the committee's report (H. Rept. 94-221):
Your committee does not Intend that these import quotas be an energy conservation measure in themselves. Rather, the levels of the quotas are desig-ned to reflect the energy conservation and conversion measures elsewhere in the bill, and the purpose of the quotas is to make sure that all oil savings resulting from the conservation and conversion program are reflected in reduced imports. The President, therefore, is given the authority to vary the level of the quota. Becau11se of the greater uncertainty about the level of demand and domestic supply farther into the future, the President is given more flexibility in later years. The bill gives the President the authority to vary the basic quota by up to one million barrels per day in 1975, 1976, and 1977. 1.5 million barrels per day in 1978 and 1979. and 2. million barrels per day in 1980 and thereafter. If the quotas are at all restrictive, to prevent oil importers from receiving excessive profits from the import licenses provided under the quota system and to allocate oil imports as efficiently as possible, import licenses are to be distributed through public auctions. Also, to ensure that users of imported fuel oil have time to convert to other energy sources, import restrictions for residual and distillate fuel oil are set at a minimum of 2 million barrels per day for the Years 1975-1977 out of the overall quotas for those years.





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The chairman of the Ways and Means Committee had intended to seek House passage before the Memorial Day recess, and floor debate had been scheduled for May 21 and 22, subject to clearance by the Rules Committee. The Democratic leadership decided on May 20 to postpone debate until after the recess, hoping to be able to consider the proposals jointly with the House Commerce Committee's complementary companion bill, H.R. 7014, not then reported from committee.
When it became clear that the House Commerce Committee would not be able to report H.R. 7014 in time for joint consideration, the House proceeded to consider the Ways and Means bill alone, in the general understanding that other complementary and supplementary measures were pending in other committees.
General debate began June 9, 1975, under a rule, H. Res. 505, which permitted consideration of the more than 100 pending amendments title by title.
The quantitative import quota provision came under attack almost immediately, with a recommendation that it be striken entirely from the bill. The motion was rejected by a vote of 185 ayes to 224 noes, on June 10, 1975. and title I was retained with a modification which increased the ceilings permitted for 1979 from 5.5 million barrels a day to 6 million barrels per day, and for 1980, from 5.5 million barrels per day to 6.5 million barrels per day. The adjustment was based primarily on the prediction that, even with positive action to bring about substantial savings in consumption and positive incentives to increase domestic production, total domestic oil production was likely to at best remain at present levels but could still continue to decline as old fields went out of production faster than new fields could be brought into flow. The vote approving the increase, on June 11, 1975, was 211 ayes to 200 noes and, at these levels, quantitative quotas were retained in the final bill which was approved on June 19, 1975, by 291 ayesto 130 noes.
However, as noted above, the Senate Finance Committee reported a version of the bill which omits the import quota provision.

C. IMPORT QUOTAS-A DUAL ROLE
Although the 94th Congress did not reach agreement on this important management tool, the debate has already produced a much more comprehensive awareness of its wider role in reshaping energy demand and stimulating new supplies. As stated many times in this report, the administration's energy policy has emphasized the central role of a pricing policy designed to increase the cost of oil and natural gas as a dual measure for both cutting back on consumption and encouraging increased production of domestic supplies.
During the course of the floor debate on H.R. 6860, a parallel alternative concept was put forward, namely, that quantitative limitations on petroleum imports would also serve a dual role, both to promote conservation of energy and to encourage increased domestic production of not only oil and natural gas but also alternative energy resources.
It should be noted that this rationale was a new phenomenon in the evolution of the Ways and Means energy proposals. As a number of






67

opponents of the bill sharply pointe d out, the committee report. had downplayed the role of quotas as a direct constraint on consumption, arguing that its role -would be rather to insure that petroleum savings otherwise achieved would be reflected in savings in imports.
However, this premise -was promptly challenged by both opponents and proponents of the quantitative import limitation provision, early in the debate and even before the tax on gasoline was removed from the bill:
Mr. KETCHUM. I find it absolutely amazing that the committee majority conltinues to believe that quotas on imports are not going to produce a major crunch. Just listen to this language from the committee report:
"Your committee does not intend that these import quotas be an energy conservation measure in themselves * a comprehensive program of quota restrictions is necessary to be sure that the conservation achieved by other provisions in the bill will result in a reduction in foreign imports rather than a reduction in domestic production."
This premise is so false that it defies comprehension. Domestic production is declining and this pious hope will not stem the decline. On the contrary, other actions already taken by Congress, such as the repeal of the depletion allowance, and actions being contemplated such as a windfall profits tax insure a drop in domestic energy activity. The PEA estimates that, at best, there would be a 1 million barrel a day increase in petroleum production, if a Massive development program were underway and oil sold at $11 a barrel. These are optimistic assumptions by anyone's standards. At the same time, assuming a 4-percent increase in demand a year, we will need between 7 and 9 million barrels a day of imported oil, figures well above the 6 million barrel a day quota. So how in the name of heaven can the supporters of this bill say that the quotas would not have a tremend ous impact?'

-Mr1. CONABLE. This quota supposedly has enough flexibility so that it will 'not bite, but if the gasoline tax is eliminated I do not think there is any doubt that the quota, as a quantitative limitation would inf fact come into -play and cause serious problems in the administration of the resulting scarcity.2

31r. OTTINGER. We have in the bill which is coming up from the Commerce Committee provided allocations, so that if import quotas create some shortfall and it may well do that at some time in the future, we will be able to manage that and the President will have the authority to make the necessary allocation.
WVe have got to take some hard decisions in this House and any way we turn is hard. If the decision is to go to the price route, it means everybody is going to, pay huge increases in price for everything in our economy. If we decide to do nothing to conserve, we are going to have this absolutely horrendous transfer of assets to the OPEC countries. Quotas and allocations with price controls is by far the best alternati-ve.
I think this is at the heart Of the bill. 'Regardless of what people do on the gasoline tax, if we have a quota in place we will have a meaningful congressional energy policy.3
The Congressman. who fought the hardest to strike all of title I, on oil import quotas, was the first to argue that its effect would in fact be so rapidly to drive up domestic oil production as to "drain America first":
Mr. GIBBONS. NOW, oil is a very precious commodity. If we call up the Federal Energy Agency and ask them how Much oil there is in the United States within the 50 States, the safe 50, they will tell us there are about 4,000 days of oil left in this country.
If we call up the U.S. Geological Survey and say, "HOW Much oil is left in this country, oil we know is here and oil we hope is here and how long will that last at

1 Con gressional Record, June 10, 1975, p. 115218.
2 Ibid., p. 115231.
3Ibid., p. H5238.







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the present rate of consumption?" They will tell us oil we know is here and oil we hope is here and oil we know is on the Outer Continental Shelf, all that Pil will last for all of 35 years.
Now, how old will we be when that oil runs out and how old will our children and grandchildren be when that oil runs out?'What kind of heritage will we be leaving for ourselves find what kind of heritage will we be leaving for our children and for our grandchildren? What kind of position are we putting the United States in as far as bargaining just down the road? What kind of position are we putting the United States in as far as national security is concerned?
Our answer to all those questions has got to be that we are putting them in the worst possible position that we could dream of. What worse position could we get ourselves in than to use up our most precious natural resources before and at a much more rapid rate than we should be exhausting it.
If we put on quotas, that is the only result that can happen. The only reason for quotas is to protect domestic production and to make domestic production run at its top rate, while the rest of the world goes on with its oil resources.'
Proponents agreedthat the effect of quotas firmly applied, would indeed provide a "bite" and a "crunch" but pointed out that, with or without quotas, oil as a finite resource was being depleted in the United States and throughout the world, that quotas served notice both to OPEC and to ourselves that the United States must move swiftly develop not just remaining oil but also all available sources alternative to oil.
Mr. BELL. Mr. Chairman, I just wanted to point out something else which I think has not been mentioned. When we talk about draining the resources of our country, we also should be considering the fact that weare encouragin-,, other oil companies in this country to go out and explore. By this proposal we are encouraging this, which is also a very important facet of this program it seems to me."

Mr. CORMAN. If we must cut back on those imports or, at least, hold them where they are, then clearly the sensible way to do it is through an import quota. It will be the incentive for investing in domestic exploration and production. If we do it merely by price, we will further bloat the profits of the oil companies, and we will leave totally within their discretion where exploration money is spent's

Mr. KocH. The only way we could find a feasible way of facing up to the problem is laying out the numbers of barrels, as we have here. Oil is a finite commodity. The gentleman says we have a glut of oil, but the world will be out of oil in 20 or 30 or 35 years. There is no long-range glut of oil, and in terms of history that is a very short time.
This country peaked out in production 5 years ago, and production has gone down each year since. The best possible way of developing alternative sources and assuring that there will be a market is to establish this kind of quota system, This is the heart of the bill.'

Mr. GpxEN. Every country in the world is running out of oil, and we have to find alternate sources of energy. That is one of the things this bill has tried to do, to stop being energy hogs, to serve notice that we intend to discipline ourselves. We have very carefully tailored this quota, and, we have time in the future, if we have made a mistake to correct it.
The quota that would be in effect this year will not be reached and if it were and we were in some kind of a tight bind and needed oil, we have given the President aw additional 1 million barrels a day for the next 2 years. discretionary authority. By balance, I think we have built in the kind of flexibility we need to begin to come to grips with this problem. American oil is drying up with or

4 Ibid., p. H5230.
5 Ibid., p. H-5231.
6 Md., p. TV5233.
71bid., p. H5235.







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without a quota. We cannot afford the dependence today. We must develop our own sources. $ *
The fact of the matter is that we are going to run out of oil at some point, and unless we begin to develop alternate sources of energy in this country, we are in trouble.
Let us say it is 35 years, 13 years, or 42 years, or let us say it is 112 years. The fact of the matter is that we are going to run out of oil in this country, and we cannot, in the meantime, continue to be dependent and be placed in a position where the OPEC countries can strangle the United States of America '. Unless we begin to put a quota on as to how much we are going to take, and unless we begin to develop alternate sources of energy in this country, we can quibble as to whether it is 35 years, 13 years, or 50 years, but we have to get down to doing the job that is necessary.'
At the end of the 2 weeks of hard fought floor debate, as the House moved toward the final showdown vote on June 19, 1975, the Chairman of the Ways and Means Committee summed up the message that was intended to be communicated through the measure and through the then still pending critical vote, which shortly afterward passed by a vote of 291 yeas to 130 nays.
Mr. ULLMAN. Mr. Chairman, we are about to conclude a long and tedious debate on the subject of energy.
We know better now than we did in the beginning that there are no easy answers. There will be, I understand, a recommittal motion; but I would like to say to my colleagues that a recommittal has to be a dead end. There is no way we can go back to the committee and take a new turn. . .
We begin by telling the OPEC countries and the world that we are putting a limit on the amount of oil we import. From now on we are not going to import oil without limit. We are telling the oil-producing countries that there will no longer be an unlimited flow of petroleum into this country from abroad." We are telling industry and utilities, through our excise tax provisions, that they simply must begin the job of converting to coal and nuclear energy. We are telling the automobile industry that they simply have to start building more efficient automobiles in this country.
We have credits here for the average citizen with respect to home insulation to conserve heat, which is very important.
We have tax incentives that I think are very important in developing the flow of capital into vital areas which will produce alternative energy sources.
We have a trust fund that goes specifically to developing alternative energy sources in a meaningful way. This also is very important . .
Mr. Chairman, the way that legislation is passed in Congress is that we build a framework, we build a base and this is a base. We build over it in subsequent legislation. That is the way it ought to be with energy policy.
Soon to come along will be the energy bill from the Committee on Interstate and Foreign Commerce on which they have jurisdiction, and these two measures will work together. Then after that we will have the bill brought out by the gentleman from Washington (Mr. McCormack) on NASA and atomic energy. That is another ingredient added on to what we now have and will soon have. Together, they will all make up our energy policy."
Some of these controversial portions of the new national energy policy await further Congressional action, but the legislative process

8 ibid p. H5230.
9 lh1d:1. P. H5236.
10.NTr. 17711man spoke extemporaneously on the floor and was misquoted In one respect by the recorder; be used the word "companies" not "countries" In the second sentence. As phrased in the written text of his remarks, Issued at the end of the debate, this paragraph read-,: "The energy bill passed today Is a message to the world 'that we are not going to Import unlimited foreign oil. It's a message to the oil companies that they can't count on mounting supplies of OPEC oil for their refinerips--that they must restructure their prodiietion. We are signaling industry and electric utilities that a massive shift away from oil toward other sources of energy must be--in. And the energy bill Includes a clear order to produce cars -that don't wastes much oiqn1inP.11
I'- Congressional Record, June 19, 197.5, pp. H5743-45.






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just described is now well under way. With the enactment of the two major multifunction energy acts and related laws, the framework laidt out in the early composite plans has been substantially converted to a base on -which additional energy legislation and new policy can continue to be built.
These and other still controversial issues await further Congressional action, but the legislative process just described is now well under way.











CONCLUSION: ISSUES CON_\ZFRONTING THE 95TH CONGRESS
Energy issues which continue to confront Congress and the Nation reflect the following interlocking legislative concerns and tasks:
Provide protection against interruptions in energy supply.
Restrain and reshape U.S. demand for energy, in particular
U.S. demand for oil and natural gas.
Reshape the policies and procedures governing public management of oil and natural gas.
Encourage increased production of supplies of energy alternative to oil and natural gas.
Reduce dependence on foreign imports of oil.
Identify, define and ratify an overall national energy policy
which is consistent with and further supports other major national policy goals.
The 94th Congress and the Administration forged a legislative consensus which addressed some, but by no means all of the issues subordinate to each of these tasks.
Among critical questions which will need to be addressed fairly early in the 95th Congress are the following: Oil import policy
Should oil imports be deliberately reduced by quantitative restraints to hasten the transition to other fuels or will this only "drain America first?"
Energy supply priorities and production goals
What relative priorities are to be given to reliance on nuclear energy as compared with fossil fuels and with the development of alternative renewable fuels?
Should the Federal Government set quantitative energy goals to be achieved within a given time frame? If so, what should they be?
If voluntary private sector choices do not result in a distribution of investment and resultant output which reflect the chosen priorities, should mandatory measures be adopted to influence quantitative production results?
Energy managementt issues
How much authority over siting of energy facilities and other related energy decisions should be delegated to State and lower local levels?
What should be the pattern of ownership, funding, organization and structure of the new or expanded energy producing and using systems ? Is divestiture to any degree necessary or desirable? Should development of renewable fuels, including recycled waste, be reserved for state and local planning and operation? Energy pricing
How should crude oil prices be managed after the moderated, monitored increases reach the new world levels ?
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What should be Federal policy on managing the wellhead price of natural gas?
Energy conservation
Should substantial taxes on energy use and/or high prices be adopted as a primary energy conservation tool, leaving shifts away from oil and gas to other fuels and more efficient energy use to individual choice? Or should changes in volume and pattern of energy use be mandated by such quantitative measures as forced conversions or selective bans on gasoline or automobile use? Reorganization of Federal agencies
How should the federal energy organizations be restructured to handle the six basic tasks and concerns outlined in the opening paragraph of this analysis?
These still-controversial issues await further congressional consideration but the outlines of a new national energy position have already appeared. With the enactment of the two major multi-purpose energy law and the accompanying additional legislation, the framework laid out in the early composite plans has been substantially converted to a base on which further energy policy and laws can continue to be built.


























APPENDIXES


APPENDIX I
Breakdown of Federal Natural Resources, Environment and Energy:
Budget Authority and Outlays-1976 and 1977
















NATURAL RESOURCES, ENVIRONMENT, AND ENERGY
(in millions of dollars)

Budget authority Outlays
1977 current 1977 current
Subfunction and major program 1976 actual services base'1 1976 actual services base'1

Budget authority/utlays:
Water resources and power:
Corps of Engineers-------------------------- 2,216 2,540 2,151 2,577
Tennessee Valley Authority ------------------- 10, 100 126 980 1,170
Department of the Interior-------------------- 674 1,012 545 1 3
Other, including offsetting receipts------------- -23 -134 -76 -72
Subtotal------------------------------- 12, 966 3, 544 3, 600 4,810
Conservation and land manag.ement---------------- 1, 2(~3 1,134 1,245 1,135
Recreational resources --------------------------- 874 954 895 1, 092
Pollution control and abatement:
Sewage plant construction grants ---------------------------- 680 2,429 4,380
Other pollution control --- ---------64783 638 793
S ubtotalI -------------------------------- 684 1,463 3,067 5,173
Energy:
Energy Research and Development Administration ---------------------------------- 2,561 4,026 1,899 3,241
Strategic petroleum reserves------------------ 313 448 (2) 323
Other energy------------------------------- 614 552 489 534
Subtotal ------------------------------- 3, 488 5, 025 2, 388 4, 098
Other natural resources -------------------------- 921 1, 096 895 1, 026
Deductions for offsetting receipts------------------ -807 -798 -807 -798
Total budget authority/outlays ------------------ 19, 328 12, 418 11, 284 16, 536

Compares with budget authority of $18,200,000,000 and outlays of $16,200,000,000 in the 2d concurrent resolution on the 1977 budget.
2S50,00, 000 or less.
Source: Executive Office of the President, 0MB, Current Services Estimates, November 1976, p 26.

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AprPENTDx II Comparison of Three Composite Energy Plans Considered in the 94th Congress





















79-157-76---7












A COMPARISON OF THREE COMPOSITE ENERGY PLANS
The three plans which are compared are:
1. "The President's Plan"-The summary includes some measures undertaken as administrative acts as well as the provisions of the Administration's omnibus energy bill, introduced in the Senate as S. 594 on February 5, 1975 and in the House as H.R. 2633 and H.R. 2650 on February 4, 1975. An official summary was reprinted in the Congressional Record, February 5, 1975, pp. S1421-26.
2. "Ways and Means"-The summary is taken from the suggested alternative proposals drawn up by eight task forces made up of the Democratic members of the House Ways and Means Committee and issued March 3, 1975. A text is reprinted in the Congressional Record, March 4, 1975, pp. H1370-1374. The draft proposals differ somewhat from the provisions of H.R. 5005 introduced by Mr. Ullman, March 17, 1975.
3. "Democratic Majority"-The summary is drawn from the recommendations prepared jointly by the Democratic Policy and Steering Committee of the House and Democratic Policy Committee of the Senate as the Democratic Majority's comprehensive proposals covering both energy and economic recovery. Entitled, "The Congressional Program of Economic Recovery and Energy Sufficiency," it was announced February 27, 1975 and was printed b the Senate Democratic Policy Committee for use by Members of Congress.
(79)










A COMPARISON OF 3 COMPOSITE ENERGY PLANS

Goal and task President's plan Ways and Means Democratic majority

1. Reduce dependence on foreign oil --------- Essential-------------------------------- Agree-but not so fast and not through tariffs----. Agree-but econom*,c restoration is Nation's
highest priority.
By what means? ------------------ Import fees, tariffs, and excise taxes: Rely on price Quantitative controls: Import quotas, Federal Conservation mainly: Let new National Energy
and market to lower imports, through lowered Petroleum Purchasing Agency to buy all imports. Production Board decide whether import quotas consumption. or other n-eans are needed.
Eow much and how fast?------------ 1,000,000 bbl/d, end 1975; 2,000:000 bbl/d end 1,000,000 bbl/d over 2 to 3 yr, an estimated Believe total program will reduce "domestic
1976. But this still means rise in imports from 400,000 bbl/d 1976. consumption of imported petroleum" 500,000
5,300,000 bbl/d, 1975 to 5,800,000 bbl/d, 1977 bbl/d, 1st yr; 1,600,000 bbl/d, 2d yr; 5,000,000
(administration figures). bbl/d, 1 28O.
Reduce and limit imports to what levels?-.- 3,000,000 to 5,000,000 bbl/d by 1S85----------- To about 25 percent of expected domestc oil out- To about 10 percent of expected domestic energy
put by "early 1980's" [estimated 4,000,000 consumption by 1985. [Estimated 4,5(0,OG0 bbild based on estimated domestic oil produc- bbl/d based on plan's target of holding energy tion of 15,800,000 bbld in 19851. consumption to 45,000,000 bbl/d in oil equivalent
in 1975.1

1I. Protcct against disruption of imports ------- Essential-------------------------------- Agree ---------------------------------- Agree.
By creating a system of strategic petro- Fully explore, develop and produce all (4) naval Accumulate reserve stockpile by- Accumulate reserve stockpile byleumn reserves, petroleum reserves. Federal purchase of imports (outside any Federal purchase of imports.
Use oil and revenue gained to create a national quota limit) and/or From naval petroleum reserves, 005 and
petroleum reserve stockpile of not more than: From naval petroleum reserves, market place.
1,000,000,000 bbl for civilian use. Goal "during next few years": Goal:
3,000,000 bbl-military use. 50 percent of annual imports, (e.g., 6 mo. 3,000,000 bbl/d for 6 mo by 1980. [Equals
Reserve 20 percent of production NPR No. 4 for supply); at import level of 5,000,000 500,000,000 bbl] and 3,000,000 bbl/d
strategic reserves; balance for the public bb1id, this would equal 600,000,000 for full year by 1985 [equals 1,000,000,economy. (Note: It is anticipated that N PR No. 4 bbl. 000 bbl.l
will be able to produce a minimum of 2,000,000 National Energy Production Board would
bbl/d by 1985. 80 percent of this would be "oversee establishment".
1,600,000 bbl/d for current public consumption.)
Require any domestic importer or refiner to maintain stored petroleum reserves as determined by
President.
Authorize standby energy authority in- Essential-------------------------------- Agree ---------------------------------- Agree.
cluding particularly: To deal with future embargoes, international corn But in addition: But the allocation and other standby authority
mitments, other emergencies. Mandatory allocation of oil needs to be con- should be vested in! the National Energy ProducAllocation of fuels ------------- To be invoked only if President finds emergency tinued in any case to insure shifts from oil tion Board, and we should extend allocation syssituation exists. and other conservation measures. tern now to "accomodate" reduced dependence
Continue current legislative authority and by "managing and controlling" excessive FEA allocation system. (Public Law 93-159). consumption.
End-user consumer rationing ------ Only in emergency, e.g., embargo------------- Agree ---------------------------------- Agree.




.. . . . . .. . .






11I. Restrain and reshape demand------------ Essential ------------------- ------------ Agree on goal but not on method.-------------- Agree on goal but not on method.
By what means in general?---------- Rely mainly on increased prices, jawboning for Speifc incentive and disincentive taxes and sub- Similar to ways and means plus extended maindvoluntary compliance, modest subsidies and re- sis for specific conservation targets, plus se- tory allocation program to manage and control
Bwhtmasseiiallaxed auto emission requirements. lected mandatory conservation measures, excessive energy consumption.
Increase prices------------ (a) Import fees, tariffs on imported oil -------- .(a) Re)ject------------------------------- (a) Reject.
(b) Excise taxes on domestic oil and gas --------(b) Reject general tax-Propose specific taxes on gasoline, inefficient autos.
(c) Deregulate old oil----------------------- (c) and (d) Reject as conservation measu re-b ut-p ro pose phased deregulation to encourage increased
('d) Deregulate new gas --------------------- production.
(e) Establish oil floor price------------------ (e) Reject------------------------------- (e) Reject-Recommend some price control to
shield consumer from OPEC-inflated prices.
Improve auto fuel efficiency ------Relax clean air standards on cars; voluntary effort Auto efficiency tax, be-inning 1977 model year of Mandatory fuel and deficiency standards to imby industry to improve 40 percent by 1980. $0 to $500 for 20> -15'm.p.g. prove 50 pe: cent by 193i0, 100 percent by 1085.
Tax credit for new auto purchase, graduated--Purchase rebates for low-use cars, excise tix for "Consider" mandatory fuel standards by 1979 high-use car, R. & D. for low-fuel, low-polluting model year. now auto prototype.
Gasoline tax------------------ None ------------------------------- 5 cents per gallon 1975, rising to 40 cents 1979----. 5 cents per gahln b it primarily for revenue.
Insuate reroft rsidntil ad Dsig thrma eficincystadars fr nw bild"Consider' tax credits for residential energy irn Maj-'r loan guarantees, grant, tax credit program commercial buildings. ings, to be promulgated through States (after provements including solar equipment, and foi i~imu.Iation, etc., to upgrade 40,000,000 houses
about 4 yr). rapid amortization commercial solar equipment. in 10 yr.
Finance 3-yr State "winterizing" program, mainly Investment credits for industrial retrofiting on Upgrade standards for new construction, especially for low-income homes-$9,000,009 1975, $55- large scale. Federal buildings.
000,000 1976-77.
Encourage conversion to coal--Relax clean air standards-------------------- Relax clean air standards ------------------- "Discourage" use of natural gas in now plants.
Expand authority to require conversion to coal..---- Require switch to coal "ASAP."---- -----Taxcredit and loans to retrofit for coal; "suggests" 00
5-yr amortization of costs of new coal equipment.- current clean air standards not be increased for I""
such plants.
More efficient electric utilities -----Change "offpeak" pricing to encourage more "Encourage" experiments with utility rate design Financing for improved transmission, extended balanced use. alternatives; establish rate restructuring tinder lines.
Permit increased rates submitted in this plan as FPC. Better use of existing capacity, redesign rate
method to expand supplies but effect could be structure.
restrained use.
Encourage mass transit ----------Supports mass transit (included in budget request).. Supported as object of energy trust fund expendi- Added funding for public transport, railroad
tures. rehabilitation, electrification.
Use highway trust fund to expand mass trans~t_ -Increase Federal aid to railroads--------




















A COMPARISON OF 3 COMPOSITE ENERGY PLANS-Continued

Goal and task President's plan Ways and Means Democratic majority

IV. Increase domestic energy supply:
Oil and natural gas:
Price incentives.___. -------------- Deregulate old oil. Deregulate new gas. Establish Accept phased deregulation of oil and natural Accept phased deregulation of oil and natural
floor price for oil. gas-over several years. gas-over several years.
Alternative approaches ;are being considered But maintain control to separate price of domestic 00.
coveringtime frame -of 5 to 15 yr. Reject floor energy from OPEC control. United States should prices. determine its own energy prices. Reject floor
price.
Tax incentives -------------------- Retain depletion allowance [however, windfall tax Eliminate depletion allowance on all crude oil as of Eliminate depletion allowance on all foreign drillwould reduce basel. Jan. 1, 1975 (H.R. 2166). Phase out small pro- ing. Retain DIA only for small producers who do
ducers by Jan. 1, 1978. Eliminate depletion al- not operate retail outlets. lowance for most natural gas.
Impose graduated tax (15 percent to 90 percent) Graduated "windfall" profits tax plus plow back- Excess profits tax, avoidable by blowbackk" reinwhich would phase out on all domestic crude to vestment. Proceeds to energy trust fund.
capture windfall profits. No blowback.
No change in taxes which encourage U.S. com- "Neutralize" tax laws to remove incentives to in- Eliminate foreign tax subsidies so U.S. capital is panies to invest in oil/gas production abroad, but vest abroad, several alternatives being con- not encouraged to invest abroad. import fee of $1.20 on product imports to be in- sidered. creased to $2 per barrel after excise tax is enacted to keep excise tax from encouraging
foreign refining.
Alaskan oil and gas --------------- Devote 80 percent N PR No. 4 output to current use Not discussed in current proposal --------------- Develop NPP's rapidly to make "estimated 10,(est. 1,000,000 bbl,'d by 1985). 000,000,000 to 40,000,000,000 bbl" available for
J'storage or commercial use."
Legislation to be submitted for constructing a na- Not discussed in current proposal --------------- -- Expedited consideration" of natural gas delivery
tural gas pipeline from Alaska. system from Alaska.
Outer Continental Shelf ----------- Accelerated development and production under ex- No mention ----------------------------------- Revise OCS Act to accelerate "exploration conisting law, including lease sales in Atlantic, sistent with public interest", public data bank,
Pacific, and Gulf of Alaska. production under leases to prevent withholding,
mandatory-unitization.






Enlist more Independent producers-. No special provision but antitrust legislation to be No special provision except possible delay In Change bidding system for all Federal leases "to enforced against "price fixing and bid-rigging" eliminating depletion allowance for small pro- permit greater participation by small com(In Oct. 8, 1974, address, reaffirmed Jan. 1, ducers. No special antitrust provision. pane. Similar possible concession on de1975.) petonallowance. Strengthen antitrust laws to
promote free enterprise and competition.
Ca:Environmental considerations -----Strip mnining-Modified version of vetoed bill. Strip minining reclamation and mine safety pro- Enact the Strip Mining Control Act.
Design new program of coal leasing. grams are listed as programs which could be
funded from an energy trust fund.
Tax incentives---------------No special provision, investment credit increased 5-yr amortization new coal mining and coal using No special provision: mentions "Coal conversion
for all investors to 12 percent for 1 yr. equpetadascae railroad expansion. incentives of major proportion" to induce shift
50-yrmotiatnd ainaned boe mgt oalelcrculiesndhvynutil
be considered." boilers in 10 yr but coal mining not mentioned

Capital incentives-------------- No special provision --------------------- Capital must be raised for opening new coal a addt 1 ao onec
mines."
Nuclear------------------------ Expedited licensing and siting (separate legisla- Tax incentives suggested to "encourage and facili- No special provisions.
tion) and 1976 budget increase of $41,000,000 tate expansion"' if environmental issues are for nuclear safeguards and waste management settled.
Alternate fuels ------------------National synthetic fuels commercialization pro- Recycled oil-tax incentives to encourage. Solid National Energy Production Board to directly
gram (announced Jan. 15, 1975) to produce wastes as fuel-tax and other incentives. Geo- undertake or finance on contract or joint yen1000,000 bbl/d synthetic fuels by 1985 from oil thermal-expand definition of intangible drilling ture; commercial demonstration of synthetic shale and coal. expense to include costs associated with geo- fuels; oil shale; MHD; Geothermal; Solar.
Rely on ERDA for continuing program in other fuels thermal. Solar energy-tax incentives to encourdevelopment, age retrofitting. Synthetic oil and gas; "Be alert" 0y0
to possible encouragement measures.
Research and development---------- To be administered by and through ERDA and its To be financed in part through an energy trust To be financed in part through an energy trust budget fund. fund, similar to highway trust fund, into which
5 cents gasoline tax would be paid.
Energy management measures designed Reform utilities regulation to allow increased rates No special provisions --------------------- Reform utilities rate structure and speed up FPC
to speed up development and pro- to finance capital expansion-readjust off-peak and State regulatory procedures, but reject any
duction of energy supplies. pricing-allow full pass through of all costs. automatic pass-through on cost. Enact regional
Expedite energy facilities planning and siting: planning mechanism in which States can par:EA prepares a national plan; States prepare ticipate and resolve regional concerns through
related management plans. other agencies.






























A r PENDIX III
Selected Energy Enactments in the 94th Congress







I






SELECTED ENERGY ENACTMENTS IN THE 94th CONGRESS

Bill number and title: Legislative history Public LawMULTIPURPOSE ACTS

Energy Policy and Conservation Act; H.R. 7014/S. 622 (includes S. 349, S. 1883. S. 677): 94-163 (Dec. 22, 1975).
House Reports: No. 94-340 accompanying H.R. 7014 (Committee on Interstate and Foreign
Commerce) and No. 94-700 (Committee of Conference).
Senate Reports: No. 94-26 (Committee on Interior and Insular Affairs) and No. 94-516
'Committee of Conference), accompanying S. 622. See also No. 94-253 (S. 349); No.
4-179 (S. 1883); and No. 94-260 (S. 677).
Congressional Record: Vol. 121 (1975):
Mar, 12,13, Apr. 7-10, considered and passed Senate.
Sept. 23, considered and passed House, amended, n lieu of H.R. 7014.
Sept. 26, Senate concurred in House amendment with an amendment Dec. 15, House concurred in Senate amendment with an amendment.
Dec. 16, 17, Senate concurred in House amendment.
Weekly Compilation of Presidential Documents; Vol. 11, No. 52: Dec. 22, Presidential
statement.
Energy Conservation and Production Act; H.R. 12169/S. 2872 (including H.R. 8650/S. 1483): 94-385 (Aug. 14, 1976).
House Reports: No. 94-1113 (Committee on Interstate and Foreign Commerce) and No.
94-1392 (Committee of Conference), accompanying H.R. 12169. See also No. 94-377
(H.R. 8650).
Senate Reports: No. 94-874 accompanying S. 2872 (Committee on Governement Operations) and No. 94-1119 (Committee of Conference). See also No. 94-86 and 94-623
JS. 1483).
Congressional Record: Vol. 122 (1976):
Ma y 27, June 1, considered and passed House.
Julie 16, considered and passed Senate, amended, in lieu of S. 2872.
Aug. 5, Senate agreed to conference report.
Aug. 10, House agreed to conference report.

OTHER MAJOR ENERGY LAWS

Tax Reduction Act of 1975 (repeated depletion allowance for large companies); H.R. 2166: 94-12 (Mar. 29, 1975).
House Report No. 94-19 (Committee on Ways and Means).
Senate Report No. 94-36 (Committee on Finance).
Congressional Record, Vol. 121 (11975):
Feb. 27, considered and passed House.
Mar. 18 21, considered and passed Senate, amended.
Mar. 26, House and Senate agreed to conference reportWeekly Compilation of Presidential Documents; Vo.1 11, No. 14: Mar. 29, Presidential
statement.
Amtrak Improvement Act; H.R. 4975/S. 852: 94-25 (May 25, 1975).
House Report No. 94-119 (Committee on Interstate and Foreign Commerce).
Senate Report No. 94-65 accompanying S. 852 (Committee on Commerce).
Congressional Record; Vol. 121 (1975):
Apr. 24, considered and passed House.
May 8, 13, considered and passed Senate.
Weekly Compilat;on of Presidential Documents: Vol. 11, No. 22: May 26, Presidential
statement.
Public remuneration in the event of a nuclear incident; H.R. 8631: 94-197 (Dec. 31, 1975).
House Report No. 94-648 (Joint Committee on Atomic Energy).
Senate Report No. 94-454 (Joint Committee on Atomic Energy).
Congressional Record: Vol. 121 (1975):
Dec. 8, considered and passed House.
Dec. 16, considered and passed Senate, amended, in lieu of S. 2568.
Dec. 17, House concurred in Senate amendmenL
Rail Services Act, comprehensive aid to improve services, including regulatory reform and 94-210 (Feb. 5, 1976). 46,000,000,000 in aid; H.R. 10979 S. 2718: House Reports: No. 94-725 accompanying H.R. 10979 (Committee on Interstate and
Foreign Commerce) and Nos. 94-768 and 94-781 (Committee of Conference).
Senate Reports: No. 94-499 (Committee on Commerce) and Nos. 94-585 and 94-595
Committee of Conference).
Congressional Record:
Vol. 121 (1975):
Dec. 2, 4, considered and passed Senate.
Dec. 17, considered and passed House, amended, in lieu of H.R. 10979.
Dec. 19, Senate and House agreed to conference report.
Vol. 122 (1976):
Jan. 20, House vacated certain actions and recommitted the bill to committee
of conference.
Jan. 21, Senate vacated certain actions and recommitted the bill to committee
of conference.
Jan. 28, House and Senate agreed to conference report.
Weekly Compilation of Presidential Documents: Vol. 12, No. 6 (1976): Feb. 5, Presidential
statement. (87)








88

OTHER MAJOR ENERGY LAWS-Continued

Bill number and title: Legislative history Public LawNaval Petroleum Reserves Production Act of 1976; H.R. 49/S. 2173: 94-258 (Apr. 5, 1976).
House Reparts: No. 94-81-Pts. 1, 2, 3 (Committee on Interior and Insular Affairs) and
No. 94-1h6 accompanying H.R. 919 (Committee on Armed Services) and No. 94-942
(Committee of Conference).
Senate Reports: No. 94-327 accompanying S. 2173 (Committee on Armed Services) and
No. 94-708 (Committee ci Conference).
C ongressional Record:
Vol. 121 (1975):
July 8, considered and passed House.
July 28, S. 2173 considered in Senate.
July 29, considered and passed Senate, amended, in lieu of S. 2173.
Vol. 122 (1976):
NWr. 24, Senate agreed to conference report.
Mar. 31, House agreed to conference report.
W.eely Compiation of Presidential Documents: Vol. 12, No. 15 (1975): Apr. 5, Presidential
statement.
Motor Velicle Iof,)rmation and CotSavings Act; H.R. 10807,1S. 1518: 94-364 (July 14, 1976).
House Report No. 941-764 accompanying H.R. 10807 (Committee on Interstate and Foreign
Commerce).
Senate Reprt No. 91-155 (Committee on Commerce).
Congressional Rc".ord:
Vol. 121 (197 ): June 5, considered and passed Senate.
Vol. 122 (1976):
Jan1. 212, considered and passed House, amended, in lieu of H.R. 10807.
June 29, Senate agreed to House amendments with amendemrnts.
July 1, House concurred in Senate amendments.
C )astal Zcne Managnement Act amendments State grants; H.R. 3981/S. 588: 94-370 (July 26, 1976).
House Reports: No. 9.1-378 accompanying H.R. 3981 (Committee on Merchant Marine and
Fisheries) and No. 94-1299 (Committee of Conference).
Senate Reports: No. 94-277 (Commfittee on Commerce) and No. 94-987 (Committee of
Conference).
Congressional Record:
Vol. 121 (1975): July 16, considered and passed Senate.
Vol. 122 (1976):
Mar. 11, considered and passed House, amended, in lieu of H.R. 3981.
June 29, Senate agreed to conference report.
June 30, House agreed to conference report.
Weekly Compilation of Presidential Documents: Vol. 12, No. 31 (1976): July 26, Presidential statement.
Federal Coal Leasing Amendments Act; HIR. 67211S. 391: 94-377 (over veto)
House Report No. 94-G81 accompanying H.R. 6721 (Committee on Interior and Insular (Aug. 4, 1976).
Affairs).
Senate Report No. 94-296 (Committee on Interior and Insular Affairs).
Congressional Record:
Vol. 121 (1975): July 31, considered and passed Senate.
Vol. 122 (1976):
Jan. 21, considered and passed House, amended, in lieu of H.R. 6721.
June 21, Senate concurred in House amendment.
Weekly Compilation of Presidential Documents: Vol. 12, No. 27 (1976): July 3, Vetoed;
Presidential message.
Congressional Record: Vol. 122 (1976):
Aug. 3, Senate overrode veto.
Aug. 4, House overrode veto.
Electric and Hybrid Vehicle Research, Development and Demonstration Act of 1976; H.R. 94-413 (over veto)
8800/S. 1632: (Sept. 17, 1976).
House Reports: No. 94-439 (Committee on Science and Technology) and No. 94-1363
(Commi.ttee on Conference).
Senate Reports: No. 94-836 accompanying S. 1632 (Committee on Commerce) and No.
94-1048 (Comm~ttee on Conference).
Congressional Record:
Vol. 121 (1975): Sept. 5, considered and passed House.
Vol. 122 (1976):
June 14, considered and passed Senate, amended, in lieu of S. 1632.
Aug. 26, Senate agreed to conference report.
Aug. 31, House agreed to conference report.
Weekly Compilation of Presidential Documents: Vol. 12, No. 38 (1976): Sept. 13, vetoed;
Presidential message.
Congressional Record: Vol. 122 (1976):
Sept. 16, House overrode veto.
Sept. 17, Senate overrode veto.
Land and VWater Conservation Fund Act, includes establishment of States Oil ShaleFunds, to 94-422 (Sept. 26, 1976).
offset impacts of oil shale development; H.R. 122^4/S. 327:
House Reports: No. 94-1021 accompanying H.R. 12234 (Committee on Interior and Insular Affairs) and No. 94-1468 (Committee of Conference).
Senate Report No. 94-367 (Committee on Interior and Insular Affairs).
Congressional Record:
Vol. 121 (1975): Oct. 29, considered and passed Senate.
Vol. 122 (1976):'
May 5, considered and passed House, amended, in lieu of H.R. 12234.
Sept. 10, House agreed to conference report.
Sept. 13, Senate agreed to conference report.
Weekly Compilation of Presidential Documents: Vol. 12, No. 40 (1976): Sept. 28, Presidential statement.







89

OTHER MAJOR ENERGY LAWS-Continued

Bill number and title: Legislative history Public LawResource Conservation and Recovery Act of 1976 P.L. 94-580.
H.R. 14496/S. 2150
House Repo rt No. 94-1491 accompanying H.R. 14496 (Comm. on Interstate and Foreign
Commerce).
Senate Report No. 94-869 (Comm. on Public Works).
Congressional Record, Vol. 122 (1976):
June 30, considered and passed Senate.
Sept. 27, considered and p ssed House, amended, in lieu of H.R. 14496.
Sept. 30, Senate concurred in House amendments.
Weekly Conpilation of Presidential Documents, Vol. 12, No. 43:
Oct. 72, Presidential statement
Alaska N atu ral'Gas Transportation Act of 1976 S. 3521/H. Res. 1584 P.L. 94-586.
House Report No. 94-1658, Pt. I (Comm. on Interstate and Foreign Commerce).
Senate Report No. 94-1020 (Comm. on Commerce and Comm. on Interior and Insular
Affairs).
Congressional Record, Vol. 122 (1976):
July 1, considered and passed Senate.
Sept. 30, considered and passed House, amended
Oct. 1, Senate agreed to House amendments.
Weekly Compilation 6f Presidential Documents, Vol. 12, No. 44:
Oct. 22, Presidential statement.


AUTHORIZATIONS AND APPROPRIATIONS

Nuclear Regulatory Commission appropriation authorizaLion.($50,200,000 for fiscal year 1975, 94-18 (Apr. 25, 1975).
supp.): H.R. 4224/S. 994.
House Report No. 94-100 accompanying H.R. 4224 (Joint Committee on Atomic Energy).
Senate Report No. 94-50 (Joint Committee on Atomic Energy).
Congressional Record: Vol. 121 (1975):
Mar. 24, considered and passed Senate.
Apr. 10, considered and passed House, in lieu of H.R. 4224.
Nuclear Regulatory Commission appropriation authorization ($223,000,000 for fiscal year 1976 94-79 (Aug. 9, 1975).
and $52,700,000 for transition): H.R. 7001/S. 1716.
House Report No. 94-260 accompanying H.R. 7001 (Joint Committee on Atomic Energy).
Senate Report No. 94-174 (Joint Committee on Atomic Energy).
Congressional Record: Vol. 121 (1975):
June 17, considered and passed Senate.
June 20, considered and passed House, amended, in lieu of H.R. 7001.
July 31, Senate concurred in House amendment.
Military construction authorization acts, 1976 (includes $86,000,000 for energy conservation 94-107 (Oct. 7, 1975).
and authorization for adding solar heating and coiling): H.R. 5210/S. 1247.
House Reports: No. 94-293 accompanying H.R. 5210 (Committee on Armed Services)and
No. 94-483 (Committee of Conference).
Senate Reports: No. 94-157 (Committee on Armed Services) and No. 94-376 (Committee
of Conference).
Congressional Record: Vol. 121 (1975);
June 9 considered and passed Senate.
July 29, considered and passed House, amended, in lieu of H.R. 5210.
Sept. 24, House agreed to conference report.
Sept. 29, Senate agreed to conference report.
HUD and Independent Agencies Appropriations 1976 (included $100,000,000 for EPA energy 94-116 (Oct. 17, 1975).
R. & D. for fiscal year 1976 and $21,000,000 for transition): H.R. 8070.
House Reports: No. 94-313 (Committee on Appropriations) and No. 94-502 (Committee of
Conference).
Senate Report No. 94-326 (Committee on Appropriations).
Congressional Record: Vol. 121 (1975):
June 24, considered and passed House.
July 26, considered and passed Senate, amended.
Oct. 3, House agreed to conference report; concurred in Senate amendments with
amendments; Senate agreed to conference report; concurred in House
amendments.
Interior Department Appropriations 1976; H.R. 8773: 94-165 (Dec. 23, 1975).
House Reports: No. 94-374 (Committee on Appropriations) and No. 94-701 (Committee
of Conference).
Senate Report No. 94-462 (Committee on Appropriations).
Congressional Record: Vol. 121 (1975):
July 23, considered and passed House.
Nov. 20, considered and passed Senate, amended.
Dec. 11, House agreed to conference report; concurred in Senate amendments with
amendments; Senate agreed to conference report; concurred in House amendments.
Public Works Appropriations 1976, including ERDA;..H.R. 8122: 94-180 (Dec, 26, 1975).
House Reports: No. 94-319 (Committee on Appropriations) and No. 94-711 (Committee
of Conference).
Senate Report No. 94-505 (Committee on Appropriations),
Congressional Record: Vol. 121 (1975):
u ne 24, considered and passed House.
Dec. 5 considered and passed Senate, amended.
Dec. 1 House and Senate agreed to conference report.







90

AUTHORIZATIONS AND APPROPRIATIONS-Continued

Bill number and title: Legislative history Public LawERDA Authorization 1976: H.R. 3474/S. 598: 94-187 (Dec. 310,1975).
House Reports: No. 94-294 (Joint Committee on Atomic Energy and Science and Technology) and No. 94-696 (Committee of Conference).
Senate Reports: No. 94-104 (Joint Committee on Atomic Energy), No. 94-332 (Committee
on Interior) and No. 94-514 (Committee of Conference).
Congressional Record: Vol. 121 (1975):
June 19, 20, considered and passed House.
July 31, considered and passed Senate amended.
Dec. 18, House and Senate agreed to conference report.
ERDA appropriation authorization, fiscal year 1976 (includes $3,189,000,000 plus$241,502,000 94-269 (Apr. 16, 1976).
for fiscal year 1976 and $937,849,000 for transition); H.R. 12388/S. 3108:
House Report No. 94-931 accompanying H.R. 12388 (Joint Committee on Atomic Energy).
Senate Report No. 94-707 (Joint Committee on Atomic Energy).
Congressional Record: Vol. 122 (1976)
Mar. 24, considered and passed Senate.
Apr. 6, considered and passed House, in lieu of H.R. 12388.
Nuclear Regulatory Commission appropriation authorization includess $274,300,000 through 94-291 (May 22, 1976). Sept. 30, 1976); H.R. 12387/S. 3107:
House Report No. 1079 accompanying H.R. 12387 (Joint Committee Atomic Energy).
Senate Report No. 94-772 (Joint Committee on Atomic Energy).
Congressional Record: Vol. 122 (1976):
May 5, considered and passed Senate.
May 10 considered and passed House, in lieu of H.R. 12387.
Public Works appropriations, fiscal year. 1977, including ERDA; H.R. 14136: 94-355 (July 12, 1916).
House Reports: No. 94-1223 (Committee on prpitos n o9-27(omte
of Conference).I nAporain)adN.9127(mite
Senate Report No. 94-960 (Committee on Appropriations).
Congressional Record: Vol. 122 (1.976):
June 15, considered and passed House.
June 23, considered and passed Senate, amended.
June 29, House agreed to conference report; receded and concurred in Senate amend-.
ments: Senate agreed to conference report.
Interior Department, appropriations fiscal year 1977; H.R. 14231: 94-373 July 31, 1976).
House Reports: No. 94-1218 (Committee on Appropriations) and No. 94-1330 (Committee
of Conference).
Senate Report No. 94-991 (Committee on Appropriations).
Congressional Record: Vol. 122 (1976):
June 25, considered and passed House.
June 26, considered and passed Senate, amended.
July 20, House and Senate agreed to conference report.
Military Construction Authorization acts, fiscal year 1977; H.R. 14846/S. 3730 (Authorizes 94-431 (Sept. 30, 1986).
adding solar energy facilities even if costs exceed the limits otherwise laid down in the law).
House Report No. 94-1371 (Committee on Armed Services).
Senate Report No. 94-1233 (Committee on Armed Services).
Congressional Record: Vol. 122 (1976):
Aug. 24, considered aMi passed House.
Sept 15, considered and passed Senate, amended.
Sept. 16, House concurred in Senate amendments.
Weekly Compilation of Presidential Documents: Vol. 12, No. 40: Sept 30, Presidentia
statement.
Continuing certain appropriations, including ERDA, through Mar. 31, 1977; H.J. Res. 1105: 94-473 (Oct. 11, 1976).
House Report No. 94-1678 (Committee on Appropriations).
Senate Report No. 94-1378 (Committee on Appropriations).
Congressional Record: Vol. 122 (1976):
Sept. 27, considered and passed House.
Sept. 30, considered and passed Senate.

BUDGET RESOLUTIONS


1st Concurrent Resolution on the Budget, fiscal year 1976-energy and, environment outlays Passed House and Senate
$11,600,000,000; H. Con. Res. 218/S. Con. Res. 32: May 14, 1975.
House Reports No. 94-145 (Committee on Budget) and No. 94-198 (Committee on
Conferencee.
Senate Reports: No. 94-77 Committee on Budget and 94-113 (Committee on Conference).
1st Concurrent Resolution on the Budget, fiscal year 1977-enegy and environment outlays Passed House and Senate $15,700,000,000; H. Con. Res. 611/S. Con. Res. 109: May 12, 13, 1976.
House Reports No. 94-1030 (Committee on Budget) and No. 94-1108 (Committee on
conference).
Senate Reports No. 94-731 (Committee on Budget> and No. 94-805 (Committee on
Conference).


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