Federal energy reorganization, historical perspective

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Federal energy reorganization, historical perspective
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FEDEAL ENERGY REORGANIZATION:






CESEARC SERVICE
ATr REQUEST OF
HENRY M. JACKSON, Chairman
COMITTE ON INTERIOR AND
INSLARAFFAIRS
STATS SENATE
PURSUANT TO
S. Res. 45
TAL FUELS AND ENERGY
POLICY STUDY









Pritedfortheuse of the
Comitte n Iterorand InsularAfar

U.S.GOVRNMNT RININGOFFIE
W-M WASINGTN :1976









(NATENAL FUESOAND ENERGY P

(SENATE RESOLUTION 45, 92D C


This publication is printed for the use of Senators participating in th
Fuels and Energy Policy Study, authorized by Senate Resolution 45 o
Congress.
Senate Resolution 45, introduced by Senator Jennings Randolph a
M. Jackson, was amended and agreed to by the Senate on May 3, 1971.
lution authorized the Senate Committee on Interior and Insular Affai
officio members of the Committees on Commerce and Public Works and
Committee on Atomic Energy to make a comprehensive study of prep
policies required to meet national energy needs.
Subsequently, the Senate approved the addition of ex-officio members
Committees on Aeronautical and Space Sciences, on Finance, on Fore
tions, on Government Operations, and on Labor and Public Welfare.

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
HENRY M. JACKSON, Washington, Chairman


FRANK CHURCH, Idaho
LEE METCALF, Montana
J. BENNETT JOHNSTON, Louisiana
JAMES ABOUREZK, South Dakota
FLOYD K. HASKELL, Colorado
JOHN GLENN, Ohio
RICHARD STONE, Florida
DALE BUMPERS, Arkansas


PAUL J. FANNIN, Arizona
CLIFFORD P. HANSEN, Wyoming
MARK 0. HATFIELD, Oregon
JAMES A. McCLURE, Idaho
DEWEY F. BARTLETT, Oklahoma


GRENVILLE GARSIDE, Special Counsel and Staff Director
DANIEL A. DREYius, Deputy Staff Director for Legislation
WILLIAM J. VAN NEss, 411hief Counsel
D. MICHAEL HARVEY, Deputy Chief Counsel
OwEN J. MALONE, Senior Counsel
W. 0. (FaE) CRA,Jr., Minority Counsel


Ex-OFFICIO MEMBERS Fo uNATIONAL FUELS wND ENERGY PoCY STUDY


Committee on
AERONAUTICAL AND SPACE SCIENCES

COMMERCE


FINANCE

FOREIGN RELATIONS

GOVERNMENT OPERATIONS

LABOR AND PUBLIC WELFARE

PUBLIC WORKS



ATOMIC ENERGY [JOINT]

**
RICHARD D. GRUNDY, EseC
DAVID STAN(, D


Senator
FRANK E. MOSS, Utah, Chairman
BARRY GOLDWATER, Arizona
WARREN G. MAGNUSON, Washington,
Chairman
JAMES B. PEARSON, Kansas


Louisiana, Chairman
Arizona
, Rhode Island
E, New Jersey
)-F, Connecticut, Chai
'Y, Illinois
|AWAY, Maine


(11)


I












MEMOANDM OFTHECHAIRMAN


To Me r and Ex Offlcio Members of the NationaZ Fuels and Energ7y
Policy Study (S. Res. 45, 92d Congress), Committee on Interwr
and Inedar Affairs:
For the past 6 years there have been increasing doubts in the Con-
g and in the executive branch about the organization of the Fed-
e Government for energy affairs. This concern continues despite
the fat that numerous reorganizations have taken place during this
time in an effort to manage the Nation's energy problems more effec-
tively. Since 1973, the energy functions of the Executive Office of the
P dent have been reorganized several times; the Atomic Energy
Commission has been abolished and two new agencies, the Energy Re-
rch and Development Administration and the Nuclear Regulatory
Commission have been established to absorb its functions; the Federal
Energy Administration was established, expired in mid-1976, and
then was temporarily extended despite numerous complaints about
its role, structure and performance.
Proposals for a major department focusing on energy and natural
resources continue to receive attention and wide debate. This concern
over Federal organization-and the sense of an urgent need to re-
organize-has a long history. Since 1849, when the Department of
the Interior was established, the problem of properly organizing a
continually growing Federal Government for the management of its
affairs has resulted in proposals to re-arrange the administrative com-
ponents which govern energy and natural resources. There has been
a continual evolution of the organizing concepts which predominated
in these proposals over the years, leading up to the current perception
of energy and fuel resources as a central focus in organizational
patterns.
This evolution is reflected in the key reports and proposals offered
through the years, and in some of the recent reports and studies
which address the interrelationships between energy policy and
orgaizaion.
Many of these documents and reports have long been out of print
and are hard to obtain. In order to provide both historical perspec-
tive and a conveniently accessible collection of relevant reports and
documents which address energy and organization over the past 125
years, I have asked the Environment and Natural Resources Policy
Division of the Congressional Research Service, Library of Congress,
to prepare a compilation of the key reports and documents. Analyst
Susan R. A collected the materials included in this compilation
and p r d d a brief narrative for the collection and each section
which iden the components and their significance. A bibliography
(M)






IV

of materials which address both energy and organization through the
years was assembled by Adrienne Grenfell.
I believe this collection will be a useful reference source in the con-
tinuing discussion of energy and resource organization. By making
available the important discussions of this subject in both the distant
and recent past, this collection should serve to enrich future debate
on this subject by providing a valuable perspective.
HENRY M. JACKSON, Ckairmn.















CONTENTS


Page
Memorandum of the Chairman..------------------------------------
Introduction.. ..------------------------------------------------
Chronology------------------------------------------------------- 7

PART I: OVERVLEW
Introduction ---------------------------------------------------11
Federal Energy Organization: A Staff Analysis----------------------12
Prepared by Daniel A. Dreyfus at the request of Senator Henry M.
Jackson, chairman, Committee on Interior and Insular Affairs, U.S.
Senate pursuant to S. Res. 45: A National Fuels and Energy Policy
Study. Washington: U.S. Government Printing Office, 1973. 62 pages.
C ittee print. "Serial No. 93-6 (92-41)"
A description of the Federal organization for the administra-
tion of energy policy with alternatives for reorganization, this
paper briefly summarizes the history of Federal involvement with
the energy system.
History of Federal Energy Organization: A Staff Analysi.---------------74
Prepared by Bruce Murchison and Grover Dunn, under the direc-
tion of Daniel A. Dreyfus, at the request of Senator Henry M. Jackson,
chairman. Committee on Interior and Insular Affairs, U.S. Senate, pur-
suant to S. Res. 45. Washington: U.S. Government Printing Office.
1973. 59 pages. Committee Print "Serial No. 93-19 (92-54)"
A history of the principal events which have shaped the his-
torical development of the Federal energy organization.
Federal Energy Organization-------------------------------------131
A report prepared by Susan IR. Abbasi, Analyst, Environment and
Natural Resources Policy Division, Congressional Research Service.
Updated September 24,1976.29 pages.
A concise description of the agencies, executive offices and
executive departments which make up the Federal energy
organization.

PART II: HISTORICAL DEVELOPMENT
Introduction ---------------------------------------------------163
American Policy for Natural Resources: An Historical Survey to 1862
[Excerpts] --------------------------------------------------165
By Ernest A. Englebert. Unpublished Doctoral Dissertation.
Harvard University, 1950. Pages 372-400.
"Interior: A Department Without a Focus" and "Agriculture:
A Department With A Clientele." These excerpts present the po-
litical history of the formation and early years of these
departments.
Reorganization of the Executive Branch of the r t of the United
States, 1912-1948 [Excrpts].. ..---------------------------------180
By W.B Graves. Legislative Reference Service. Public Affairs









PART Ui: HI8TORIC&L DEVLOPwET-COntinUed
Page
Investigation of Executive Agen-cies of the Government [Excerpts]-293
Preliminary Report of the Select Committee to Investigate the
Executive Agencies of the Government pursuant to Senate Resolu-
tion No. 217 (74th Congress). Senator Harry F. Byrd, chairman.
Washington; U.S. Government Printing Office, 1937. 661 Pages. (75th
Congress 1st Session. Senate Report No. 1275)
Excerpts from the Byrd Committee report, prepared by the
Brookings Institution, describe Government activities and recom-
mendations in the areas of natural resources, minerals and the
public domain.
Adminitrative Marnagement in the Government of the United States
[Excerpts]------------------------------------------------------429
The President's Committee on Administrative Management, Louis
Brownlow, chairman. Washington: U.S. Government Printing Office,
1937. 47 pages.
,Excerpts from this report include the introduction and the chap-
ter: "Administrative Reorganization of the Government of the
United States."
National Resources Planning Board-------------------------------450
History and Bibliography. Two reports, one by Wallace Bowman,
1968, and one by Susan R. Abbasi, 1975, both of Environment Policy
Division, Congressional Research Service; the latter includes substan-
tial portions of the bibliography which appears in "Natural Resources
Planning: The Role of the National Resources Planning Board in the
Process of Government" by Landon G. Rockwell.
Survey of Fuel and Energy Federal Organizational Proposal: 1930-71---_470
Report prepared by Nelson Rimensnyder, Analyst, Government and
General Research Division, Congressional Research Service, 1972,
22 pages.
A description of the major organizational proposals is followed
by an extensive bibliography of the subject.
Achievements in Federal Reorganization: The Contribution of the First
and New floover Commisions-------------------------------------493
By Ray F. Harvey, Louis W. Koening, and Albert Somit New York:
Schools and Universities Department, Citizens Committee for the
Hoover Report, 1955. 30 pages.
A description of both Hoover Commissions; a brief account of
previous efforts at reorganizing the executive branch, the nature
of the commissions and associated task forces and the recommen-
dations resulting from them.
Reports on natural resources of the Commission on Organization of the
Executive Branch of the Government-First Hoover Commission-------523
(a) Organization and Policy in the Field of Natural Resoures.. 523
(Appendix L) Report of the Task Force on Natural Resources,
prepared for the Commission on Organization of the executive
branch of the Government. January 1949. Washington, U.S. Gov-
ernment Printing Office, 1949, pages 1-63.
This excerpt presents the body of the report prepared by the
Legislative Reference and the Task Force on Natural Resources.
"The Commission's own report on Natural Resources is submitted
to to the Congress separately"-see item b.
(b) Reorganization of the Department of the Interior- .......... 591
A report to the Congress by the Commission on Organization of
the executive branch of the Government, March 1949. 94 pages.
The Hoover Commission Report of 1949 makes several recom-
mendations and includes a separate report by Vice Chairman
Acheson, Commissioners Pollock and Rowe recommending the for-
mation of a separate Department of Natural Resources.
Resources for Freedom [Excerpt] -------------------------------
A Report to the President by the President's Materials Policy Com-
mission, (Paley Commission) June 1952. Washington: U.S. Government
Printing Office, 1952, 5 volumes.
In this short excerpt the Paley Commission Report recommend
the formation of a new agency "to assay trends and policies
throughout the entire energy field" and "to appraise the various
specific energy policies and programs" of a score of agencies.






ViI


PART III: FEDERAL ORGANIZATION IN THE SEVENTIES
Page
on- 693
Congress and the Nation's Environment .- -695
A series of reports prepared by the Environmental Policy Division,
Con onal Research Service, at the request of Henry M. Jackson,
chairman of the Committee on Interior and Insular Affair, U.S. Senate.
(a) From: Environmental Affairs of the 91st Congress: "Executive
Reorganization" by E. M. Boswell, "Legislative Reorganization"
by W. D. Bowman, 1971----------------------------------695
(b) From: Environmental and Natural Resources Affairs of the 92nd
Congress. Chapter 20. "Governmental Reorganization for Environ-
mental Affairs" by S. R. Abbasi, 1973------------------------717
(c) From: Environmental and Natural Resources Affairs of the
93d Congress, Chapter 11. "Government Reorganization for
Energy, Environment and Natural Resources," by S. R. Abbasi,
1975 -----------------------------------------------744
(d) From: Environmental and Natural Resources Affairs of the
94th Congress. "Government Reorganization for Energy, Environ-
ment and Natural Resources" by S. I. Abbasi, 1976-----------777
"The Case for a Department of Natural Resources" by Mister Z appeared
in Natural Resources Journal, volume I No. 2; November 1961, pages
197-207 -------------------------------------------------831
Reports from the President's Advisory Council on Executive Organization
(Ash Council) ............................- 842
(a) Establishment of a Department of Natural Resources [and]
Organization for Social and Economic Programs [Excerpts]-- 842
Memoranda for the President of the United States submitted by
the President's Advisory Council on Executive Organization, (the
Ash Council). 160 pages.
These memoranda were printed [by the White House] in Feb-
ruary, 1971, according to the President's covering letter. Excerpts
include "The Establishment of a Department of Natural Re-
sources", dated May 12, 1970, pages 3-39, and the Appendix I "The
Rationale for the Recommendations on Departmental Organiza-
tion" pages 77-85.
(b) The President's Proposals for Executive Reorganization: Re-
form/Renewal for the 1970's-------------------------894
Washington: U.S. Government Printing Office 1971. 25 pages.
"Background information concerning the reorganization-pro-
posals announced by the President-March 25, 1971."
(c) Papers Relating to the President's Departmental Reorganization
Program: Reference Compilation [Excerpts]--------------922
Revised February 1972, Office of Management and Budget, and
reproduced by the Library of Congress, Congressional Research
Service. Includes:
"Part I. President's Message to Congress."
"Part II. General Departmental Information."
"Part IV. The Proposed Department of Natural Resources."
EReorganization: A Summary Anal ysi.-------------------1043
Eleventh Report by the Committee on Government Operations.
Washington: U.S. Government Printing Office, 1972 (92d Congress,
24 Session. House Report 92-922), 53 pages.
Pros and cons of the President's reorganization proposals are
presented to Congress by the Subcommittee on Legislation and
Military Operations, of House of Representatives Committee on
Government Operations.
Energy Regulation: An OrganizationalStud-----1100
P red for public, Congressional and agency comment by the Fed-
eral Energy Regulation Study Team, William 0. Doub, chairman.
Washington: U.S. Government Printing Office 1974. 37 pages. Appen-
dixes.
The Doub report, produced as the result of the President's man-
date that a comprehensive study be undertaken to determine the
best way to organize all energy-related regulatory activities of
the Government, includes a comprehensive discussion of energy
pand organization.







vIfi


PART III: FEDERAL ORGANIZATION IN THE SEVENTS-Continued
Page
Federal Energy Reorganization, Is8ues and Options ............... .1230
Report to the Committee on Government Operations, U.S. Senate
prepared by the Congressional Research Service for Senator Charles
H. Percy. Washington: U.S. Government Printing Office, 1976. 219
pages.
"U.S. National Energy Organization: The Policy Setting-A Back-
ground Paper," by F. A. Gulick, Environment and Natural Resources
Policy Division. A summary of a workshop on Government Organiza-
tion for Energy Affairs, and excerpts from the workshop transcripts.
Bibliography -------------------------------------------------1341
Part 1. A selected list of readings on the administration of natural
resources and energy.
Part 2. A selected list of government publications relating to federal
organization for energy.
















ENERGY REORoAIZATION: HISTORICAL PRSPECTVE

Prepared and Edited by

Susan R. Abbasi, Analyst

with Bibliographic Assistance of
Adrienne Grenfell,

Information Analyst
ronment and Natural Resources Policy Division

Congressional Research Division
Library of Congress

at the Request of
HenryM. Jackson, Chairman

Committee on Interior and Insular Affairs

U.S. Senate
December 1976















ENERGYREGANIZATION: HISTORICAL PERSPECTIVE


INTrRODUCTION


(By Susan R, Abbasi)


I reorganization ranks among the most persistent issues
ve elicited urgent calls for action throughout the Nation's
nd the documents and reports on the subject are voluminous.
years, the studies on energy policy and energy resource man-
Lave been equally voluminous. And increasingly, the public
a of energy problems has been linked to the need for reor-


tasant.L -.L "i
.tsan


-.present
ing orga


inc


legis
In th


he two concepts have not frequently been
ily been in recent years that energy and
a fundamental, central organizing con-
re agencies of the Government. The evolu-
osals over the years has led the Nation
L very little consciousness of general re-
rganizational need, to increased percep-
without energy as a key component, and
upation with energy and Tfels as a some-
ral concern.


trace this evolution, provid-
the years which deal with
management. Also included
ich cover pertinent events,
cents on energy reorgamza-
)n, a brief overview of this
s provided, discussing some


t was the


(1)


roc


., -. .


I to








After the turn of the 'Century, reorganization was perceived as an
urgent necessity, with many proposals but few sweeping changes. The
natural resource perspective began to emerge, but in fragmented form.
In 1924, after a report by the Congressional Joint Commission on Re-
organization of Government Departments, President Harding pro-
posed a plan which included two proposed major purposes for the In-
terior Department: management of the Public Domain and construc-
tion and maintenance of public works. It would gain the entire Fed-
eral Power Commission and Public Roads from Agriculture, but
would lose the Bureau of Mines to the Commerce Department. Clearly,
energy affairs in the FPC were perceived to be related to Public Do-
main affairs, but consolidating energy concerns was not a main prin-
ciple in this proposal, since the Department would have lost the Bu-
reau of Mines.
Only the transfer of the Bureau of Mines to Commerce in 1925 was
effected from this proposal. Some years later, in 1934, it would be
transferred back to Interior.
In 1933, a proposal by President Hoover organizationally linked
public works and resource management. It would have established a
Public Works Division in the Interior Department which would have
included.Parks, the Bureau of Reclamation, the Geological Survey,
already in Interior, and the civil functions of the Army Corps of
Engineers, and Public Roads from the Agriculture Department. The
same proposal suggested a Division of Land Utilization in the Agri-
culture Department which would have included the Forest Service, the
General Land Office from the Interior Department, and the Adminis-
trative Committee on the Public Domain from Interior. In this pro-
posal, again, energy and fuels were not organizing principles, and there
was a perception o land management as related essentially to agricul-
ture. However, this proposal to integrate the civil functions of the
Army Corps of Engineers in the public works/irrigation division in
the Interior Department was a precursor of much later proposals to
integrate resource management efforts in an expanded Interior
Department.
During the 1930's one of the first efforts toward an integrated ap-
proach to natural resource management was instituted in the form of
the National Planning Board. This was a group of three individuals
with a small staff, which initially advised the Public Works Adminis-
trator, and undertook two research reports on planning of public
works. It evolved into the National Resources Planning Board
(NRPB), with a growing mandate for reports on plans and programs
for management of the Nation's natural resources. Out of numerous
reports on various resource questions only one, in 1939, was on energy.
Entitled "Energy Resources and National Policy," it included few
organizational suggestions.
The NRPB was abolished in 1943, partly as a result o.f the uncer-
tainties in Congress over long-range planning and centralization of
resource planning. Meanwhilein 1937, major studies were undertaken
by Congress and by the President to facilitate substantial reorganiza-
tion proposals. Both studies recommended changes in natural resource
management, but did not focus on energy. However, a new emphasis
on resource planning and conservation emerged from these efforts. The









ka its chama as the Browniow Committee.
ress simultaneously established the Select Committee
ate the Executive Agen of the Government, known
arman as the Byrd Committee. The Byrd Committee
ed a major report by the Brookings Institution, and pub-
sport and recommendations that resulted without specifi-
sing them. Natural resource planning-if not manage-
,k both committees as important. Both the Browniow and
r mended making permanent the National Re-
nmittee (the immediate predecessor to the NRPB).
i Committeedid not recommend consolidation of natural
management to any significant degree; however, the Brown-
tee strongly urged the consolidation of the Federal Gov-
012 major departments, and the inclusion of all independ-
)ry agencies in these departments. Presumably, this would
b the inclusion of the Federal Power Commission in a
t, but no specific recommendations as to transfers were
is group. The three departments proposed which would
ed natural resources were (1) Conservation, basically the
department renamed, with a mandate to manage public
s, mineral and water resources; (2) Agriculture, with a
%ted only to agricultural aspects of lands; and (3) Public
h a mission to carry out large-scale public works not inci-
Le normal work of other departments, except as their agent.
Byrd and Brownlow committees made extensive studies of
ation of the federal government and identified its major
Snatural resource components, but did not use these as
nizing principles. However, the Brownlow Committee's
change Interior to a Department of Conservation provided
icentrated natural resource emphasis in a Federal depart-
if no particular new duties or functions were given to it.
als of these committees were not adopted, although bills to
were introduced.
ajor reorganization study and proposal was under the
the Commission on Organization of the Executive Branch
arnment, known popularly as the Hoover Commission. In
Commi n report we find the first proposals which were
n theb of grouping agencies specifically for purposes
resource management. In accord with its announced aim
along "functional and major purpose lines," the
pDepartment of the Interior
ring to it control and river and harbor improvements
rmy Corps of Engine ;i nve tion of natural gas
the Federal Power Commission, leasing of mineral
ned;an other community services and public building
lor, it would havem d out of Interior the Bureau
management (except mineral leasing functions) to the Agri-
parmen, Cmmrcial Fseries to the Commerce Depart-
I Affairs to a p Education and Social Security

ver Commission did perceive energy and water resource
it as organizing principles around which to group agencies






4

in the Interior Department. Land management was also an organizing
principle, but located again in Agriculture, and perceived to be related.
to agricultural activities.
These were the major precursors to the President's Advisory Coun.
cil on Executive Reorganization, appointed in 1969 by President
Nixon, and known as tie Ash Council. The Ash Council, building on
the approaches to integrated resource management of the Brownlow
and Hoover reports, suggested the most massive reorganization to
date; it urged the consolidation of seven major Departments into four,
organized around major goals and purposes. One of these was inte-
grated management of natural resources in a Department of Natural
Resources, organized in six major units: Land and Recreation; Water
Resources; Energy and Mineral Resources; Marine Resources and
Technology; Geophysical Science Services Administration; and
American Trust and Treaty Peoples. These were the major organiza-
tional areas, and for the first time, energy and mineral resources was
advanced by such a study as a major organizing principle. As pro-
posed, the Energy and Minerals components would contain the Geo-
logical Survey, the Bureau of Mines, Oil Import Administration,
Office of Coal Research and the Power Marketing Agencies, all from
Interior, and theRural Electrification Administration from Agricul-
ture and non-military energy activities from the Atomic Energy
Commission. The Bureau of Land Management, with its mineral
leasing responsibilities, was suggested for inclusion in the Land and
Recreation component of the DNR.
This proposal laid the groundwork for the legislative proposals in
the 92nd Congress for all of the four departments, in close alignment
with the organization urged by the Ash Council. In the 93rd Congress,
only the natural resources department was again put forward in
legislation in a bill to establish a Department of Energy and Natural
Resource (DENR) ; it was coupled this time with a proposed Energy
Research and Development Administration (ERDA), to come from
dismemberment of the Atomic Energy Commission, and transfers to
the ERDA of research activities from Interior. In the 92nd Congress,
DENR received close attention, but only ERDA and the NRC were
enacted. By this time the 1973 oil embargo had intensified concern over
energy allocation and planning, and the Federal Energy Administra-
tion was also enacted in the 92nd Congress, in mid-1974. In the 94th
Congress. reorganization was an underlying concern which surfaced
when the FEA came up for extension in June of 1976. It was extended
through the end of 1977, with express directives for reports on future
reorganization, and an understanding that the 95th Congress would
act on a more definitive solution to the organizational dilemma. By
this time, energy has emerged as a predominant organizational focus,
and the question now is the extent to which it should be coupled with
management o.f other natural resources, and whether it should be
organizationally linked to environmental functions with which energy
development so often clashes.
In the interest of providing the maximum amount of perspective
for the background to this debate, excerpts which apply to natural
resources in the materials mentioned in this introduction are reprinted






5

ompilation in three sections: there is an overview section in
historical developments in Part II, and Current Development,
rom 1969 and the Ash Council to the present in Part II.
ironology provided below serves as a summary of the propo-
eents covered by the documents and studies in this collection.















CHONOLOGY
180-Interior Department established basically as a domestic affairs
department. It was a loose conglomeration of diverse agencies
whose only c m factor was that they were concerned with
domestic affairs.
1of the Congressional Joint Commission on Reorgani-
zation of Government Departments was submitted; Presi-
dent Harding offered a reorganization proposal which
included the transfer of the Federal Power Commission to
Interior, and the transfer of the Bureau of Mines (BOM)
to the Commerce Department Only the BOM transfer was
effected.
1 President Hoove proposed a major departmental reorganiza-
t which would have included transfer of the civil func-
t of the Army Corps of Engineers to Interior, and would
have made Agriculture the d Land Utilization depart-
ment. This was not adopted.
193--ationsi Planning Board established to advise the Public
Wors Administrator on planning public works. Three mem-
bers and a small staff.
1934-National Resources Board established as the successor to the
National Planning Board. It included an expanded mandate
in planning and membership included the Secretaries of
Interior, War, Agriculture, Cod e
Public Works Administrator. This group, with same mem-
bership, evolved into the National Resources Committee in
1935.
1u of Mines transferred back to the Interior Department

1937-Congress and the President undertook major studies on Federal
organon: the President established the President's Com-
mittee on Administrative Management (Brownlow Commit-
tee) and the Congress established the Select Committee to
Investigate the ExecutiveAs of the Government
(Byrd Committee). Both recommne making permanent
the National rces Committee, and other reorganization
of Fedrlagenciswhich afce nry
The proposal submitted by Prese Rooevelt followed
the Browulow Committee's recommendations and urged con-
solidation ofo in 1 major departments and

ment was the Departmet ofC rvation.
1939-In lieu of the National urces Committee. a permanent

(7)


W270 0 2







wished by the Reorganization Act of 1939. It operated
through technical committees on various resource Questions.
1943-The iNILPB was abolisheci after issuing numerous reports on
specific resource issues.
1949-The Commission on Organization of the Executive Branch of
the Government (Hoover Commission) made its report, in-
cluding a proposed "Reorganization of the Department of
the Interior." These proposals were the first to specifically
identify natural resource management as a major purpose
around which to organize an agency. The proposals for de-
partmental reorganization were not adopted.
1952-The President's Materials Policy Commission (Paley Com-
mission), in an extensive report on U.S. resource issues and
needs, urged consolidation of energy programs and activities
into a single energy agency.
1955-The second Hoover Commission made its report and focused
mainly on water and hydroelectric power resources.
1961-One of the first published proposals for a Department of
Natural Resources, including a "Mineral Resources" and an
"Electric Power" Administration within it was outlined by
an anonymous author in the Natural Resources Journal.
1969-The President's Advisory Council on Executive Reorganiza-
tion (Ash Council) reported on severalphases of possible
reorganization. It proposed a massive consolidation, includ-
ing a Department of Natural Resources (DNR) which in-
cluded an Energy and Mineral Resources Administration
within it.
1970-Environmental Protection Agency (EPA) and the National
Oceanic and Atmospheric Administration (NDAA) were
established by Reorganization Plans 3 and 4 of 1970. These
were the only two major reorganizations of natural resource
agencies to flow directly from the Ash Council recommenda-
tions and to be put into effect.
1971-President Nixon proposed legislation to establish four con-
solidated departments, including a Department of Natural
Resources (DNR) much like that proposed by the Ash
Council. Hearings were held on the legislation, but no action
was taken.
Jan.
1973--An expanded version of DNR was introduced by request of
President Nixon. This was a proposal for a Department of
Energy and Natural Resources (DENR) plus an indepen-
dent agency, the Energy Research and Development Admin-
istration (ERDA).
Apr.
1973--Special Committee on Energy established in White House,
consisting of special advisers John Ehrlichman, Henry
Kissinger, and George Schulz.
June
1973--Energy Policy Office (EPO), headed by former Governor John
Love of Colorado, superseded the Special Committee.









-Arab oil embargo in October added a sense of urgency to the
need to properly organize the government to deal with energy
problems.

-Federal Energy Office (FEO), superceded the EPO. The FEO
was the immediate precursor of the Federal Energy Admin-
istration (FEA). It had the same organizational compo-
nents, and legislation to make the FEO statutory and name
it the FEA was introduced when the FEO was created by


-The Federal Energy Administration was enacted into law
(P.L 93-275) and took over as an independent agency, super-
ceding the FEO.

-Legislation to establish the Energy Research and Development
Administration (ERDA) and the Nuclear Regulatory Com-
mission (NRC) separately from the DENR was enacted
(P.L. 93-438). This resulted in abolishment of the Atomic
Energy Commission (AEC), transfer of its functions to
ERDA and the NRC, and transfer of other energy research
functions from Interior and the National Science Founda-
tion to ERDA.

-The FEA was due to expire on June 30; after extensive debate
it was extended until Dec. 31, 1977, with the understanding
that further energy reorganizationwould be the subject of
intensive review in the period both by the Administration
and the Congress.















PART I. OVERVIEW
INTRODUCTION
o reports originally printed as Committee Prints by the Senate
ior Co for the National Fuels and Energy Study combine
ve an excellent overview of the issues and history of energy
ition. "Federal Energy Organization" provides a broad
sion of the policy perspective and energy organization over the
and discusses the situation which was current in 1973; "History
deral Energy Organization" stresses historical development of
Spolicy- and organization.
congressionall Research Service multilith, "Federal Energy Or-
ation" gives -an overview of the present organizational setting


(11)










93d Congress
1st Session


COMTTEE PRINT


FEDERAL ENERGY ORGANIZATION




A STAFF ANALYSIS
PREPARED AT T-;E 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. 93-6 (92-41)


Printed for the use of the Committee on Interior and Insular Affairs

U.S. GOVERNMENT PRINTING OFFICE
91-092 WASHINGTON : 1978












SATE RESOLUTION 45

NATIONAL FuE ANDENERGY POLICY STUDY

on isa backgrunddt for the National Fuels and Energy
S by Senate Resolution 45, introduced by &nator
p dolph and Henry M. Jackson on February 4, 1971, and considered,
amended, and agred to by the Senate on May 3, 1971.
Thereolution authorizes the Senate Interior and Insular Affir Committee,
an ox-officiomembers of the Committees on Commerce and Public Works and
he Joint Commiteon Atomic Enemakeafull and complete investiga-
tionandstud ofNatonal Fuels adEeg oiis
Tu t is pub eto a t member of the Committee and other
parties in their unden of the issues inherent in the formula-
toof along-erm National Energy Policy which e the continued welfare
of the Nation, incuding balanced gowth, safeguarding and enhancing the quality
of the environment, and national security.

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
HENRY AJACKSON,Wa
ALAN BIBLE, Nevada PAUL J. FANNIN, Arizona
FRAK CHURCH, Idaho CLIFFORD P. HANSEN, Wyomi
LEE METCALF, Montana MARK 0. HATFIELD, Orn
J. BENNET JOHNSTON, JR., JAMES L. BUCKLEY, New York
JAMES ABOUREZK, SouthDaota JAMES A. McCLURE, Idaho
FLOYD K. HAKLL, Colorado DEWEY F. BARTLETT, Oklahoma
JmRYT. VLER,StafDirco
W1LLAJ J. VA NM, C uieC4unael



& Officio Member. Pursant to Section 3 of Snate Resolution.45
CoMMITTzE ON COMMERCE
WARREN 0. MAGNUSON, W tCima
NORRIS COTTON, New Hamphre


COMMITE LOPUBIC WORKS
JENNINGS RANDOLPH, West Vrina bUss
HOWARD BAKER,Tense


JOINT Commirzz ON A'roMxc EN~EG
ALAN BIBLE, Nevada HOWARD H. BAKER, JR.,
WELuIAM 3. VAN N, Cif b~
ORKNVUJZ GAumz,Special Cosusad &udy bria
RicHARD D. ORUIEDY, Eeutv etary and Pruissn&Stff
DANIEL A. DYu, Profaai... Stad EgierigCbmuilnt
AsRLNi. TUoSN, Sel coost
DAVID STANG.Deputy DirctrforMinorit
JAXU P. BuaR-z,,ProfesionalSf
PARcA E. STARKATT, &aI EnyAa1pt, CbuswttusonCommerce


ill)







14


CONTENTS



The Significance of Energy
The Present Organization Structure ---------------------------.--- 7
Introduction - - - - - - -- - - - - - -7
Definition -
Deficiencies in the Existing Federal Energy Organization Introduction__--= 11
1. High-Level Surveillance of the Energy System and Policy Advice-- 11
The Problem------------------------------------------11
Alternatives. ....--------------------------------------- I&
Conclusions --------------------------------------- 14
2. Coordination and Augmentation of Federal Operating Programs__ 15
The Problem------------------------------------------15,
Alternatives-------------------------------------------- 17
Conclusions-------------------------------------------is
Research and Development------------------------------ 19
3. Energy Data Collection, Analysis and Dissemination-------------21
The Problem------------------------------------------21
Alternatives.------------------------------------------- 23
Conchisions-------------------------------------------23
4. Coordination and Augmentation of Federal Regulatory Functions. 23
The Problem- -- 23
Alternatives-------------------------------------------25
Conclusions-------------------------------------------25
5. Energy-Environment Conflict Resolution-----------------------26
The Problem------------------------------------------26
Alternatives-------------------------------------------27
Conclusions-------------------------------------------28
History of Federal Energy Organization------------------------------29
Overview---------------------------------------------------29
Management of Fuel Resources of the Public Lands---------------- 29
Federal Water Policy------------------------------------------31
Economic Regulation and Development-------------------------- 33
Tax Policy--------------------------------------------------35
National Security--------------------------------------------36
Health, Safety, and Environmental Management-------------------38
Research and Development-------------------------------------39
Attachment 1-Tabulation of Federal Energy Agencies------------------41
Attachment 2-Summaries of Proposed Federal Reorganizations for
Energy.------------------------------------------------------4
(M)









MEMORANDUM OF THE CHAIRMAN


on Inter'ioi
IStudy (S.


licized deficiencies of Federal organization in the energy
me increasingly apparent m the course of the National
rgy PolicStudy authorized by the 92nd Congress.
bject is oiimport policy, energ resource management
development programs, the lack of adequate authority
rdination is all too clear. And while no one suggests
mization by itself will solve our energy problems, there
general agreement that a revamped and strengthened
nation is a necessary event to more rational energy


yfus


m~emo~randum
of this and oth
of energy organ


aust give priority to organizational issues as it
e of energy problem. Recognizing this, I asked
the committee staff to prepare a background
the history of Federal energy organization,
status, and suggesting some of the principles
)ngressional action on this front. I have asked
be "blished at this time as background for
ier ommittees which have responsibilities in


niz


HENRY M. JACKSON,
Chairman.






16





FEDERAL ENERGY ORGANIZATION
A Staff Analysis
PREPARED)BY
DANIEL A.- DREYFUS
Professional Staff Member
AT THE REQUEST OF
SENATOR HENRY M. JACKSON, Chairman
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
UNITED STATES SENATE
PURSUANTTO S. RES. 45
A NATIONAL FULS AND ENEY PoiacY STmuy


MARCH 5, 1973






17


THE SIGNIFICANCE OF ENERGY ORGANIZATION
J recently, surprisingly little attention has been given to the
n of the Federal government to formulate and implement
r ,polcy.The great size of the energy industries in economic
and their obvious critical significance to the well-
of sety, however, have attracted the interest of all levels d
et. A complex body of policy has evolved which constitutes
ava if uncoordinated, Federal involvement in many aspects of
system. The policy is presently administered by a diffuse
Assembly of agencies throughout the Executive branch.
Survey made by the Congressional Research Service of the major
lrarganization proposals of the past 40 years reveals no specific
i n for fuel and energy matters until the relatively modest
ri rendations of the Ash Council. Similarly, a review of
r 100 studies of fuel and energy matters found that they included
y few remarks on organization and even those few were in general
vague terms.
' studies are evidence of the fact that energy has not been
wed as an organizing concept for government. The existing Federal
ry responsibilities are comprised of narrow programs and activities
were individually initiated in response to relatively specific
ds, often not primarily viewed as energy needs.
'he major policy areas which have contributed to the Federal in-
rement in the nation's energy system can be classified as follows:
Management of Fuel Resources of the Public Lands.
Federal Water Policy.
E omic Regulation and Development.

National Lurity.
Health, Safety and Environmental Management.
Research and Development.
brief history of the development of Federal energy policy in each
iese areas is presented in a later section of this paper. The history
ny shows an evolutionary development in which individual
cy decisions were made in response to the needs of the time and
ly wereocerned exclusively or even significantly with energy
1ly. Federal policy has been influenced by the growth of the energy
istries and has, in turn, influenced their development, but there
been no conscious intent on the part of Federal policy makers to
age the nation's energy system in a comprehensive sense. Most
-ral policies with energy significance were not formulated as
a policy." They were primarily intended to serve other obJec-
ogovernment.
eet concern over fuels and eney policy issues has brought
h loofcriticiss of the ormance of existing Federal
range in scope from specific
(3)






18


4

complaints of inordinate delays in the processing of Federal permi
for nuclear powerp ant construction to more abstract dissatisfaction
with the complex economic and security aspect! of oil import policy.
Much of the current criticism has included proposals for reorganize
tion of the agencies which presently have responsibilities inparticilw
issue areas. Most of these proposals are based upon intuition ram
responsive only to limited problems. No in-depth analysis ofFe
eneryorganization has been available. At the initiation of the
Senate's Fuels and Ene Policy Study, the staff was unable tofid
even a description of the existing Federal eneyorganization.
The Senate study which is undeay puruant to Senate Resolution
45, 92d Congress, has covered a wide range of energy problems and
issues. Throughout the heang and studies, it has been apparent
that there is a significant organizational aspect to eneryproblems.
The e-sting organization has contributed to current and emerging
problems in at least three respects:
(1) it has failed to anticipatee emerging energy problems, such a
diminishing fuel rsrves and environmental confrontations, and to
initiate timely corrective action to forstall crises;
(2) it has failed to react adequately to mitigate those crises which
have, in fact, occued, such as increasing fuel shortages and loss of
electric power system reliability; and
(3) it does not appear to have the initiative and sufficient reliable
and credible information to develop and support the policy decisions
which must now be made.
In addition to these existing shortcomings.inthe organization's
ability to deal with current energy problems, it is clear that much
greater demands will be placed upon it in the future. If comprehensive
national fuels and energy policies are established, the fragented,
uncoordinated organization structure will be unable to implement
them. Furthermore, it now appears that an era of plentiful energy is
at an end in our society. The immediate future appears to be one of
short supply. and it is probable that intensive management of the
available resources must be the objective for the foreseeable future.
Considering the size and compleity of the energy system and the
pervasive role which Federal policies already play, intenve manage-
ment of energy resources in the public interest almost certainly im-
plies far more sophisticated and explicit policies for the Federal
administration of ene matters than ever before.
In terms of legislative action, policy is probably inseparable from
organization. Whatever policies are considered appropriate by the
Congress to respond to the "energy crisis," willinvolve gts of
executive authority, directives to act, and appropriations of funds.
Executive agencies must be chosen to be the implementing agents for
such policies. Expansion or revision of testing agency mandates and
reorganization where emsting agency authorities and capabilities
are inadequate wll be necessary.
Effective policy, furthermore, cannot be static. As needs and values
change in society, as current problems are resolved and unforeseeable
problems emerge, the Executive agencies must be capable of responding
to evolving conditions. They also should perform an advisory role;
anticipating new retirements for Federal action and developing
policy proposals for congressional consideration.






19

5

papr dscrbes the exidstm Federal
i alternatives reor-
Pariclar atento isgivento the~
Q9e of the eneg system end policy
id development, because reorganiza-
,e ineac re nd action appears
r bielysummarizes the history of






20


THE PRESENT ORGANIZATION STRUCTURE
INTRODUCTION
It has become the conventional wisdom that Federal energy policy
is "fragmented," and does not reflect a coordinated attitude which'is
responsive to current public goals and problems. Intuitively, those
who have worked with or studied the national energy system in any
comprehensive sense, have realized that the.Federalorganizational
structure which deals with energy is difficult either to comprehend or
describe.
The brief history of Federal involvement in the energy system,
presented in a later section, helps to account for the fragmented or-
ganizational structure which has resulted. The motives for establishing
various Federal energy policies and activities usually were not spe-
cifically energy related. Even when they were, the relationships among
them were not perceived and no real effort has yet been made to co-
ordinate them.
A survey made by the Congressional Research Service of the major
Federal reorganization proposals of the past 40years reveals no specific
consideration of fuel and energy matters until the relatively modest
energy recommendations of the Ash Council. Similarly, a review of
over 100 studies of fuel and energy matters found that they included
very few remarks on organization, and even those few were in general
and vague terms. These studies are evidence of the fact that energy
has not been viewed as an organizing concept for government. A few
agencies, such as the Bonneville Power Administration or the Federal
Power Commission, can be identified which are exclusively concerned
with one or more aspects of the energy system. Such agencies, within
the scope of their jurisdictions, can usually be identified with functional
energy duties and sometimes with defined national energy policies
such as those enunciated in the Federal Power Act.
Other energy related activities of the Federal government, however,
reside in agencies which do not consider their primary responsibilities
to be energy-oriented. Examples are the leasing of energy resources as
a part of the Bureau of Land Management's stewardship of the public
domain. Even more abstract are the impacts upon the energy system
of agencies such as the Internal Revenue Service or the Environmental
Protection Agency. In the pursuit of their several policy objectives,
such agencies, almost inadvertently, influence energy matters in
ways which may not have been intended or even anticipated in
policy decisions.
Regardless of the complexities involved, however, it must be recog-
nized that Federal policies for energy, either existing or prospective,
can be given substance only through the administrative operations of
the Executive agencies. A description of the existing organization for
the formulation and implementation of energy policy is essential for
an evaluation of the shortcomings of existing policy. Furthermore, the
(7)











s tion structure is the starting place for any reorgani-
t be neto achieve the objectives of a com-
venationale e. .
'in-ti!rbal mosbe to cn trucanopeational
of an "energy agency" which will fit everyone's intuitive
It is to adopt a definition, however, before such
nbe catalogued or described. As in any systematic analysis,
smust be made. The definition of the system being studied
orgniation) must be sufficiently broad that no i essential
omitted from the analysis. On the other hand, if the bound ar-
rawn too wide, the focus of attention will be too diffuse to
6ytical power.
irposes of analysis, the following operational definitions have
encompasses all of the primary
, ghydroelectric, and nuclear-and
f tities associated with their discovery, extraction,
conysndelivery, use and the disposal of waste
a i ic1 administer energy policy or programs in-
e all Federal agencies which have either or both of the follow-
(A) Administer programs, or develop or implement policies,
which have been specifically initiated for their particular
impacts upon the nation's energy system.
() Administer programs, or develop or implement policies,
which were not specificyintended to have unique impacts
upo the energy system but which have proven in practice
to have influences upon the energy system which are sig-
niflcantly different than the influences they have on other
Fedralagecie whchhave very significant impacts upon
gy system may be excluded this definition. The exclusion
i that the impact should be ignored, only that it is
La part of the "environment" within which energy systems
rathr tan par ofthesystm bingstudied.
ulaio ofFeera eerg aenceswas prepared based upon
adtnumber 1). The tabulation shows
re are 46aecies which administer programs or implement
with s impacts on the energy system. There are 18
.ncies which administer programs or policies which probably
t intended to be energy oriented, but which currently have
mpacts upon, the energy system. These 64 agencies are dis-
among nine Executive Departments, 15 independent agen-
the Executive Office of the President.
agencies with energy programs share line supervision in com-
LeDepartment of the Interior includes the greatest concentra~-
uch agencies. A measure of coordination is provided among
ncies by Departmental ovesht. The Committee's analysis
.west thermal powerplant d opment, however, is evidence
comprehensive energy impacts of Interior's proare not
preciated or coordinated. There are no formf interagency
*ordnatin mehanims erforming functions similar to those






22


9

The complexity of implementing broad policy involving a number of
agency responsibilities through this mechanism is self evident. One
manifestation of the coordinative shortcomings is the proliferation of
ad hoe task forces in the field of energy policy formation. Many of the
very important energy policy decisions made in the Executive Branch
have been based upon the work of ad hoc task forces which were con-
vened to deal with a particular problem. The President's energy
message of June 1971 and the 1973 message currently in preparation
are examples at the White House level. The Federal Task Force on
Southwest Energy Problems and the Interior Task Force on Oil Shale
are interdepartmental and intradepartmental examples. Recent major
policy actions on coal mine health and safety, oil shale leasing, energy
research and development and other issues have been heavily based
upon task force efforts. The roles of task forces in energy organization
are, of course, transitory and, while they are in existence, they may
greatly influence organizational patterns and activities. The implica-
tions are discussed further below.
Another aspect of energy policy formation is the special role which
the energy industries play in Federal decisionmaking. The Regional
Advisory Committees to the Federal Power Commission and the
National Petroleum Council are examples of industry groups which
provide basic information and often the fundamental assumptions
upon which Federal policy decisions are based. In many areas of
energy, well-organized trade associations representing the industries
are customarily consulted and relied upon, not only for basic data and
analysis, but for advice upon the cumulative impact of Federal policy
on the energy system.
In effect, a major portion of the files, or institutional memory, of the
bureaucracy and a part of the coordination among Federal agencies
have been delegated to the energy industries. An interesting contrast
can be drawn to water resource management where the authoritative
data base and the coordination functions have been internalized in
the Federal bureaucracy (perhaps to an excessive degree).
The significance of the industry role in Federal energy policy is
two-fold. First, it is possible that the apparent gaps and coordination
deficiencies in Federal energy organization are deceptive and that
some of these needs are being adequately filed by non-Federal entities.
Secondly, there is a question as 'to the appropriate degree of reliance
upon industry data and analysis in the Federal policy formation
process. These matters are discussed further below.







23


IN THE EXISTING FEDERAL ENERGY
ORGANIZATION
INTRODUCTION
e neglect of organization in earler energy
r t commentaries on te "energy crisis" have
Saai or have recommended
chagesat the Federal level. There presently are
reoganzaton proposal pending through~ either
xecutieinitiative, and more proposals are an-
rhich have been identified and the proposals which
y greatly in terms of their significance and the
ew. The variety of governmental functions which
itions and the complexity of the energy system
that a single, reasonably simple organizational
ey to the full range of energy problems which has
or Committee, in its study of national fuels and
-piled a tremendous amount of information on
of current energy issues. The following analysis is
anizational factors which have been identified in
e description of the existing energy organization
piled.
.existing energy organization can be conveniently
to their organizational aspects in the following

I surveillance of the energy system and policy

ion and augmentation of Federal operating pro-

tta collection, analysis, and dissemination.
ion and augmentation of Federal regulatory func-


ANCE






24


12

consideration by the President, and to provide policy advice to sup-
port his decisions.
Because energy issues which are of Presidential consequence are the
most visible and important, many commentators have focused their
attention upon this aspect of energy policy rather than upon the far
more numerous issues which must be resolved at lower organizational
levels. As a consequence, it is possible that the deficiencies of high-level
surveillance and policy advice are being greatly overstated. Many
issues which are discussed in terms of high-level policy failings have
only become of Presidential importance because of the prior fail-
ures of lower organizational units to resolve them properly. Other
such issues are perhaps not as significant as the critics believe and
are ignored by the White House not because of ineffective policy
mechanisms but because they are really not important enough to
command scarce Presidential attention.
There are some energy policy areas, however, which are clearly of
Presidential significance. Experience shows that important energy
decisions which are made with considerable White House involvement
generally involve policy considerations in addition to energy (such
as national security and economic stability). The non-energy factors
are often dominant. In the establishment of oil import policy, for
example, national security and economic stability largely outweighed
the more mundane matter of supplying the energy system with a
choice of fuel types and sources.
The lack of a comprehensive, publicly stated oil import policy has
been cited as a failure of high-level policy advice. Continued reluctance
of the President to propose significant new efforts in energy iesearch
has been cited as an omission in surveillance (the failure to anticipate
the emerging needs for a range of energy options) as well as a deficiency
in high-level policy advice (there is no White House advocate for the
non-nuclear options).
Despite the possibility that the influence of this deficiency may be
exaggerated, examination of the existing arrangements shows very
little permanent responsibility for energy matters at the highest level
of government. Until recently, the Office of Science and Technology
and the Office of Emergency Preparedness have had diffuse respon-
sibilities to look at the energy as well as other aspects of their areas of
responsibilities. Other energy advice through a subcommittee of the
Domestic Council and the Oil Policy Committee has had little con-
tinuity. A basic problem is that these groups are called into action
only after an issue has become of major consequence and has been
defined for White House attention.
The President has recently announced plans to reorganize the
Executive Office. The Office of Emergency Preparedness "ill be
abolished and its functions assigned to line agencies. The Office of
Science and Technology would also be abolished along with the
existing Presidential science advisory structure in favor of an advisory
role for the Director of the National Science Foundation. There also
has been an announcement by the President of an informal energy
advisory council in the White'House composed of the Secretary of the
Treasury, the Senior Assistant on Domestic Affairs, and the Special
Assistant on Foreign Affairs. The council will be assisted by a full-time
special consultant to the President for energy.
These developments suggest that energy will be assigned consider-
able importance in Presidential affairs. They also imply, however, that






25


national security, and
hermore, this reorpi-
in the technical staff
woblematical whether,


.ergy system which will be adequate to
tug issues for White House attention. It
a point of contact for the energy agencies
would expand its ability to sense energy
s not suggest, however, that Presidential
ble or sensitive to emerging issues.
past, policy analysis and recommendations
be provi by ad hoc task forces tailored
d and to the President's perception of the
ident Nixon chose the Chairman of the
isors to head the Domestic Council sub-
dhis first energy message.) Presidential
Iue and ncn-reletitive. They will always
Llypolicy asp~ects. There aire substantial
ch decision with a speciallv organized task


esta


been


is one


)roblem without any ins titu-
gathering information from
sources (in energy matters
-gathering activity usually
ime and attention than the


decision,-;
policy. To
,dj ust ment

ving, highi-
ve been to






26


14

his mind, and an incompatible high-level policy mechanism will not
be used.
It also appears that Executive Office agencies are informally sorted
into two groups-those which enjoy continuing direct communications
with the Presidental staff and those which are usually monitored by the
Office of Management and Budget (OMB). Advisory groups which
are obliged to communicate through OMB are often seriously con-
strained. Creative ideas frequently imply financial commitments
which OMB tends to suppress.
Conclusions.-As previously stated, major energy decisions at the
White House level probably will continue to be made by ad hoe groups,
and any attempt to substitute an energy policy staff for those groups
may be impractical. It should be noted, however, that the lack of
accountability to the Congress and the public and the loss of continu-
ity of policy surveillance which result from "task force" policy-
making are serious drawbacks. If the cooperation of the President
were assured, a central energy policy group would offer many
advantages.
Alternatively, the Task Force approach would be strengthened by
provisions for surveillance of the energy system and specialized tech-
nical staff support for energy policy decisionmaking. These services
could be provided by an energy staff located anywhere, even in a
subcabinet energy agency.
A staff group in the Executive Office, available to assist in energy
policy formation, would have the objectivity of separation from
ongoing agency programs. There is some question whether energy is a
broad enough concept to keep such a staff group actively involved in
White House business. If it does not have enough important issues,
it will stagnate and lose influence. Natural resources might be a
more viable scope of responsibility than merely energy (and there are
significant potential shortages in the non-energy resources which
also probably deserve attention).
If an Energy Administration is formed, within a Department of
Natural Resources or elsewhere, and if it is made into a truly compre-
hensive body, it could provide adequate technical support for Presi-
dential decisionmaking. It is presumptuous to suppose, however, that
such a body could serve the functions of raising issues for Presidential
attention or of remedying past policy errors (as the DNR proposal
claimed the Energy Administration within DNR would do). These
functions can only be carried out through effective communications
with the Presidential staff. There are too many line agencies vying
for attention for any one of them to have a continuing probability
of success and there are too many filters between a sub-cabinet officer
and the White House.
Another consideration is that agencies which are externa -to the
Executive Office are subject to many allegiances to client. groups, the
Congress, and others which impair their effectiveness as participants
in intimate Presidential decisionmaking.
An approach to high-level surveillance of the energy system and
policy advice should include the following organizational concepts:
(1) Recognize that the principal mechanism for high-level
policy formation will continue to be the White House advisory
structure selected by the President and that ad hoc task forces
will be established for specific issues as needed.






27

15






28


16 0 4

None of the Federal agencies involved has the responsibility to
examine the full range of impacts which these Federal actions will have
on the reliability of present and future electrical service in vast regions
of the nation.
Similarly, each Federal energy agency is specialized on a nrrow
base. There exists no Federal center of technological excellence cover-
ing the broad range of the energy system. When policy questions of
considerable breadth must be addressed, it is necessary to assemble
the expertise on an ad hoc basis which involves all of the inefficiencies
of unfamiliar communications, divided leadership, and interagency
rivalry. In recent months, such efforts have been necessary to consider
the impacts of surface mining regulation, the need for a deep water
seaport policy, and the Federal responsibility for Southwestern (Four
Corners) powerplant development.
While there are advantages to the flexibility of task force approaches
to high-level policy advice, there is less of an argument for ad hoc
technical advisory groups. They tend to overemphasize the interests,
expertise, and data which is readily available to the detriment of
im portant factors which none of the participants has been involved
with. Greater continuity and life expectancy is necessar to permit
comprehensive expertise and data bases to be acquired.
Another attribute of relatively narrow agency functions is that
the decisionmakers must deal with equally narrow and specialized
client groups. The Bureau of Land Management, for example, in its
decisions to lease areas of the outercontinental shelf for oil production
depends greatly upon the views of the oil companies concerning need,
timing, and even the areas to be selected. In a recent environmental
court case 1 a significant question was whether the Bureau or even
the Secretary of the Interior should properly consider the need for the
oil or the alternatives to the lease in terms of non-oil sources of energy.
Even if such alternatives are considered in the decision, there clearly
is no authority for the Bureau to assist actively in bringing most of
them to fruition.
In such instances, the agency tends to adopt the attitudes, priorities,
and concerns of the client group. The close similarity of policy state-
ments of Interior Department officials to the statements of the Na-
tional Petroleum Council and, indeed, the very existence of the
Council are evidence of intimately shared viewpoints and dose
alliances.
A particularly significant current issue which is related to narrow
agency interests results from the duel role of the Atomic Energy Com-
mission (AEC) in the nuclear industry. The AEC was specifically di-
rected to nurture a civilian nuclear industry, and it has been uniquely
successful in expediting practical applications of a new technol-
ogy. Initially, the limited scientific knowledge of nuclear energy
dictated that its development and regulation should reside in the same
Federal technical agency. There is an important correlation,however,
between the costs of safety and environmental protection in nuclear
powerplants and the competitive economic position of the industry
in relation to other fuel sources. The conflict of interest between
AEC's regulation and promotion roles has been Widely criticized and,
regardless of the fact situation, the public credibility of Federal nu-
clear energy regulation has been impaired.
13Natural Resources Defense Council v. Mouton,33 7 Fed. Supp. 165, December 16,1971. Motion denied,
458 F. 2d827.






29


17

,etin asois particularly difficult when related program,;
terd b searte aecies. Success in the competition for
rcs tndsto turn upon the relative popularity, vigor, and
engt oftheageniesandtheir principal admiistraos
the elaiveneeds of society for the outputs of the pro-
iere are gaps between the p moreover, it is the
aoneof he aences to discover and fill them.
ement problem are in the Federal
Lrh nddevelopmet (R & D) effort. The Fiscal Year 197:3
all sh R & is about $642 million, distributed among
t l entities Of this amount, nearly $480
r t is ocated to nuclear research to be primarily
b AEC a partcularly strong agency. Only about $20
uded for coal ga cation by the Office of Coal R arch.
research effort which could doubtlessly be
by aditional fiancing and which offers potential energy
.iesae tmeframes as much of the AEC effort. The Office
Barcb is a relatively obscure agency within the Department
vigorously for increased efforts.
ive forr t fund increases for coal gasification has come

'enionl & araswhich are not within existn agency
S ,advanced power cycles, and
amics, have tedly been funded at nominal
ya t ultof public and Congressional emphasis on the
3.
ene system is too complex and too pe a
ety to contemplate a grand consolidation of all, or even
which impact upon it. Many programs with
negysigifcance must continue to be managed primarily
)nieaiostoghhpflly with a grate dgreof
to heenegyimplications. As an example, the primary
tonprorams of the Department o Trans-
lut hotnet ete aint rnprtation requie
i tnflencewhc transportation
.pneneryrqurmnts. Greater consolidation of Federal
agemet, however, woul reduce the existing polm of
1 apoiea nmfbnefit.
osais for energy reor zation at the agency or depart-
involve teconcet of a Department of Natural Re-
e Pesdet's 1971prooslfor aDeparttof Natural
ncudda mior cnoiainofeeg prting func-






30


18 4

For a number of years, critics have been suggesting that the regula-
tory functions of the AEC be separated from the remaining functions.
The President's Advisory Council on Executive Orgamzation (Ash
Council) recommended that the civilian reactor, nuclear fuels, and
plowshare programs of AEC be transferred to the proposed Depart-
ment of Natural Resources.
There no longer appears to be any compelling reason for the AEC
regulatory and developmental functions to be associated in a single
agency. Tie developmental functions are among the largest, most
aggressive, and most successful of Federal energy activities. Combin-
ing them with Interior's fossil fuel and electric programs could be of
mutual benefit. It would add balance to the heavy Federal emphasis
on the nuclear alternative, and it would apply the management and
technical sophistication of the AEC staff to other energy technologies.
Consolidation of these Federal activities might offer other advan-
tages. A Federal administrator who is concerned with both nuclear
and fossil fuel sources would have a broader view of the energy system
and might be expected to better appreciate the full impact of his
actions. If he were also involved-with the planning and operation of
electric power systems through the power marketing agencies, he
would gain some of the viewpoint of the electric utilities which are
major consumers of the basic fuels. The pipeline safety program of
the Department of Transportation would add another dimension.
There might be some logic in including the administration of the
REA programs of Agriculture in this consolidation to further extend
its involvement in electric energy system concerns.
The countervailing pressures upon an administrator who has wide
responsibilities throughout many sectors of the energy system would
mitigate agency biases in favor of a particular industry and would
assist in setting rational priorities among alternative programs. An
energy agency also would become a center of expertise which could
provide broad technical support for energy policy decisions.
In terms of R & D management, such an agency might be more
receptive to new concepts than the existing agencies (such as the
Office of Coal Research and AEC) which are primarily charged with
the promotion of particular fuel or a particular competitive industry.
Furthermore, the agency would have less vested interest in any
single research effort; hence, it might be more objective in setting
priorities for the Federal R & D effort.
There is, however, an especially urgent need for the development
and implementation of a coherent strategy for energy R &D. In
view of-the inherent delays of achieving major reorganizations and
the trauma which generally results from such reorganizations, it
might be advisable to establish an interim interagency coordinative
mechanism to manage energy R & D pending the resolution of agency
reorganizations.
Conelusions.-The potential values ,of line coordination argue
for a more comprehensive consolidation. All of the present Interior
Department* functions for fuel resource management and electric
power marketing should certainly be included in the major line energy
agency. The overriding policy considerations of power system planning
and fuel leasing strategy are energy considerations, not primarily
water resource or land management considerations.







31


coordination, however,
Ogram with the present


trus and
-Y. Con-
! safety,


value.
ices in


eople
,ht of


ve a great many
ion of the other
areas as Indian


I be made
approach
the AEC
eer weight
ot benefit
secretary of
ities. An
to relate


-


- A - - -A.






32


20

sake alone or simply to preserve the elegance of the organization
concept.
If a major reorganization of Federal energy management activities,
such as those described above, were carried out, many of the energy
related R & D functions would ultimately be situated within the new
energy agency, and relationships between R & D and management
functions could be preserved. In the interim, until an energy agency
has been established, an effort could be mounted to coordinate and
supplement existing R & D programs and to develop a government-
wide energy R & D strategy.
An interim mechanism having a minimum of disruptive impact on
existing efforts could be a statutory interagency bodywhich would
consist of one representative from each agency having significant
energy R & D functions.
The management body should have an Executive Director ap-,
pointed by the President with advice and consent of the Senate, and
of approximately equal rank with the members. It should have a small
technical, administrative and budget staff.
A sizeable budget would be authorized and appropriated to the
Executive Director. These funds would be used to supplement existing
agency programs; fund university, national laboratory, or contract
research; participate in industrial research; or participate in specially
established development corporations as necessary to advance the
general energy R & D strategy. When the Federal R & D reorganiza-
tion has been resolved, the authority and budget (and probably the
executive staff) would be assigned to the agency having the consoli-
dated Federal energy operating functions.
The management body should have broad latitude to select options
for advancing a general research- strategy.
There are at least three distinct phases in a successful research and
development effort:
(1) Discovery and definition of opportunities.-This phase calls
for creativity and open-mindedness, but usually not large sums
of money.
The strategy should be to seek the broadest effort possible
and to bring every potential technology to the point where it
can be reliably evaluated.
The work is probably best done in the less structured environ-
ments of universities, national laboratories and research firms.
It involves such matters as solar energy methods which may have
long-range payoffs, but it might also produce immediate, mgeni-
ous results in such areas as pollution control, mining methods, etc.
(2) Development of technologies.-Tis phase is the long-term
R & D work on identified promising technologies which brings
them to the application stage. It may involve relatively inex-
pensive creative research (as presently in the fusion process),
but in the later phases it usually involves expensive hardware
(pilot plants, etc.).
The strategy should be to seek optimum funding for a variety
of technologies which can be expected to offer a range of policy
options in the future. It is important to maintain progress toward
long-term payoffs, as well as to expedite short-term results.
Where expensive har"'ware programs are concerned, hard
priority choices must be made. Developmentof selected tech-
nologies (such as the breeder) can be administered through









21






341


analysis. The assumptions which have been made are not always
obvious in the results. The views and motives of the alysts, either
inadvertently or deliberately, can s can tly influence policy
decisions which are based upon the information.
The Federal government also presently obtains data from industry
which is not peculiarly industrial data. For example, the Department
of the Interior relies eavily upon industry for information concerning
the potential value of fuel resources on the public lands. Greater
disclosure of raw exploration data or exploration directly by the
Federal agencies could be substituted for such information.
There are indications that the present Federal reliance upon energy
information from industry is excessive. Federal decisionmaking is
influenced not only by the facts, but by the assumptions used in
analysis. Furthermore, the Federal government is unable to recognize
deficiencies or errors in industry decisions.
The recently released U.S. Energy Outlook report of the Nation
Petroleum Council is an example of predigested, policy advice which
often is offered to Federal decisionmakers in the guise of industry data.
An analysis of similar major energy studies which wereavailable at
the initiation of the Senate energy study showed that the underlying
assumptions were so thoroughly concealed that the projections
supply and demand could not be reliably normalized among the
reports considered.
The dangers in relying upon predigested data were highlighted in
Committee hearings on recent fuel shortages. A representative of the
Office of Emergency Preparedness testified that the Office had been
assured by the oil industry that supplies were adequate for this
winter. Appropriate Federal contingency planning, therefore, had not
been done.
Present deficiencies in information for energy policy decisions fall
into four general categories:
(1) adequacy of data-is sufficient original source databein
collected m an accurate and timely fashion (e.g., is sufficient
geological exploration being done)?
(2) analysis-is the data being analyzed competently and with
regard to relevant issues (e.g., has anyone estimated the impact
of surface mining slope limitations upon coal availabilhuy)?
(3) validity-is the information being distorted to prove pre-
conceived notions (e.g., are projections of energy demands based
upon realistic assumptions of growth)?
(4) credibility-will decisions based upon the available in-
formation be suspect (e.g., will conservationists believe that pro-
posed powerplants are essential on the evidence of industry
projections)?
There are indications that existi ngenergy data management falls
short in each of the foregoing areas.
The energy information available for Federal policy formation has
been inadequate for past decisions and it is certainly grossly deficient
in the present crisis. Now, and in the future, increasingly difficult
tradeoff decisions between energy and other needs of society will be
necessary. The management of the energy system willcontinue in
the foreseeable future to labor under critical shortage conditions.
14 U.S. Congre, Senate, Committee onInteuior andI
ProjectioM, Committee Print 92-19, 92d Cong., 2d Be, 1972 evaluation.






35


23


the greatest


AND AUGMENTATION OF FEDERAL REGULATORY
FUNCTIONS.


business
iiect to a






36


24

mission without Presidential removal powers is-anathema to advo-
cates of a strong Executive. The President's inability to implement his
policies easily through the actions of the commissions is usually cited
as a weakness of Federal administration. The independent commis-
sions, of course, were intentionally created toprotect the public
interest (and the rights of the regulated industries) from short-term
political whims. This objective is probably incompatible with strong
Executive control.
An argument is often made that the lack of responsiveness of inde-
pendent commissions to Presidential policy stands in the way of
coordinated action on public issues. The alternative consideration, of
course, is that the impact of fluctuating policies on such fundamental
aspects of business as management practices and rate akingmight
be disastrous. The nature of investment requires some continuity in
regulatory policies.
Additional considerations are the Constitutional implications of
proposals, such as the Ash Council's, to transform the independent
regulatory commissions into Executive agencies headed by a single
administrator serving at the pleasure of the President. The com-
missions theoretically are extensions of the Congress exercising quasi-
legislative powers vested in the Congress by Article I of the Constitu-
tion. The statement in Field v.Clark that "Congress cannot delegate
legislative power to the President is a principle universally recognized
as vital to the integrity and maintenance of the system of government
ordained by the Constitution"45 has not proved to be an' obstacle
to most Congressional delegations; but the Ash Council proposal
could in fact be an abdication of Congressional authority rather than
merely "delegation run riot." 4 The difficulty is not Congressional
failure to circumscribe the delegation, but the vesting of the power
to set policy itself in the Executive.
The quasi-judicial functions of the regulatory commissions may
present a more serious Constitutional question. The proposals for
administrators serving at the pleasure of the President imply Executive
power to remove administrators who disagree on basic policy. This
removal power, central to the reorganization, runs afoul of the separa-
tion of judicial from Executive functions and is directly contrary to
Supreme Court decisions on the ability of the President to remove
from office a person exercising judicial functions.41
The collegial form of leadership in commissions is often cited as a
source of internal confusion and of diffusion of responsibility resulting
in less than vigorous decisions. (This accusation is seldom made
concerning the AEC, however.) The argument in favor of collegiality
is that it offers diversity of viewpoints in decisions and reduces the
risk of personal whims influencing rulings which strongly affect the
fortunes of major economic sectors. There probably are opportunities
to improve the internal structure of commissions, however, and there
is a strong argument that non-regulatory functions can more effec-
tively be handled in conventional organizations.
The FPO, along with other regulatory commissions, has been
criticized as being the captive of the industries it regulates. One reason
for this phenomenon is that for many years the industries and the
4 143 U.S. 649. 692 (1892)
4Panama Refining Co. v. Ryan, 293 U.S. 388 (1935); A.L.A. Shechter Poultry Corp. v. United States, 295
47 Wiem~fv. U.S., 357 U.S. 349 (1948); Humawphey'8 Executor v. U.S., 296 U.S. 6072 (1935).






37




assciaedin proceedings to whicl

sfr proceedmnsv emt
ave helped to aleviate
Dp b cm inigi hte reg
I this evolution.
zed for its performance in regard tc
to state conclusively that the Com-
is clear evidence of indecision in th
at stronger Executive control would
r. For example, the oil import issue
,ontrol and has a similar history of

f the FF0 appears to justify a major
attribute any major energy issue to
gement. There is no evidence thai
cific energy policies which are nol
bion. If he does, he can influence the
by forcefully stating his position or
congress, of course, can impose new
statute.
n which is generally overlooked is
e past history of Federal regulation
otives. One motive is the protection
es and small businessmen from dis-
and unfair competition. An equally
regulation is to assure the public of
ien the profit motive alone has not
,te utility regulation had this goal.
an has been to assist the regulae
,onpetent to serve. The Intetate
Civil Aeronau tics Board bot are
Acting the regulated industries from
or excessive competition.
theefoestems not only fo h
1,is, but from failuresinrlae
Th emegingcritical situations in

Roerperanent en-use controls
'public interest" at
and will be proprna for quasi-






eithe AEfCbthttiohncerooe-





38)


26

plant safety would be significantly enhanced by a sepiaton of the
licensing function from the reactor program. An opportunity would
then be presented to combine this function with the regulatory func-
tions of the FPC and the Utility Company Holding Act functions of
the SEC which already largely depends upon the FPC for expertise.
An Energy Regulatory Commission of this kind would permit the
rational consolidation of the Federal Government's relationship to
the electric utility industries. Furthermore, it would involve a broader
range of interests and consequently focus a larger measure of public
attention upon the work of the agency. The creation of a broader
based regulatory staff would be an important preparatory step if the
Congress establishes new regulatory powers in the energy field.
FPC's existing non-regulatory duties, such as the national power
survey, could be reassigned to line agencies with conventional man-
agement; perhaps to a new energy information agency.
The Interstate Commerce Commission has been invested with the
responsibility to oversee the operation of oil pipelines as "common
carriers" within the same generic authorities which it exercises over
other transportation modes. The critical importance of oil supplies
and the more proximate relation of oil pipelines to gas pipelines
(regulated by the FPC) than to railroads suggests that the ICC
responsibilities over oil pipelines would be better transferred to the
new regulatory Commission. Such a transfer would do little violence
to the ICC's present policies and would permit single agency regulation
of the energy industries.
5. ENERGY-ENVIRONMENT CONFLICT RESOLUTION
The Problem.-There are a number of major energy problems which
have important environmental aspects or which actually have their
origin in environmental policy decisions. The traumatic impact of the
air-quality standards upon powerplants using high-sulfur coal and
oil is one example. The potential impact of strict surface mining
standards upon the availability of fuels for existing and potential
powerplants is another. The nation's petroleum system is affected by
environmental constraints from production (offshore leasing and
Alaska pipeline delays) to consumption (increased gasoline use
resulting from auto-emission control devices).
The genesis of the severe shortages of low sulfur fuels was recently
summarized bySenator Jennings Randolph as follows:
In the Can Air Amendments of 1970, the Congress mandated
achievement, by 1975, of a primary air qualit standard designed
toaprotectpublic health-the consumer.Prvision also was
mae for secondary standards designed to protect the public
welf are at a "reasonable time" thereafter. The States, however,
in establishing their plans' of implementation, accelerated this
time schedule.Exercising authority provided in the same 1970
Amendments, the State implementation plans, in many instances,
call for achievement of the national secondary (welfare) standards
by 1975, on the basis of air.quality enhancement.
In reality, the sulfur oxide control standards adopted for
heavily polluted regions, such as New York, also are being










airquaitycontrol regions in response to

) u t over the availability of
,omercalla alecontrol tchologies to
primry eath>) air quality standards for
Environmental Protection Agency approved
encorag th Sttesindividually to take
ve rsutd n acta impaiment of the
tem. The EPA, of course, has not been given
'O environmental standards to accommodate

hulated to acheve environmental
Dr ysemhas beenjleft with the problems of
tThese have been
the taeoff was not oxplicity evaluated
Sn responsibility for
Le f h eegysstm
atinal factor mnti problem is the strength
iEnvironmental Prtection Agency (EPA).

lethe reason ostensibly was
)f actions without conflict
the Environmental Protection Agency is not
)ey. As the center of technical competence
sit alsoplaysa majorroleind and
rds and schedules which it enforces. The
imental goals inevitably involves sariicsin
er social objectives. It involves the commit-
as and setting of priorities among desirable
Is)it involves tradeoffs.
purpose agency by definition. It serves a very
ts to it for su port.tIts'msonary" role has
ethe values of the environ-
s equipped to make tradeoff
,onmetal and other objectives.
an independent agency the only Eecutive
,apbl o blacig PAobjectives aant
gasis the Prsdent, and he does not have
.ciion bengmade. Independence may be a
butsinle-inedness is no virtue in multi-

i tical at ths time to consider any
of the EPA. If that were ble, the


appan


39






40


to be to provide interagency mechanisms to insure consideration of al
aspects of.environmental decisions.
Conl.uiow.-The strengthenin of Federale oraiza,
tion in the areas already considered will have abeic
policy decisions-at the energy-environment interface. Improved
information, expertise, and credibility of energy agencies will mist
in insuring that the energy aspects of such decisions are as fully and
competently presented as the environmental aspects.
Attention should be given to the trend to invest additional
research and development and planning responsibilities in EPA. At
present, for example, EPA has specific statutory authority to conduct
R& D into the use of solid waste asfuel. Whateverthemeitsofusing
solid waste as fuel may be, it is unlikely that the energy implications
of such research will distract the Agency from its broader mandate to
alleviate the problems of solid waste. The broader mandate also
addresses the problem in terms of quantity which may overwhelm
research into the relatively small percentage of solid waste which can
possibly be used as fuel.It is unlikely that the EPA viewpoint willbe
conducive to the development of a full-range of technological options
in the energy area, and investments in energy research through EPA
will diminish the incentive to fund adequately such research elsewhere.






41


Y OF FEDERAL ENERGY ORGANIZATION


of
na-.


to a Federal energy policy.


role of energy


to the

in the






42


30

By the 1820's, the cance of management of the public lands
had been recognized in the formation of stan committees on
public lands in both the House (1805) and the Senate (1816). Early
administrative responsibilities for the public lands resided in the Treas-
ury Dep axtment reflecting the basic revenue producing objective of
land policy.In 1812, the General Land Office was established as a
bureau within the Treasury Depa.-ment. Early land policy wa
predicated upon the remise that the disposal of public lands to
encourage private exploitation would result in the greatest benefits
to all concerned, and the administrative establishment for surveying,
managing and disposing of the vast acreage of public domain ws
concentrated within the Office. Earlier interests of the State Dep
ment in making grants and the War Department in veterans' lnd
bounties diminished. The Ordinance Bureau of the War Dep
however, continued to have an important policy role in its su
of the public mines. The General Land Office later was transferred to
the Department of the Interior when it was created in 1849, and in
1946 was combined with the Grazing Service to become the Bureau
(f Land Management.4
The discovery of gold in California in 1848 and the subsequent min-
ing booms on the public lands of the West lent new significance and
public attention to the inadequacies of law and olicy regarding
public proprietorship over the minerals on the public dcmain. The
Minin*gAct of 1866 declared the public domain to be "free and open"
to exploration for minerals and for mining, a general policy which
obtains to this day. As mining policy became more formalized, the
Geological Survey (1879) and the Bureau of Mines (1910) were es-
tablished in the Department of the Interior to oversee the Federal
interest in mineral resources development. The particular problems
of fuel minerals led to the development of special policies regardin
coal, oil, gas and more recently uranium. Lands known to contain
valuable coal deposits initially, were sold in small tracts formini
purposes. After 1900, however, the conservation movement under
the Roosevelt Administration began to focus attention upon wasteful
practices in the exploitation of the public domain. Beginning in 1906,
President Roosevelt sought to end abuses by directing the Secretary
of the Interior to withdraw from all forms Of entry more than 60
million acres of known coal lands.
Reactions to the withdrawal and continued urging by the President
led the Congress to enact legislation reserving the rights to minerals
underlying agricultural lands entries," a concept which opened the
way to later mineral leasing policies.
1n the late 1800's, also, petroleum production expandedgreatly
and about the turn of the century began to shift from the Appalachian
Field to Western locations. Because of the special nature of petroleum
exploration activities, the conventional policies and practices regarding
mineral entries on the public lands roved ineffective in encouraging
and protecting efficient, non-wasteful development of the resource.
As in the case of the coal lands, the initial governmental action was a
withdrawal of oil lands from entry by President Taft in 1909. One
consideration in the withdrawal was the Geological Survey's warning
3'Act of April2Z6, 1812 (2 Stat. 71);-
4Reorg. Plan No. 3, July 19,19,5 U.S.C.A. app., p. 185 (1967).
14 Stat. 251.
35 Stat. 844 (1909).






43


31


reser


LAV A.resi
rPoses, 7
were es-


to devil
ct of 1
ing per


ore,


FEDERAL WATER POLICY


the nation's energy system
ign rights over waterways.


e "common highways and forever free." In
ion, the problems of continuing sectionalism
Ithe need to encourage development of the
al sto improve communication and
Jeferson Administration; Secretary of the
prepared a Report on Roads and Canals in
Federal program to develop roads, rivers


din the Reclamation
the Homestead Acts
age and conveyance


116).






44


32

of giving preference in the sale of surplus power to municipalities.
Today, the revenues from energy generated at Federal dans are a
major factor in the financial viability of continued reclamation
development.
The Department of the Interior also has the responsibility for
marketing the hydroelectric power generated at dams which have
been constructed by the U.S. Army Corps of Engineers in its flood
control and navigation programs. The function is carried out through
the Bureau of Reclamation and the Bonneville, Alaska, Southeastern
and Southwestern Power Administrations. Each of these agencies
operates a Federally-owned transmission line system, and as a major
supplier of energy participates with the public and private utilities
in regional power system planning, sharing of transmission facilities
and exchanges of energy.
Federal power is intended to be sold at the lowest rates consistent
with sound business practice. This policy, along with the preference
accorded to public utilities and cooperatives, is distinctly intended to
establish a competitive "yardstick" for private electric cornanies
in the regions. Current policy does not explicitly recognize a Federal
"utility responsibility" to meet the energy demands of its customers
beyond the availability of "surplus" power. The sheer magnitude of
some Federal systems (Bonneville operates the largest electrical
transmission system in the world and controls 50 percent of the energy
in the Pacific Northwest) and the reliability problems facing many
electric power systems seem likely to increase the Federal responsibility
to share in the efforts to forestall critical shortages. The Bonneville
Power Administration has already been empowered by the Congress
to acquire power from non-Federal thermal-electric plants through
complex exchange arrangements. The Bureau of Reclamation has
direct financial interests in two thermal powerplants to provide
pumping power for the Central Arizona Project and the Central
Valley Project in California.
Aside from direct Federal construction of hydroelectric projects, the
Federal government, by virtue of its control over navigable water-
ways, has had the ability to restrict the obstruction of waterways by
non-Federal interests. In 1890, the Congress prohibited "the creation
of any obstruction, not affirmatively authorized by law," on the navi-
gable waterways.12 And in the Rivers and Harbors Act of 1899, it set
forth a procedure calling for the approval by the Chief of Engineers
and the Secretary of War of plans for dams or other works on navi-
gable streams and for the consent of Congress wla re interstate waters
were involved.'"
The particular energy significance of these measures lies in the fact
that between 1880 and 1910 the concept of electrical power distribution
from central generating stations came into being, and power transmis-
sion technology developed to the point where energy could be practi-
cably conveyed distances of two or three hundred miles. The utiliza-
tion of prime hydroelectric power sites, most of which were at a dis-
tance from centers of electrical demand, became attractive.
Definitive policy regarding hydroelectric sites was established by
the Federal Water PowerAct.1' The Act affirmed Federal ownership
12 Act of September 19, 1890 (26 Stat. 454).
13 Act of March 3, 1899 (30 Stat. 1121).
14 A of June 10, 1920 (41 Stat. 1063).






45


a 33
l water power of the navigable streams. It established a Federal
ver Commission consisting of the Secretaries of War, Agriculture
I Interior. The Commission was given authority to grant 50-year
nses for power sites to non-Federal entities or to recommend Fed-
I development to the Congress. Preference was to be given to public
tes if there was competition for a particular site. The charges for
3s, however, were restricted to the cost of administering the
Te Commission was also directed to collect data on the power
Pof>continuity and staff support for the Commission's work

scented culties and, in 1930, the Commission was reorganized
an independent regulatory agency headed by full-time commis-
ie.15 The Commission also was authorized to conduct the Electric
,teSurveyand the National Power Survey to provide data for
decision.
. ,by Title II of the Public Utility Act" the Commission was
jurisdiction over the interstate transmission of electric energy.
i presently has broad regulatory authority over the
connection, rate schedules, adequacy of service, and business
dices of the electric utilities which engage in interstate transmis-
a of energy.
ECONOMIC REGULATION AND REVELOPMENT
e depression conditions of the early 1930's gave rise to a phios-
4y of extended Federal management of economic affairs. Extensive
erience with Federal regulation of industry already existed. The
kCommerce Commission (ICC) had been established in 1887
apple with the problems of vast railroad holdings, and the Federal
ission created in 1914 had been one response to the
titrst sentiment of the time.
urthe ore, some form of public control has usually followed the
velopment of all natural monopolies and has origins in the common
v.The gas and electric industries, both of which underwent tremen-
is wth in the decades of this century, had the attributes of
ural monopolies. It was apparent that the provision of more than
electric power or gas distribution system in most a would be
Lh wasteful and disruptive.
Initial lation of utilities by State and local government tended
i objectives. Exclusive franchises and rights-of-
y were incu charters in return for certain guarantees of







46


34

The Hepburn Act of 190617 extended the jurisdiction of the ICC
to petroleum pipelines and declared such pipelines to be "common
carriers." The Act was primarily a reaction to the Standard Oil Com-
pany's use of its pipeline monopoly to manipulate the price of crude
oil produced by others.
In 1935,.coincident with the extension of FPC regulatory powers
over electric utilities, the Public Utility Holding Company Act 18
required holding companies to register with the recently created (1934)
Securities and Exchange Commission. The Commission was empow-
ered to simplify and oversee the management structure and practices
of such companies.
In 1938,,Congress extended the FPC's jurisdiction to the trans-
mission of natural gas in interstate commerce and to sales of such gas
for resale.1' Of principle concern at the time were the interstate pipe-
lines themselves, which were beyond the reach of State regulatory
action. Because much of the natural gas produced was in association
with oil and therefore could not be retained in the ground, and because
pipeline development was not yet extensive, both producers and cus-
tomers found themselves at the mercy of the pipeline owners in
bargaining. Waste of gas and pricing discrimination were evident.
The Natural Gas Act was initially interpreted by the FPC to
exclude the Commission from regulating producers' sales to the
pipelines. In 1954, the Supreme Court ruling upon a suit brought by
a consumer State, Wisconsin, reversed that interpretation.0 The Court
ruled that the sales made by a major producer to interstate pipelines
were subject to FPC regulation.
Legislative efforts, defeated by two Presidential vetoes, subsequently
were made to reverse the Court. The Commission later instituted
rate regulations premised upon price ceilings for the principal pro-
ducing regions. The impact of this rate regulation on the supply of
natural gas has become a major issue in the present energy crisis.
Another economic basis for Federal involvement in the energy
industries was the reluctance of electric utilities to extend service to
sparsely settled rural areas. The Federal government, through the
Rural Electrification Administration (REA) became directly involved
in the financial support of electric systems. In 1935, President Roose-
velt signed Executive Order No. 7037 establishing a Rural Electri-
fication Program under the general authorization of the Emergency
Relief Appropriation Act of 1935.21 The program had the dual purpose
of relieving unemployment as well as providing electricity to the
rural areas. The construction of electric lines, however, called for
skilled labor not found in rural areas, and power companies which
possessed the necessary expertise showed little interest in obtaining
program funds, either to relieve unemployment or to carry out rural
electrification.
In 1936 Congress enacted legislation to create a Rural Electri-
fication Administration as a lending agency with a continuing ten-
year program.2 The Act, modeled after the Tennessee Valley Authority
Act of 1933 gave preference to non-profit organizations such as
1734 Stat. 5&4.
18 49 Star. SM.
19 52 Stat. 821.
2 Philps Peiro m Co. v. Wisa in, 347 U.S. 672.
n 49 Stat. 115.
2249 Stat. 1363.











,y ditrits and mncplties which were willing
e waauthi .n1944,theAct was
tep ttwop tintretrateforall
1w loans and continuing te REA indefinitely.
"by ouraging municipal and cooperative
a sincant role in shaping te pattern o electric
st areas of the nation. Te pattern is an important

TX PLIC

by the energy industries, like those made in any
ly influopcre4by the tax policies which affect them.
y, however, is not intended to have unique impacts
ys d would be inappropriate for discussion
f ed lorporatetax, however, the depletion
e on income from oil and gas wells, has
tionl eergypolcy of considerable significance.
c tax law prior to 1913 did not provide a deduc-
on of eral reserves. I 1913, mine ow
aing a deduc of "not to exceed 5 per centiir of
he mine of the output for the year."This
e was prdcated upon an analogy to depreciation
ital nestItwaterpretedalsotoapply
let of 1916 substituted "reasonable allowance"
b dedion ndin1918 a discovery deplion was
a tion. The Senate Report stated:

s sarh. When he doesloate a produictive property and
,emsA unwise ad unfair that his profit be taxed at the maxi-
Sordinary income attributable to the normal activities of a
ate prospecting and exploration, the committee has limited
Aothselng prie .h. d

on of the allowancedwas
,ovide incentie to exploration. Later amendments

esfially resute7Li abandonment of discovery-
ue es nirly
ieeopent desiged toprovide aspeial incentive
ion an icvrdsoery-value depletion also
the dioverer of an field, forexm pl, would
trUnder the
etho, te txpyer was permitted to recover tax-

L sentprir t dicovryo ol was worth ten dollars






48


36
other income-while a 1924 amendment further limited the deduction
to 50 percent of the net income from the property. Difficulties in
determining what constituted a discovery and how to determine
"discovery-value," began in 1926 to lead to a gradual abandonment
of discovery-value depletion.
Depletion allowances based on a percentage (27 4%) of annual
income, as first introduced in 1926, were limited to oil and gas. Later
they were extended to other- minerals, and in each case replaced
discovery-value depletion. With the enactment of the 1954 Internal
Revenue Code, discovery-value depletion disappeared from the law.
Other rate changes have been made from time to time and the de-
pletion allowance was reduced to 22 percent by the Tax Reform Act of
1969.26
NATIONAL SECURITY
During the emergency in World War I, concerns over the nation's
dependence upon foreign nitrates for explosives resolved a monumental
political struggle between the advocates of public and private power
and led to the construction of a Federally owned hydropower and
nitrate production complex at Mussel Shoals on the Tennessee River.
The project was initiated under the authority of the National Defense
Act of 1916,27 although the major power producing feature, the
Wilson Dam, clearly would not be in operation in time for war pro-
duction. The potential advantages of cheap public power and post-
war production of nitrogen fertilizers were more or less overt motives
for the development.
The appropriateness of such public ownership remained in contro-
versy, but in 1933 the depression sentiment and the strength of the
Roosevelt Administration made possible the ratification and expansion
of the concept with the establishment of the Tennessee Valley Au-
thority.28 The TVA is a comprehensive regional development scheme
based upon Federal energy production.Although the TVA concept
has never been replicated-in the same form, the massive systems of
Federal dams and transmission lines which have been constructed in
the Columbia, Colorado, and Missouri River basins have, through
low-cost hydropower, similarly influenced the social and economic
development of the regions.
In World War II, the Manhattan Project developed atomic wefipons
and unlocked a totally new energy source. The peculiar "secret
weapon" aspects of early nuclear energy development have invested it
with a degree of Federal proprietorship which is unmatched in fossil
fuels or even hydropower.
Almost immediately after the use of the atomic bomb in 1945, the
question of the appropriate post-war control of nuclear energy was
raised. Only two months after the Hiroshima bombing, President
Truman urged the Congress to establish an Atomic Energy Commission
and to state an atomic energy policy. The principal issue in the sub-
sequent debate concerned the extent of continued military control
over atomic energy.
The Atomic Energy Act of 1946 29 established a civilian Atomic
Energy Commission with control over the policy aspects of atomic
2683 Stat. 487.
239 Stat. 186.
28 Tennessee Valley Authority Act (48 Stat. 58).
39 60 Stat. 755.




















per-


49

37






50


38

The Mandatory Oil Import Program has three primary fun:
to regulate the degree of import restrictions by means of
quota levels; to allocate permitted imports among domestic d a
and to manage program administration.
The Proclamation created an Oil Import Appeals Board in the
Department of the Interior with power to modify or grant alloca
and to review any revocation or suspension of an importlic
The Mandatory Wil Import Program is administered by the Oi
Import Administration which reports to the Assistant Secretary for
Mineral Resources, Department of the Interior.

HEALTH, SAFETY, AND ENVIRONMENTAL MANAGEMENT
The mining industries, particularly coal mining, have always been
notoriously unsafe. Efforts began in the Congress as early as 1865
to create a Federal Mining Bureau which would have had responsi-
bilities for improving the health and safety aspects of mini activities.
The Bureau of Mines was not actually established in the Department
of the Interior until 1910 in the aftermath of a series of coal
disasters.M The Bureau was empowered to investigate methods of
improving mining operations, especially the safety aspects. The au-
thority to make inspections of mines and publicize the findings wa
granted to the Bureau in 1941.11
During the labor disputes of 1946 and 1947, when the Federal
government operated many of the nation's coal mines, a Federal
Mine Safety Code was agreed upon between the Secretary of the
Interior and the United Mine Workers. It became a guideline for
Federal inspectors. The death of 191 miners in the West Frankfort,
Illinois, explosion in 1951 gave impetus to the enactment in 1952 of
legislation making compliance with the Code mandatory and author-
izing inspectors to close unsafe mines in some instances." The con-
tinued occurrence of major disasters pointed up deficiencies in the
law and led to a series of amendments. Public awareness of the health
aspects of coal mining, particularly the extent of disabilities from
pneumoconiosis or "black lung," also increased.
In 1968, the Farmington, West Virginia, disaster, which killed 78
men, provided the incentive for the passage of the Federal Coal Mine
Health and Safety Act of 1969Y The new Act conveyed broad
new regulatory powers for standard-setting and inspection and estab-
lished a new Fedeal responsibility in woIkmen's compensation as it
applies to black lung disabilities.
The environmental management concerns of the Federal govern-
ment regarding the energy industries also have ancient origins. A
strong association between the early conservation movement and
antimonopob%, interests can be traced at least as far back as Theodore
Roosevelt's Administration, and conservation has long been an
important aspect of Federal attitude toward the energy industries in
both the mineral resources and hydropower areas. Until recent ly,
however, Federal policy decisions were predominently concerned with
the economic and financial aspects cf the industries. In the late 1960's
with the emergence of a strong Federal regulatory role in water and
4 Orga ic Act, Bureau of Mines (36 Stat. 369).
SFede=a Co l Mine Safety Act (55 Stat. 177).
Coal M-ine Safety Act (66 Stat. 692).
"83 Stat. 742.






51


12






52


40

lands and the examination of the geological structure, mineral re-
sources, and products of the national domain," was the final civia
culmination of a variety of formal and informal arrangements for
exploration of the West. Most of the earlier agencies such as the Army
Corps of Topographical Engineers had a heavy military emph
From the begmnning, the Geological Survey included a varieyof
applied research among its activities. In the early 1900's, the Congress
began to appropriate funds to the-Survey for research in coal tesig
and mine explosions, and by 1909 it had a program of more than
$500,000 in fuels and mining research. Although the Bureau of Mines
has now taken over such activities, the Survey retains a research
program in geothermal energy and it has important technical functions
regarding the leasing of Federal coal and oil resources.
The Bureau of Mines was created in the Department of the Interior
in 1910,42 and assumed the mining research activities of theGeological
Survey. Its activities have since been expanded to encompass
metallurgy, and mineral technology. During World War1,[ its knowl-
edge of mine gas was directed toward poison war gas defense.
The Bureau of Mines presently controls the largest budget for
energy research and development, with the exception of the AEC.
The Bureau conducts research into the production and utilization of
coal resources, mining health and safety, petroleum extraction tech-
nolooies, oil shale, and geothermal energy.
The Office of Coal Research was created pursuant to the Goal
Research Act of 1960 as a line research agency. All of its research
is performed by contracts with public and private organizations. The
Office does not issue grants, maintain its own laboratories, or perform
"in house" research. The Office's activities are closely allied with
coal research by the Bureau of Mines.
The history of the AEC already has been discussed. The AEC
administers the largest component of Federal funding for energy
research and development. It has programs in nuclear gas stimulation,
civilian nuclear power development, nuclear materials process devel-
opment, fusion and laser research, electrical power research and
thermal pollution control.
The Tennessee Valley Authority is engaged in research in pollution
control technology for sulfur oxide removal, and the Environmental
Protection Agency is engaged in research into air pollution control
techology as well as thermal pollution control.
Federal support for basic science is primarily funded through the
National Science Foundation (NSF). The program grew essentially
out of the experience of the two World Wars which had necessitated
crash programs in military applications of science and technology.-The
National Research Council in World War I and the Office of Scientific
Research and Development (OSRD) in World War II were exclusively
concerned with scientific support for the war effort.
In 1945, at the President's request, the Director of OSRD, Dr.
Vonnevar Bush prepared a report entitled Science-The Endles#
Frontier which advocated a permanent arrangement for Federal
support of basic research regardless of military necessity. The report
was the basis for legislative action resulting in the National Science
Foundation Act of 1950." The National Science Foundation in
recognition of the "energy crisis" has been funding an increasing
amount of research in the energy field.
Act of May 1, 1910 (36 Stat. 369).
u 74 Stat. 336.
64 Stat. 149.






53


ATTACHMENT I


FEDERAL ENERGY AGENCIES


the


cde8 which have been
, A includes agencies
)grams as defined at


table. Table H includes agencies which administer
rams which are not specifically energy oriented but
ue impacts on the energy system.
i the column headed "classification," includes a code
es of energy policy activities itperforms. The key to
i is set forth below. The remaining columns indicate
Shas been identified as an "energy" agency in the
t out in the tables.


r OF ENERGY POLICY ACTIVITIES OF FEDERAL AGENCIES


Activities


f Standds, Rules, Regulations,

Review of Proposed Legislation


a. Operations of energy facilities or production or
marketing of energy or energy resources (includ-
ing financial assistance for such activities by
non-Federal entities).
b. Management of Energy Resources (including
purchasing in quantities large enough to effect
regional or national supplies).
c. Enforcement of Rules and Regulations
d. Research and Development, Data Collection,
and Technical Assistance.
cities Having Unique Impacts Upon the Energy System
1. Policy Formation
a. Planning and Forecasting
b. Formulation of Standards, Rules, Regulations
and Rates
c. Preparation or Review of Proposed Legislation
2. Policy Implementations
a. Operation of facilities or production of resources
having unique impacts upon the system.
b. Management of Resources
c. Enforcement of Rules and Regulations
d.hand Development, Data Collection, and

(41)


I 0









54


42


TABLE A.-FEDERAL AGENCIES WHICH ADMINISTER ENERGY, POLICY OR PROGRAMS
Category A-Agencies which administer programs Or develop or implement policies which have been specifically initiated
for their particular impacts upon the Nation's energy system]

Classification


Apncy


Executive office of the President:
Domestic Council --------------------
Office of Emergency Preparedness-----
Office of Management and Budget-...
Natural Resources Programs
Division.
Office of Science and Technology ......
Federal Council for Science and
Technology.
Oil Policy Committee-..............
Oil Import Appeals Board ............
Joint Board on Fuel Supply and
Transport.
Department of Agriculture:
Forest Service ------. --............
Rural Electrification Administraticn ---
Department of Commerce ................
Bureau of Domestic Commerce .......
Office of Import Programs_ -
Department of Defense ..................
Army--Corps of Engineers--civil ......
Office of Naval Petroleum and Oil
Shale Reserves.
Department of the Interior:
Alaska Power Administration .........
Bonneville Power Administration ......
Bureau of Land Management .........
Bureau of Mines-..................
Bureau of Reclamation ...............
Defense Electric Power Administration.
Geological Survey -------------------
Office of Coal Research-............
Office of Oil and Gas ------- -------
Oil Import Administration-..........
Southeastern Power Administration. -
Southwestern Power Administration_--
Department of Justice-..................
Land and Natural Resources Division.-
Antitrust Division-..................
Department of State ---------------------
Office of Fuels and Energy ............
Department of Transportation-..........
Office of the Secretary (grants-in-aid
for natural gas pipeline safety).
Federal Highway Administration (use
of trust fund derived from energy
tax).
Department of the Treasury-............
General Counsel-...................


A.l.a.c-.........
A.I.a.b., A.2.a.b.c....
A.l.a.b.c . . .

A.I.a.; A.2.d ........
A.I.a.; A.2.d ........
A.l.a.b-...........
A.2.c .............
Al e~ -- -- -- -- --


A.2.b_----------
- A .2 .a .. . . -X.. .. .X-.. . .. ..-x


A.I.a.; A.2.d.; B.2.d__
A.l.a.; A.2.c-------

A..'a.; A.2.a.b.c-....
A.I.a.b.; A.2.b.c.d...--


A.1.a.b.c.; A.2.a.b.d.
A. .a.b.c.; A.2.a.b.d_-
A. .a.b.c.; A.2.a.b.c__-
A.1.a.b.c.; A.2.a.b.c.-
A.I.a.b.c.; A.2.a.b.c.
A.1.a-..............
A.1.c.; A.2.d .......
A.l.a.; A.2.d-.......
Ala.; A.2d .....
A.L.a.b.; A.2.c.
A.1.a.b.; A.2.a.b ....
A.L.a.b.; A.2.a.b ....

A.1.c.; A.2.c-......
A.1.a.; B.2.c .....


----------------- -- -- .-xI. .
--- ..- ------.. .
-- - - - - - - - - - -
---.-.-----.-.------.--.-----.--.--


x

x
x
x
x
x


-------------


X


X.
X
X
X



x


- - - - - - - -.-i- -
I... A.------ -----


"- ---- --_--"_- _- --
A.2.a-- - - -
A.1.b.; B.I.a.c.;
B.2.a.b.d.


A.1.a.. . . .


Atomic Energy Commission----------I A..a.b.c.; A.2.a.b.c.d-


Environmental Protection Agency .........
Office of Air Programs ...............
Office of Radiation Programs..--------
Office of Solid Waste Management
Programs
Federal Maritime Commission (oil pollution
financial responsibility) ................
Federal Power Commission ...............
Federal Trade Commission ...............


AJ.a.b.c.; A.2.c.d-...--
A.1.a.b.c.; A.2.c.d...--
A.I.a.; A.2.a.b.d-....

A.l.b.; A.2.c .........
A.I.a.b.c.; A.2.b.c.d_-
A .2.c ..............


X


X


X

X


General Services Administration I.... I---
Federal Supply Service---------- A,.b.; A.2-a.c.d-.--. I-


x


x
x
x


- - - - - -


X


x


Ix






X


X

X
X
X




X
x

X
IX
X



X
X

x






X



X






X








55


43


Classification


________ 1 {2 LL......1 4 5 Isli


s and Space Aduini-
Program ...-----..






uncil ..............


A . ............--
A.La.; A.Z.d ........
A.Lb.; A.2j.........
A.1.b.; 2 .-- -----


A.La.; A.d.-......


x



x


x


X


-


IX


x
x


NOTES
is an energy agency in an i nt survey made by the committee staff from available
ification outline).,
irmativefy to questionnaire concerning fuels and energy goals,.
o have energy related programs In an analysis made in 1968.
to have prepared or cotace for energy related studies.


f in tg il
f agencies


erned wth oil and gas matters prepared by te Office


iihhaebe se ialyinite








56



44 ,i

TABLE B.-FEDERAL AGENCIES WHICH ADMINISTER ENERGY POLICY OR PROGRAMS
Category B-Agencies which administer programs or develop or implement policies sich were n pci y
to have unique impacts upon the energy system but which have proven in practice to have influences upon the energy
system which are significantly different than the influences they have on other industrial or social systems]

Classification

Agency 1 2 3 4 5 6 7

Executive Office of the President:
Council on Environmental Quality-..... .a.b.c.......... X ........ X X -- -- X
Office of M anagem ent and Budget ..... .................. ................ ........
Budget Review Division ----------- BJ.a.bx....- ...---- .-------- .............----- _------- ..........
President'sPanel on OilSpills.---------8B.1.------------------X .-----------
President'sTaskForce onAirPol lotion 8..--------------------....X ..--------
Department of Commerce-------------------.------.-----------------------X X
Bureau of Census. .- .. ..--------------8..d d---------- X.................-................ X
Maritime Administration...----------.B2.a-----------...... .------------------------------X
Department of Defense---.------------------ ----------------------X X
Defense Supply Agency, Central Sup- B.2.a.b.d--------.----------------.-------------- X
ply and Maintaenae.
Department of Housing and Urban De-
velopment
Department participation in Urban 8.2............................. ...........
Transportation R. & D.
Department of the Interior:
Bureau of Indian Affairs...----------B..b-----------_,.--- ------.X ...-X
Department of Transportation---------.--------------------------- -X
Office of the Secretary-Transporta- B.la.; 8.2.d ...................... ........
tion Planning R. & D.
Coast Guard (oil pollution)---------.B.b.;B.2a.c.d- ----------------------------- X
Urban Mass Transportation Admin B.2.d
istration.
Department ofthe Treasury------------- ------ ---------X.. X
Internal Revenue Service. ..---------- B..b.c.;B.2.c -----------------------X
Civil Aeronuatics Board (subsidy of Air B.2.a.............-................ ........
service).
Environmental Protection Agency:
Office of Water Programs...---------- B.a.b.c.; B2.c.d. X---------------------- X
Interstate Commerce Commission-------B.l.b.; B.2c------------------------X X
National Aeronautics Space Administration-.----------------.--------------------- X
Office of Applications.. ..------------B.2.d............................ ........
N a tio n a l W at e r C o m m is s io n - - - - - - -- - --.. .-B.- . . . . . . .. .

NOTES
Col. 1: Agency was classified as an energy agency in an independent survey made by the committee staff from available
sources (See the attached classification outline).
Col. 2: Agency responded affirmatively to questionnaire concerning fuels and energy goals.
Col. 3: Agency was deemed to have energy related programs in an analysis made in 1968.
Col. 4: Agency was reported to have prepared or contracted for energy related studies.
Col. 5: Agency claimed direct statutory authority in the energy field.
Col. 6: Agency claimed indirect statutory authority in the energy field.
Col. 7: Agency was listed in a1971 compilation of agencies concerned with oil and gas matters prepared by the Office of
Oil and Gas.










ATTACHENT 2


FEDERAL
GY


Page


System and Provision for Policy
indPolicyAct._------.. -----....
useBill)
late B ill)-- - - - - -
a rd - - - - - - -
. . . ..-- - - - - - - - - - -


leources~-
anc l1-------
- - - - - - -


s and n


57







58



1. HIGH LEVEL SURVEILLANCE OF ENERGY SYSTEM
AND PROVISION FOR POLICY ADVICE

The high level surveillance of the energy system and provision for
policy advice has been the subject of several major proposals: S. 33301
introduced by Senator Jackson, the "National Resources Planning
and Policy Act of 1972"; H.R. 157521 introduced by Congressman
Keith to create a Council on Energy Policy, which would advise the
President and the Congress on energy policy and exercise leadership
in formulating that policy; S. 38021 introduced by Senators Hollings
and Magnuson to create a Council on Energy Policy, which would
serve as a central point for collecting and analyzing energy statistics,
coordinating all Federal energy activities, and preparing long-range
plans related to energy; S. 36411 introduced by Senator Pearson to
create a National Energy Advisory Board; and H.R. 258' introduced
by Congressman Murphy to create a Commission on Fuels and
Energy.
Al'ational Resources Planning and Policy Act of 1972
Senator Jackson introduced S. 33301 to provide for the establishment
of a coherent long-range policy-making capacity for the management
of the Nation's natural resources.
Senator Jackson summarized S. 3330 as follows:
The National Resources Planning and Policy Act would declare improved
organization, policy-making, planning and management of our natural resources
to meet national, economic, social, and environmental requirements to be a new
national goal. The Act would state new national policies for the management,
conservation, use, and development of natural resources. Among others, these
policies would be concerned with the development of new technologies; better
monitoring and data collection; research on new methods to produce more efficient
and cleaner energy sources; and better decisionmaking and coordination of
activities within the Federal Government.
The Board on Natural Resources Planning and Policy would have three
members. Their duties would include: the coordination and improvement of all
Federal programs and activities in the natural resources and energy fields; the
conduct of studies and research; the responsibility, where appropriate, to insure
that technical and economical information accompanies environmental impact
statements; the recommendation of policy changes and new programs or actions;
and the recommendation, jointly with the Council on Environmental Quality, of
alternatives to Federal actions enjoined by the courts.
One of the most important assignments of the Board would be the preparation
and transmittal to Congress of an annual Natural Resources Report. This Report
would meet the need for a continuing assessment of present and projected natural
resources requirements; research and development efforts concerning natural
resources; data collection and monitoring activities; and efforts to develop applied
technology. With this informational base and annual assessment of problems and
opportunities, Congress and the Executive Branch would, Ibelieve, be greatly
assisted in the preparation and implementation of needed policies for the manage-
ment, conservation, use, and development of our natural resources.'
Council on Energy Policy (Houe Bill)
A Council on Energy Policy was proposed by Mr. Keith and 22
co-sponsors. (H.R. 15752, June 28, 1972.) The Council would be in
192d Congress.
'Congressional Record, March 13, 1972, S. 3816.
(47)






59


Lrgy-related functions


d advisor to the President -and
Sle a e p in formulating


g it of plants and programs fr
nergy ation. In addition, the
1 formulate plces for andcoriaepr-
aor controlled by
nmen& In cooperation with the Council on
ality,_the Energy Policy Council would pre-


ve editions and reports to
s to theextentthathesedealwith


ions to the President and Congress for re-
licies of Federal agencies.
ion of policies to Federal and State agencies


or energy


on would require the Presi t to prepare
ner Report to Congress. The report would

f energy needs for the ensuing ten years.
f the domestic and foreign energy supply.
os c trends in the quality, management
egyr and the effects of those trends
niac and other requirements of the Nation.
I appria of the adequacy and appropri-
le, p urea, and practices, including regu-


as the


V 1- I-,


48


v


Scierm and Astronautics by






60


49

conservation of energy resources by reducing energy demands,
and development of technological capabilities to produce al
tive clean energy sources.
The Council would be the principal advisor to the President and
Congress on energy policy, exercising leadership-in form ulatin gov-
ernment policy concerning domestic and international energy issues.
The Council would make recommendations to the Presidetand
Congress for resolving conflicting energy policies of Federal agencies.
It would promptly review all legislative recommendations and reports
to Congress of Federal agencies, to the extent that such recommenda-
tions and reports deal with energy matters. The Council also would
keep Congress fully and currently informed of all of its activities.
The President would cause to be prepared and submitted to Con-
.gress an annual energy report. This report would include-
(1) an estimate of national energy needs for the ensuing ten
years;
(2) an estimate of domestic and foreign energy supply for the
United States;
(3) current and foreseeable trends in the price, quality, manage-
ment, and utilization of energy resources and the effects of these
trends on the social, environmental, economic and other require-
ments of the nation;
(4) a catalogue of research and development efforts funded
by the Federal government to develop new technologies, to
forestall energy shortages, to reduce waste, to foster recycling,
and to encourage conservation practices; and recommendations
for developing technologies capable of improving the quality
of the environment, increasing efficiency and protecting employee
health and safety in energy industries;
(5) recommendations for improving the energy data and
information available to the Federal agencies by improving
monitoring systems, standardizing data, and securing addi-
tional needed information;
(6) a review and appraisal of the adequacy and appropriate-
ness of technologies, procedures, and practices employed by
Federal, State and local governments and nongovernmental
entities to achieve the foregoing objectives; and
(7) recommendations for the level of funding for the develop-
ment and application of new technologies, as well as procedures
and practices which may be required to achieve such objectives
and to improve energy management and conservation.
The level of effort for this version of the Council would be $4
million annually after the second year.4
A NationaliEnergy Advisory Board
Senator Pearson proposed a National Energy Resources Advisory
Board..(S. 3641, May 24, 1972.) Established as an independent
agency in the Executive Branch, the functions of the proposed Board
would be to:
(1) Make a full, complete, and continuing investigation, including
the holding of public hearings, of the current and prospective fuel and
energy resources and requirements of the United States, and the
present and probable future alternative procedures and methods for
4 AWi.











iicipated requirements, consistent with achieving national
zding high priorities, national security, and environmental.

it to the President and to the Congress a report-
recomnding specific legislative action with regard to
nation of effective and reasonable policies to assure reliable
B nt sources of fuel and energy adequate for a balanced
my, a clean environment, and the national security; and
on the extent of the investments by public and private
rise for the maintenance of reliable, efficient, and adequate
s of energy and fuel, including the adequacy of such
ments to provide a clean environment.
acting its inquiries and compiling the required report, the
Id take into account-
the proved and predicted availabilities of our national fuel
iergy resources in all.forms and factors pertinent thereto,
[ as worldwide trends in consumption and supply;
projected national requirements for the utilization of these
es for energy projection and other purposes, both to meet
ange needs and to provide for long-term future demands;
the interests of the consuming public, including the avail-
in all regions of the country of an adequate supply of
and fuel at reasonable prices and including the main te-
of a sound competitive structure in the supply and dis-
on of energy and fuel to -both industry and the public;
technological developments affecting energy and fuel pro-
n, distribution, transportation, or transmission in p rgress
prospect, including desirable areas for further exploration
cnological research, development and demonstration;
the environmental effects of energy production;
The effect upon the public; and private sectors of the
ay of any recommendations ..;
the effect of any recommendations made pursuant to this
n economic concentrations in industry; and
governmental programs and policies now in operation:
rrect upon segments of the fuel and energy industries, and
upact upon related and competing sources of energy and
d their interaction with other governmental goals, objec-
ind programs.'
ion on Fuels and Energy
mission on Fuels and Energy was proposed by Congress-
iy of New York (H.R. 258, introduced January 22, 1971).
ission would recommend programs and policies intended to
ough maximum use of indigenous resources, that the
requirements for low-cost energy be met, and to reconcile
ital quality requirements with future energy needs..
mission would make a full and complete investigation and
he energy.demands and the fuels and energy resources,
ts, and policies of the United States. It would also evaluate
alternative methods of energy production and the relative
all energy sources including fossil fuels, synthetic fuels






62


51

,derived from natural fossil fuels, nuclear, and any other practical
sources. The Commission would recommend those programs
policies which are most likely to insure, through maximum use of
indigenous resources, that the Nation's rapidly expanding require-
ments for low-cost energy will be met, and in a manner consistent ith
the need to safeguard and improve the quality of the environment.
The Commission would report its findings and recommendations to
the President and to Congress within a year after its organization. An
appropriation of $1.5 million is authorized.
The Commission would consist of 19 members appointed as follows:
Six from the Senate, appointed by the President of the Senate,
three from the majority and three from the minority party.
Six appointed from the House by the Speaker, three from the
majority and three from the minority party.
Nine appointed by the President from members of the pu
have particular knowledge and expertise with respect to fuels and
energy.
The President would also appoint nine representatives of the
Executive Branch to serve as advisory members of the Committee.
6 ibid.






63


AND AUGMENTATION OF FEDERAL OPERATING
PROGRAMS
Is!hav emegdaddrsigthe coordination and'
mg s: the proposal of the
SMineral Resources compo-
leateto La Resources and the Presi-
, t mitted to the Congress
No.1 of1973wh sdeindto abolishithe
Pandt er its functions to other
theOffce of Science and Technology and transfer
rtor of the National Science Foundation, and
Aeronautics and Space Council.
icuingprmarlyon fuels and energy research
,.1de ongessanWyman's proposal for the.
;ynteti hydocabonfuel corporation (H.R.
imclly feasible pro s for convert of
I other liquid d gaseous hydrocarbons. The
ian Wyman's proposal, would be financed
S bonds, with the U.S. government's stock
alty payments once the corporation had devel-
c~mria process.
proposed a New Energy Sources Corporation.
t government-industry project to demonstrate
of produ energy from oil shale, tar sands,


valuable for the






64


53
& j
materials for manufacture into raw materials or salable products.
The deductions range from 15 percent for recycled solid wastes in
general to 22 percent for recycled metals.
In order to facilitate the demonstration Of new technologies, Coin
gressman Williams introduced legislation (H.R. 14218)' proig a
special allowance for depreciation with respect to certain by-product
and waste energy conversion facilities. This accelerated depreciate
proposal would permit a five year writeoff of capital investMent in
facilities which use waste heat from various processes or which convert
waste materials into energy. The degree to which depreciation may
be accelerated annually would depend upon the use of the facilities
so as to encourage maximum use.
Presiden's Proposal for a Department of Natural Resources.-The
proposed creation of a Department of Natural Resources (DNR)
would combine policy making and operations for energy r
development. This department would be one of the four roposed
super departments for Natural Resources, Community Dev ment
Human Resources, and Economic Affairs.2 The Departm tofatural
Resources would comprise five major administrations, one of which
would be for energy and mineral resources.
The President transmitted his proposals for this reorganization to
Congress on March 25, 1971, giving as his primary reason the
fragmentation of Federal responsibility for energy and its consequences
and the need to organize the Federal Government by national goals.
Concerning the Department of Natural Resources the President said:
I propose that a new Department of Natural Resources be created that would
bring together the many natural resource responsibilities now scattered throughout
the Federal Government. This Department would work to conserve, manage and
utilize our resources in a way that would protect the quality of the environment
and achieve a true harmony between man and nature. The major activities of the
new Department would be organized under its five subdivisions: Land and
Recreation Resources, Water Resources Energy and Minerals Resources,CO,
Atmospheric and Earth Sciences, and Indian and Territorial Affairs.
The new Department of Natural Resources would absorb the present Depart-
ment of the Interior. Other major programs which would be joined to it would
include: The Forest Service and the soil and water conservation programs for the
Department of Agriculture, planning and funding for the civil functions of th
Army Corps of Engineers and for the civilian power functions of the
Energy Commission, the interagency Water Resources Council, the oil
pipeline safety functions of the Department of Transportation, and the National
Oceanic and Atmospheric Administration from the Department of Commerce.'
The bill to accomplish the creation of the Department of Natural
Resources, was introduced by Mr. Holifield as H.R. 6959,1 which wa
referred to the Committee on Government Operations, which h
chairs.
Within the Department of Natural Resources is proposed an Energy
and Mineral Resources Administration (EMRA), headed by an
administrator who reports to the Secretary. Figure 1 shows the main
components of DNR and EMRA's place in it. The functions of this
administration include:
Formulation and plementation of national energ
policy; myrsuc,
Development of energy production technology;
I 92d Congress. (f
The President's proposals were announced in his State of the UnionM ee of January 1971.
Weekly Compilation of Presidential Documents, vol. 7, Janu n, pp. -
1Weekly Compilation of Presidential Documents, vol. 7, Mr29, 19, pp. 556..Lalso House
'bW., p. 552.






65


54


hand iormatgion srie
,g mining health andsaey
g oil and gas pipeline safety;
environmental consideration.4
nations andpthat would be transferred to
'L


dSolid


"power development (policy and funding)
ram (policy and fu n
raization would, it is aserted, benefit I


F Also,






66


a 55

thermonuclear re-search utilities scientific until feasibiity has.been
demon-strated 7
Energy Adrstration as Proposed by the AshCouuci.-The
President's Advisory Council on Executive Organization (Ash Council)
in it November 1970 memoranda to the President entitled "Estab-
Is hkment of a Department of Natural Resources/Organization for
Social and Economic Goals" recommended the creation of an Energy
and Mineral Resources Component in a proposed Department of
Natural Resources. The Ash Council proposed that the new fuel and
energy adMintrative enti be composed of the follow listing
programs and agency components:
From Interior:
Geological Survey
Bureau of Mine
Office of Mine Health and Safety Appeals
Oil Import Administration
Oil Import Appeals Board
Office of Oil and Gas
Defense Electric Power Administration
Activities of the former Office of Merals and Solid Fuels
Power Marketing Agencies (including those of the Bureau of
Reclamation)
Office of Coal Research
From Agriculture: Rural Electrification Administration
From the Atomic Energy Commission:
Uranium Raw Material Management
Uranium Enrichment
Nuclear Power Reactor Development
Plowshare Programs
Basic Research
The Nixon Administration in its departmental reorganization
legislative proposals did alter the Ash Council's recommendations in
relation to fuel and energy administration. The Administration has
proposed an Energy and Mieral Resources Administration in a new
Department of Natural Resources which differs considerably in
component organization from the Ash Council recommendations as
follows:
(1) The Rural Electrification Administration would be placed
in the proposed Department of Community Development.
(2) Geological Survey would be placed in a separate Natural
Resources Department administrative division called the Oceanic,
Atmospheric and Earth Sciences Administration.
(3) The power marketing activities of the Bureau of Reclama-
tion would be in another Natural Resources Department entity
called the Water Resources Administration.
(4) The Controlled Thermonuclear Reactions Program would
remain in the Atomic Energy Commission (AEC).
(5) AEC would retain the operational aspects of the Civilian
Nuclear Power Reactor Program, but funding and policy aspects
would be administered by the Energy and Mineral Resources
Admini station.
7 aeilo U












67






56


ld be transferred

the Energy and


1 would

South-


INTONA


L JUYSgnyn


wAe aw wrna
WASS



OVAI W 9 NALM
AM -NWr
A at


I -- .

OCAMIC AT~MOPERIC.

O M F f. A O .IU M I

CA
F..IMAT mArN#,AA


AV NWA LIm
a --- UAVf S A


AiMSRaAYOR FO



Wmf fc O



mS~w Po.


I --OMA IN


of imports.


r






68


57

(3) To the Chairman of the Oil Policy Council (who will be
designated by the President and will perform these functions
under guidance from the Council of International Economic
Policy or the Domestic Council), all functions relating to oil
policy and oil import control programs.
(4) To the General Services Administration (to perform the
functions under guidance from the National Security Council),
all other functions including general oversight of the adminis-
tration of the Defense Production Act of 1950, as amended;
establishment of policies and standards with respect to the
National and Supplemental Stockpiles; continuity of government;
emergency preparedness planning; mobilization planning; re-
source analysis; relocation sites and related facilities for civilian
components of the Government; and related activities.
A Synthetic Hydrocarbon Fuel Corporation.-To deal with one seg-
ment of the energy industries, Congressman Wyman has proposed
establishment of a Synthetic Hydrocarbon Fuel Corporation, which
would not be an agency or an establishment of the Federal Govern-
ment (H.R. 16918, September 28, 1972). The function ofthe Corpora-
tion would be to carry out a policy to develop commercially feasible
processes for conversion of coal to crude oil and other liquid and
gaseous hydrocarbons, to make new processes available as soon as
possible, and to provide for the widest possible participation by private
enterprise in development of this technology.
The Corporation would have a Board of Directors consisting of
three members appointed by the President by and with the advice
and consent of the Senate; the Director of the Office of Coal Research;
and nine members elected annually by the stockholders of the Cor-
poration.
The Corporation would be financed by the issuance of stock and
bonds. At such time as the Corporation has developed and licensed a
commercial process for conversiGn of coal to these faels, the stock of
the Corporation held by the United States would be retired by the
payment to the Government of 40 percent of the proceeds from such
royalties until the Federal investment has been returned in ful.
Note, participation in the Corporation would not be construed as a
violation of Federal antitrust laws.8
A New Energy Sources Corporation.-Senator Moss has proposed a
New Energy Sources Corporation (S. 2510, September 14, 1971) to
bring into being the technology for commercial development of new
energy sources as quickly as possible by establishing a Government-
industry program jointly managed and funded to demonstrate com-
mercial methods of producing energy from oil shale, tar sands, solar
resources, and other new energy sources, as they may develop.
The Corporation is authorized to design, construct, operate and
maintain demonstration type facilities, up to a single, full scale, com-
mercial-size facility. As each new energy source is brought to com-
mercial production stage, the Corporation will cease to function in
that area.
The Board would be funded at a level of $5 million per year for the
first year and such sums as may be necessary for the next five fiscal
years.
The Corporation would have a Board of nine Directors who elect a
member annually to serve as Chairman. Five members would be ap-
*Materials op. d.


Am-






69


58A

resident, by and with the advice and consent of the
members by the President on the basis of recoin-
any private entity or entities entering. The Corpora-
President and other officers and employees as may be
nted by the Board.'
ower Research and Development Board.-Senators
Hart have proposed a Federal Power Research and
nendment No. 364 to S. 1684, introduced August 3,
e Board would be authorized to conduct a program
development to improve the means of production,
tribution, and consumption of electric energy with
t on nt. It could do so directly or
t, grant or other arrangements with other organiza-
for allocation of funds appropriated would include-
ising the efficiencies of energy generation, trans-
ribution, and consumption;
ising the adverse environmental impact of, present
nergy generation, transmission and distribution;
ring basic innovations for new means of reliably
nery while protecting the environment;
ig increased efficiencies and improved technology
liable to all electric utilities, regardless of size or
mership; and
areas which the Board deems to be within the broad
the Act.
to reserveat least 5 percent of its appropriations for
iake a deliberate effort to search for adverse social,
r economic effects of proposed orp resent technologies.
uld report annually to the President, for transmittal
report would indude
ph analysis and evaluation of research and de-
' under the Act;
apprehensive evaluation of the areas most in need
Lad development fund in the future;
ilysis of the possible dprbable impact of emerging
, on thepresent and future aspcts of the following:
'oth the supply of and dem a or electrical energy;






70


111. ENERGY DATA COLLECTION, ANALYSIS AND DISSEMINATION
The major proposals dealing with energy data collection, analysis
and dissemination are S. 3330 1 introduced by Senator Jackson and
S. 3802 1 introduced by Senators Hollings and Magnuson to create a
Council on Energy Policy which were discussed previously.


IV. COORDINATION AND AUGMENTATION OF FEDERAL REGULATORY
FUNCTIONS
Two major proposals which address the coordination and augmen-
tation of Federal regulatory functions as they relate to fuels and
energy are the Ash Council recommendations and a study by the
Bar of the City of New York, "Electricity and the Environment."
Ash Council Report on Independent Regulatory Agencies
The President's Advisory Council on Executive Organization (the
Ash Council) submitted its report on the independent regulatory
agencies to the President on January 30, 1971. However, the recom-
mendations were not submitted to the Congress.
The report made several far-ranging recommendations for restruc-
turing the various commissions. Seven regulatory agencies were
considered-the Interstate Commerce Commission, the Civil Aero-
nautics Board, the Federal Maritime Commission, the Securities and
Exchange Commission, the Federal Power Commission, the Federal
Trade Commission, and the Federal Communications Commission-
and, with the exception of the Federal Communications Commission,
the report recommended that the independent commissions be
abolished and their functions be combined into five agencies-a
Transportation Regulatory Agency, a Federal Trade Practices
Agency, a Federal Antitrust Board, a Securities and Exchange
Agency, and a Federal Power Agency-headed by a single Admnis-
trator appointed by and serving at the pleasure of the President, and
confirmed by the Senate.
The report also recommended a streamlining of the adjudicative
processes of the regulatory functions by restricting review of hearing
examiner decisions so that "hearing examiners would enjoy the
status of administrative judicial officers." Review by the Adminis-
trator would be limited to policy review within a 30 to 45 day period
after the hearing examiner had rendered his decision.
Appeals from the transportation, securities, and power agencies
final judgment would be taken to a new Administrative Court com-
posed of 15 judges serving 15 year terms with appeal only to the
Supreme Court. At present, appeals from Commission decisions are
taken to the Federal Courts of Appeal with the exceptionof 100
determinations which are reviewed by a three-judge Federal District
Court.
192d Congress.
(p9)





71


60

e basic reasons suroundig the Council's recommendations for
indep t atoy commissions and replacing them
w sealed b S am le inistrators serving at the pleasure
oent are: the e eetiveness of policy formulation, the ef-
f of management, the extent to which agencies are account-
aCongress and the President, and the ability to attract and
able pesn. (Because of the subjective nature of the Coun-
c ach, the ollowing discussion presents not only the objectives
sthe Council but also critical comments.)

oloncludes that the commissions as collegial bodies are
fent anisms for formulating and implementing specific
"diu i a t me to the "difficulty of having coequal
i n agree on major policy statements or rules. This dif-
hted in ho case-by-ease determinations in adjudica-
"The case-by-case method for setting policy is
zdd to the narrowness of the decision and the limited guid--
ane giento earngexaminers.
o Council's proposal for a single administrator would obviate the
edered by disagreement among comissioners, and.
ader use of rule to determine policy.
ONo satisfacto:r definition of "rulemaking" and "ad-
t has ever been offered which adequately distinguishes the
ttrator would not suffer the imprecision in policy
in inherent in a divided Commission, but, at the same
is not as likely to have considered all viewpoints. By removing
dof ne the threat is also present that
c y be generate in the White House and not by the

To thAegree that the caseload facing the independent commissions
is rsut~p ofCntitutional requirements limiting judicial review to a
"tialevid based on the record as a whole" test in decisions
as ,nd a onable relation" test with respectto law, the,
fc bya sgAdmstrator will
not flet th nuberof adjudications.
Reviionof he dmiistative Procedures Act may be useful, but
Thecomisson as-bycas baklg is the pieof limited judicial
revew.The broader more flxble rules of evidece used by commis-.
p t the developet of afuller record for review. If the
ustry does not receive its "day in court" before the co
the co with even longer
Dificltes n oodintinifthey exist, are better solve by Con-



Sts due to "the ambiguity
e t in the separate uthoity v in each of the
memers" To harcteistcsof colial bodies are cited as the
reaonsforths ieffciecythe wper-judclization of agency process-
listed four efects attributable to -those chenactriporcs


80-270 0 77 6






72


1:,61

Collegial bodies' fail to coordinate regulatory policy with other
executive agencies. As a result, they may develop policies in-
consistent with those of other agencies or with broad govern-
mental economic thrusts.
The processes of collegial administration are un
protracted, creating backlogs and concentrating on details often
at the expense of expeditious action and administrative fle-
bility. Such processes also prevent collegial bodies from adapting
to ongoing changes in the economics, structure, and technology
of the regulated industries.
Collegial bodies perpetuate court-like environments which
permeate the agency and have the effect of."legalizing" agency
process and culture while deemphasizing disciplines which are
useful and sometimes necessary for effective economic regulation.
Collegial bodies give little direct consideration to the appro-
priate allocation of resources within an agency. Consequently,
some functions are performed in great detail while others of
equal importance may be either ignored or ineffectively carried
out.
Accout abiity.-The Council stated that the inherent diffusion
of authority among relatively anonymous coequal members of the
commissions has resulted in an inability to fix responsibility for agency
performance. The Council concluded that a single administrator
"serving at the pleasure of the President and personally answerable to
the Congress" would be more accountable to the Congress and the
President.
Critk'.isnn.-Certainly the Council's proposal would increase ac-
countability to the President; but one of the primary reasons for-
making the commissions independent w"as to insulate them from the
political exigencies of the Executive. The commissions, in theory, are-
a delegation of the legislative function of government, not an extension
of the executive, and such a transfer as is proposed would in effect
grant the President broad legislative powers. The failure of Co
to exercise its oversight powers or its authority to amend the com-
missions' enabling legislation, and to respond to commission requests
for additional funds or legislation does not mean that the con-
missions are not accountable to Congress. If the Council's proposals
were implemented, in all likelihood there would be little or no
accountability for policy decisions to Congress due to the President's
ability to insulate and protect decisionmaking at the White Horn
level.
Attracting and Retaining Able Personnel.-The Council concluded
that the division of authority on a collegial body deters able personnel
from seeking a position on the Commissions.
Federal Power Agen.,-The proposed Federal Power Agency would
assume the functions of the FPC together with the activities of tbe-
SEC under the Public Utility Holding Company Act with respect to-
utility regulation. The Councid based this reorganization on the need
for a coordinated power policy. The generic criticisms of collegial
administration were advancedim support of this reorganization.
Criticim.-The report cit the failure of Congress to enact FPC
proposed legislation on electric power reliability as evidence of-
Congr~ssionaal unhappiness at the aPC's unresponsiveness to.











ss-a rather dubious conclusion and certainly not a premise
ving te com iin thin the executive.
Council, although it cited the need for a coordinate power
did not discuss the AEC regulatory functions with respect
grower, the ICC jurisdiction over oil pipelines, nor the
agencies concerned with fossil fuels. Removal of the Power
from F1C was also not dicussed.
e tory Agency .-The Council recommended
olition of the ICCC and the FMC and the transfer of
el rpo. is.to a new transportation regulatory
aded by a single administrator. The promotional functions
ree commissions would be transferred to the Department of
ortation. The Council stated that competing commissions
able to provide a constructive framework for competition and
benefits of intermodal procedures and technologies. The
I found that the promotional functions of each agency with
to its own mode of transportation inhibited the discontinuance
iclent routes in favor of another competing mode of transport.
cjsm.-The ICC jurisdiction over oil pipelines is mentioned,
t discussed, ht be better removed tothe proposed Fed-
wer Agency.
of Sp Committee on Electric Power and the Environment,
ew York City Bar
Special Committee grew out of a joint project originated
n 1971 by fr regular committees of Lhe Asociation of the
the City of New York-Administrative Law, Atomic Energy,
mental Law, and Science and Law-dealing with electric
iting problems in the State of New York. The Special Corn-
transmitted its final.report in August 1972, and although its
was not on Federal reorganization, it made several recom-
tions for ro of the Federal regulatory framework.
report recommends the creation of an Energy Commission
would be a regulatory body "consolidating the regulatory
of the FPC, th AEC, and preferably, those parts of the
61 government which deal with energy forms other than elec-
S(262-263) and an Energy Agency which would be "a de-
iental body consolidating the research activities of the AEC,
[ce of Coal Research, anall ot r administrative and execu-
fces concerned with energy "(6)
ergy Commission wouleresponsibility for studying
tent to which the demand rgy should be encouraged or
raged and presenting its rec endations to Congress. The
mission would also have the responsibility to review the inter-
e-range plans of utilities and regional reliability councils,
P yhomi actuall needed and in
enrlzdlctosscnecaaiysolbesited.
pto be a one-stop reguia-
amework for powerplants, though the requirements of other






74


93d Congress I C0CMITTEE PR
1st Session





HISTORY OF FEDERAL ENERGY
ORGANIZATION




A STAFF ANALYSIS
PREPARED 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. 93-19 (92-54)







Printed for the use of the
Committee on Interior and Insular Affairs

U.S. GOVERNMENTPBDFTING OMCE
-WASHINGTON : 1973







75


S ATE RESOLUTION 45

ONAL FUELS AND ENERGY POLICY STUDY

is a backgroud document for the National Fuels and Energy
hoed by Sn 45, intreduccd by Senators
i and Henry Jackso on ebruary 4, 1971, and considered,
ed to by the Senate on Ml3, 1971.
ut the Senate Int r and Insular Affairs Committee,
ber of the Committees on Commerce and Public Works and
e on At Energy, to make a full and complete investiga-
National Fuels and Energy Policies.
i pubi hd ahecommxitteAnd other
in her udestadigof the isue!nherent in the formula-
Na Energy Policy "wre the conti nued welfare
iding balanced owth, saf and enancing the quality
t, and national security.

'E ON INTERIOR AND INSULAR AFFAIRS
HENRY M. JACKSONWasigoCara
isPAUL J ,ANNIN, Auizona
dLIFORD P. HANSEN, Wyoming
ktaKRK 0. HATFIELD, Oregon
TON, JR., Louisiana JAES8 L. BUCKLEY, New York
SothDaot AMS cLURE, Idah
L, DEWEY F. BARTLETT, Oklahoma

JERYT. VmLER, Staff Director
WILLIAM 7. VAN NESS, Chief Counsel
HA~isoNLoucx, MinoriyCune


Me s Pursuant to Section 3 of Senate Resolution 45

COMMITTE ON COMMERCE
WARREN G. MAGNUSON, Washington,
NORRIS COTTON, New Hampshire


COMMITTEE ON PUBLI WORKS
JENNINGS RANDOLPH Wt Virgnia,
HOWARD BAKER,


JOIN COMMTEON ATOM ENERGY
Is ~~~HOWARD H. BAKER, JR.,Tense

DAA J. Ch n,
EL A. DREFU rofesioaltndEgierigCosltn

pufr Minorit
JAxiz P. Bzmu&, Poesoa tf
3A SARRTT Stff negy nalst Comiteeon Cmec


Oa)







76







CONTENTS


Page
Memorandum of the chairman--------------------------------------v
Introduction. ......------------------------------------------------ I
I. Management of mineral and fuel resources of the public lands ....... 5
II. Water resources management -----------------------------------. 13
III. Economic development and regulation--------------------------27
Natural gas regulation-------------------------------------30
Federal utility responsibility--------------------------------31
Tax policy- ------------------------------------- 32
IV. National security policy---------------------------------------35
Atomic energy-------------------------------------------37
V. Health, safety, and environmental management------------------- 41
VI. Research and development-------------------------------------45
Chronological listing of policy decisions relating to Federal energy
organization--------------------------------------------------51


(M)






77


THE CHAIRMAN


niov
(S.


isin-
have
res of


and1


AsB this random
as a nation. It
to theenergy


are


y Policies
interpret


are


the Federal role in energy matt,
examination of the consi
organizational arrangements. With
iaration of this history of the princi-
e historical development of Federal


a chronological listing of major
energy agencies adprorasand
nent of energy o rzations. Both
or areas of national policy within
S have been made in the .
Bruce M and Mr. Grover
,Elsah Illinois, under the direction


time as


their


is time for the benefit
organization issues


X -


*th qt


01,
u itairm an.







78


INTRODUCTION
The development of American society may be traced in the ever
increasing use of energy to provide for human wants, to achieve
national goals, and to shape a unique life style.
In 1850, the United States had about one-third of a horsepower of
prime mover capacity per capita. The average work week was six
11-hour days. The average worker's annual wage was $300. During
the next 50 years, expansion of railroad and industrial machinery
raised the ratio to just under 1 horsepower per capita, which was
reflected in slightly shorter work days and an increased annual wage of
$438 in 1900.
In the next half-century automotive transportation came into its
own, central electric power stations became commonplace, and
machinery replaced work animals on the farm. In 1950, there were 31
horsepower per capita. By that time the average work week had been
reduced to 40 hours and wages increased to $3,000.
In 1970, the trend continued toward an increasingly energy intensive
society, the Nation had 100 horsepower of prime movers per capita.
Wages for a 40-hour week had increased to $6,240.
The intensive use of energy in the United States has resulted in the
growth of massive energy industries which, because of their economic
and financial size alone, are critically important to national welfare.
Moreover, beyond the significance of the jobs, capital wealth, and
economic activity involved in fuels and energy systems, the energy
industries provide commodities which are essential to the life support
systems of a technological society. The patterns of housing and com-
merce in our major metropolitan areas depend upon transportation
systems which consume huge quantities of fuels and electricity.
Modern homes and business offices are no longer the self-sustaining
units of colonial times; many of them are unlivable without gas and
electrical services. Modern government and commercial business can-
not be transacted without sophisticated communications and trans-
portation systems which rely on energy. American agricultural
industries are the most energy intensive in the world. Without vast
lUantities of fuel for farm machinery, our population could no longer
be sustained.
The critical influences of energy industries upon the public safety,
health, and welfare and upon national economic strength and security
have attracted the attention of local, State, and Federal governments.
The Federal involvement in the Nation's energy system
has been an evolutionary development, the roots of which
predate the inception of the Federal Government itself.
Federal policy which affects the energy industries has in-
fluenced and has, in turn, been influenced by their growth.
This association, however, does not reflect a conscious effort
on the part of Federal policymakers to manage the Nation's
energy system in any comprehensive sense. Most Federal
(1)











primarily


with


grew out of


?nse also was
the areas of
technological
Safety, and


of the Public


;an


to which of


ibuted to
ure. Each
foregoing


U.S.Coges Sente Committee on


79






80


3

This history provides insights into the development both of Federal
organization and of Federal policy. It will be important, as new co-
ordinated energy policies are formulated and appropriate organiza-
tional arrangements designed, to realize that many of the other objec-
tives which prompted the creation of existing agencies are still valid.
In seeking resolutions of current issues, care must be taken to preserve
the valuable resolutions of past issues. Energy is an important factor
in national well-being, but it is not the only factor.
Perhaps the most important conclusion to be drawn from this study
is that Federal energy policy has developed in a piece-meal, ad-hoc
fashion characterized by little or no regard for either the long-term or
short-term energy consequences.
There has never been, nor is there now, a national energy policy in
any meaningful sense. Rather, the Federal Government pursues un-
coordinated and complex national security; research and develop-
ment; water, land and mineral resources; environmental, health and
safety; and economic policies which w, a byproduct have profound
energy consequences.- Today, with the realization that comprehensive
andl coordinated energy policy has taken on new and increasing im-
portance, two interdependent steps toward a viable energy policy will
be necessary. First, the Federal Government must abandon the "con-
sequence" approach to energy matters and develop an "objective"
approach to energy problems. Second, to implement this new policy
the Federal Government must abandon the piecemeal, ad hoc organi-
zational and planning arrangements which today serve as an energy
organization, and reorganize itself in a manner which is responsive to
the critical needs of the current energy crisis.
As a final caution, however, today's preoccupation with energy
ought not result in inflexible, narrow visioned organizational arrange-
ments; arrangements which have been designed with concren only for
the energy issues and energy objectives of the moment. The history
presented in the following sections contains too many examples of such
single objective decisionmaking. The energy consequences of past non-
energy decisions have contributed to the energy crisis. The nonenergy
consequences of current energy decisions ought not become contribu-
tors to tomorrow's crises.









T OF MINERAL AND FUEL RESOURCES
OF ThE PUBLIC LANDS






82


6

mines in 1829.4 The Government had more success in the 1820's with
an area in southwestern Wisconsin and northwestern Illinois. However,
the Government leasing program deteriorated rapidly after 1829. ThiS
was due to a combination of factors. First, the lead mining areas began
to suffer from a depression. Lead had been overproduced, and food
prices were on the rise. Second, pressure for the sale of lands to be
used for agricultural production increased. A scandal, arising from the
passage into private ownership of three-fourths of the public mineral
lands in the western half of the Wisconsin Territory, also dealt the
leasing program a severe blow. Ultimately, the lack of administration
of the leasing program on the part of the Federal Government was
probably a main cause of the program's downfall.
One significant Supreme Court case, United States v. Gratiot took
place in 1840 during this period of Federal leasing. The defense argued
that the Congress had no constitutional right to authorize the leasing
of mineral lands.5 The Court ruled unanimously that Congress had
unlimited pwer over the public domain including the right to au-
thorize the leasing of mineral lands. Thus, the act of 1807 was upheld.
The premise that the disposal of public lands to encourage private
exploitation would result in the greatest benefits to all gained almost
universal acceptance in the 1840's. Aa act in 1846 authorized the sale
of the lead mines in Illinois and Wisconsin and granted preemption
rights.6 This marked the beginning of the virtual wholesale giveaway
of valuable public mineral lands. Congressional policy had clearly
evolved into one of using the public lands to induce expansion and
settlement rather than to raise revenue. This policy is further reflected
in the transfer in 1849 of the General Land Office from the Treasury
Department to the newly created Department of the Interior. Even
greater exploitation of mineral lands occurred under measures such as
the Homestead Act which were intended to promote widespread
distribution of land ownership among the public. Great tracts of
mineral lands passed into the hands of speculators under the guise of
agricultural ventures. The Government's efforts "to check this per-
version of the public land acts" 8 were sporadic and ineffective.
The discovery of gold in California in 1848 and the subsequent
mining booms on the public lands of the West lent new significance
and public attention to the inadequacies of law and policy regarding
public proprietorship over the public mineral lands. Early mining
statutes largely ratified and confirmed the traditional practices of the
mining communities which began as trespassers on the public domain.
Congress seemed content to let the mining camps establish their own
law based on mining tradition. Proposals to exert some control came
up from time to time, but the Congress was virtually inactive on the
whole question of the California gold mines from 1850 until 1866.
President Fillmore also adopted a wait-and-see attitude concerning
policy direction for the mineral lands.9 The only discernable policy
during this period was one of noninterference. The end of the Civil
War brought about a slight change of mood. There were proposals
4 4 Stat. 364 (1829).
5 14 Peters U.S. 526 (iMlO).
6 9 Stat. 37 (1846).
7 12 Stat. 392 (1862).
S Robert W. Swenson, "Legal Aspects of Mineral Resources Exploitation," History of Public Land Law
Development, a report written for the Public Land Law Review Commission (Washington: Government
Printing Office, 1968), p. 708.
6 Swenson, p. 713.









7


a pier









8

conserve the Nation's mineral resources. Finally in 1909, C
enacted a law reserving for the.Government the rights to mi
underlying agricultural land entries.1 This concept opened theway t
later mineral leasing policies.
After the advent of the first commercial well in Pennysivania in
1859, petroleum speculation and production began to expand and to
shift from the Appalachians to western locations. Oil mining on the
public domain first came under the authority of the Placer Act of 1870,
since oil was defined as a mineral deposit. After several years of debate
and contradictory rulings by the Department of the Interior,
removed any doubt that oil mining entries on publicly
ject to the placer laws by passing the Oil Placer Act in 1897.H owever,
the law was unworkable because of the nature of oil deposits, ly
in the West. The main shortcoming was that an oil prospector had no
protection during the time he was exploring until adi
made. When word of oil prospecting got out, nomnineral cli ts
would come in and harass the prospector. Acreage limitations also made
mining inefficient. Obviously the conventional policies and practices
regarding mineral entries on the public lands proved ineffective in
encouraging and protecting efficient, nonwasteful development of oil.
As in the case of the coal lands, the initial Federal action was a
withdrawal of oil lands from entry by President Taft in 1909. Some
withdrawals, in fact, had taken place as early as 1904. These tracts
were withdrawn from agricultural entry in reality to protect oil
prospectors. A large consideration in the withdrawal was the Geologi-
cal Survey's warning that the western oil lands were passing swiftly
into private hands and that the Government would find itself repur-
chasing the very oil which it had lost through entries. The report
must have had quite an impact on Taft who was not likely to abuse
his constitutional authority. In January of 1910, the President sent
Congress a message urging adoption of legislation to give him the
authority to withdraw public lands for conservation purposes. Con-
gress did just that with the passage of the Pickett Act.1' There was
some reluctance to give to the Executive authority which had been
primarily and traditionally a legislative function. However, the
Congress realized that public sentiment in this matter had been on
the side of Roosevelt and was now with Taft. In giving the Pre t
withdrawal authority, however, Congress carefully avoided confir-
ing the legality of the previous withdrawals. Also, the withdrawn
lands remained open to entry under the mining laws for minerals
other than oil, gas, coal, and phosphates. In the decade following the
passage of the Pickett Act, near y all unappropriated public lands
were withdrawn from full mineral development. Most of thesewith-
drawals were in the form of naval reserves established to conserve
oil for possible fuel for warships. Two were in California, at Elk Hills
and Buena Vista Hills, one was the Teapot Dome in Wyoming, and
the fourth was the extensive Petroleum Reserve Number Four on
the North Slope of Alaska.
The constitutionality of Taft's original 1909 withdrawal was tested
in a 1915 Supreme Court case, United States v. Midwest(hi Co."
1 35 Stat. 844 (1909).
17 29 Stat. 526 (189.
"Swenson, p. 732.
1"936 Stat. 847 (1910).
2236 U S. 459 (1915).









9

uphed te wthdrawal piting out that numerous lExecu-.
'4mkin rseratinsfor various purposes had been issued
or tattory athorizato from Congress." 1 ogrsioa
the opnin of the majority of the Court, implied consent.
e d to development until 1920
debt on what olicy to follow concerning the lands.
teong delay was what action to take
the oilc pames which were at various stages of pros-
e time of the 1909 withdrawal. Many companies had
with t, spulating that the withdrawal would
[ ucontittioal.Oilcompany pressure for legislation to
t e entually, some provisions were passed
the Mineral Leasn Act of 1920.
1910 and 19,there was constant pressure on the Govern-
n Two minor steps toward a leasing
during that decade. In 1914, Alaskan coal lands
e 1ae The Potash Leasing Act was passed in 1917,1
B potash important in the production of explosives
eral Lea Act of 1920 211was passed when western
lized tat an exclusive leas policy was the only way to
drawn lands opened up. The act established the modern
eg permits and leases for the development
o acoft public lands. The.36 sections
apple detailed specifications and qualifications to the
act also provided for the allocation of the royalties from
I; prce to the reclamation fund, 37 cent
Ss are located for education
-ent to the Fdral Treasury.25
uin followingthe eatment of the Mineral Leasing Act
in hatbecmeknown asth "Teapot Dome" scandal.
e of thN al Petroleum e Act later that year
teSecretary of the Navy extensive authority over the
-n a secret docmet this authority was transferred to the
f thelInteio,Albert B. Fall, whowsopoe oany
At inovmetwtbsns. I ece adw thot o-
[dig e eaedthe Teapot Dome Petroleum Reserve to
[ dofthe orniareservestoE.L.Doheny
3ul questionable legal authorization.
Ho ver nded le on Government oil lands
r he tok ffce in 1929, bcuse wasteful exploitation
1920's had bught on frthp c
; rtooill inApril of 1932 aftercertain

)ecam evidet ha eslyacesile petroleum reserves on






86


10

coast at the low-water mark. In 1945, President Truman directed the
Attorney General to itiitiate court proceedings which would determine
whether the so-called tidelands belonged to the States or the Fe al
Government. In 1947, the Supreme Court declared the United States
to be the owner of the tidelands (more properly, submerged lands) in
the case, United States v. California_1 Two subsequent cases also ruled
in favor of the Federal Government. However, in the 1952 campaign
Eisenhower promised, if elected, to restore control of the subm
lands to the States. As a result, Congress passed the Submerged
Act in 1953 28 which gave the States jurisdiction over their submerged
lands and any resources therein. The submerged lands were defined as
beginning from the shore at the low-water mark and extending seaward
to the States historic boundaries, which varied from 3 to 10% miles.
The Supreme Court case, Alabama v. Texas (1954), upheld the
constitutionality of the 1953 act.29 In addition, Congress enacted the
Outer Continental Shelf act 10 later in 1953. This act reserved
Federal control over the lands of the Outer Continental Shelf, which
began from 3 to 10 miles offshore and extended seaward up to 150
miles in some places. A mineral leasing system, similar to the Mineral
Leasing Act of 1920 as amended in 1946, was set up. All royalties were
to go to the U.S. Treasury. The Bureau of Land Management, which
had been created in 1946 in the Department of the Interior by com-
bining the General Land Office and the Grazing Service,"' was to
administer the leasing program on the Outer Continental Shelf as it also
administered the 1920 Mineral Leasing Act with respect to the public
domain.
The advent of the atomic bomb and the enactment of the Atomic
Energy Act of 1946 32 initiated still another energy aspect of public
land policy, the mining of uranium on the public domain. The 1946
act reserved for the Government all uranium ores on the public lands.
Uranium deposits "were generally found in a type of sedimentary
deposit which was potentially valuable for oil and gas. And, one
estimate was that as much as 75 percent of the available uranium
lands were already under Federal oil and gas leases." 33 Because of the
nature of uranium deposits and because the Government had made a
reservation on the uranium, initial mining efforts were confused.
Swenson explains the basic conflict between the mining laws and the
leasing Jaws which the mining of uranium made obvious:
The conflict between location and leasing came about
because the Mineral Leasing Act, which made certain
nonmetalliferous minerals exclusively leasable, made no
provision for disposing of other minerals which might be
discovered in leased lands. On the other side of the coin, there
was no attempt to amend the mining laws so as to provide
that mining patents must contain reservations of the various
Leasing Act.minerals."
Alhhough no one was sure of the legality of their claims, miners
began tolocate uranium mines. Even before stop-gap legislation to
2332 U.S. 19 (1947).
A 67 Stat. 29 (1953).
39 347 U.S. 272 (1964);
0 67 Stat. 462 (1953).
1 Presidential Reorganization Plan No. 3 of 1946, 60 Stat. 1097.
8 60 Stat. 755, 760 (1948).
33 Swenson, p. 751.
K id.













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88


II. WATER RESOURCES MANAGEMENT
The history of Federal Government involvement in water resoe
and power development is the story of a long evolutionary p
involving the gradual expansion of the Federal role. Federal
evolved out of the necessity for control of navigable watersforc -
merce followed by the creation of the waterway improvement progm,
the reclamation program, and the flood control program. Also
integral part of this history is the history of technological aebi.
ment of electric power industry and the history of the conservaton
movement. These factors taken together form the background for
the current Federal Government role in water power development.
The origins of the Federal involvement with water resources and
power development can be traced to the Treaty of Paris of 176,'z
which provided for freedom of navigation on the ppi. The
Treaty of Paris of 1783,2 which ended the Revolutionary
guaranteed that rivers would be open and would remain forever
This early period was marked by the attitude that the rivers, which
were virtually the only source of transportation on the American
Continent and thus vital to commerce and expansion, were to remin
free for use by all. Early settlers were reminded that in feudal Euro
the feudal barons had used river taxes as a significant
revenue. Economic control of the Fivers seriously hampered com-
merce, consequently, Americans were determined that the rvem
should remain open and free to commerce. This philosophy r
a vital force in modern public works planning.
One of the major drawbacks of the Articles of Confederation 3 a
the delegation to the States of the authority to regulate comc
The result was rivalry and discrimination culminating in out-a ut
trade wars between the States. The lack of coordination in the
lation of commerce and the increasing sectional antagonisms prey
in early America, the situation caused Hamilton, in the Federais
to draw parallels disparagingly similar to conditions which bad
rendered the waterways of the German Empire useless.
The first definitive policy statement made bythe eican Govern-
ment was contained in the Northwest Ordinance of 1787 which stated
that the streams of the new territories were "cmon" highways and
forever free."6 This principle was extended to all new territories by
various ordinances (1790, 1803).
, The Constitutional Convention translated the reactiont
the prevailing commercial chaos and sectional antagonism into s e
clauses in the new Constitution which embodied the freedom of naviga-
tion and commerce principles." Although the scope of the Federal
Government's role in controlling navigable waters has been the subject
of debate over the years, that the Federal Government has jurisdic-
I William 1. Hull and Robert J. Hull, The Origin and Development o fW thJVer 8 Poli of tAeU.S
(Washington: National WaterwaysC,17.
2 Ibid.
3Ibid.
4 Ibid.
A Conuager (Ed.), Docments of American H r, pp. 1~283.
* U.S. Constitution, Art. I, See. 8, See. 9, in Hull and Hull.
(13)