The 94th Congress and the energy record

MISSING IMAGE

Material Information

Title:
The 94th Congress and the energy record
Physical Description:
Book
Creator:
Library of Congress -- Congressional Research Service
Gulick, Frances ( comp )
United States -- Congress. -- Senate. -- Committee on Interior and Insular Affairs
Publisher:
U.S. Govt. Print. Off. ( Washington )
Publication Date:

Record Information

Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 26901908
oclc - 2334108
System ID:
AA00022640:00001

Full Text
\ "


94th Congress
2d Session I


COMMITTEE PRINT


THE 94TH CONGRESS
AND THE ENERGY RECORD




A PROGRESS REPORT
PEPARMED BY THE
CONGRESSIONAL RESEARCH SERVICE
AT THE REQUEST OF


HENBY 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


Committee on Interior and Insular Affairs

U.S. GOVERNMENT PRINTING OFFICE


WASHINGTON : 1976


_ ' /


67-716 0







NATIONAL FUELS AND ENERGY POLICY STUDY

(SENATE RESOLUTION 45, 92D CONGRESS)

This publication is printed for the use of Senators participating in the National
Fuels and Energy Policy Study, authorized by Senate Resolution 45 of the 92d
Congress.
Senate Resolution 45, introduced by Senator Jennings Randolph and Henry
M. Jackson, wa-s amended and agreed to by the Senate on May 3, 1971. The reso-
lutiOn authorized the Senate Committee on Interior and Insular Affairs and ex officio
mitnibwr. of the Committees on Commerce and Public Works and the Joint Com-
mittee on Atomic Energy to make a comprehensive study of programs and policies
required to meet national energy needs.
Subsequently, the Senate approved the addition of ex-officio members from the
Committees on Aeronautical and Space Sciences, on Finance, on Foreign Rela-
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 F. 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. DREYTvS, Deputy Staff Director for Legislation
WILLIAM J. VAN NESS, Chief Cou nsel
D. MICHAEL HARVEY, Deputy Chief Counsel
OWEN J. MALONE, Senior Counsel
W. 0. (FRED) CRAPT, Jr., Minority Counsel



EX-OFFICIO MEMBERS FOR NATIONAL FUELS AND ENERGY POLICY STUDY


Committee on
AERONAUTICAL AND SPACE SCIENCES


COMMERCE .a.



FINANCE 4
9- *<
FoEZIGN RELATIONS


GOVERNMENT OPERATIONS -

LABOR* 4
LABOR ANri" tU Wltrl
** V. .< _-
a. .: ; ,, -^


PUBLIC WORKS


ATOMIc ENERGY [JOINT]


Senators
FRANK E. MOSS, Utah, Chairman
BARRY GOLDWATER. Arizona


WARREN G. MAGNUSON, Washington,
Chairman
JAMES B. PEARSON, Kansas

RUSSELL B. LONG, Louisiana, Chairman
PAUL J. FANNIN, Arizona

CLAIBORNE PELL, Rhode Island
CLIFFORD P. CASE, New Jersey

ABRAHAM RIBICOFF, Connecticut, Chairman
CHARLES H. PERCY, Illinois

WILLIAM D. HATHAWAY, Maine
RICHARD S. SCHWEIKER, Pennsylvania

JENNINGS RANDOLPH, West Virginia,
Chairman
PETE V. DOMENICI, New Mexico

JOSEPH MN. MONTOYA, New Mexico
HOWARD H. BAKER, JR., Tennessee


RICHARD D. GRUNDY, Executive Secretary and Professional Staff
DAVID STANO, Deputy Director for Minority
(U)


1k'. .* .







MEMORANDUM OF THE CHAIRMAN


To Members and Ex-Officio Members of the Senate Committee on In-
terior and Insular Affairs National Fuels and Energy Policy
Study, Pursuant to Senate Resolution 45 (92d Congress):
This report undertakes to describe congressional activity in the
field of energy policy completed during the 1st session and underway
early in the 2d session of the 94th Congress.
During this period, more committees in both House and Senate
were grappling with complex and controversial energy issues than
ever before. While the legislative record is far from complete, it is
already clear that the 94th Congress is making valuable contributions
to the work of developing new energy policies commenced in the 93d
Congress, sufficient to mark 1975 as a major turning point in our
Nation's energy history.
This report provides valuable background on energy-related legis-
lation already enacted and in progress during the first quarter of the
second session. I have, therefore, directed that it be published as a
committee print for the use of Senators participating in the national
fuels and energy policy study.
HENRY M. JACKSON, Chairman.
(M)



















Digitized by the Internet Archive
in 2013













http://archive.org/details/94thconner00libr

















LETTER OF TRANSMITTAL


THE LIBRARY OF CONGRESS,
CONGRESSIONAL RESEARCH SERVICE,
Washington, D.C., March 20, 1976.
Hon. HENRY M. JACKSON,
U.S. Senate,
Washington, D.C.
DEAR SENATOR JACKSON: In response to your request, I am trans-
mitting herewith a manuscript entitled: "The 94th Congress and
the Energy Record". This review of the progress of energy legislation
completed during the first session and underway during the first
quarter of the second session, was compiled by Dr. Frances Gulick,
analyst in our Environment and Natural Resources Policy Division.
I am pleased that you have decided to issue this report as a com-
mittee print to bring it to the attention of the entire Congress.
Sincerely,
NORMAN BECKMAN,
Acting Director.











CONTENTS


Page
Memorandum of the Chairman---- ---------------------------------- III
Letter of transmittal-- -------------------------------------------- v
Abstract and introduction ------------------------------------------ 1
Legislative actions----- ----------------------------------- ---- 1
Three distinctive features -------------------------------------- 2
I. Measures to protect against interruptions in supply- -------------- 5
A. National strategic petroleum reserves--------------------- 5
B. General standby emergency authorities and responsibilities-- 6
C. Gasoline rationing contingency plan ---------------------- 7
D. Allocation of petroleum and petroleum products ----------- 7
E. Authorities with respect to international energy program- - 8
II. Measures to restrain and reshape energy demand- ----------------- 9
A. Automotive fuel economy ------------------------------- 9
B. State energy conservation plans and consumer product con-
servation measures----------------------------------- 11
C. Modification of buildings to conserve energy--------------- 12
D. Industrial conservation measures ------------------------ 14
E. Improved transportation systems ------------------------ 14
F. A comprehensive conservation initiative ------------------- 16
III. New oil and natural gas management measures ------------------ 17
A. Removal of the depletion allowance and changes in some
foreign oil tax credits- -------------------------------- 17
B. Contrasting positions on pricing policy-------------------- 21
C. Oil pricing policy as enacted in Public Law 94-163--------- 22
D. Natural gas pricing policies------------------------------ 25
E. Other oil and natural gas measures ----------------------- 25
IV. Measures intended to encourage increased production of other energy
supplies---------------------------------------------------- 29
A. Conversion to coal to conserve oil and gas and incentives for
increased production--------------------------------- 29
B. Nuclear power----------------------------------------- 32
C. Solar and other non-nuclear energy research and develop-
ment ----------------------------------------------41
D. A national energy production board and other management
measures -------------------------------------------- 43
V. Reduced dependence on foreign imports of oil_----_----------------- 49
A. Oil import tariffs and other fees --------------------------49
B. Quantitative oil import controls-------------------------- 51
C. Import quotas-a dual role------------------------------ 52
APPENDIXES
Appendix I.-Breakdown of Federal energy outlays-1976 and 1977----- 59
Appendix II.-Comparison of three composite energy plans------------ 63
Appendix III.-Energy related legislation-status as of March 18, 1976-- 71


(VII)









THE 94TH CONGRESS AND THE ENERGY RECORD


ABSTRACT AND INTRODUCTION
The 94th Congress is deeply engaged in intensive consideration of a
strategic national issue: What should be the size, substance, and shape
of a comprehensive energy policy for the United States? The opening
months of the 2d session of the 94th Congres found Congre-s and
the administration well along in the forging of a consensus on such a
new energy policy, to a degree that was unexpected after months of
virtual deadlock that persisted down to the final weeks of December
1975.
The landmark legislation marking that emerging consensus is
incorporated in Public Law 94-193, the Energy Policy and Con-
servation Act of 1975, signed December 22, 1975. This law marks the
culmination of more than 2Y2 years of almost continuous debate by the
93d and 94th Congresses on legislation to provide standby energy
emergency authorities as well as longer run measures to conserve
existing fuels and to increase the volume of domestic energy supplies.
As finally enacted, the law consolidates provisions of five major bills
introduced in the 94th Congress-S. 622, the Standby Energy Author-
ities Act; S. 677, the Strategic Energy Reserves Act; S. 349, the Energy
Labeling and Disclosure Act; S. 1882, the Automobile Fuel
Economy Act; and H.R. 7014, the Energy Conservation and Oil
Policy Act. In addition it amends and substantially extends the pro-
visions of the expiring Emergency Petroleum Allocation Act of 1973.
Many of the provisions in this significant new law are very similar
to those in the predecessor bill of the 93d Congress, the National
Energy Emergency Act which had been hotly debated over a period of
more than 15 months, revised by literally hundreds of amendments,
vetoed, and twice reintroduced before that Congress adjourned.
It would be a mistake, however, to infer from this that there is little
difference between the two. On the contrary, there appear to be major
shifts in both the mood of Congress and the intent of the current
legislative action.
It is indicative that the term "emergency" has been dropped from
the title of the bill, the word "temporary" has been dropped from the
statement of the purposes, and the termination date for most of the
key provisions is now not 2 years hence but 5.
Overburdened with detail as are the 123 sections of the law, there
may be seen throughout clear signs that this Congress is assuming both
authority and shared responsibility for the outcome of the rigorous
tasks required to shape a new energy policy for the Nation's future.

LEGISLATIVE ACTIONS
The degree and substance of the enlarging consensus between
Congress and the administration may be seen min the fact that this
new omnibus Energy Policy and Conservation Act covers the sub-
(1)


67-716 0 76 2







stance of at least 4 of the 13 titles of the admini.tration'o original
corilp-ite t energy bill (S. 594 1t.R. 2633 and II.R. 2650), and 4
additional lleal-Iire- de(-lired by the ladiniIii-tration are included in
lei,-1.latioll which 1as ) as-ei one Or both Hllou- e in a form generally
acceptab11e to the adiliistratioI.
M.l,- lre-, already enactedd include the following: Authorization to
create, a -.-tenm (f national -trateglic petrole(i 1 reF-erve-; a wide range
(if tandb erg' eImergency legi-lation, including continuing author-
ity for allioction of iar'ce nat erial- and( petrolre m; graduated
decontrml (if oil price,- over 9 :01onth-.; extended a1ithority for the
FEA Adminii-.trator to force indus-trial conver-ion from oil and natural
\ga- to other fiiel :; mand IatMorv labeling for energyv-iil-ig appliances and
ifai!lzttItoWry ,.ompliance witil at1utomnobile fuiel-efficienc'y standards.
.ajor ,appropriation Nill-, have already committed most of the $11.6
billion a--1ime d for iatUtmril re-ourc Ie, enviro inment, and energy outlays
in the fir-t concurrent re-olution on the budget for fiscal year 1976.
In 1976, outlay-, for energy alone are estimated at $7,944,000,000 and
at $10,.61,000,000 for 1977. (See Appendix I for breakdown.)
In proees.- are bill-, covering the development and use of naval
petroleum re-,erve- (H.R. 49/S. 2173, min conference); mandatory
building standards and winterization assistance ,H.R. 8650) and
graduated deregulation of natural gas. (The Senate version, S. 2130,
is said to be acceptable to the administrationn.
Remaining from the original composite packages and still awaiting
action are Clean Air Act revisions, changes in regulatory procedures
and inve-tment credits for utilities; and a number of provisions
de-igned to speed up State decisions on siting and development of
major nuclear, coal, and other energy facilities.
The appearance of a consensus on these measures, however, does
not mean that in surn they add up to the equivalent of a comprehensive
new national energy policy. On the contrary, the key issue of what
relative priority is to be given to reliance on nuclear energy as com-
pared with fossil fuels and development of alternate renewable fuels
has not yet been fully joined, although the elements of a major debate
are emerging and gaining increased attention nationwide. The related
is-ue of how and through what agencies both private and public
capital i- to be mobilized also remains to be hammered out. The
administration's proposed Energy Independence Authority, a $100
billion loan and investment guarantee agency (S. 2532/H.R. 10267),
has- run into strong opposition and the congressional majority's
National Energy Production Authority (S. 740) and national petro-
leum and natural gas conservation and coal substitution bill (S. 1777)
have not yet been reported for floor debate. Major confrontations
may be expected when these are put to vote.
Nonetheless, the progress is substantial, already sufficient to
identify the legi-slative actions of the 94th Congre.ss as a major turning
point in national energy policy.
THREE DISTINCTIVE FEATURES
Underlying this intensive activity and the resultant enlarging con-
sens.s are several distinctivee features that uniquely mark the efforts
and achievements of this Congress. These may prove to be definitive
in setting the direction in which the new national energy policy will







move-among them the adoption of a composite approach to energy
policy, the repeal of the depletion allowance for large oil and gas
firms, and the emergence of the use of quantitative restrictions as
major management tools in restraining and reshaping energy demand.
The composite approach to formrulating energy policy.-Responding
to the administration's omnibiiu legislative package announced
January 15, 1975, Congress approached the complex collection of
basic energy issues and their legislative options collectively, as a
whole. Among the several comprehensive congressional proposals, the
most prominent were the congressional majority proposals, a joint
House and Senate economy-energy statement issued by the Demo-
cratic majority leadership on February 27, 1975, and a similar com-
posite energy program announced by the Democratic members of the
House Ways and Means Committee on March 3, 1975. (See appendix
II for a tabular summary of the main provisions of these administra-
tion and congressional proposals.) The enactment of the Energy
Policy and Conservation Act of 1975, Public Law 194-163, defining
the initial area of national consen-sus on energy policy, confirmed the
usefulness of this new approach.
Repeal of the depletion allowance.-After sixty years in which
this provision was a key factor in the U.S. petroleum industry's ex-
ploration, production and pricing policies, Congress repealed the 22
percent depletion allowance in its entirety for all major oil and natural
gas producers, identified as those producing more than 2,000 barrels
of oil per day, or 12 million cubic feet of natural gas per day, post-
poning its abolition for independent companies who do not have retail
outlets and produce less than these amounts, on a graduated schedule
until 1984.
While a number of major companies announced that removal of the
depletion allowance would require reconsideration and reduction
in their capital investment plans, there is some indication that the re-
ductions would take place in projected capital venture, other than
exploration and investment in developing new energy supplies.
Whatever the role of the depletion allowance has been in the past,
its recent repeal clears the way for a fresh look at oil and other fossil
fuel production incentives whose effectiveness as stimulants to in-
creased domestic production can be more easily measured and
identified.
Quantitative restrictions as a major energy policy management ap-
proach.-Perhaps the most unique feature of the congressional energy
initiatives during this period has been the emergence of the use of
quantitative limits as a major management tool in conserving energy,
redirecting demand and stimulating increased production. This ap-
proach is a distinctive alternative to the administration's heavy reli-
ance on a market oriented approach.
Four key bills have incorporated quantitative control concepts of
this type: The House Ways and Means energy bill, H.R. 6860, ap-
proved June 19, 1975, would place quantitative limits-subject to
some flexibility-on the volume of crude oil and oil products which
could be imported. A quantitative ceiling on the volume of gasoline
which may be consumed, which was included in the Energy Policy and
Conservation Act as it passed the House, was dropped in conference.
However, the bill as enacted retained discretionary authority to impose
direct controls on refinery operations to limit the production of gaso-






line. It also extended the authority of the Federal Energy Adminis-
trator to compel powerplants and other industrial fuel burning
installations to convert to the use of domestic coal.
The Senate national petroleum and natural gas conservation and
coal substitution bill, S. 1777, and the National Energy Production
Board bill, S. 740, both of which have been targeted by the congres-
sional leadership for action during the second session, are oriented
toward quantitative limitation concepts. The coal substitution bill
would limit the number of oil- and gas-fired powerplants and industrial
boilers to those existing now and would require them to convert to coal
by 1980; and require all new powerplants and industrial boilers to be
capable of burning coal and to convert to coal by 1985. The National
Energy Production Board, to be patterned after the War Production
Board of World War II, would be charged with establishing quantita-
tive energy production goals and programs whose priority claims on
scarce materials and capital would have the effect of placing quantita-
tive limits on atill less essential claims, on energy and materials.
What is unique is that these particular ceilings are set in volumetric,
not percentage terms. Even the long-standing mandatory oil import
control program did not have limits fixed in quantitative volu-
metric terms. The formula used in the mandatory oil import con-
trol program, in force between 1959 and 1973, was intended to limit U.S.
imports to a more or less; fixed proportion of U.S. production. A crude
oil-oil products import level was set initially at a little over 12 percent
of estimated U.S. consumption. After 1963, the quota was calculated
at about 12 percent of U.S. production. However, the pressure of
increasing U.S. demand for oil products coupled with flattening do-
mestic U.S. petroleum production induced exceptions and adjustments
in the program to such a degree that by March 1973, just before the
President removed the mandatory oil imports quotas, foreign crude-
product imports totaled 6,575,000 barrels a day (3,162,000 in crude
and 3,413,000 in refined petroleum products) as compared with
.,175,000 barrels a day of crude from domestic production.
Enactment of legislation setting a quantitative ceiling on oil imports
would mark a major change in U.S. oil policy and require significant
conservation in the use of oil and a shift to other fuels.
The following summary describes energy legislation enacted and
pending in the 94th Congress about one quarter through the second
session, under the following general functional topics:
I Measures to protect against interruptions in energy supply.
II Measures to restrain and redirect the use of energy.
III New oil and natural gas management measures.
IV Measures intended to encourage increased production of other
energy supplies.
V Measures designed to reduce dependence on foreign oil.
Since, as acknowledged by the President, the recently enacted
Energy Policy and Conservation Act now "puts into place the first ele-
ments of a comprehensive national energy policy," 1 each section begins
with the appropriate measures from that act, followed by other
enactments and pending legislation. These are also listed, together
with the reference House and Senate report numbers and dates of
passage, in Appendix III.
I Presidential Statement on Signing P.L. 94-163, Dec. 22, 1975.








I. MEASURES To PROTECT AGAINST INTERRUPTIONS IN SUPPLY
The continuing heavy dependence on imported oil coupled with
declining domestic production has heightened the importance of reach-
ing early agreement on and enactment of special measures to protect
against another interruption of imports such as that produced by the
Arab embargo. The principal measures designed to provide such pro-
tection-development and production of oil from the naval petroleum
reserves and standby allocation, rationing and other emergency
energy conservation measures-were enacted in the Energy Policy
and Conservation Act, Public Law 94-163.

A. NATIONAL STRATEGIC PETROLEUM RESERVES
A logical counterpart to continued dependence on oil imports, even
at a decreasing rate, is the creation of some kind of strategic reserve
capability to be drawn on in the event of serious interruption or
depletion of supply. In the United States the petroleum industry has
in the past maintained inventories of less than 40 to 50 days supply
to deal with seasonal demands and operating requirements. However,
this is only normal working inventory and cannot by any means be
said to constitute a reserve capability.
In developing a reserve capability, there are two basic options open:
Oil can be bought and stored in salt domes and tanks or developed in
place and then shut in, to be drawn on when needed.
Both of these options are provided for in the new omnibus energy
act.
Title I, part B of the Energy Policy and Conservation Act provides
for a system of national strategic petroleum reserves.
A strategic petroleum reserve would be established for storage of
up to 1 billion barrels of petroleum products and not less than 150
million barrels within 3 years of enactment. The purpose of the
reserve is to reduce the impact of petroleum product supply dis-
ruptions and to carry out obligations under the international energy
program. An early storage reserve is also established to meet near-
term emergencies.
A plan for the reserve is to be prepared and transmitted to Congress
by December 15, 1976. Within 7 years the volume of crude oil in the
reserve is to be equal to the total volume of crude oil imported during
a base period, within 18 months 10 percent, within 3 years 25 percent,
and within 5 years 65 percent. In this section the reference is to
crude oil rather than to petroleum products. No limitation is placed
on cost and siting of the reserve or related facilities, although this
and several other considerations are to be included in the strategic
petroleum reserve plan. The impact of the acquisition of such large
amounts of petroleum on world market prices and on competition
within the petroleum industry is to be taken into account.
An industrial petroleum reserve may also be established with up
to 3 percent of the oil imported or refined being placed in storage.
(5)







A regional petroleum reserve for each FEA region in which demand for
re.identia l fuel oil and other prodllcts ex('eed 20 percent of the demand
for the preceding 24 nionth,, i., also established for each FEA region
with uich deficit,. Autlhority i- given to the Administrator of FEA to
implement the reserve by s-toring crude oil produced from Federal lands
including thlte naval petroleumn reserve-, royalty oil, iand oil purchased
or received iii trade. Drawdown.. would be permitted only in ac-
cordance with thle dlistrilbution plalln.
Section 162 of the Act, entit ed "'Coordination with Import Quota
S.-tenm," anticipatiing future enactmlient of tlie import quota pro-
posed in 11. i. tts), provide- ani exemption from any quantitative
re-triction, for pet1roleumn product-, imported into the United States
for -,torage in the Strategic Petroleum Reserve.
Dvelopmei nlt of Petroleum Re-erves on Public Lands (H.R. 49)
which pa---ed thle touI.-Ce July 8, 1975, is in conference with S. 2173,
which 'l pa-edl the Senit e July 29, 1975. For more than a half century,
tlhe l'nited State,, la.s inaintainedl Naval Petroleunm Reserves m
Elk Iill-. and Buena Vi-.ta, ('Calif. and in Teapot Dome, Wyo. Recently,
a fourth naval petroleum reserve in Ala-ika was created. These deposits
of crude petrolelumi had been ldesignated for the use of the Navy in
the tiihe of national emergency when sufficient supplies of foreign
or domestic petroleum )ro(duct- could not be assured. Both Houses
were agr'ee(1 that some production from these reserves ought to bcgin.
The Houie bill directs production to commence from the Wyoming
and California reserves. The crude oil would then be sold on the
open market, with the proceeds. from such sales. to be directed toward
increa-ing production capacity at the reserves- and toward purchase
of oil in the open market to construct a national petroleum reserve
for commercial and private, rather than military, use.

B. GENERAL STANDBY EMERGENCY AUTHORITIES AND RESPONSIBILITIES
The new law requires, the President to transmit to Congress,
within 180 days after tlhe date of enactment of this legislation, one
or more energy conservation contingency plans and a gasoline ration-
ing contingency plan. Additional such plans.-, could be submitted at
any time. No such contiongency plan could become effective unless
it was, approved by a re-o ution pa,.-ed by each House of Congress
within the first period of 60 calendar days of continuous session of
Congres- after such transmittal, in accordance with procedures for
expedited( congre-ssional review. No such approved plan could be
put into effect unless (1) the Preident found that a severe energy
supply interrtiption required such implementation, and he trans-
mitted to Congre,- n request to put such plan into effect, and (2)
neither House of Congr-r., di-approved( such request within the first
period of 15 calendar (lays of continuou-, season of Congre..ss after
such train-smittal. Such an approved plan could be put into effect
without such additional review% by Congre..ss if and to the extent
that the Presidlent determinedl, during a "7-percent shortfall period"
that suchl implementation was nece-,ary to meet the obligations of
the United States under tlie international energy program. A "7-
percent -hortfall period" w-Us del(fined as a period con(0 iencing on a
date when tlhe President determined coiinitri'- who are parties to
the international energy pnrogr-,i have -1ii-taineil1 a reduction in oil








supplies equal to at least 7 percent of average daily consumption
during the base period and ending 60 days after the date on which
he finds this condition no longer exists.
An energy conservation contingency plan is defined as a plan which
imposed restrictions on the public or private use of energy which were
necessary to reduce energy consumption. No such plan could provide
for the imposition of gasoline rationing or any tax, tariff, user fee,
or minimum price for any petroleum product or for any credit or
deduction in computing any tax. Energy conservation contingency
plans could remain in effect for the period specified in the plan up to
18 months. States or political subdivisions could be exempted from
an energy conservation contingency plan if the President determined
that a comparable program or special circumstances exist in that
jurisdiction.

C. GASOLINE RATIONING CONTINGENCY PLAN
The new law requires the President to prescribe a gasoline rationing
contingency plan, as part of the regulation under section 4(a) of the
Emergency Petroleum Allocation Act of 1972. As amended by the
bill such a plan must provide for the establishment of a program for
the rationing and ordering of priorities among classes of end users
of gasoline and for the assignment of rights entitling certain classes
of end users to obtain gasoline in precedence of other classes. No
gasoline rationing contingency plan could be put into effect unless
(1) the prerequisites for implementation of an energy conservation
contingency plan were satisfied, and (2) the President determined
that, without such rationing plan, all other practicable and authorized
methods to limit energy demand were inadequate to achieve the ob-
jectives of section 4(b) of the Emergency Petroleum Allocation Act.
The President is directed to make appropriate adjustments in the
petroleum allocation program in furtherance of a gasoline rationing
contingency plan which is in effect. The President is directed to provide
for the use of local boards (whose composition reflected the community
as a whole) of States or their political subdivisions to receive petitions
from end users of gasoline and to order reclassification or modifica-
tion of any determination made with respect to the end users' rationing
priority or entitlement. No gasoline rationing contingency plan could
impose a tax, provide for a tax credit or deduction, or impose any
user fee except to cover administrative costs. A gasoline rationing
plan could remain in effect for up to 18 months.
It is indicative of the extreme reluctance Congress has shown in
respect to authorizing consumer end user rationing that, although
the President is permitted to order any other approved contingency
plan to be put into effect in the case of an extreme interruption in
energy supply without again obtaining congressional consent, the
gasoline rationing contingency plan is an exception to this authority
and must be first resubmitted to offer Congress an opportunity to
indicate disapproval.

D. ALLOCATION OF PETROLEUM AND PETROLEUM PRODUCTS
Title IV of the new act, which includes the revisions on pricing pol-
icy described in section III below, continues the entitlements program
and the allocation provisions of the old Emergency Petroleum Alloca-






tion Act of 1973, with a few additionall provi-ions and authorizes
colnver-ion of the allocation atuthoritie-s to .standbt -statu.-. Allocation
authority, whether -tandiNby or riot, i., extended througlli September 30,
19s1.
New di!,cretionarv authority is provided under which the President
nma% "require adju-.tments in the operations of tany refinery in the
'mited Strate- with respect to the prtoportion-s of re.,i(dual fuel oil or
aniv refined petroletlill product't" if thi., i; necessary to asutire adequate
vol0umile of a11y priority produirct in tlhe event of h-liortages. The bill
omit- a Ho -e-pa--ed adatory ceiling that would have limited the
cosum-uinption of gasoline to tlhe level of 1972-74 and would have
further reduced consumption by 2 percent per year for each of the
next 3 year,.
He may al-o require maintenance of up to 90 days' inventory of
crude or oil product, at any -tage from production through distribu-
tion. except that no one is required to make physical additions to
their existing storage capacity in order to comply.

E. AUTHORITIES WITH RESPECT TO INTERNATIONAL ENERGY PROGRAM
Intcrnatiial oil allocation and rolunbtary agreements.-The President
is authorized to require that the energy industry make arrangements
to meet U.S. obligation-, in the international allocation of petroleum
product-. Such action would be immune from the antitrust laws. The
Attorney General and the Federal Trade Commis.ion are to be in-
volved in the development of agreements and plans to propose
alternatives which would avoid or minimize anticompetitive effects.
Report-; to Congre;.- are to be made by both agencies every 6 months.
Authorization i: al-o provided for the establishment of an advisory
committee. Exchanges of information are also authorized, except for
material considered proprietary or trade secrets, unless the President
certified, that it will not be disclosed because of adoption of adequate
security measures by IEA. Thi, information is to be transmitted only
if other countries are supplying comparable data.







II. MEASURES To RESTRAIN AND RESHAPE ENERGY DEMAND
The following sections summarize briefly some of the legislative
and other action to date on (a) improved auto fuel efficiency measures,
(6) State energy conservation program assistance and other consumer
product conservation measures; (c) modification of buildings to con-
serve energy; (d) industrial conservation measures and (e) encourage-
ment and improvement of mass transportation transit facilities to
conserve gasoline. New legislation recently introduced to launch a
greatly expanded and more comprehensive energy conservation ap-
proach is described in section (f) below.

A. AUTOMOTIVE FUEL ECONOMY
The private automobile occupies a central place in the American life-
style and economy. Consumption of gasoline to fuel that lifestyle ac-
counts for almost 40 percent of the total demand for oil products in
the United States and, prior to the Arab embargo in October 1973, it
was anticipated that gasoline consumption would probably continue to
rise at the rate of more than 5 percent annually for the country as a
whole. Measured in its equivalent of barrels of oil per day, motor gaso-
line was being consumed in February 1976, at the rate of 6.5 million
barrels of oil per day and being consumed in cars which had been in-
creasing in weight, air-conditioning and gadgetry and had decreased in
fuel mileage efficiency. The 1958 model year cars averaged about 14
mi/gal. This had dropped to a low for the 1973 model year average of
only 11.6 mi/gal. A joint EPA-Department of Transportation study
published in October 1974 ("Potential for Motor Vehicle Fuel Econ-
omy Improvement: Report to Congress") estimated 1974 model year
average fuel efficiencies as 14 mi/gal, and 1975 model year efficiency at
15.9 mi/gal., a 13.5-percent improvement in 1 year.
A promising area for substantial gasoline savings without sacrificing
mobility appears to be in retooling car designs to obtain greater mile-
age per gallon of gasoline. Allowing for gradual attrition and junking
of old models-and no net increase in total number of cars-a require-
ment that all new models be built to run 24 miles a gallon could cut
gasoline consumption in half by 1985 without drastic change in life-
styles. Additional fuel economy can be obtained by using radial tires,
or shifting to the use of electric highway vehicles.
The new Energy Policy and Conservation Act (P. L 94-163)
requires that the average fuel economy for passenger automobiles
manufactured after the 1977 model year must be no less than 18 mi/
gal in 1978, 19 mi/gal in 1979, 20 mi/gal in 1980 with future increases
to be set by the Secretary of Transportation at the maximum feasible
level. By 1985 the standard is to be 27.5 mi/gal. Each year the Con-
gress is to review these levels and to determine the ability of the in-
dustry to meet the 1985 levels. Manufacturers of less than 10,000
automobiles per year may be exempted. Any manufacturer may
(9)


67-716 0 76 3







apply for modification of its average fuel economy standard. Each
manufacturer would be required to attach to each automlliobile a label
indicatit,,g it- fuel eco,. omil the e,-t iii d In, l ia t 11 co-t of Oiperation, and
the fuel economy range of comlparable)l autoiobl)ile'-. Sli-, section is
vewrV -iilar to a colip)aralble provi-io in I I.t. Stio(), which is still
pe (diT g.
If a manufacturer or importer fail- to meet the required average
fuiel e(oln om :tandard, lie would he liable for it civil penalty, which
could be waivem d or modifiedi uTider certain colition-. Conversely, if
ft Ia 1aufacturer ex'ceed,- the fuel economy tandtard, he would be en-
titled to a credit of $5 for each extrai one-tenth of a iuile per gallon
multiplied by the number of unit- manufactured to be applied to
fult 1re model y eNar. The penalty for noncompliance would be calculated
the -ie way, plhi-. m additional $10,000 per da3 for the duration of
the violation period. A program to te-,t the fuel economy improvement
p)Otetial of retrofit devices would alr.o be initiated.
Electric Vehicle Re-.earchl Devwlopmenpt and Demoonstration Act
(II.R. SSOO) pa-.ed the Hou-.e September 5, 1975. This bill directs
the Admiii-trator of the Energy Rese arch and Development Adminis-
tration to initiate and provide for the conduct of research and
development in areas related to electric and hybrid vehicles. It also
direct-, the Admninistrator to enter into contracts for the production
of significant numl)er-, of urban passenger and commercial vehicles
which ha%'e electric propulsion systems on conventional chassis; and
for the production of significant numbers of urban passenger and
commercial vehicles which are specifically designed for electric pro-
pulsion as the primary power source. Finally, this bill directs the U.S.
Postal Service, General Services Administration, Secretary of De-
fense, and the heads of other Federal agencies to arrange for the
introduction of electric and hybrid vehicles into their fleets as soon
as possible, and provides for guaranties of loans made to small busi-
nesses for commercial development of electric and hybrid vehicles.
H.R. 6860, the Energy Conservation and Conversion Act, which
passed the House June 19, 1975, and is being readied for floor debate
in the Senate, includes generous tax credits for the purchase of electric
highway vehicles and radial tires. Radial tires improve the mileage
obtained by automobiles by between 3 and 5 percent, but they are
more expensive than other types. To reduce the price differential and
encourage greater use of these tires, the bill repeals the present excise
tax of 10 cents per pound on radial tires (about $3 per tire).
On June 13, 1975, the House approved by a standing vote of 73
to 31 an amendment to H.R. 6860 which would provide a tax credit
of up to $750 (25 percent of the first $3,000 cost) for the next 3 years
to those who buy electric cars for highway use. It was argued that this
would help sell 50,000 vehicles that "guzzle no gas."
A Senate bill, S. 1518, approved on June 5, 1975, in the Senate and
on January 22, 1976, in the House, would also amend the Motor
Vehicle Information and Cost Savings Act (Public Law 93-492)
to incorporate within it "a concern for fuel efficiency of motor
vehicles." This concern takes the form of authorizing for appro-
priation $5 million for fiscal year 1976 and additional amounts totalling
$16,500,000 in subsequent years through September 30, 1978, in order
to set up diagnostic inspection demonstration projects with a capacity







to determine a car's fuel efficiency capability as well as whether it
meets emission standards. Citing the cost benefits which would be
associated with enforcement of mandatory standards (which the bill
does not set, but which development of diagnostic equipment would
help enforce), the report (S. Rept. 94-155) stated:
The most recent study on air quality and emission controls done by the Na-
tional Academy of Sciences has determined that the societal loss due to auto
emissions is between $2.5 billion and $7 billion per year.
The Environmental Protection Agency data indicates that emission tune ups
could save as much as 375,000 barrels of crude oil per day nationally.
On the cost side, the States of Pennsylvania and New Hampshire which cur-
rently have the most comprehensive inspections, charge about $4.65 for the in-
spection. Several studies have been conducted to determine the costs associated
with States owned and operated lane type inspection facilities. One study con-
cludes that separate safety and emissions inspection facilities are significantly
more expensive than multipurpose facilities combining safety and emissions
inspection under one roof. Where a comprehensive approach is taken, the study
concludes that fees between $2 and $6 are feasible depending on the level of
inspection.
During Senate hearings on Clean Air Act amendments in July
1975, the point was brought out that since air pollution standards are
set for each individual pollutant, it is possible to change or relax
standards for one pollutant until technology is further improved but
still maintain existing standards for another pollutant. This is well
illustrated in the case of current auto emission control requirements:
There seems to be general agreement that the use of a catalytic con-
verter to abate carbon monoxide and hydrocarbon emission levels
in conformance with existing standards will not exact a fuel penalty
and therefore levels for those particular pollutants would not neces-
sarily have to be changed. However, a fuel penalty is likely to be
exacted if the requirement to abate nitrogen oxide standards to cur-
rently required levels would be allowed to stand.

B. STATE ENERGY CONSERVATION PLANS AND CONSUMER PRODUCT
CONSERVATION MEASURES
The new law, Public Law 94-163, authorizes a $150 million Federal
grant-in-aid program ($50 million in each of 3 years beginning in
fiscal year 1976) to assist States in developing and administering
State energy conservation programs. These programs will have as
a target a 5-percent reduction in energy consumption by 1980 below
levels projected for that time. The legislation identifies conservation
measures to be implemented by the States, but calls for adminis-
tration of the programs on the State and local levels. State programs
would include the following energy conservation measures:
Lighting efficiency standards and restriction on hours of public
buildings;
Programs to promote carpooling, vanpooling, and public trans-
portation systems; and
Energy efficiency and insulation requirements for new and re-
modeled buildings.
Within these Federal guidelines, States would establish conserva-
tion programs in a manner tailored to local economic geographic and
climatological conditions. This legislation thus provides impetus,
direction, and financial assistance for energy conservation while
protecting the States interest in self-determination and local control.





12


The new Energy Policy and Conservation Act would also require
test procedures for an energy efficiency labeling of major home ap-
liances and certain other consumer productt, using more than 100
wh per year. This information is essential to consumers in making
an informed judgilent in the purchase of appliances. rThle label must
include representative annual operating costs associated with the use
of these products unless tlhe FEA determines that labeling would not
be feasible or would not be likely to assist consumers in making pur-
chasing decisions.
If the FEA prescribes a labeling rule for a class of major household
appliances and then finds (1) that labeling will not suffice to induce
manufacturers to produce (or consumers to purchase) products of
that class which achieve the maximum energy efficiency which is
technologically feasible, and (2) that the benefits of increased energy
efficiency outweigh any increased consumer costs and( any decrease
in utility of the product, the FEA is authorized to prescribe an energy
efficiency performance standard for that clas-, of product. The FEA
would be required to exercise this authority in certain cases where in-
dustry is unable to achieve energy efficiency improvement targets
which would be set by the FEA for major home appliances. These tar-
gets would be set at the maximumn level which would be economically
and technologically feasible, and would require at least a 20-percent
overall improvement in energy efficiency for new major home ap-
pliances in 1980, in comparison to 1972 levels.

C. MODIFICATION OF BUILDINGS TO CONSERVE ENERGY
Almost coequal with transportation as a major consumer of total
energy in the United States is space conditioning of residential and
commercial buildings. About 12 percent of total energy is used for
residential heating and cooling and 9 percent for similar commercial
uses. When heating and cooling of industrial buildings is added, more
than 25 percent of all the energy used in the United States is con-
sumed in heating and cooling the buildings where people live and
work.
The only provision in the new law, other than what might flow
from State conservation plans, which directly affects the critical
energy savings area of building standards may be found in title III,
part E, which deals with Federal energy conservation measures.
All Federal agencies would be required to develop a 10-year
plan for energy conservation. This plan would deal with lighting
standards, construction guidelines, restrictions on hours of operation,
thermostat settings and other conditions related to the operation of
Federal buildings.
Title X of the Administration bill (S. 594/H.R. 2650) would estab-
lish mandatory thermal (heating and cooling) efficiency standards for
all new homes and commercial buildings to be developed, discussed,
reviewed and promulgated over a period of about 4 years before
becoming mandatory. It was anticipated that this program would save
the equivalent of 500,000 barrels of oil per day in 1985. The Secretary
of Housing and Urban Development in consultation with engineering,
architectural, consumer, labor and industry representatives would be
responsible for developing thermal efficiency standards. Standards for





13


residential dwellings would be promulgated and implemented within
1 year, and performance standards for commercial and other resi-
dential buildings developed and implemented as soon thereafter as
practicable. State and local governments would assume primary
responsibility for enforcing standards through local building codes.
In addition, title XI of S. 594 would establish, within the Federal
Energy Administration, a grant program for States to assist low in-
come persons, particularly the elderly, in winterizing their homes.
Title XI is modeled after a successful pilot project that was conducted
in the State of Maine during 1974. Annual appropriations of $55 mil-
lion would be authorized to fund the 3-year grant program, and
enable States to purchase winterization materials for dwellings of
low-income persons.
The Ways and Means bill, H.R. 6860, pending in the Senate,
includes several measures designed to speed up the conservation of
energy in this consumption sector. As summarized in the committee
report (H. Rept. 94-221), these include:
Tax credit for home insulation. An important way to conserve energy is to
install such energy-saving items as insulation, storm windows, and thermal glass
in homes. To encourage a major effort during the next 3 years, your committee has
included in the bill a 30-percent tax credit for up to $500 of expenditures on in-
sulation, storm windows, and similar energy-saving items for principal residence.
The maximum credit, then, would be $150. It is expected that this tax credit
will save between 50,000 and 100,000 barrels of oil per day by 1985.
Tax credit for residential solar energy equipment. Eventually, solar energy
will have to become a major source of energy, since the Sun is one of the few non-
depletable resources. To stimulate a more rapid development of solar energy, your
committee has included a tax credit for homeowners who install solar heating
or cooling equipment. The credit is to be 40 percent on the first $1,000 of such
expenditures and 20 percent on the next $1,000, so that the maximum credit
is to be $600. While probably only several thousand households will actually
make use of this tax credit, so that the revenue loss will be minimal, these home-
owners will be the vanguard of the shift to alternative sources of energy.
Investment credit for insulation and solar energy equipment. As noted above, a
new tax credit is provided for insulation and solar energy equipment for home-
owners and tenants. In the case of businesses, the investment credit is made
applicable through 1977 for insulation and through 1980 for solar energy equip-
ment. These investments are not now eligible for the investment credit, because
they are considered to be parts of the building or its structural components. At
the same time, the investment credit is removed from room air-conditioning units
and space heaters, which are less efficient than central units. Central units do not
receive the credit because they are part of the building and not equipment.
In initial votes on these provisions on June 13, 1975, the House re-
tained the tax credit for insulation and, by a vote of 244 to 132, raised
the solar energy credit to 25 percent of the first $8,000 of cost. The
House also extended residential solar energy credit to equipment
meeting "interim" rather than "definitive" HUD standards and al-
lowed credit for solar installations shared by several houses.
Incorporating many of these provisions, the Energy Conservation
in Buildings Act (H.R. 8650) passed the House September 8, 1975,
and the Senate March 9, 1976. This bill provides grants to the States
to assist low-income home-owners in insulating their residences
properly and calls upon the Federal Government to establish insula-
tion efficiency standards for commercial and residential structures
built in the future.
The energy conservation in buildings bill authorizes $55 million in
grants to the States over the next 3 years. Such grants in conjunction
with State funds would be used to purchase housing insulation ma-





14


tennials. The insulation would be provided to low-income homeowners
tlhrougli local agencies with the General Accoiintinfg Office supervising
their, ilpleimwntation of the program.
Local building (odes alid standlards -vary ratly tlhrollghout the
United States. This lIill authorizes the Secretary of IoIlsin, and
1bi-an Developmnent, after consultation with othlelr Federal officials.
to foriuulate fuel efficiency standlards for new I)uiilding construction
thirouill oult the l lnited States. The S,;ecret ar is directed to set such
guidelines for commercial buildings no later than 1i months after
tlhe passage of the act, and no later than 3 years after the passage of
tlhe at for re.:idlential blil1ding gs.. RecogIniz 'ing tle diversity in local
building code-. rcerional climatic variations, and diffein,. cost benefit
analyses, tih House bill permit, ilich factors to lbe considered in draft-
ing tlie energy conservation standards.

D. INDUSTRIAL CONSERVATION MEASURES
The industrial sector consume- about 40 percent of the U.S. energy
budget. It has been estimated that up to 30 percent of industrial energy
consumpltion is wasted. lndi-strial energy consumption patterns are
extremely complex and are affected by choice and availability of fuel
type and costs, raw miaterials, state of the economy, and type of indus-
trial procesing. Because of the complexities within the industrial sec-
tor, it is difficult to reasonably define baseline energy consumption con-
ditions on which to found regulatory or incentive measures considered
in the building and transportation sectors.
The new energy law, Public Law 94-163 (title III, part D) has as
its goal in industrial efficiency to increase the national average
industrial energy efficiency by the maximum feasible amount by
January 1, 19S0. The Energy Policy Act recognizes that industry must
share respons-ibility for attaining the goals of energy independence
and wis,,e utilization of scarce resources. The Project Independence
Blueprint estimates that the energy equivalent of 400,000 to 600,000
barrels of crude oil per day can be saved in the industrial sector in
the 1980's.
Industrial energy efficiency targets would be set for the 10 most
energy-intensive industries. Each target would represent the maximum
possible improvement in industrial efficiency which a particular in-
dustry could achieve by January 1, 1980. The 10 most energy-intensive
industries would be required to report annually on their programs in
attaining energy-efficiency targets.
The new law also includes measures which would serve to con-
serve oil and natural ga.-, by requiring certain industrial plants to
convert to coal. For convenience, these are de-,scribed along with other
measures relating to coal in section IV-A below.

E. IMPROVED TRANSPORTATION SYSTEMS
Use of railroad and other mass transit facilities is recognized as a
major potential source of fuel savings enabling conservation of gaso-
line otherwise used for personal transport ue and more efficient use
of other motor fuels. However, it is abo increasingly realized that
until improved mass transit is actually in place and available, it
cannot serve to divert present auto user-, from reliance on personal
transport.





15


During the 1st session of the 94th Congress, the following bills
were either enacted into law or had passed one or both Houses:
Public Law 94-5, approved February 2, 1975, authorizes an addi-
tional $347 million to insure the continuation of essential rail services
in the Northeast and Midwest under the regional Rail Reorganization
Act (P.L. 93-236); increases from $85 million to $282 million Federal
grants to bankrupt railroads in the Northeast and Midwest to keep
them in operation until a plan being developed by the U.S. Rail
Association becomes effective; increases from $150 million to $300
million loan guarantees to bankrupt railroads to maintain and improve
rail facilities until the new system is in operation and gives the
Secretary of Transportation more flexibility in deciding how and
when the guarantees will be used.
An Amtrak Supplemental Authorization (S. 852/H.R. 4975),
which passed the House April 24, 1975, and the Senate on May 13,
1975, provides a $63 million supplemental authorization for fiscal year
1975, of which increased operating costs due to inflation accounted for
about $50 million. It was signed as Public Law 94-25 on May 25,
1975.
H.R. 8365, making transportation appropriations for fiscal year
1976 and the transition period, totaling $10.8 billion and $2.7 billion
respectively, passed the House on July 10 and the Senate, amended,
on July 25, and was signed November 24, 1975 as Public Law 94-134.
Included in these amounts were $439 million for Amtrak, of which
$110 million is for capital costs, which for the first time are being
funded by a direct Federal grant.
The Rail Services Act of 1975 (S. 2718), a comprehensive railroad
rehabilitation program, was signed as Public Law 94-210 on
February 5, 1976. It includes $6.1 billion in new funding for railroad
assistance, about $1 billion less than the amount in the bill as origi-
nally cleared by the conference committee.
The key change agreed to in the second version involved funding for
improved railroad passenger service in the Northeast Corridor be-
tween Washington, D.C., and Boston. That authorization was reduced
to $1.846 billion from $2.4 billion in the bill as originally approved.
Another cut was made in funding for subsidies to continue operations
of light-density branch and commuter railroad lines scheduled for
abandonment. The total subsidy was reduced to $495 million from $525
million.
Other authorizations included in the compromise bill sent to the
President were:
Loans of $2.1 billion for the Consolidated Rail Corporation (ConRail), the
quasi-governmental agency that was to take over the operations of the Penn
Central and other bankrupt Northeast and Midwest railroads.
Aid of $1.6 billion to railroads outside the ConRail system.
For passenger service outside of the Northeast Corridor, $20 million.
For a study and plan for the conversion of abandoned railroad rights-of-way to
recreation and conservation use, $20 million, and $20 million for other miscellane-
ous studies.
To establish a rail bank for fossil fuel and agricultural production purposes, $6
million.
The final bill also would set up a finance committee on the Board
of the U.S. Railway Association (USRA), the agency created
in 1973 to draft the plan for reorganizing the Northeast railroads. The
finance committee, composed of the Secretary of the Treasury, the







Secretary of Transportation, and the USRA Board Chairman, would
oversee the funding of ConRail and could terminate or modify its
financing.
The bill would give the House and Senate the final word on ConRail
funding since either Chamber could disapprove an action of the finance
committee within 30 days from the d(late it was made.
Also for the first time, the tlou-e voted to amend a provision of the
Federal Highlway Act of 1973 (in HI.R. 8235, passed House, Dec. 18,
1975) that allows urban areas to use their interstate funds from the
Highway T"rust Fund for mass transit, to permit those funds in the
future to be u.ed( for other urban highways as well. By granting this
new flexibility to urban areas, the bill promotes a more efficient urban
tran-portat ion planning.
Thi: legislation also gives Congress more flexibility in deciding
future transportation policy with a view of po..sibly ending or reducing
the Highway Trust Fund in favor of other transportation means.
The Senate tried, unsuccessfully, to add a $700 million allotment to
repair thousands of miles of railroad track, first, to the $5.3 billion
emergency jobs appropriations bill (H.R. 44S1), and, second, to the
fiscal year 1975 supplemental appropriations bill (H.R. 5899), losing
out in conference.
The rationale-that of linking expenditures to decreasing present
unemployment and to link a full-employment goal with increased
energy savings and increased domestic energy production-is a key
element in the longer term Senate proposal for a National Energy
Production Board, described below.

F. A COMPREHENSIVE CONSERVATION INITIATIVE
A major new bill, the Energy Conservation Act (S. 2932), introduced
February 5, 1976, contains three principal features:
(a) A package of Federal loan guarantees not to exceed $10 billion at any one
time for financing energy conservation improvements, with priority for homes
and small business, including farms. Industrial energy users not able to obtain
financing from commercial sources could also qualify for guaranteed loans.
Interest rates subsidies for residential con-umers and small b,,;inesses are provided
to reduce the lending rate to 5 percent with not more than 20 percent of the loans
to be subsidized at a rate of 2 percent.
(b) Use of State governments as agents of the Federal Government in pre-
paring and carrying out State energy conservation implementation programs to
provide consumer information, energy audits, loan procedures, and installation
of energy conserving materials; and
(c) A Federal grant-in-aid program of $50 million annually for 4 years to assist
States in designing and carrying out their State energy conservation imple-
mentation programs.
Loans will be made solely for the purpose of reducing the amount
of energy used in residential, commercial and public buildings and in
manufacturing plants and small businesses. Only permanent improve-
ments, such as insulation, storm windows, solar energy equipment,
revamping of ventilation systems, heat pumps, and heat exchangers,
can qualify for federally guaranteed loans. Also, loans must be repaid
with the projected savings that are realized over the life-cycle of the
energy conserving facilities.
It is anticipated that savings the equivalent of 2 million barrels of
oil per day could be achieved within 4 years if programs which could
be supported by this legislation were actively pursued.







III. NEW OIL AND NATURAL GAS MANAGEMENT MEASURES
Two major legislative measures enacted or still under debate on this
key energy goal are: (1) Removal of the depletion allowance for oil
and gas and adjustment of selected foreign tax credits; and (2) the use
of price policy as a primary stimulus for increased production, includ-
ing decontrol of prices of both oil and natural gas and related offsetting
provisions to manage windfall profits.
Abolition of the depletion allowance, which for 60 years has been a
key feature in the U.S. petroleum industry's production and pricing
policies, is a landmark event, the consequences of which for both energy
investment and price have not yet been fully identified. Enacted as
part of a tax reduction bill intended to stimulate the economy, removal
of the depletion allowance eliminated what had traditionally been
thought of as a prime incentive to encourage increased investment
in oil and natural gas while at the same time permitting reasonably low
domestic prices for their end products in the United States.
Higher prices as incentives to increase domestic production of oil
and natural gas have been generally conceded as desirable for some
time-but the sudden escalation in prices for oil produced abroad pre-
cipitated the only recently resolved national debate over what the
level should be and under what kind of regulatory or other oversight
controls.
The oil pricing provisions included in the new Energy Policy and
Conservation Act, Public Law 94-163, which provide for phased and
controlled upward revisions in domestic oil prices, represent the first
major national decision on the still volatile energy pricing issue. Sim-
ilar difficult decisions and compromise will be required to reach a na-
tional consensus on the pending natural gas deregulation bills.
In addition to these two still controversial moves, a number of
measures are underway which are intended to revise the terms on
which oil and natural gas are leased and developed on public lands,
including the Outer Continental Shelf. These are also summarized
in this section.

A. REMOVAL OF THE DEPLETION ALLOWANCE AND CHANGES IN SOME
FOREIGN OIL TAX CREDITS
Historically, the primary congressionally endorsed stimulus to do-
mestic production of oil and natural gas was the depletion allowance.
Beginning with the first income tax law in 1913 and modified as a flat
percentage level in 1926, the depletion allowance permitted subtrac-
tion of 27.5 percent of gross income from production of oil and gas
at the wellhead, in recognition of the fact that extraordinary capital
costs and risks were involved in exploration and development of oil
to replace that depleted by each year's production. The allowance
was a flat deduction and did not include any mandatory requirement
that it would in fact be invested in new exploration and development
of oil.
(17)


67-716 0 76 4







(il hl(ad quickly been realized to be a much limore convenient and
m,(bile -11bl.titut for coa l wiid ertail\ n i-y'muclh more deirable fuel
for ilitlr\ ii-e(, a1 1d >,i('cc'--(ivw' Co0igrec-'-, dv' elo( )v'%e(d -upporters for
contiltui g the Iallowanice, wlii(li was claillied to be str(og in icentive
for firtlher in've'-ti.ent and proIductioI. DI)-.piti oppol.ti ol to it in
three ladninisit rati(on-Roosevelt':, lTruinani's ai Knw *ed y'.s---except
for 1969 when it was re(dllced .soi(ewhallt, to 22 9 )e('rce(nt, open support
in C(ollre' The -.Id(den -lir) rie in tlhe price o(f inmported oil and the conse-
qi(lnt a-tronomi "c increase i iinll IT lie and p)ro)fits- accruinig to the U.S.
iilduivt I\ cat-,Ld ali equally sharp change in attitude. A reasomably stiff
bill-witfi ai three year phase out of the depletion all()wanIcet combined
with a windfall pro()fit- and inves-tment plow-back credit-was reported
fr' ,n tilie Hou-e Ways and iMeians, Committee Ml ay 4, 1974, but the
93.d Congrc-s adjourned before agreement could be reached on the
rule- under Nwhich the bill would be put to vote.
Tif 94th Congre-- came into Washington in a different mood. A
strong and vocal group of Congressnmen overrode more senior col-
league' in the 1Hou-s( Democratic Cauticus to insist that depletion repeal
be included in the tax reduction bill and won. As finally enacted, the
new law, Public( Law 94-12 (H.R. 2166), includes tilhe following changes
which greatly reduce the hitherto almost untouchable oil and natural
gas inve-tnient incentives:
On the crucial issue of oil and gas depletion, the new law:
Repealed the 22 p)etrcent depletion allowance on oil and gas production retro
active to January 1, 1975.
Retained the 22 percent allowance until July 1, 1976, for natural gas sold under
federal price regulations (or until the controlled price was raised to take account
of repeal of depletion).
Retained the allowance for natural gas sold under fixed-price contracts until
the price was raised.
Provided a permanent small producer exemption that allowed independent oil
companies to continue taking the depletion allowance on a basic daily output of
oil and natural gas.
Allowed an initial small producer exemption retaining a 22 percent depletion
allowance for producers with an average daily production of 2,000 barrels of oil
or 12 million cubic feet of natural gas or an equivalent quantity of both oil and gas.
Reduced the daily production eligible for depletion by 200 barrels a day for
each year between 1976 and 1980, leaving the small producer exemption at a
permanent level of 1,000 barrels of oil per day or 6 million cubic feet of natural gas.
Reduced the depletion rate available on the small producer exemption to 20
percent in 1981, 18 percent in 1982, 16 percent in 1983 and to a permanent 15
percent rate in 1984.
Kept the depletion rate at 22 percent until 1984 for production of up to 1,000
barrels a day through costly secondary or tertiary recovery methods used to
extract remaining oil and g;:.- from wells that were mostly pumped out.
Limited the deduction taken under the small producer exemption to 65 percent
of the taxpayer's income from all sources.
Denied the small producer exemption to any taxpayer that sold oil or gas
through retail (outlets or operated a refinery processing more than 50,000 barrels
of oil a day.
Former tax breaks involving foreign income were also changed. The
new law:
Limited the amount of foreign tax payments on oil-related income that an oil
company could take as a credit agaisnt U.S. taxes to 52.8 percent of its 1975
income from foreign oil operations. The limit would be reduced to 50.4 percent
in 1976 and 50 percent thereafter.
Allowed use of excess credits within tiho.-e limits only to off.st U.S. taxes on
foreign oil-related income, not on income from other foreign source.s.





19


Denied oil companies after 1975 the use of the per country limitation option
that allowed a company to compute its maximum foreign tax credits on a country-
by-country ba Required rcealpt iire of foreign oil-related lo-st,- that were deducted from income
subject to U.S. taxes by taxing an equivalent amount of subsequent foreign oil-
related profits as if earned in the United Statt,-" (and therefore not eligible for
deferral until transferred to the United States). The credit for foreign taxes on
the subsequent profits also would be reduced in proportion to the amount treated
as U.S. profits.
Denied the foreign tax credit for any taxes paid to a foreign country in buying
or selling oil or gas from property that the nation had expropriated.
Denied the investment tax credit for drilling rigs ii-ed outside the northern
half of the Western Hemisphere.
Denied deferral of taxes on half of the profits from exports of natural resources
and energy products by domestic international sales corporations (DISCs).
Repealed, effective in 1976, certain existing exemptions from a 1962 law requir-
ing current U.S. taxation of profits earned by suihsidiariev set up by U.S. corpora-
tions in tax haven countries that imposed little or no taxes.
Allowed deferral of U.S. taxes on all earnings by a foreign subsidiary if less
than 10 percent of its income was defined as tax haven income.
The additional revenues which would accrue to the Treasury (and,
at the same time, be withdrawn from the major oil producers' cash
flow) are estimated at around $3.7 billion in 1975: About 1.7 billion by
denial of the depletion allowance; some 1.5 billion by changes in the
foreign tax credits; and about $500 million by requiring that the for-
eign income of all multinational corporations, including the oil compa-
nies, be taxed in the year earned.
While these amounts are substantial, they are only a small fraction
of the volume of capital investment in oil development in the United
States which had been planned for 1975 by the oil companies before the
tax changes were enacted: $26.2 billion for the oil industry as a whole,
of which $8 billion was to be in drilling and exploration and $2.1 bil-
lion in production.1 Industry claims of drastic negative effect on new
domestic investment of the loss of up to $3.7 billion from these partic-
ular changes have not received much postenactment congressional
sympathy, especially since there remain many writeoff and investment
credit provisions under which actual development expenses can be
and are being charged off as regular business costs.
An interesting aspect of the testimony and floor debate on removal
of the depletion allowance was the argument that, although the intent
of the original legislation providing generous percentage depletion
allowances was to encourage increased exploration and development
of new oil and gas supplies, in fact, the volume of such exploration
over the years did not appear to be particularly related to the amount
or to the level of the depletion allowance.
The total number of exploratory wells drilled annually in the United
States has been declining since 1956, despite the existence of the deple-
tion allowance.2 The first major cut took place in the tax revisions of
1969 when the depletion allowance was cut from 27.5 percent to 22
percent. However, the industry's capital expenditures in the United
States have substantially increased since 1971. Actual capital ex-
penditures in the United States by the oil industry in 1973 were esti-
mated at $15.3 billion (with $6.6 billion for drilling exploration and
$1.7 billion for production); $21.1 billion in 1974 (with $7.7 for explor-
ation and $2 billion for production) and, as mentioned above, $26.2
billion had been estimated as budgeted for 1975 with $8 billion tagged
1 Oil and Gas Journal, Feb. 3, 1975, p. 37.
2 See chart on p. 20.






20

for drilling exploration and $2.1 billion for production. These figures
do not include the hundreds of millions U.S. companies have also
budgeted for projects abroad, and may be compared with total oil
industry capital investment in development of oil in the United
States of $7.7 billion in 1971 and $12.7 billion in 1972.8
While a number of major companies have announced that removal
of the depletion allowance would require reconsideration and reduction
in their capital investment plans, there is some indication that the
reductions would take place in projected capital ventures other than
exploration and investment.4
7 Y--7 -1-T 7 r 7 T. T T- 7 -
TV I
*'IIn,,Ie ItIent.
='-', .. .^..... .. ' .. . . . . . . . . . ' 7 i/ ;-!_-i:; '' irr n rj]
,. "------ EXPLORATORY WELLS DRILLED IN UNITED STATES z
AUTHORITY" ANIERICAN Vi:TP.(L[:r'\l INqTTITI"T. O1970-1973
=I AMERICAN ASS.CIA.%TION O'F PLTIILI.L'M GLOLOGISTi I'qA-1',V. AM)D V,-7.199 I
___... "OIL AND GA6 JULRNAI," 19J56-1%8
,I I_ ....... .I I i ]_L


I7 -7z~r~z -zzlzilzzz7iz
I 1 I____ 1Z7hi Z I2P( i








-A
S 2 i - : , i "--,_ --- : d L J -I

I I I I i I I r - --I- --T--. I I \




ii i i i
I i i i 'i l~ t ~ r t 'm ~ r i i ri, , , i [ i i I J .







L i i ; I . .. -'-' I- _ __._._' '- i -i-! I I
w o i r. , ',1 l .~ / A '..t;" } i I' I r I' ~ I Ir ~








I J O F ,p O oL, ,_!-, I
| . .. * I .'," "7 - i ; l =L iJ
H 4I- -, ----- r A J,, -'- "- -"-, 4-- -v-- .... I--- -1 - --l- -- -_ T -- T
J i i i i ,1 ,I I i I
: : ,,' ,' -.--- v, r - ---4-'' -- -[ *--.-....






ue ---^ ,-- -. z- - -j ---v *_ -4 1 ^ -| L-* ..-.--1 ---- .. -._ .--.-. -- -


l i I. A ' 7, 7 , 'L , i T, i / S I
-llO jI' J ^ -,,--. --., --..-.. .;J .-. -. -. : : .: -. ---. *-!- ,-- .,;-- 1 ,-.i,--- I-
L J J ^ :! / . ._J._LI_ _^^^^ _.-1 -.I

,,. 2.-1i -L7- J,' ^ '_-I , -' "- ^ '_L -:-: ':-_' ...... "_i+_L '.: '





I. I 1 I
.. .^ ~ ". ." .' :-- -' . .. . ... . . . ... .. . .. ....~ . .'. .. ' - -'' -*- ' _-t-_
,,~~~~~~...... _-........:.. ...... :.... '. ....... __I_!__:._











S14 s i9 > 19 '9'o, i /s '900

Source: "Twentieth Century Petroleum Statistics, 1974," Degolyer and Mac-
-Jr- J












Naughton, p. 27. .
-1--3- 1W- -1955 -96 19 5-:IN














3 "Oil and Gas Journal," Feb. 3. 1975, p. 37.
"Energy Notes." Feb. 24, 1975, Morgan Stanley & Co.. Inc., reprinted in Congressional
Record, Mar. 22, 1975, p. S4804 to S4S07. See also Wall Street Journal. June 9, 1975,
Spp 1, 25.







If industry capital investment decisions on domestic exploration pro-
grams made by the major oil firms have been based primarily on factors
other than the level of the depletion allowance, its removal may not
have any particularly depressant effect per se on future domestic
exploration programs. In any event, 80 percent of the exploratory
drilling in the United States is done by independents, for many of
whom the 22-percent depletion allowance has been largely maintained
for some time to come.
It is interesting that despite the repeal, exploration of oil and gas
has shown an upward turn during 1975. As reported in the FEA
Monthly Energy Review for January 1976:
November [1975] statistics on drilling activity presented a much brighter
picture. The number of rotary rigs drilling for oil and gas reached 1,757, the highest
level for November since 1961, and an increase of 10 percent over the rig count
for last November. Moreover, the number of wells drilled during the first 11
months of the year (33,019) has already surpassed the number drilled during
all of 1974 (31,698).

Whether the changes in foreign tax credits are sufficient to encourage
a shift of exploration and development resources away from the up-to-
now less costly operations abroad to the United States remains to be
seen.
Whatever the role of the depletion allowance has been in the past,
its recent repeal clears the way for a fresh look at oil and other fossil
fuel production incentives whose effectiveness as stimulants to
increased domestic production can be more easily measured and
identified.

B. CONTRASTING POSITIONS ON PRICING POLICY
There are two important differences between the administration
proposals and the congressional majority proposals in this energy
policy field, on the face of it 180 apart: The administration wanted
an oil price policy which permitted a floor but no ceiling;5 the majority
wanted an oil policy which set a ceiling but no floor.
The administration's primary energy policy position was to rely
on deregulation of the price of domestically produced oil and natural
gas and its consequent effect within the domestic market to produce
not only reduction in consumption of these products but also to
provide the price incentive which the administration believes will
result in increa-ed supplies of oil and natural gas. Import tariffs on
imported oil and oil products were intended to tilt domestic purchases
of oil and natural gas toward domestically produced products and
thus provide an additional stimulus for increasing domestic supplies
from increasingly expensive exploration and development operations
in continental and offshore U.S. sources.
In addition, it was anticipated that, as the deregulated prices ap-
proached the (at the time) concurrent costs of developing "new"
energy supplies (that is, coal gasification, and/or liquifaction, oil shale,
geothermal and solar), this would further encourage the shift away
from oil and gas and stimulate increased private investment in these
areas.
5 Secretary of the Treasury Simon, in discussing a minimum long-term supply price
before the Ways and Means Committee on Mar. T17, 1975, said that if the depletion allow-
ance were removed he felt the "long-term supply price" would have to raised from a
then estimated $7 to $8 per barrel to about $S.4() per barrel. Hearing, transcript, p. 1665.





22


In contrast, the policy proposals backed by the Democratic major-
ity. "The Co(ngre,,ional Program of Economic Recovery and Energy
Sulfficiency,' is-ued February 27, 1975, stated on the question of price
control:
WVe reject the fundamental premise of the Pr'-sident's program that the only
way to achi(ev' tnrgy conservation is dtlibherately to raise the price of all petroleum
pr,,duct, lto all American ci,'nsuimers by heavy indiscriminate additions in taxa-
ti,,n. Th, *3 per ] arr(l tariff on oili miplort- will not reduce imports; it simply
will imake them mniore co-tly t,, Anmerican consumers.
A, it- gal the Adnminiktration seeks a reductiiin of energy consumption by one
million barrel-, per day in 1975. To achievee it, energy prices wouiild be greatly
inlcrrela.d, fir-I by taxing all crude (il and natural gaL.s and then by removing the
present ctntrtik l on the mn :rket price of oil and gas.
The price of energy is not determined by free, forces of supply and demand but
rather by the gi vernments of the nations that produce energy. The policy question
is whether the U'.S. or the OPEC' governments will set energy prices in this
country. The Adminiktration wishes- to decintrol old oil and new natural gas,
giving the control of price to, OPEC and letting U.S. energy price, follow the prices
established by it. . .
The oil price control pro,.gram should be modified also to create sufficient incen-
tive. to produce all oil that can be recovered economically through secondary and
tertiary recovery, sul,.-tantially increasing the amount of oil ultimately produced
fromi the avxer.age field. Perhali., the mnot effective plan would be to include some
decontrol treanttment for secondary and tertiary recovery as "new" oil.
Expl)loiting fully natural gas potential is equally critical and the Federal Power
Commission nmist be mandated to provide price certainty at levels high enough to
reflect future cost- and to eliminate regulatory delays, reducing any incentive to
withhold gas because (if the uncertainty over government pricing l)olicy.
The Congressional program therefore recommends measures to reform and
simplify natural gas regulation, but. continue interstate price controls on old
natural gas-, and establih a sta:ttut-orv formula ceiling that reflects cost of produc-
tion. This should a.,sure that the price is high enough to encourage maximum
domestic production, but still below the OPEC cartel level.
In -upport of it-, program, the administration made price deregula-
tion proposals, both under existing executive authority and as pro-
posed in S. 594/H.R. 2650, which would, if approved, accomplish
at least five interrelated results: (1) Increase the cost of imported oil
by imposing- tariffs and fees, to raise its price relative to domestic oil
and encourage production of domestic oil; (2) spread price increases
on crude oil among all refiners by using the FEA "Old Oil Entitle-
ments Program"; (3) decontrol the price of "old" oil; (4) decontrol
the price of natural gas sold in interstate trade; and (5) establish (or
authorize establishment of) a floor price for oil to insure price sta-
bility over the longer run.
These are di.scu-,sed in detail in tlhe earlier report "Highlights
of Energy Legi,,slation in the 94th Congress," Congressional Research
Service. It provides additional background and a description of much
of the intervening legislative action, now culminated in the new
Energy Policy and Conservation Act, and will not be repeated here.

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

The new compromise on oil pricing policy is included in title IV
of the Energy Policy and Con-ervation Act of 1975. Although now
signed into law, they remain probably the most controversial pro-
vision., of the entire act. They are controver-ial not so much because
of the .till differing views over the quantitative levels of petroleum

Fur a narrative account of the first 7 months see the text of this reliort reprinted In
the Congressional Record, July 31, 1975, pp. S14487-8 and S1449".





23

prices but because the basic confrontation has been and remains the
far more fundamental one of public versus private management of
those prices.
Two Congresses have been debating this issue now for more than 2
years: Should the management of petroleum prices be left to the pri-
vate producers and distributors of petroleum products and their
mutual adjustments in the market or should those prices be subject
to regulation by the executive within criteria laid down by Congre-s
and closely monitored for conformance? The conference bill provides
an answer which, while clearly a compromise on levels of prices, accepts
and asserts a right and responsibility in management and monitoring
of those prices in the market as a whole.
Pricing and related provisions
Among the many specific provisions of title IV which give effect to
this substantive strengthening of public responsibility for petroleum
price management are the following:
The previously floating uncontrolled price for "new", "released" and "stripper
well" oil which makes up about 40 percent of all domestically produced crude
oil was replaced by a ceiling to be imputed from a "maximum weighted average
first-sale price" for all domestic crude of $7.66 per barrel. As described in the Con-
ference report, this could be as high as $11.28 for all previously uncontrolled
domestic oil, provided that "old" oil prices were continued at present levels of
$5.25. The old stripper well provisions were explictly repealed. Old oil was re-
defined as that volume of crude oil produced from a property in a month which
is equal to or less than the volume produced and sold from such property in the
months of September, October and November of 1975.
The President is given authority to adjust whatever prices are promulgated
upward under prescribed criteria and subject to Congressional veto by as much as
10 percent a year, of which no more than 3 percent can be justified as needed to
encourage additional production from difficult and high cost properties. Up-
ward adjustments for inflation are permitted within this formula, again subject
to criteria which seek to prevent undue weighting in the inflation rate from in-
creased energy costs themselves. Even these levels can, under certain conditions,
be increased if Congress agrees to the Administration's arguments.
Formal endorsement is provided for continuing the "entitlements" program,
under which the various domestic and imported prices are equalized among
refiners with varying access to less expensive crude. (The program was launched
by FEA in January 1975 and an earlier simple extension of the Emergency Pe-
troleum Allocation Act from February 1975 to August 15, 1975 had been premised
on Congressional understanding that the entitlements program would be under-
taken by FEA.)
Monitoring of prices at all levels of production and distribution would be
tightened in timeliness and detail, and further audited by the General Accounting
Office.
Any regulations and changes proposed are subject to Congressional right of
disapproval over a period of 15 days, rather than the 5-day period provided for in
the old Emergency Petroleum Allocation Act.
The President is directed to submit to Congress on February 15, 1977, an
analysis of energy supply, demand and import relationships that have evolved
under the Act.
The President is required to submit to the Congress on April 15, 1977, a report
on the impact of anticipated Alaskan oil production levels and prices on domestic
oil prices and on incentives to increase and maintain production in the lower 48
states. The President may then propose, subject to Congressional review, the
exclusion of up to two million barrels per day of Alaskan production from the
composite price ceiling and the establishment of a separate ceiling for this pro-
duction not to exceed $11.28 per barrel as adjusted for inflation.
The bill permits conversion of allocation authority to standby status at an
early stage if the President recommends and Congress agrees; converts the oil
price control authority described in the Act to standby status at the end of 40
months; provides that the standby authority terminates after five years.




24


The President is specifically prohibited from using any authority in this legis-
lation to prescribe minimum prices for crude oil, residual fuel oil, or any refined
petroleum product. Establishment of a "floor" price for crude oil was a policy
which the Administration has urged be adopted to encourage domestic production.
New discretionary authority is provided under which the U.S. government
may exercise the exclusive right to import and purchase all or any part of the
crude oil, residual fuel oil, and refined petroleum products of foreign origin for
resale in the United States.
In exercising this authority, the President is required to "endeavor to buy and
sell without profit or loss," except that he may in individual cas.-e sell on the basis
of competitive bid any oil or oil product '"at a price above or below the cost of
such oil or product if, in the judgment of the President, such s:less may result in
progress toward a lower price for oil sold in international commerce."
Effect uf pric( lerl prorision,
As enacted, the substantive provisions are likely to produce little
if any reduction in the comnposite acqui-sition costs for crude oil paid
by domestic refiners, and consequently little if any reduction in prices
to the endl-use consumer. "
Once tlhe acquisition co-ts of imported oil (now riinning in excess of
4.9 mb/d of crude as compare(l with slightly over S million barrels
a day from domesticc crude) are equalized through the entitlements
program, that averaged price could easily be $1 to $1.50 higher than
the "weighted average first ,ale price" for all domestic crude of $7.66
mandated as the new domestic price. This may be the case even after
the President's $2 import fee is removed and even if there is no addi-
tional upward pressure from companies who have withheld some $1.4
billion allowable "banked" prices increases and who may decide to
pass them through to consumers.
The conference report includes an explanation of reason why the
full rollback of $1.09 in first sale average prices of domestic crude,
highlighted in the official summary, may not be reflected immediately
in consumer prices and may be offset by passthroughs of banked costs.
It does conclude that at least "prices will be less in future months than
they otherwise would have been utinder the continuing of the present
program.
Whatever level composite domestic-imported crude oil prices reach,
the bill, if enacted, would insure that domestic crude oil prices could
be maintained below the established world market prices established
by the OPEC cartel.
Effect of management provisions
On the other hand, the new energy law reflects important and sub-
stantive changes which strengthen the authority for and mandate the
participation of both the executive branch and Congress over a
period which would extend until September 30, 1981. This does not
mean that all allocation and all price controls would continue without
change until that time. On the contrary, the bill provides for a shift
from mandatory to discretionary authority in pricing regulations for
the President 40 months after enactment, and for a much earlier shift
from mandatory to standby authority for the continuing allocation
regulations, if the President so recommends and Congress does not
disagree.
Nevertheless, the combined effect of the pricing and allocation pro-
visions of title IV marks an assertion of the right of public regulation
and surveillance of petroleum prices and responsibility for maintain-
ing authority to correct inequities in both price and distribution of





25


domestic and imported crude and refined petroleum products which is
unprecedented in peacetime in the United States in a period not
clearly identified as an emergency.

D. NATURAL GAS PRICING POLICIES
The Senate has passed a bill, S. 2310, which would under its emer-
gency provisions allow certain hard-pressed interstate natural gas
companies to buy gas from intrastate companies and other companies
to meet the needs of high-priority consumers without regard to pricing
and most other provisions under the Natural Gas Act until April
1976. It would also authorize the FEA to prohibit the use of natural
gas as boiler fuel and give the President authority to allocate propane
in emergencies. Under title II of the bill, effective after April, new on-
shore gas may be sold at market prices. New gas from offshore wells
may be sold at prices increasing to market levels over 5 years, and gas
from wells now being sold under contract may be sold at prices rising
under a prescribed formula, but may not be totally deregulated when
the existing contracts expire.
The House, however, passed substantially different legislation
(H.R. 9464, on February 5, 1976) which ended natural gas price
control over small gas producers but enlarged regulation of major
companies. A compromise amendment (adopted initially by the
narrow vote of 205 to 201, and by a final vote of 205 to 194) would
deregulate prices of natural gas sold by independent producers with
sales of less than 100 billion cubic feet a year. The plan frees from
price controls all gas that was not dedicated to interstate commerce
before January 1, 1976, involving 5,000 to 7,000 independent pro-
ducers, but keeping controls in place on 25 to 30 major gas producers.
The proposal actually enlarges controls over the major companies,
moreover, by extending Federal regulations to gas sold by those pro-
ducers in intrastate markets not subject to the existing regulatory
system. Uncontrolled intrastate gas currently is being sold at three
to four times the 52 cents per thousand cubic feet price for interstate
gas set by the FPC.
As passed, the bill authorizes the FPC to set a national average
price for interstate and intrastate gas sold by these large producers
using flexible procedures more favorable to the producers than exist-
ing regulations. The conflict in approach taken by the bills is significant.
Whether the two bills will be considered in a conference committee,
one of them will be directly voted upon by the other body, or both will
be shelved by the hostile body.

E. OTHER OIL AND NATURAL GAS MEASURES
Related provisions in the new energy policy and conservation law
include prohibition of certain lease bidding arrangements and authori-
zation to require stepped up production on Federal lands.
Increased competition in the oil industry is the objective of the
first provision. Joint venture bidding by major oil companies or their
affiliates in the development of crude oil or natural gas on the Outer
Continental Shelf is prohibited. A major oil company is defined as
one producing in excess of 1.6 million barrels of crude oil, natural
gas liquids, and natural gas equivalents per day. This restriction is


67-716 0 76 5





26


quite similar to a rile recently made by the Interior Department on
a temporary basis. The bill also requires a study to be made for similar
limitations on crunde oil, natural gas, natural gas liquids, coal, and
oil shale on other Federal lands.
The President is authorized to require the production of crude oil
and natural gas from designated fields at the maximum efficient rate
of production or the temporary emergency production rate on Federal
lands. The States- would still set the MER and TEP for areas, except
for Federal lands, within their borders. During a severe energy supply
interruption, the President may require that any field in any State
be produced at the maximum levels allowed by those States. MER's
and TEP's may be set by the Secretary of the Interior for fields on
State land that are unitized with Federal lands and in energy emer-
gencies production levels may also be set.
Outer Continental Shelf leasing, S. 521, which passed the Senate on
July 30, 1975, by a vote of 67 to 19, amends the Outer Continental
Shelf Lands Act, to create, among other things, a new and compre-
hensive method of leasing the offshore lands.
Key features of the bill as passed are:
Creates new bidding methods by which the Secretary of the Interior may offer
a lease for sale. In addition to the existing combinations of cash bonus and royalty
methods, the new methods authorize the use of diminishing or sliding royalties, and
a fixed share, diminishing or sliding share, or percentage share of the net profits to
the U.S. Additionally there is included a provision that the net profit share
methods must be used for at least 50 percent of the frontier areas offered for lease
in a given year.
Authorized the Secretary to conduct or contract for exploration activities,
including exploratory drilling to determine on an experimental basis the presence
or absence of commercial quantities of oil or gas prior to selling a lease.
Changes the present limitation that a lease be no larger than 5,760 acres.
Under the proposal the Secretary would be authorized to lease an entire geological
structure or trap to the extent practicable.
Requires that prior to development or production of oil and gas from the
Outer Continental Shelf, the lessee must submit a development plan for the
approval of the Secretary.
Other features of S. 521 include a coastal State fund for the purpose
of compensating the coastal State for the adverse impacts, primary
and secondary, economic, social and environmental in nature caused
by OCS oil and gas activity; and an off-shore oil pollution settlements
fund, which would be used to compensate for damages caused by oil
or gas discharges. A holder of a lease or right-of-way is held strictly
liable for such discharges, except those caused by an act of war or
negligence on the part of the United States or other governmental
agency. Recovery is limited to $200 million per incident and the holder
is liable for the first $22 million.
The House OCS Select Committee is marking up a revised staff
draft of the comprehensive outer continental shelf oil and gas de-
velopment bill (H.R. 6218). Sessions were scheduled for February 25
and 26, and March 4, 17, and 18.
The President reaffirmed, in his energy message to Congress on
February 26, 1976, that the Department of Interior will pursue
aggressively lease sales in the Outer Continental Shelf, and has
scheduled eight sales in 1976. The OCS, particularly in the frontier
areas, provides a crucial new potential source of energy for the Nation
and could produce almost 3 million barrels a day by 1985.







It is not clear what effect these various measures will have now or
in the near term on the production of domestic supplies of oil and
natural gas. Many producers argue that the combination of un-
certainty of future policy, restraints on price and the complexity of
the current regulations combine to reduce the inclination or incentives
for the very large investments needed for enhanced recovery or for
development of offshore and Alaskan wells.
However, it is clear that Congress is assuming both new authority
and shared responsibility for the outcome of a distinctly different
new energy management policy, particularly in regard to the produc-
tion and pricing of oil and natural gas, where decisions for so many
years had been delegated deliberately or by default to the producing
companies and the private sector.



























(






I 1
i
t
(
* t












(







IV. MEASURES INTENDED To ENCOURAGE INCREASED PRODUCTION OF
OTHER ENERGY SUPPLIES
The 94th Congress has acted on a number of measures intended to
increase domestic supplies of coal, nuclear power, solar and other
non-nuclear energy supplies. A number of new institutional or regula-
tory measures have also been proposed, among them a National
Energy Production Board, under Senate consideration, and the $100
billion Energy Independence Authority proposed by the administra-
tion. All of these are intended to step up the rate and volume of
domestic energy supplies, as well as to reshape the relative priorities
among the alternate fuels. These are described in the sections below.

A. CONVERSION TO COAL TO CONSERVE OIL AND GAS AND INCENTIVES
FOR INCREASED PRODUCTION
Energy measures relating to coal serve dual functions of both con-
servation and incentives to increase domestic supplies. Proposals
directed at conserving oil and gas by encouraging or forcing con-
version to the use of coal-would also have the effect of encouraging
increased production of coal. In addition to these, agreement on the
terms under which strip mining would take place has been considered
of major importance in achieving this goal. For convenience both
types of measures are considered jointly in this section.
Both the administration and Congress have placed a high premium
on rapidly stepping up the output of coal as a means of offsetting re-
ductions in imports of oil and as a longer run substitute for oil and
natural gas. The administration's target is to double coal output in
10 years-from the present 600 million tons per year (TPY), a goal
which would require opening up about 140 new two-million TPY
eastern underground mines, some 30 new two-million TPY eastern sur-
face mines, and 100 new 5-million TPY western surface mines. About
half of present production is by the stripping process.
The congressional majority energy policy statement also endorsed
increased use of coal but underscored its concern for an energy pro-
duction policy fully compatible with environmental concerns. It rec-
ommended the adoption of the Surface Mining Control Act, legislation
which recognizes the interests of States in energy facilities siting,
and called for establishment of machinery to recognize and resolve the
concerns of coastal, Rocky Mountain States, and others concerned with
damage to the quality of life from potential exploitation of their
regions and to provide adequate funding to minimize detrimental
secondary effects.
Coal provisions in Public Law 194-168
The new Energy Policy and Conservation Act includes incentive to
develop underground coal mines. The legislation authorizes the FEA
to guarantee loans to increase coal production by encouraging new
market entry. The total guarantees to any person (or company) are
(29)





30


limited to $30 million. The aggregate outstanding principal amount of
loans guaranteed may riot exceed $750 inllion and only 20 percent
of talit almoiunt 'an1 be use-d to develop coal vwhichl is not low in sulfur
content. Eligibility re-.trictions will lilnit tlie loans to very small
operator-.. IMaximunI interest rates are not -,pecified nor are provisions
for them discl sell. Tllere i-, no provision for penalties in cases of non-
payment or for companies that already have financing problems.
Thle cost of opening a rnew mine is so large an(l the cost of equipment
o() great that a loan of $30 million would be only a very slight incentive.
Because participation is limited only to small operators of under-
grlound low-sulfur coal mines, the volume of new production that it
might stimulate is automatically reduced.
The authority of the Federal Energy Administrator is extended to
direct powerplants, and other major fuel burning installations, to con-
vert to tlhe use of domestic coal. All powerplants that have a coal-
burning capability on June 22, 1974, or acquire it thereafter would be
required to use coal. In many areas, however, particularly in large
urban areas thi, requirement could conceivably conflict with air
quality standards. Some plants, PEPCO's Anacostia plant, for ex-
ample, have recently been ordered to shift from coal to oil.
Coni,'ersion to Coal: Provisions of S. 1777
In the Senate, hearings have been completed on S. 1777, the
National Petroleum and Natural Gas Conservation and Coal Sub-
stitution Act of 1975. These hearings were carried out under the
auspices of the Senate's national fuel and energy policy study
(S. Res. 45, 92d Congress) by the Committee on Public Works, the
Committee on Interior and Insular Affairs, and the Committee on
Commerce. S. 1777 would require that all new fossil fuel fired power-
plants and major fuel burning installations be capable, after Jan-
uary 1, 1979, of burning coal as their primary fuel, that existing fossil
fuel fired powerplants and industrial boilers be burning coal by
January 1, 1980, and that all new fossil fuel fired powerplants and
industrial boilers be burning coal by January 1, 1985. This bill is
scheduled for action this session.
The Energy Conservation and Conversion Act (H.R. 6860), which
passed the House on June 19, 1976, and is pending in the Senate
Finance Committee, includes several important measures designed
to encourage coal production and require a shift away from oil and
natural gas to other fuels in order to conserve oil and gas.
To encourage business conversion for greater energy conservation
excise taxes on the business use of natural gas, crude oil and other
petroleum products would be imposed, rising from 17 cents in 1977
to $1 in 1982 and thereafter. Five year amortization, in lieu of regular
depreciation, would be provided for installation of energy saving
equipment, including waste-using equipment, recycling, as well as
for solar energy, shale oil conversion, and various coal mining, process-
ing, coal slurry pipeline and railroad equipment. Investment credits
would be extended for insulation and solar energy equipment installed
before a stated date.
An energy conservation and conversion trust fund would be set up,
funding not to exceed $5 billion.







Coal leasing and strip mining bills
The House, January 21, by a vote of 344-51, approved H.R. 6721,
to amend the Mineral Leading Act of 1920 to revise procedures
governing the leasing and development of coal deposits on Federal
lands. Among other provisions, the bill, as approved:
Reduces to 10 years from 15 the period for which a lease could be
held without development;
Protects lands within the national parks, wildlife refuges, wilder-
nesses, trails and wild rivers systems from coal mining;
Allows a Governor to delay for 6 months issuance of a lease to
allow strip mining within a national forest in his State; and
Expands the uses to which Colorado and Utah could put revenues
received from Federal oil shale test leases.
The bill includes a comprehensive Federal exploration program,
estimated to cost $1.2 billion during the first 5 years.
The bill is in conference with a similar Senate-passed bill, S. 391,
which includes strip mining requirements affecting such mining on
public lands.
The Senate, on February 4, 1976 approved legislation (S. 2371)
to ban new mining operations in the National Park System and halt
mining completely for 4 years in several scenic areas; including
Death Valley, Calif.
The House failed to override the President's veto during the
first session of a comprehensive strip mining bill (S. 7/H.R. 25).
However, similar legislation is being considered in the House Interior
Committee in a new bill, H.R. 9725, almost identical to the vetoed
bill. The same committee is marking up legislation to prevent strip
mining in national parks.
Clean Air Act amendments
First session hearings, held July 8 to 14, 1975, by the Subcommittee
on the Environment and the Atmosphere of the House Committee on
Technology, have addressed the possible increase of sulfates in the
atmosphere resulting from additional conversions to coal. Emissions
from stationary sources are acknowledged to contribute 99 percent of
the current sulfate load.
The Senate Committee on Public Works, in its Environmental
Pollution Subcommittee, is marking up a bill to amend the Clean
Air Act to clarify congressional intent with respect to the no significant
deterioration provision of the act and to take into more specific
account the impact of air quality control requirements or the added
burning of coal that will occur as a result of the amendments of
ESECA.
The administration's bills (S. 594/H.R. 2860) also addressed them-
selves to these issues.
Titles IV and V contain amendments to the Clean Air Act and the
Energy Supply and Environmental Coordination Act of 1974
(ESECA). One of the proposed amendments to the Clean Air Act
would eliminate the regional requirement which prohibits major fuel
burning sources from burning coal where the violation of health-related
7 A narrative account of the development of this legislation and the reasons for the veto
is provided in "Highlights of Energy Legislation in the 94th Congress," op. cit.





32


standards is caused by other sources. Another amendment would
permit certain isolated plants to use intermittent control systems on
an interim basis where they do not pose a threat to public health.
Title VI would delete the significant deterioration requirement
from the Clean Air Act. The administration argues that there may
be more appropriate ways to deal with the issues associated with sig-
nificant deterioration than through the Clean Air Act, and Congress
should undertake a prompt and comprehensive review of this issue.
Coal research and development
It may be noted that the administration's fiscal year 1977 proposed
budget outlays for coal, under the Energy Research and Development
Administration's program, exceed $390 million in 1977, up from $288
million in 1976, including efforts on converting coal into clean-burning
liquid and gaseous fuels, the development of clean-burning coal
fired boilers (fluidized bed combustion), and research on developing
high efficiency techniques for obtaining electric power from coal
combustion through topping cycles and magnetohydrodynamics.

B. NUCLEAR POWER
Estimates and plans for future energy supplies for the United
States anticipate major expansion of nuclear power, the technology
for which has been developed over the past three decades with very
large infusions of public funds through the Atomic Energy Commis-
sion (AEC) and now through the Energy Research and Development
Administration (ERDA).
However, (luring recent Congresses, issues have been raised con-
cerning the general presumption that nuclear power will supply an
increasing part of the Nation's energy through the year 2000.
Included are such basic questions as the sufficiency of domestic
supplies of low-priced uranium ore to fuel the anticipated expansion;
the balancing of risks from possible catastrophic accidents or misuse
of stolen nuclear materials against the economic and environmental
benefits of nuclear power; the possible impacts on society of measures
to keep risk of theft of nuclear materials or sabotage of nuclear facil-
ities within acceptable bounds; a legislative decision whether to look
to the Government or the private interests to finance, build, and
operate missing parts of the nuclear fuel cycle, particularly enrich-
ment of uranium and long-term management of radioactive wastes;
and control over nuclear exports to minimize prospects for further
proliferation of nuclear weapons among the arsenals of nations of
the world.8
Indications of these questions are to be found in hearings held
by the Joint Committee on Atomic Energy on the breeder, chaired
by Mr. McCormack; by the House Committee on Interior and
Insular Affairs on the nuclear debate, chaired by Mr. Udall; by the
Joint Economic Committee on the breeder chaired b Senator
Humphrey; by the Senate Committee on Government Operations
on nuclear safeguards, chaired by Senator Glenn; and by the Senate
Committee on international Relations on nuclear transfers, chaired
by Senator Symington.
"The Subcommittee on Energy and the Environment of the House Committee on In-
terior and Insular Affairs held oversight hearings on nuclear energy April 28-29. May 1, 2,
June 2. 5 and 6, 1975. See Hearings, Part II, Nuclear breeder development program, for a
detailed discussion of estimates on uranium reserves and resources of the United States.





33


During the first session and opening months of the second session,
ERDA and NRC authorizations were enacted as Public Law 94-187
and Public Law 94-79 respectively and funds were appropriated in
Public Law 94-180, signed December 26, 1975. Supplemental appro-
priations for NRC, to provide an additional $50 million for safety
measures were enacted, as Public Law 94-18 during the first session,
and a revised law providing for public remuneration in the case of a
nuclear incident was also passed, as Public Law 94-197.
The following sections very briefly describe legislative activity and
other events during this period involving: (1) ERDA and NRC organi-
zation and funding; (2) the breeder reactor; (3) plutonium recycling;
(4) exports of nuclear materials and technology, and related safeguards
issues; (5) siting and licensing of nuclear plants; (6) nuclear insurance
indemnification: The Price-Anderson Act; and (7) enriched uranium
supplies. Additional details may be found in Nuclear Power and the
94th Congress: A Midterm Report, by Dr. Warren Donnelly and
Ms. Barbara Rather, Environmental Policy and Natural Resources
Division, CRS, who have also prepared this section.
ERDA and NRC organization and funding for nuclear power
On January 19, 1975, President Ford activated the Energy Re-
search and Development Administration (ERDA) and the Nuclear
Regulatory Commission (NRC). Both new agencies were created by
the Energy Reorganization Act of 1974 which also abolished the old
Atomic Energy Commission.
The NRC is to carry out the licensing and regulatory functions for-
merly assigned to the AEC, and is to devote its full attention to assur-
ing the safety as well as the reliability of nuclear power. Creation of
the NRC should end the concern that some have expressed in the past
when one agency, the AEC, had the dual and conflicting responsibili-
ties for development and for regulation of civilian nuclear power.
The ERDA brings together in one agency the major Federal energy
research and development programs and bears the responsibility for
leading the national effort to develop the technology needed to assure
the United States ample and secure supplies of energy at reasonable
prices. ERDA consolidates major energy research and development
functions from the AEC, the Department of the Interior, National
Science Foundation and Environmental Protection Agency. ERDA
will also continue research and development for production of nuclear
materials and for atomic weapons.
Public Law 94-187, signed December 31, 1975, provided authoriza-
tions for ERDA totaling about $5.7 billion, of which about $1.2
billion was for nonnuclear projects.
The appropriations bill for the Energy Research and Development
Administration and the Nuclear Regulatory Commission (H.R. 8122)
became Public Law 94-180 on December 26, 1975. It set ERDA
appropriations at $3,130,765,000 for fiscal year 1976, and $941,507,000
for the transition period, July 1, 1976 through September 30, 1976.
NRC appropriations totaled $215,423,000 for fiscal year 1976 while
$51,425,000 was appropriated for the transition period.
While only $212 million of this amount (plus $58 million for the
transition period) was earmarked for the liquid metal fast breeder re-
actor, the overall LMFBR program cost for the period through the
year 2020 is now estimated at $10 billion, as compared with a late


67-716 0- 76 6





34


1960's estimate in the range of $3 to $4 billion, and the estimated total
program cost of the C(linch River demonstration Breeder Reactor
Project, an essential element of the whole fast breeder program, has
already escalated from $700 million to $1.7 billion, although it will
not be operational until the year 1982.
The breeder reactor
A major controversial issue of energy and nuclear power policy in
the 94th Congress is the future of the breeder reactor and ERDA's
program to further develop thllis technology and to build a larger
breeder demonstration on the Clinch River at Oak Ridge, Tennessee.
Compared with previous Congresses, more Members are now raising
questions about and challenging this program than in the past, as the
number of official reports on the topic provide a broadening informa-
tion base for Congress and the public. Within the past year the GAO
lihas reported on the cost of the program (May 22, 1975); the Joint
Committee on Atomic Energy's ad hoc subcommittee issued a report
(JLine 30, 1975); and ERDA's final environmental statement on the
breeder wa-; issued December 31, 1975.
In January 1975, an ERDA review group completed its report on
the LM\IFBR program and confirmed the need to ". . proceed
expeditiously to develop the LMFBR at this time to assure the
continued availability of the nuclear power option to meet the
Nation's future energy needs." The report deemed prudent the objec-
tive of achieving commercial breeder availability by the early 1960's,
although it noted some risk that this timing may be late in relation
to need.9
The report also found that known economically recoverable domes-
tic uranium reserves would be committed to converter reactors within
a few years; that the LMFBR program contained the essential ele-
ments for success and was in reasonable balance; and that foreign
LMFBR programs would contribute important data and information,
but that it would be impractical to substitute foreign reactor experi-
ence and technology for critical elements of the U.S. program.
In March 1975, ERDA proposed realignment of management of
the fast breeder reactor project. The change would have ERDA
assume direct management of the demonstration project in order to
recognize the Government's expanded financial commitment and to
assure that the project has single lines of authority and that its
objectives are met.10
At about the same time, the Natural Resources Defense Council
issued a report sharply criticizing the breeder project and proposed
bypassing the breeder and moving directly into using solar, geo-
thermal, and fusion energy and energy conservation. The real LMFBR
debate, according to NRDC, will center around whether it is possible
to make this leap. NRDC believes the leap can be made and recom-
mended that the Federal Government delay the LMFBR program for
a decade as premature and because they see no penalty in such delay.
Funds freed by the LMFBR cutback could finance accelerated devel-
opment of solar, goethermal, fossil, fusion, and conservation tech-
nologies.
9U.S. Energy Research and Development Administration. "Report of the Liquid Metal
Ftr Breeder Reactor Program Review Group," January 1975. 5I9 p., report ERI)A-1.
10 Cf., ERDA press release No. 75-3,2, Mar. 11, 1975.





35


The postponement would also provide time for data to be gathered
and assessed which bears critically on the future desirability of the
LMFBR program. Such data would include: (1) More accurate in-
formation on uranium availability and future energy demands; (2)
information on the potential of solar, geothermal, and fusion energy
(which should increase "dramatically" with appropriate funding);
and (3) information to answer critical health and safety problems of
the LMFBR with more certainty than is now present.1"
The Joint Economic Committee, chaired by Senator Humphrey,
held hearings on the LMFBR program on April 30 and May 8,1975. In
June, the Subcommittee on Energy and the Environment of the House
Committee on Interior and Insular Affairs and the Ad Hoc Sub-
committee to Review the National Breeder Program of the Joint
Committee on Atomic Energy began hearings on the national breeder
reactor program and related issues.
Secretary of Commerce Morton and Federal Energy Administrator
Zarb told Washington newsmen that the breeder program should not
be undertaken on a crash basis.12
On June 30, 1975, ERDA Administrator Seamans issued a finding
on the preliminary final environmental statement for the breeder that
in essence supported further development. When he released the final
environmental impact statement on December 31, 1975, Adminis-
trator Seamans said:
At this stage of LMFBR technology development we do not have all the
answers necessary to determine the environmental acceptability, technical
feasibility and economic competitiveness of LMFBR technology for widespread
commercial deployment. It is to find these answers that ERDA is continuing the
research, development, and demonstration program.
He added that at least one additional programmatic environmental
statement will be prepared and considered, probably in 1986, prior to
any future ERDA decision on the commercialization of the LMFBR.
ERDA has announced that it has commissioned the National
Academy of Sciences to conduct an 18-month independent analysis of
all the risks and benefits associated with alternative conventional and
breeder reactors as sources of power.13
Bills concerning the breeder thus far in the 94th Congress have
been limited to the ERDA authorizations. In the Senate, Senator
Tunney on June 10 proposed an amendment to the ERDA authoriza-
tion for fiscal year 1976 to eliminate funds for onsite construction
of the breeder demonstration and to require an assessment and report
to Congress by the Office of Technology Assessment on the breeder
within a year.14 In the House, the ERDA authorization was passed
on June 20, after attempts to amend the bill to reduce or delay the
breeder had not succeeded.15
Plutonium recycle
Whenever nuclear fuel containing uranium-238 is exposed to neu-
trons, which is the condition within a nuclear reactor, some of the
U-238 is transformed into plutonium. If more atoms are so trans-
Thomas B. Cochran, J. Gustave Speth and Arthur R. Tamplin, Bypassing the breeder.
A report of misplaced Federal energy priority. Washington, D.C. : Natural Resources
Defense Council, March 1975. 16 p.
12 Victor K. McElheny, "Morton and Zarb join in suggesting a slowdown on nuclear
breeder reactors and call for more research." The New York Times, June 10, 19775. p. 25.
13 Nucleonics Week, June 12, 1975, p. 4. This newsletter attributed the origins of the
study to a letter from NAS President Philip Handler to Senator Tunney.
14 Congressional Record, June 10, 1975, p. S10175.
ICongressional Record, June 20, 1975, pp. H5833r-58.7.






36


formed into phitoniuim than tre fissioned to energize the reactor, then
tlie reactor is called a breeder. Conventional nuclear powerplants do
traillsfoinrm U-23S into plitonlimi, which inl principle can be recovered
and used as a Mnuclear fuel in the reactors b)y mixing it with ordinary
uranium. Over the years, thie AE(' has funded somnile research and de-
velopment to perfect this idea, known as plutonium recycle. In August
1974 the AEC publi-,hed in draft an environmental statement on
use of such fuels ill light-water reactor,-.1" lhe 1wissue addressed is a
method of operation of the nuclear power indus-try, including nuclear
reactors and associated fuel cycle facilities and operations. If plu-
tonium recycle is authorized for commercial practice, then the pluto-
nium produced in conventional nuclear powerplants will extend the
nuclear fuel resources of the Nation and also provide new income for
the nuclear industry and reduce the amount of plutonium held in
storage. If plutonium recycle is not authorized, then the energy re-
coverable from uraniuinml reserves with present nuclear powerplants
will not be increa-.ed, there would be less reason to process used fuels-
which would reduce opportunities for theft or diversion of recovered
plutonium, a new source of income for the nuclear industry would be
foregone, but the chances of dangerous, releases of plutonium to the
environment would be substantially reduced.
The National Resources Defense Council in its analysis of pluto-
nium cycles strongly opposed the concept as dangerous and unneces-
sary.7 The Nuclear Regulatory Commission addressed plutonium
recycle early in 1975. On May 8, the NRC announced that before
making a decision as to whether recycled plutonium may be used
widely in fuel for light water reactors, it would ask for public comment
regarding possible courses of action for evaluating the safeguards
issue.18
On November 12, 1975, the Nuclear Regulatory Commission
announced its procedures for deciding-possibly by early 1977-
whether to permit widescale use of plutonium mixed with uranium
to fuel nuclear powerplants. It also issued procedures for related
interim licensing activities pending that decision.9
The Joint Committee on Atomic Energy in reporting the NRC's
authorization for fiscal year 1976 noted that undue delay by NRC will
inevitably result in expensive inefficiencies and postponement of re-
lated (commercial) decisions. The Joint Committee urged the NRC to
expedite its decisions on plutonium recycling and safeguards ". . to
the maximum extent without reducing the necessary scope and depth
of its inquiry, regardless of its decision as to the'separability of these
two issues." 20
Plutonium recycle has attracted legislative attention. In February
1975, Mr. Aspin introduced a Plutonium Recovery Control Act, to
prohibit the licensing of certain activities regarding plutonium until
'6U.S. Atomic Energy Commission. "Draft generic environmental statement mixed oxide
fuel (recvcycle plutonium In lightwater-cooled reactors)," August 1974, 4 vols., report No.
WASH-1327 (known as the GESMO report).
17 J. Gustave Speth. Arthur R. Tinmplin and Thomas B. Cochran. "The plutonium decision.
A report on the risks of plutonium recycle." Washington. D.C. : Natural Resources Defense
Council. September 1974. 29 p.
18 NRC press release No. 75-115, May 8, 1975.
NRC press release No. 735-270, Nov. 12, 19!75.
2 S. Rept. 94-174, to accompany S. 1716, June 4, 1975, p. 6.





37


expressly authorized by Congress and to require a comprehensive study
of plutonium recycling by the Office of Technology Assessment.2'
In the Senate, Senator Tunney introduced a Plutonium Recovery
Control Act to likewise prohibit licensing of plutonium recycle except
for military or research and development purposes, and to require
OTA to undertake a 3-year assessment.22
Exports of nuclear materials 'and technology ana related safeguards
issues
Controlling exports of nuclear materials and technology and safe-
guarding these items from theft and diversion in the U.S. and abroad
has been a concern of the 94th Congress. Reports of U.S. shipments of
weapons grade uranium to South Africa, of West Germany's intention
to export large-scale nuclear reactors, fuel processing plants and a
uranium enrichment plant to Brazil, and recent international meetings
to review safeguards problems have heightened this concern and
prompted Congress to introduce and act on legislation as well as hold
hearings on nuclear exports and safeguards.
The Export Reorganization Act would reorganize the functions
of the Departments of State and Commerce, ERDA, and the NRC.
The State Department would be designated the lead agency for
negotiating and entering into all agreements for nuclear cooperation.
It also would study the feasibility of internationalizing all strategically
significant parts of the nuclear fuel cycle, including establishment of
Regional Nuclear Fuel Cycle Centers. All peaceful nuclear export
licensing authority would be consolidated in the Nuclear Regulatory
Commission. The Arms Control and Disarmament Agency would be
required to submit a Nuclear Proliferation Assessemnt Statement on
all U.S. nuclear agreements and on all strategically significant nuclear
export applications.
The Senate Committee on Government Operations held hearings
on this proposed reorganization in late April, 1975 and again in
January 1976. In the House, bills have been introduced to prohibit
the transfer of atomic technology to foreign powers without the ex-
press approval of the Congress,- and to prohibit the transfer of nuclear
materials to countries which have not ratified the Treaty on Non-
Proliferation of Nuclear Weapons.24
One provision of the Plutonium Recovery Control Act introduced
in the House by Mr. Aspin would require the Office of Technology
Assessment to conduct and complete within 3 years a comprehensive
study of the recycling of plutonium to include an investigation of
the risks of the unauthorized diversion or theft of plutonium.25
During House debate on the NRC authorization bill for fiscal year
1976, Mr. Long of Maryland introduced an amendment to prevent the
NRC from using any of its funds to license or authorize the export of
21 H.R. 3618, Feb. 25, 1975, and H.R. 4945 and H.R. 4946, Mar. 14, 1975. Referred to
the Joint Committee on Atomic Energy. Mr. Aspin was joined by 48 cosponsors on the
several bills. Cf. Mr. Aspin's statement in the Congressional Record of Feb. 26, 1975,
pp. E738-739 and Mar. 14, 1975, p. E1159.
2 S. 1197, Mar. 17, 1975. Referred to the Joint Committee on Atomic Energy. The bill
would require the OTA to conduct and complete within 3 years a comprehensive study
of the recycling of plutonium for the purposes of determining the extent of the dangers to
the public health and safety and the environment of such recycling. The study would
include: (1) Investigation of the toxicity and carcinogenic characteristics of plutonium;
(2) Investigation of the risks of unauthorized diversion or theft of plutonium; and (3)
Consideration of the development of systems for the use of plutonium which will assure
the protection of the public health and safety of the environment. Cf. Senator Tunney's
remarks in the Congressional Record of Mar. 17, 1975, p. S3963.
23 H.R. 622, Jan. 14, 1975 ; H.R. 2452, Jan. 30, 1975.
24H.R. 6082, Apr. 16, 1975; H.R. 7224, May 21, 1975.
m H.R. 3618, Feb. 25, 1975.





38


nuclear fuel or technology to any country which furnishes or agrees
to furnish uranium enrichment or nuclear fuel reprocessing plants to
a country not a party to the NPT, or any country which is not a party
to the NPT and which develops either an enrichmfnent or reprocessing
plant without concluding an arrangement with IAEA or Euratom re-
quiring present and future nuclear facilities to be subject to safe-
guards established by either such agency against diversion of nuclear
material. The provision,- would not prevail if the President deter-
mines that the national security requires such a license or authoriza-
tion and reports this determination to Congress at least 60 days prior
to the issuance of such a license or authorization. Opponents of the
amendment argued that it would not serve to advance U.S. policy
toward nonproliferation. The amendment was defeated 139-117.'
House Congressional Resolution 371, which was introduced by
Mr. Zablocki on July 30, 1975, urges a halt to the transfer of nuclear
fuel, technology, and equipment to any country that has not accepted
IAEA safeguards for all its nuclear programs, or has not become a
party to the nonproliferation treaty.27 It also urged the processing
of plutonium in regional facilities. The Subcommittee on Interna-
tional Security and Scientific Affairs of the House Committee on
International Relations held hearings on this resolution in October
and November, 1975. Senate Congressional Resolution 69 is similar.28
A resolution urging the President to seek international cooperation
in strengthening and improving international safeguards (Senate
Resolution 221) was introduced by Senator Pastore.29 It also directs
the President to seek the restraint of suppliers of nuclear equipment
in the transfer of nuclear technology. Senate Resolution 221 was
passed by the Senate on December 12, 1975.
Concurrent resolutions have been passed which expressed congres-
sional approval of proposed additional amounts of special nuclear
material which may be distributed to the International Atomic Energy
Agency30 and the European Atomic Community31 pursuant to the
Atomic Energy Act, and the proposed 2-year extension of the 1955
Agreement for Cooperation between the United States and Israel
concerning the civil uses of atomic energy.32 Hearings were held on
these proposals on February 6, 1975, by the Subcommittee on Agree-
ments for Cooperation of the Joint Committee on Atomic Energy.33
Hearings on the export and safeguarding of nuclear materials and
technology not related to specific legislation were held by committees
of the House and Senate. The Subcommittee on Energy and Environ-
ment of the House Committe on Interior and Insular Affairs held
hearings on the plutonium economy and nuclear theft international
proliferation of nuclear technology and safeguards, as part of its overall
SCf. debate in the Congressional Record. June 20, 1975. pp. H5892-5.
27 H. Con. Res. 371. July 30. 1975. By Representative Zablockl.
2 S. Con. Res. 69. Oct. 9. 1975. By Senator Cranston.
2 S. Res. 221, July 26, 1975, by Senator Pastore. Referred to the Committee on Foreign
Relations.
30 S. Con. Res. 13. Feb. 11, 1975; and H. Con. Res. 115, Feb. 10, 1975. Approved by the
Senate Feb. 19. 1975, and tabled in House Mar. 17, 1975.
a S. Con. Res. 14, Feb. 11, 197.5; and H. Con. Res. 116, Feb. 10. 1975. Passed by Senate
Feb. 19, and tabled In the House on Mar. 17, 1975.
SS. Con. Res. 15. Feb. 11, 1975, Mr. Pastore; and H. Con. Res. 114, Feb. 10. 1975.
Passed by Senate Feb. 19, 1975, and in the House Mar. 11, 1975.
3 U.S. Congress. Joint Committee on Atomic Energy. Subcommittee on Agreements for
Cooperation. "Proposals for international cooperation in nuclear energy." Hearings, 94th
Cong.. 1st sess., Feb. 6, 1975. Washington, Govt. Print. Off., 1975, 16 p.





39


hearings on nuclear energy. The Subcommittee on Arms Control of
the Senate Foreign Relations Committee held hearings on March 19,
October 21 and 24, 1975, and February 1976, on issues relative to
nuclear nonproliferation.
Siting and licensing of nuclear plants
President Ford in his State of the Union Message of January 15,
1975, spoke of nuclear power in the context of beginning to restore
the Nation's surplus capacity in total energy. He mentioned a num-
ber of actions to energize the Nation's nuclear power program and
said he would submit legislation to expedite nuclear licensing and the
rapid selection of sites. He also recommended that the 1-year invest-
ment tax credit of 12 percent be extended an additional 2 years to
speed the construction of powerplants that do not use natural gas or
oil, and proposed selective reform of State utility commission regula-
tions. His program envisions that within the next 10 years there will
be 200 major nuclear powerplants in the United States.34
The Energy Reorganization Act of 1974 required that the Nuclear
Regulatory Commission make a national survey to locate and identify
possible nuclear energy center sites defined as an area, not limited to
land, large enough to support all the facilities used in the whole nu-
clear fuel cycle-uranium enrichment, fuel reprocessing, waste storage
and other processes, in addition to the generating plant itself.
The act also authorizes the NRC to adopt policies which will en-
courage the location of nuclear power reactors and related fuel cycle
facilities on nuclear energy center sites insofar as practicable.
The study issued January 19, 1976, concluded that depending on
location, it can be feasible and practical to construct powerplant
centers of up to 20 nuclear power reactors, fuel cycle centers and
combined centers. There is not any great unequivocal advantage or
compelling need for such centers. Dispersed siting of nuclear facilities
remains a feasible and practical, and even desirable option for many
locations. Based on the study, the NRC recommended that nuclear
energy centers neither be made mandatory, nor be excluded.
Legislation to improve nuclear licensing procedures and to provide
for siting include H.R. 3995, introduced by Mr. McCormack on Feb-
ruary 25, 1975; S. 894, introduced by Senator Jackson and 26 co-
sponsors on March 6, 1975; H.R. 7002, introduced by Mr. Price on
May 14, 1975; and S. 1717, introduced by Senators Pastore and Baker
on May 12, 1975. S. 894 would authorize the Secretary of the Interior
to assist the States to develop and implement State land resource pro-
grams and, among other things, to encourage expeditious energy siting
decisions. The other bills would improve licensing and siting in vari-
ous ways.
Nuclear insurance/indemnification: The Price-Anderson Act
The Price-Anderson Indemnity Act provides financial protection to
both the public and the nuclear industry in the event of a catastrophic
nuclear accident. It was first enacted in 1957 and has been extended
three times, most recently in December 1975.
34 As of Mar. 13, 1975, MDA reported 53 operating nuclear generating units, 63 being
built, 13 with site work authorized. 92 with reactors ordered, 1.3 planned. plus two ERDA-
owned units, for'a total of 236 nuclear generating units. Cf.. AEC press release No. 75-6*,
Apr. 29, 1975.





40


The Federal Energy Administration on July 11, 1975, submitted
draft legislation to extend the Price-Anderson Act for 10 years past
its expiration date of August 11, 1977. This measure became House
Resolution 8631 and S. 2568.15' 36 The Joint Committee on Atomic
Energy held hearings on the bills, in September, October, and No-
vember 1975. Both Houses passed the measure in December and
it was signed by the President on December 31, 1975, becoming
Public Law 94-197.
The extended act provides that each nuclear licensee furnish $125
million of private insurance (the maximum amount available) to
cover public liability claims against the licensee and its subcontractors.
The AEC provides indemnity protection up to $435 million for each
nuclear incident in addition to the private insurance. The maximum
liability for any nuclear incident shall not exceed a total of $560
million.
Enriched uranium
Enriched uranium is the fuel used in U.S. types of nuclear power
plants. The Energy Research and Development Administration
(ERDA), is the principal domestic and world source of enriched
uranium. However, in 1974, the enrichment capacity of ERDA fac-
tories became fully committed and no additional long-term enrich-
ment orders can be accepted.
Without the addition of at least one major new plant, a severe
shortage in this nuclear fuel is expected in the early 1980's. There is
little opposition to expansion of U.S. enrichment capacity to fill the
demand in both domestic and foreign markets, except from those
who oppose nuclear power in general. Among the arguments for con-
tinued U.S. participation are:
The revenues from sales of enrichment services is considerable,
and
Without an assured supply of enriched fuel, foreign customers
are reluctant to buy U.S.-built nuclear reactors, and may also try
to secure other sources of enrichment services, including national
facilities. This could harm U.S. efforts to halt the proliferation of
nuclear weapons capabilities, because enriching facilities can be
used to produce the necessary fissionable material.
At issue is who should finance, build, and operate the new capacity:
ERDA or a private venture. The administration favors private
construction and operation, and has proposed legislation to establish
incentives for private financing. Some Members of Congress favor
direct Government construction and operation, or creation of a
special Government corporation to do so.
The Administration proposal, the Nuclear Fuel Assurance Act,37 38
would allow the Government to:
Supply and warrant Government inventions and discoveries in
enrichment technology;
Sell certain materials and supplies available only from the Govern-
ment;
SH.R. 8631, July 14, 1975, Representatives Price and Anderson. Referred to the Joint
Committee on Atomic Energy.
SS. 256.9, Senator Pastore. Referred to the Joint Committee on Atomic Energy. .
37 S. 203.5. July 8, 1975, Mr. Pastore. Referred to the Joint Committee on Atomic Energy.
38 H.R. 8401, July 8, 1975.





41


Buy enrichment services from private producers or sell Government
enriching services to the private producers;
Assure the delivery of uranium enrichment services to customers
who have placed orders with the private firms;
Assume the assets and liabilities of a private enrichment firm if it
threatens to fail.
The Joint Committee on Atomic Energy has held extensive hearings
on the enrichment question, most recently in December 1975.

C. SOLAR AND OTHER NONNUCLEAR ENERGY RESEARCH AND
DEVELOPMENT
Continuing a congressional initiative for greater Federal support
for solar energy begun in the 93d Congress, during the first session
and the opening months of the second session of the 94th Congress
both the House and the Senate have pushed for additional resources
in this energy field.39
A tax credit of up to $2,000 (25 percent of the first $8,000 cost) for
converting homes to solar heat was approved by a vote of 244 to 132
on June 13, 1975, in the course of debate on the Ways and Means
energy bill, H.R. 6860. The residential solar energy credits are per-
mitted for insulation of equipment meeting "interim" rather than
"definitive" HUD standards and may be provided for solar equip-
ment shared by several houses.
The Energy Conservation Act (S. 2932) introduced February 5,
1976, includes low interest loans and loan guarantee programs to
improve the thermal efficiency of individual residences by installation
of insulation, storm windows, or other improvements, or by the appli-
cation of solar energy heating and cooling equipment.
The Senate Select Committee on Small Business- began hearings,
expected to extend over a period of several months, on "Solar Energy:
How Much? How Much From Small Business: How Soon? Why Not
More? Why Not Sooner?" At the first of these hearings, held May 13
and 14, 1975, witnesses from the private sector testified who urged in-
clusion of heating-and-cooling systems contractors in the projected
solar demonstration projects to be financed under Public Law 93-409,
and provided examples of discrimination against small business in the
emerging solar energy industry.
A staff study prepared as background for the hearings tabulated a
large number of estimates by Government agencies and private re-
search firms, prepared between 1972 and 1975, on U.S. energy con-
sumption projected for estimated solar energy contributions, by
technology, 1980-2020.40 A preliminary finding was that official
estimates of contribution which can be provided by solar technologies
appear to have begun to go up quite rapidly. The joint NSF/NASA
solar energy panel, which in 1972 had estimated that by the year 2000
only 5 percent of total national electricity supply would be generated
SPublic Law 93-409. "The Solar Heating and Cooling Demonstration Act of 1974";
Public Law 93,-383, "Housing and Community Development Act of 1974"; Public Law
93-473. "The Solar Energy R&D and Demonstration Act of 1974"; and Public Law 93-316.
"The NASA Authorization Act."
40 Congressional Record, May 8, 1975. pp. S7730-40.





42


by solar energy (including wind, ocean thermal differences, and other
solar indluced energy ,olurces), in 1975 reportedly had raised this
estimate to as much a- 50 percent of projected electric power genera-
tion, made up of 25 percent wind generated. 9 percent photovoltaic,
and 16 percent from ocean thermal difference->, assuming, however,
no limit on (capital availability for concurrent development of all
three technologie-.
The NSF/NASA projection assumed that a little more than 40
percent of total L'.S. energy would come from electricity in 2000, and
would add uip to an estimated 76 quads, or a little more than the
equivalent of 30 million barrels of oil a day. About half of this could
come from solar energy.
Meanwhile, FEA has contracted with Florida Technological Uni-
versity for a study to provide regulatory and legislative recommenda-
tions designed to expand the market for solar water heating equip-
ment, Florida law already requires new single family homes to be
constructed in such a manner as to be adaptable to the installation
of solar water hearing equipment, and further State and local ordi-
nances. may result from the study. Before the introduction of cheap
natural gas as an energy source, more than 25,000 solar water heaters
were in use in the Southeastern States, including Florida.
On April 7,1975, ERDA and the Department of Housing and Urban
Development, in compliance with Public Law 93-409, submitted to
Congress an interim report for conducting a nationwide solar heating
and cooling demonstration program. The report, "National Plan for
Solar Heating and Cooling (ERDA-15)," calls for the demonstration
of solar heating by late 1977, and the demonstration of combined
solar heating and cooling by late 1979. Hearings on this report were
held by the Subcommittee on Energy Research, Development and
Demonstration of the House Science and Technology Committee
on May 13, 14 and 15, and the Report was released in October 1975.
This subcommittee also held hearings on a second important solar
energy policy document, "Preliminary Definition Report. National
Solar Energy Research, Development and Demonstration Program
(ERDA-49)." A draft of this report was released by ERDA in early
July in compliance with provisions of Public Law 93-473 which
required ERDA to develop a comprehensive plan for a national
solar energy program in all solar research areas. The final ERDA-49
was released in August 1975.
The fiscal year 1976 authorizations for nonnuclear research included
$275 million for coal energy development, $48.6 million for petroleum
and natural gas, development, $25 million for oil shale development,
$96 million for development of solar energy, anti $33.8 million for
geothermal energy.
In the President's energy message of February 26, 1976, the ad-
ministrations budget outlays anticipated for 1976 and requested for






43

fiscal year 1977, for all energy research and development, including
nuclear were summarized as follows:

PRESIDENT'S 1976-77 ENERGY R. & D. BUDGET
[Outlays in millions of dollars]

Fiscal year 1976 Fiscal year 1977
Percent
Program activities Amount Percent Amount Percent change

ERDA, total------- ----------------------- $1,412 64 $1,975 69 +40
Nonnuclear, total -----...--------------------- 519 24 710 25 +37
Fossil I ---------------------------- 333 15 442 15 +33
Solar.................................. -------------------------------- 86 4 116 4 +35
Geothermal 2 -----.-...--..---.----.. .32 2 46 2 +44
Conservation --------------------------- 56 2 91 3 +63
Environmental control .---..----------------..... 12 1 15 1 +25
Nuclear, total-----..----------------------- 893 40 1,265 44 +42
Fusion----...----.--------------------- 224 10 304 11 +36
Fission-----..-..------.----------------- 521 23 709 24 +36
Fuel cycle/safeguards --------------------59 3 144 5 +144
Enrichment R.&D D---------------------- 89 4 108 4 +21
EPA: Environmental control 3 -------------------- 80 4 73 3 -14
NRC: for example, safety research ---------------- 94 4 116 4 +23
DOI: Coal and oil shale mining ------------------52 2 64 2 +23
Other--.-----------..------------------------ 14 1 9 ------------ -36
Total direct energy R. & D ----------------- 1,652 75 2,237 78 +35
Supporting R. & D.:
ERDA.---...-----. --------.......----------------- 373 17 403 14 +8
EPA ----------------------------------- 40 2 47 2 +18
NSF......----------------------------------- 93 4 139 5 +50
Total supporting R. & D ----------------- 506 23 589 21 +16
Energy related: DOI: Coal mine health/safety
research---------------------------------- 29 2 30 1 +3
Grand total 4 -----.. ...- ---------- 2,187 100 2,856 100 +30

1 This category includes R. & D. on coal, oil, gas, and oil shale.
2 This category does not include the resource assessment activities of the Department of the Interior.
3 This category includes programs for coal cleaning and stack-gas cleanup.
4 In addition, the fiscal year 1977 budget identifies funds to accelerate the commercialization and demonstration of
energy technologies through loan guarantees: Geothermal resources development fund, fiscal year 1977 outlays of
$4,400,000; and synthetic-fuels commercial demonstration fund, fiscal year 1976 outlays of $3,000,000.
Source: White House fact sheet, Feb. 26, 1976.

D. A NATIONAL ENERGY PRODUCTION BOARD AND OTHER MANAGEMENT
MEASURES

The Democratic Majority proposals issued February 27, 1975, recog-
nized the importance of an "orderly but accelerated development of
greater and more diversified domestic sources of supply." As described
in the published report, "The Congressional Program of Economic
Recovery and Energy Self Sufficiency":
The overall objective of national energy sufficiency recognizes the enormous
undertaking involved in terms of capital investment and incentives, in terms of
environment protection and national security. Switching from oil and gas to
coal and other sources is just one aspect of the program although a most critical





44


one and it alone will require a substantial commitment of national resources. A
national program of this magnitude requires the establishment of an instrumen-
tality at the highest level of government to make certain that the program is
successful. Therefore at the core of the recommendations. is the creation of a Na-
tional Energy Production Board as, an independent agency of the government.
It would mobilize unutilized and under-utilized private and public resources to
increase domestic energy production on an urgent baLsis. The National Energy
Production Board would be patterned after the War Production Board of World
War II and, subject to Congressional review, would have authority and funding to
break energy bottlenecks, and to take all actions necessary to accelerate the pro-
duction of and conversion to domestic energy sources. Much of the cost would be
funded out of an Energy Trust. * *
As the financial base for this trust, a 5 cent tax on gasoline at the pump would be
imposed 30 days after enactment. This revenue would begin to pay for the urgent
program of conservation and production.
Additional revenues for the Trust would be derived from energy taxes on in-
efficient uses of energy and by dedication of part of the funds paid for leases cover-
ing the Outer Continental Shelf.
It was anticipated that Trust fund receipts should and would be
$1 billion in 1976 and $2 billion thereafter through fiscal year 1984.
S. 740, A National Energy Prodaction Board
S. 740, introduced February 18, 1975 (by Senators Jackson, Magnu-
son, Stevenson, Bayh and I eahy), provides the proposed legislative
authority and administrative framework through which ,his broad
objective would be carried out. Hearings were held March 20, April
14 and 15, and July 14 and 21, 1975.
As introduced, the bill would establish a "National Energy Produc-
tion Board to assure early development of energy resources on the
public domain and other Federal lands and on the Outer Continental
helf to overcome the dependence of the United States on foreign
nations for energy supplies which are essential to national security,
commerce, and a full-employment economy."
The independent nature of the Board is described in Title I, subject
to cooperative liaison and "rights of review and comment" on pro-
posals, which are listed in Title V: As described in the official sum-
mary of Title I:
The National Energy Production Board will consist of a Chairman and four
members appointed by the President with the advice and consent of the Senate.
The Chairman of the Board has cabinet rank (Level I of the Executive Schedule)
and the members of subcabinet rank (Level II). The Board is established for a
five-year term subject to extension by the Congress. No member may hold another
position in the Executive branch, nor may a member, after service on the Board,
represent. any party other than the United States in a matter involving the Board.
The Board will have power to make full use of competent personnel and enter into
contracts to carry out its work.
Title V on Guidelines and Administration provides that:
The Energy Resources Council, the Governor of any affected State and the
governing bodies of political subdivisions of affected local areas shall review pro-
posals of the Board. In addition, right of review and comment shall be provided to
private industry, labor, and environmental and consumer groups.
The duties, responsibilities and authorities of the Board are com-
prehensive and far reaching, but place certain of the programs man-
dated under congressional review with a right of disapproval and
others in a statuss which requires express legislative authorization.
Two major overall duties are described in Title II, (1) general
monitoring of all energy resource activities and (2) preparation and
execution of a Federal oil and gas exploration program on Federal
lands including the OCS.





45


The Board is empowered to monitor all activities of the Federal government
and the private sector within the United States or in other parts of the world
which have a bearing on the development of domestic en,-rgy resiirce- or the avail-
ability of material, e(lquipment or manpower for such development.
The Board is directed to prepare and carry out a Federal oil and ga= explora-
tion program designed to determine the extent, location and value of oil and gas
reserves on Federal lands, including the Outer Continental Shelf. Thik program
shall involve prompt, comprehensive, and environmentally responsible activities,
including exploratory drillings, in consultation with affected State and local
governments.
Three programs, ordered to be developed by the Board are to be
subject to congressional review and right of disapproval within 60
days, the naval petroleum reserves program (described in section I
above), a Federal facilities energy program and an expedited energy
project procedure to overcome delays and institutional impediments.
The Federal facilities energy program as described in title III,
section 303 of the bill, to be drawn up by the Board within 90 days
of the effective date of this section, would be based on and would
include:
(1) an inventory of federally owned and federally controlled industrial and
manufacturing plants and installations, including but not limited to naval ship-
yards, ship repair facilities, depots, arsenals, and other facilities and installations
of the Department of Defense and industrial and manufacturing facilities of other
departments, agencies, and instrumentalities of the Federal Government;
(2) an inventory and assessment of the capacity of various departments'
agencies, and instrumentalities of the Federal Government, including but not
limited to the Corps of Engineers of the Department of the Army, the Naval
Ordnance Command of the Department of the Navy, the Bureau of Reclamation
of the Department of the Interior, and the General Services Administration to
participate in the management of Federal energy exploration, development and
production programs;
(3) the identification and designation of idle, underutilized, or surplus Federal
facilities and installation capable of, or capable of being adapted to, at reasonable
cost, the production of materials and equipment essential for the production of
energy and fuel-, including but not limited to drilling platforms, drilling rigs,
pipe for drilling operations and pipelines, and mining and transportation equip-
ment, goods, and supplies;
(4) estimates of the cost of equipping, reequipping, tooling, or retooling such
facilities and installations for the production of energy-related materials, goods,
and equipment;
(5) estimates of the availability of the manpower required to staff such Federal
installations and facilities;
(6) a plan for the conversion of designated appropriate Federal facilities and
installations for production of energy-related materials and equipment;
(7) a schedule for the conversion of designated Federal facilities and installa-
tions for the production of -energy-related materials and equipment.
Programs to be drawn up by the Board within nine months, but
which require express congressional authorization are authorized in
title IV, officially summarized as follows:
The Board is directed to prepare, within 9 months, Federal
action programs to accelerate coal production from public lands of
the United States, improvement and augmentation of the energy
transportation system, including rebuilding railroad systems, coal
slurry pipelines, oil and natural gas pipelines, and a Federal oil and
gas production program. The Federal oil and gas production program
shall include provisions for development and production of oil and gas
reserves under Federal management, joint ventures and cost sharing
with private industry and preferences for entry into the oil and gas
production industry by independent producers. None of the programs
authorized under the title may proceed without express legal authori-
zation of the Congress.





46


An energy independence authority
Tie Adlministration has proposed, in S. 2532/H.R. 10267, sub-
mitted Octol)er 10, 1975, a new Energy Independence Authority
(EIA). In his energy inessage to Congress, February 26, 1976, the
President summarized its fiinctions as follows:
A new government corporation to :issikt private sector financing of new facilities.
It would l)h abl- to provide iup to $100 billion for financial assistance to projects
to develop), transport, or conserve energy; fcr commercializing new technologies;
for technologies essential It, the production of nuclear power; for conventional
technologies involving production and distribution of electric power generated by
sources other than oil or gas; and for conventional technologies involving projects
of unusual size or scope, or projects which represent novel institutional or regula-
tory arrangements, in the production or tran:uspl)ortation of energy.
EIPA would also expedite the regulatory process at the Federal level for projects
deemed critical for energy development. It would establish the FEA as the co-
ordinator of a streamlined permit process for all new facilities which require
Federal licensing.
Other energy management measures, Public Law 94-168
In addition to the important pricing and allocation measures which
are included in the new Energy Policy and Conservation Act and
described earlier in this section, additional management authority is
provided in title V of the new act.
Materials allocation: An important provision amends the Defense
Production Act to authorize the President to require allocation or
priority performance on contracts relating to supplies of materials
and equipment needed to maximize domestic energy supplies. The
authority may be used only if such supplies are scarce, critical, and
essential to energy production, processing, distribution, conservation,
or the construction and maintenance of energy facilities. This authority
expires December 31, 1984. The bill provides that this special au-
thority would continue even if the Defense Production Act of 1950
were otherwise to expire.
The President is given the authority to restrict exports of coal,
petroleum products, natural gas, or petrochemical feedstocks as
well as equipment necessary for further exploration, production,
refining, or transportation of energy supplies. Exceptions are allowed
for exchanges, for increased transportation efficiency, and for the
historical trading relations with Mexico.
The expanded data collection authority, which is included among
the general provisions, provides one of the most important of the new
energy policy management measures included in the bill. The au-
thor;ty of the Federal Energy Administration to gather information
under the Energy Supply and Environmental Coordination Act of
1974 is extended until December 31, 1979. The Comptroller General
is authorized to conduct detailed verification audits of books and
records of any person or corporation in the energy industry who is
required by this or other laws to furnish such information or if re-
quested to do so by a full congressional committee with legislative
or oversight jurisdiction. Furthermore, the Comptroller General
may conduct verification examinations of financial information
relating to energy resources and products of any vertically integrated
petroleum company. A civil penalty of up to $10,000 is imposed for
failure to comply with an inspection order, and each day of failure
to comply will constitute a separate violation.





47

Among the many lessons of the Arab oil embargo and the subse-
quent experience of coping with the serious petroleum shortages
which developed was the recognition of the difficulty of shaping and
executing new policies in the absence of any reliable and current
energy data base other than that supplied by the industry itself.
It is the intent of the 94th Congress that this weakness be corrected
under the authority provided in this act.









V. REDUCE DEPENDENCE ON FOREIGN IMPORTS OF OIL


During the 2Y years since the Arab oil embargo in mid-October
1973, a consensus has been reached within Congress and the admin-
istration that the country's growing dependence on imports of foreign
oil is undesirable, that it should be curbed and, hopefully, reduced.
This consensus on the broad objective, however, has not yet been
matched with a consensus on means. The administration's position
has been that oil imports can and should be reduced through imposi-
tion of import tariffs, fees, and/or excise taxes, coupled with removal
of price controls on domestic oil and gas, relying on the higher prices
to lower imports through lowered consumption. Higher prices would
also serve, it is argued, to stimulate increased domestic production of
not only oil and gas but alternative energy sources as well.
The Democratic position in general places more reliance on quanti-
tative controls, through various types of import quotas and other
energy management measures. Decontrol of oil and gas prices is to be
permitted, but only gradually and at a slower rate than the adminis-
tration desired.
During the 1st session of the 94th Congress there was a great deal
of legislative activity and debate on import tariffs, quantitative oil
import controls.
During this period, while the debate over how to reduce dependence
on imports escalated, so did oil imports: By the end of the first week
in February 1976, foreign oil imports reached a level of 6,980,000
barrels per day (4,932,000 b/d in crude and 2,048,000 b/d in oil prod-
ucts). This was 567,000 b/d higher than in February 1975 and already
exceeds the levels stipulated in the House-passed Ways and Means
bill, H.R. 6860, of 6 million b/d for 1976 and 6.5 million b/d for 1977.
Furthermore, domestic production of crude oil declined during the
same period, from 8,580,000 b/d during the first week of February
1975 to 8,062,300 b/d in the first week of February 1976, creating
additional pressures to increase imports.
The debate on limiting oil imports therefore has a prime significance.
A. OIL IMPORT TARIFFS AND OTHER FEES
Following up on the administration's comprehensive energy plan,
formally announced January 15, 1975, and introduced as S. 594 and
H.R. 2633 and H.R. 2650 on February 5,1975, President Ford imposed
a $1 a barrel tax on imported oil, effective February 1, to rise to $3 in
two additional $1 increases scheduled for March 1 and April 1, 1975.
At the same time he stated that "I am prepared to use Presidential
authority to limit imports, as necessary, to guarantee success" in reduc-
ing imports. Title IX of the administration bill, directed at insuring
price stability should foreign prices fall, would provide specific author-
ity to use tariffs, quotas, and variable fees to control imports as well as
to establish a floor price for domestic oil.
(49)





50


Congress. responded immediately with a bill. H.R. 1767, introduced
in the Hoi--e on January 20, 1975, to sii-pend for a 90-day period the
authority of the President under section 232 of the 'Irade Expansion
Act of 1962, or any other provision of law, to increase tariffs or to take
any other import adjustment action with respect to petroleum or
petroleum products and to negate any such action which may be taken
by the President after January 15, 1975.
The bill passed the House by a vote of 309 to 114, February 5, and
was approved by the Senate February 109, by a vote of 66 to 28.
It was vetoed hby the President on March 5, 1975, but only after he
announced that in the interests of accommodation and to provide
additional time for congressional action he would postpone the addi-
tional $2 tariff on oil imports until May 1.
On April :30, he again announced a further delay in import fees
until June 1 to give Congress further time to develop its alternatives.
Subsequently, on \ayv 27, 1975, after Congress had recessed without
agreement on comprehensive legislation, the President announced the
imposition of the next $1 fee on imported crude oil and $0.60 on im-
ported refined products, effective June 1, 1975.
On July 30, 1975, the FEA Administrator announced that FEA
was prepared to eliminate the 60-cents-per-barrel tariff on refined oil
products imported into the United States. However it was apparent
that this offer was contingent on congressional agreement to the
administration's price decontrol plan and congressional disapproval
of that plan, on the same day, left the outcome of the offer to drop
the tariff in imported refined products in doubt.
Meanwhile, a vote to attempt to override the veto was postponed
while intensive committee review of the Democratic alternative pro-
grams went forward in both the House and Senate.
The House included an ad valorem tariff in its first major composite
energy bill, H.R. 6860, which passed the House on June 19, 1975, and
is still under review by the Senate Finance Committee.
The bill imposes a tariff on oil imports of 2 percent ad valorem for
crude oil and 5 percent ad valorem for petroleum products. These
are approximately the levels of the import license fees that were in
effect in January 1975 under the national security provision of the
Trade Expansion Act. The authority of the President to impose oil
import tariffs or quotas under that act (except in the case of war)
is terminated, but the President is given the authority to increase
the oil import tariff to 10 percent ad valorem or $1 per barrel, which-
ever is higher. For a 2-year period, however, the tariff on residual and
distillate fuel oil is limited to 5 percent.
These and other measures using import fees were overtaken and,
for the time being, superseded with the signing of the Energy Policy
and Conservation Act, Public Law 94-163.
In a statement and fact sheet issued when he signed the bill, on
December 22, 1975, the President announced the removal of the $2
per barrel import fee, which was made effective as of the same day,
and stated that while he believed the price decontrol provisions which
were included might permit "imports to increase by approximately
150,000 barrels per day by the end of 1976, imports probably will be
about 200,000 per day less after 3 years, due to future price increases







allowed by the bill." and at the end of 40 months when price controls
end entirely, should "reduce imports by about 3 million barrels per
day."
(It is important to keep in mind that the administration's estimates
of reductions in imports have, to date, been measi:red against an
otherwise anticipated rapid rise, to 12 million barrels a day by 1985
if no new actions are taken.)

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





52


The chairman of the Ways and Means Committee had intended to
seek House passage before the Memorial Day recess, and floor debate C
had been scheduled for May 21 and 22, subject to clearance by the
Rules Committee. The Democratic leadership decided on May 20 to
postpone debate until after the recess, hoping to be able to consider
the proposals jointly with the House Commerce Committee's corn-
plementary companion bill, H.R. 7014, not. then reported from
committee.
When it became clear that the House Commerce Committee would
not be able to report H.R. 7041 in time for joint consideration, the
House proceeded to consider the Ways and Means bill alone, in the
general understanding that other complementary and supplementary
measures were pending in other committees.
General debate began June 9, 1975, under a rule, H. Res. 505,
which permitted consideration of the more than 100 pending amend-
ments title by title.
The quantitative import quota provision came under attack almost
immediately, with a recommendation that it be stricken entirely from
the bill. The motion was rejected by a vote of 185 ayes to 224 noes, on
June 10, 1975, and title I was retained with a modification which
increased the ceilings permitted for 1979 from 5.5 million barrels a
day to 6 million barrels per day, and for 1980, from 5.5 million barrels
per day to 6.5 million barrels per day. The adjustment was based
primarily on the prediction that, even with positive action to bring
about substantial savings in consumption and positive incentives to
increase domestic production, total domestic oil production was likely
to at best remain at present levels but could still continue to decline
as old fields went out of production faster than new fields could be
brought into flow. The vote approving the increase, on June 11, 1975,
was 211 ayes to 200 noes and, at these levels, quantitative quotas
were retained in the final bill which was approved on June 19, 1975,
by 291 ayes to 130 noes.
As noted above, the bill is now pending in the Senate Finance
Committee where it is now in markup.

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





53

downplayed the role of quotas as a direct constraint on consumption,
arguing that its role would be rather to insure that petroleum savings
otherwise achieved would be reflected in savings in imports.
However, this premise was promptly challenged by both opponents
and proponents of the quantitative import limitation provision, early
in the debate and even before the tax on gasoline was removed from
the bill:
Mr. KETCHUM. I find it absolutely amazing that the committee majority
continues to believe that quotas on imports are not going to produce a major
crunch. Just listen to this language from the committee report:
"Your committee does not intend that these import quotas be an energy con-
servation measure in themselves * a comprehensive program of quota re-
strictions is necessary to be sure that the conservation achieved by other pro-
visions in the bill will result in a reduction in foreign imports rather than a re-
duction in domestic production."
This premise is so false that it defies comprehension. Domestic production is
declining and this pious hope will not stem the decline. On the contrary, other
actions already taken by Congress, such as the repeal of the depletion allowance,
and actions being contemplated such as a windfall profits tax insure a drop in
domestic energy activity. The FEA estimates that, at best, there would be a
1 million barrel a day increase in petroleum production, if a massive development
program were underway and oil sold at $11 a barrel. These are optimistic assump-
tions by anyone's standards. At the same time, assuming a 4-percent increase
in demand a year, we will need between 7 and 9 million barrels a day of imported
oil, figures well above the 6 million barrel a day quota. So how in the name of
heaven can the supporters of this bill say that the quotas would not have a tre-
mendous impact? 1
*
Mr. CONABLE. This quota supposedly has enough flexibility so that it will not
bite, but if the gasoline tax is eliminated I do not think there is any doubt that the
quota, as a quantitative limitation would in fact come into play and cause serious
problems in the administration of the resulting scarcity.2
*
Mr. OTTINGER. We have in the bill which is coming up from the Commerce
Committee provided allocations, so that if import quotas create some shortfall
and it may well do that at some time in the future, we will be able to manage that
and the President will have the authority to make the necessary allocation.
We have got to take some hard decisions in this House and any way we turn is
hard. If the decision is to go to the price route, it means everybody is going to pay
huge increases in price for everything in our economy. If we decide to do nothing to
conserve, we are going to have this absolutely horrendous transfer of assets to the
OPEC countries. Quotas and allocations with price controls is by far the best
alternative.
I think this is at the heart of the bill. Regardless of what people do on the
gasoline tax, if we have a quota in place we will have a meaningful congressional
energy policy.3
The Congressman who fought the hardest to strike all of title I,
on oil import quotas, was the first to argue that its effect would in
fact be so rapidly to drive up domestic oil production as to "drain
America first":
Mr. GIBBONS. Now, oil is a very precious commodity. If we call up the Federal
Energy Agency and ask them how much oil there is in the United States within
the 50 States, the safe 50, they will tell us there are about 4,000 days of oil left in
this country.
If we call up the U.S. Geological Survey and say, "How much oil is left in this
country, oil we know is here and oil we hope is here and how long will that last at
the present rate of consumption?" They will tell us oil we know is here and oil
we hope is here and oil we know is on the Outer Continental Shelf, all that oil
will last for all of 35 years.
1 Congressional Record, June 10, 1975, p. H5218.
2 Ibid., p. H5231.
3 Ibid., p. H523&8





54


Now, how old will we he when that oil runs out and how old will our children
and grandchildren be when that nil run, out? \Vhat kind of heritage will we be
leaving for ,uir.-elves and what kind of heritage will we le leaving for our children
and fi r ,lit grandchildren? \\.hat kind cof pos;tiin :re we putting the United States
in a- f:ir as li:rgaining just down the road? What kind of )position are we putting
the United States in as far as national security is concerned?
Our answer to all those questions has got to be that we are putting them in the
wAOr-t )po-il)he position that we could dreami of. What wor-e position could we get
tur'-crlvt in than to use up ur iiio-4t precious n:Ltural resource before and at a
much more rapid rate than we should he exhausting it.
If we put on quota-, that is the only result that can happen. The only reason for
quotas is to p)r(itect d(onestic production and to make domestic production run at
its top rate, while the rest of the world goes on with its oil resources.4
Proponent, agreed tliat the effect of quotas firmly applied, would
indeed provide a "bite" and a "crunch" but pointed out that, with
or without quota-, oil a-, a finite resource was being depleted in the
United State-; and throughout the world, that quotas served notice
botli to OPEC and to ourselves that the United States, must move
swiftly to develop not just remaining oil but also all available sources
alternative to oil.
Mr. BELL. Mr. Chairman, I just wanted to point out something else which I
think has not been mentioned. When we talk about draining the resources of our
country, we also -hould be considering the fact that we are encouraging other
oil companies in this-; country to go out and explore. By this proposal we are
encouraging this, which is also a very important facet of this program it seems to
me.5
*
Mr. CORMAN. If we must cut back on those imports or, at least, hold them
where they are, then clearly the sensible way to do it is through an import quota.
It will be the incentive for investing in domestic exploration and production. If we
do it merely by price, we will further bloat the profits of the oil companies, and we
will leave totally within their discretion where exploration money is spent.6
*
Mr. KOCH. The only way we could find a feasible way of facing up to the
problem is laying out the numbers of barrels, as we have here. Oil is a finite com-
modity. The gentleman says we have a glut of oil, but the world will be out of
oil in 20 or 30 or 35 years. There is no long-range glut of oil, and in terms of
history that is a very short time.
This country peaked out in production 5 years ago, and production has gone
down each year sincee The best possible way of developing alternative sources
and a-suring that there will be a market is to establish this kind of quota system.
This is the heart of the bill.7
*
Mr. GRFFN Every country in the world is running out of oil, and we have to
find alternate source, of energy. That is one of the things this bill has tried to do,
to stop being energy hogs, to serve notice that we intend to discipline ourselves.
We have very carefully tailored this quota, and we have time in the future, if we
have made a mistake to correct it.
The quota that would be in effect this year will not be reached and if it were
and we were in some kind of a tight bind and needed oil, we have given the Presi-
dent an additional 1 million barrels a day for the next 2 years, discretionary
authority. By balance, I think we have built in the kind of flexibility we need to
begin to come to grips with this problem. American oil is drying up with or without
a quota. We cannot afford the dependence today. We must develop our own
sources.8..
The fact of the matter is that we are going to run out of oil at. some point, and
unless we begin to develop alternate sources of energy in this country, we are in
trouble.

*TIbid.. p. H5230.
sIbid., p. H5231.
Ibid., p. H5233.
7 Ibid., p. H5235.
8 Ibid., p. H5230.






55


Let us say it is 35 years, 13 years, or 42 years, or let us say it is 112 years. The
fact of the matter is that we are going to run out of oil in this country, and we
cannot, in the meantime, continue to be dependent and be placed in a position
where the OPEC countries can strangle the United States of Ame-rica. Unless we
begin to put a quota on as to how much we are going to take, and unless we begin
to develop alternate sources of energy in this country, we can quibble as to
whether it is 35 years, 13 years, or 50 years, but we have to get down to doing
the job that is necessary.9
At the end of the 2 weeks of hard fought floor debate, as the House
moved toward the final showdown vote on June 19, 1975, the Chair-
man of the Ways and Means Committee summed up the message
that was intended to be communicated through the measure and
through the then still pending critical vote, which shortly afterward
passed by a vote of 291 yeas to 130 nays.
Mr. ULLMAN. Mr. Chairman, we are about to conclude a long and tedious
debate on the subject of energy.
We know better now than we did in the beginning that there are no easy
answers. There will be, I understand, a recommittal motion; but I would like to
say to my colleagues that a recommittal has to be a dead end. There is no way
we can go back to the committee and take a new turn . .
We begin by telling the OPEC countries and the world that we are putting a
limit on the amount of oil we import. From now on we are not going to import
oil without limit. We are telling the oil-producing countries that there will no
longer be an unlimited flow of petroleum into this country from abroad.10 We
are telling industry and utilities, through our excise tax provisions, that they
simply must begin the job of converting to coal and nuclear energy. We are telling
the automobile industry that they simply have to start building more efficient
automobiles in this country.
We have credits here for the average citizen with respect to home insulation to
conserve heat, which is very important.
We have tax incentives that I think are very important in developing the flow
of capital into vital areas which will produce alternative energy sources.
We have a trust fund that goes specifically to developing alternative energy
sources in a meaningful way. This also is very important . .
Mr. Chairman, the way that legislation is passed in Congress is that we build
a framework, we build a base and this is a base. We build over it in subsequent
legislation. That is the way it ought to be with energy policy.
Soon to come along will be the energy bill from the Committee on Interstate
and Foreign Commerce on which they have jurisdiction, and these two measures
will work together. Then after that we will have the bill brought out by the gentle-
man from Washington (Mr. McCormack) on NASA and atomic energy. That is
another ingredient added on to what we now have and will soon have. Together,
they will all make up our energy policy."
This still controversial portion of the new national energy policy
waits Senate action, but the legislative process just described is now
well under way. With the enactment of the new Energy Policy and
Conservation Act, the framework laid out in the early composite plans
has been substantially converted to a base on which additional energy
legislation and new policy continues to be built.

9 Ibid., p. H115236.
10 Mr. Ullman spoke extemporaneously on the floor and was misquoted in one respect
by the recorder; he used the word "companies" not "countries" in the second sentence. As
phrased in the written text of his remarks, issued at the end of the debate, this paragraph
reads: "The (eiinerg.v bill passed today is a ni-saize to the world that we are not going to
import unlimited foreign oil. It's a message to the oil companies that they can't count on
mounting supplies of OPEC oil for their refineries-that they must restructure their pro-
duction. We are signalling industry and electric utilities that a massive shift away from
oil toward other sources of energy must begin. And the energy bill includes a clear order to
produce cars that don't waste so much gasoline."
11 Congressional Record, June 19, 1975, pp. H5743-45.


























APPENDIXES


APPENDIX I

Breakdown of Federal Energy Outlays-1976 and 1977














BREAKDOWN OF FEDERAL ENERGY OUTLAYS, 1976 AND 1977
[Outlays in millions of dollars; fiscal years]

1976 1977

Domestic energy resource development, conservation, and petroleum storage:
Energy Independence Authority...----...----------------------------------------------..................................... 65
Uranium enrichment (ERDA).---------------.-... .--------------- 874 1,216
Naval petroleum reserves strategic petroleum storage------..---------------------.. .... 11 304
TVA and power administrations:
Capital --- --------- -----------------....... (1,778) (1,956)
Operating..------------..----------------...... -----.....------------------. (1,772) (1,918)
Subtotal --------------------------------------------------- 3,550 3,874
Rural electrification loans (REA) ---------------.-------------------------- 737 849
Department of the Interior support for Outer Continental Shelf and on-shore leasing
of oil, gas, and energy minerals ---------------------------------------- 162 185
FEA nonregulatory programs------------ -------------------- ------------ 169 168
Other .- --------------------------------------..--------------------- 13 13
Subtotal .......--------.. --.--------------------------------------- 5,516 7,259
Energy research, development, and demonstration:
Direct energy R. & D----------------------------------------------- 1,659 2,239
Supporting energy R. & D. ------- ------------------------ --------------- 506 589
Department of the Interior research for coal mine health and safety----- --- --------- 29 30
Subtotal..------------. ------------------------.------------------- 2,194 2,858
Regulation of the industry:
Nuclear Regulatory Commission ------------------------------------------ 106 120
Federal Power Commission -------------------------------------------- 37 41
FEA regulatory programs -----------------------------------------------29 17
Department of the Interior regulation of coal mines ----------------------------- 62 66
Subtotal-_----------------------------------------------------- 234 244
Total outlays -.-------..-----------------------.-------.------------ 7,944 10,361

Source: White House fact sheet, Feb. 26, 1976.
(59)























APPENDIX II
Comparison of Three Composite Energy Plans















A COMPARISON OF THREE CURRENT ENERGY PLANS


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


(63)








A COMPARISON OF 3 CURRENT ENERGY PLANS


Goal and task


President's plan


Ways and Means


I. Reduce dependence on foreign oil .-------... Essential.-----.-----------. -----.. --...------ Agree bul not so fast and not through tariffs......


By what means?-.------------------

How much and how fast? ------....


Reduce and limit imports to what levels?:



II. Protect against disruption of imports.------
By creating a system of strategic petro-
leum reserves.











Authorize standby energy authority
including particularly:

Allocation of fuels...-----...---


End-user consumer rationing ...-
III. Restrain and reshape demand.............
By what means in general?


Import fees, tariffs, and excise taxes: Rely on price
and market to lower imports, through lowered
consumption.
1,000,000 bbl/d, end 1975; 2,000,000 bbl,'d end
1976. But this still means rise in imports from
5,300,000 bbl/d, 1975 to 5,800,000 bbl/d, 1977
(administration figures).
3,000,000 to 5,000,000 bbl/d by 1985--------------



Essential -..-.- ......-- .------- .---. -..- ...--
Fully explore, develop and produce all (4) naval
petroleum reserves,
Use oil and revenue gained to create a national
petroleum reserve stockpile of not more than:
1,000,000,000 bbl for civilian use.
3,000,000 bbl-military use.
Reserve 20 percent of production NPR No. 4 for
strategic reserves; balance for the public
economy. (Note: Itis anticipated that NPR No. 4
will be able to produce a minimum of 2,000,000
bbl/d by 1985. 80 percent of this would be
1,600,000 bhl/d for current public consumption.)
Require any domestic importer or reliner to main-
tain stored petroleum reserves as determined by
President.
Essential..............------ .----------------
To deal with future embargoes, international
commitments, other emergencies.
To be invoked only if President linds emergency
situation exists.

Only in emergency, e.g., embargo................
Essential.....................................
Rely mainly on increased prices, jawboning for
voluntary compliance, modest subsidies and re-
laxed auto emission requirements.


Quantitative controls: Import quotas, Federal
Petroleum Purchasing Agency to buy all imports.
1,000,000 bbl!d over 2 to 3 yr, an estimated
400,000 bbl/d 1976.

To about 25 percent of expected domestic oil out-
put by "early 1980's" (estimated 4,000,000
bbl/d based on estimated domestic oil produc-
tion of 15,800,000 bbl/d in 19851.
Agree ....-------------------------------.........................
Accumulate reserve stockpile by-
Federal purchase of imports (outside any
quota limit) and/or
From naval petroleum reserves.
Goal "during next few years".
50 percent of annual imports, (e.g., 6 mo.
supply); at impoit level of 5,000,000
bblid, this would equal 600,000,000
bbl.





Agree--------------- --.-....----....---...- ..
But i n addition:
Mandatory allocation of oil needs to be con-
tinued in any case to insure shifts from oil
and other conservation measures.
Continue current legislative authority and
FEA allocation system. (Public Law 93-159).
Agree...... .. . ..--------- --.. ............
Agree on goal but not on method-................
Specitic incentive and disincentive taxes and sub-
sidies for specific conservation targets, plus
selected mandatory conservation measures.


Democratic majority

Agree- but economic restoration is Nation's
highest priority.
Conservation mainly: Let new National Energy
Production Board decide whether import quotas
or other means are needed.
Believe total program will reduce "domestic
consumption of imported petroleum" 500.000
bbl/d, 1st yr; 1.600,000 bbld, 2d yr; 5,000,000
bbl d, 1980
To about 10 percent of expected domestic energy
consumption by 1985. (Estimated 4,500,000
bbl,'d based on plan's target of holding energy
consumption to 45,000,000 bbl/d in oil equivalent
in 1975.1
Agree.
Accumulate reserve stockpile by
Federal purchase of imports and from naval
petroleum.
From naval petroleum reserves, OCS and
market place.
Goal:
3,000,000 bbl/d for 6 mo by 1980 [Equals
500,000.000 bbl] and 3,000,000 bbl d for
full year by 1985 [equals 1,.000,000.000
bblJ
National Energy Production Board would
"oversee establishment"


Agree
But the allocation and other standby authority
should be vested in the National Energy Produc-
tion Board, and we should extend allocation sys-
tem now to accommodate reduced dependence
by "managing and controlling" excessive
consumption.
Agree.
Agree on goal but not on method.
Similar to ways and means plus extended manda-
tory allocation program to manage and control
excessive energy consumption.










By what means specifically?
Increase prices-................




Improve auto fuel efficiency......



Gasoline tax _- - - - -
Insulate, retrofit residential and
commercial buildings.



Encourage conversion to coal ------


More efficient electric utilities------



Encourage mass transit-----------


IV Increase domestic energy supply:
Oil and natural gas:
Price incentives.......----..........




Tax incentives..................


(a) Import fees, tariffs on imported oil.........
(b) Excise taxes on domestic oil and gas.........
(c) Deregulate old oil-..---------...--.........
(d) Deregulate new gas......--...............
(e) Establish oil floor price..--....--...........
Relax clean air standards on cars; voluntary effort
by industry to improve 40 percent by 1980.


None-..-----------.. ------.. ----.-......... .
Design thermal efficiency standards for new build-
ings, to be promulgated through States (after
about 4 yr).
Finance 3-yr State winterizingg" program mainly
for low-income homes-$9,000,000 1975, $55,-
000,000 1976-77.
Relax clean air standards-----------------------
Expand authority to require conversion to coal --.--

Change "offpeak" pricing to encourage more
balanced use.
Permit increased rates submitted in this plan as
method to expand supplies but effect could be
restrained use.
Supports mass transit (included in budget request)-




Deregulate old oil. Deregulate new gas. Establish
floor price for oil.



Retain depletion allowance [however, windfall tax
would reduce base].

Impose graduated tax (15 percent to 90 percent)
which would phase out on all domestic crude to
capture windfall profits. No plowback.


(a) Reject ------------ -------------. (a) Reject.
(b) Reject general tax-Propose specific taxes on gasoline, inefficient autos.
(c) andt (d) Reject as conservation measure-but-propose phased deregulation to encourage increased
production.
(e) Reject-------------------------- (e) Reject-Recommend some price control to
shield consumer from OPEC-inflated prices.
Auto efficiency tax, beginning 1977 model year of Mandatory fuel and efficiency standards to im-
$0 to $500 for 20> -15 m.p.g. prove 50 percent by 1980, 100 percent by 1985.
Tax credit for new auto purchase, graduated..----- Purchase rebates for low-use cars, excise tax for
"Consider" mandatory fuel standards by 1979 high-use car, R. & D. for low-fuel, low-polluting
model year. new auto prototype.
5 cents per gallon 1975, rising to 40 cents 1979-----. 5 cents per gallon but primarily for revenue.
"Consider" tax credits for residential energy im- Major loan guarantees, grant, tax credit program
provements including solar equipment, and for insulation, etc., to upgrade 40,000,000 houses
rapid amortization commercial solar equipment, in 10 yr.
Investment credits for industrial retrofitting on Upgrade standards for new construction, especially
large scale. Federal buildings.


Relax clean air standards -----------------------....
Require switch to coal "ASAP."------------------
5-yr amortization of costs of new coal equipment..
"Encourage" experiments with utility rate design
alternatives; establish rate restructuring under
FPC.

Supported as object of energy trust fund expendi-
tures.
Use highway trust fund to expand mass transit-----
I ncrea.;e Federal aid to railroads --..------------

Accept phased deregulation of oil and natural
gas-over several years.
Alternative approaches are being considered
covering time frame of 5 tp 5 yr. Reject floor
prices.
Eliminate depletion allowance on all crude oil as of
Jan. 1, 1975 (H.R. 2166). Phase out small pro-
ducers by Jan. 1, 1978. Eliminate depletion al-
lowance for most natural gas.
Graduated "windfall" profits tax plus plow back..-


"Discourage" use of natural gas in new plants.
Tax credit and loans to retrofit for coal; "suggests"
current clean air standards not be increased for
such plants.
Financing for improved transmission, extended
lines.
Better use of existing capacity, redesign rate
structure.
Added. funding for public transport, railroad
rehabilitation, electrification.



Accept phased deregulation of oil and natural gas-
over several years.
But maintain control to separate price of domestic
energy from OPEC control. United States should
determine its own energy prices. Reject floor
price
Eliminate depletion allowance on all foreign drilling.
Retain D!A only for small producers who do not
operate retail outlets.
Excess profits tax, avoidable by "plowback" rein-
vestment. Proceeds to energy trust fund.







A COMPARISON OF 3 CURRENT ENERGY PLANS-Continued


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


No change in taxes which encourage U.S. com-
panies to invest in oil/gas production aborad, but
import fee of $1.20 on product imports to be in-
creased to $2 per barrel after excise tax is en-
acted to. keep excise tax from encouraging
foreign refining.
Alaskan oil and gas-----------....-- Devote 80 percent NPR No. 4 output to current use
(est 1,000,000 bbl/d by 1985).
Legislation to be submitted for constructing a na-
tural gas pipeline from Alaska.
Outer Continental Shelf---------- Accelerated development and production under ex-
isting law, including lease sales in Atlantic,
Pacific, and Gulf of Alaska.
Enlist more independent produc- No special provision but antitrust legislation to be
ers. enforced against "price fixing and bid-rigging"
(In Oct. 8, 1974, address, reaffirmed Jan. 15,
1975.)
Coal:
Environmental considerations-..... Strip mining-Modified version of vetoed bill.
Design new program of coal leasing.


"Neutralize" tax laws to remove incentives to in-
vest abroad, several alternatives being con-
sidered.


Not discussed in current proposal---..----......

Not discussed in current proposal -.............
No mention--.............-...----............


No special provision except possible delay in
eliminating depletion allowance for small pro-
ducers. No special antitrust provision.


Strip mining reclamation and mine safety pro-
grams are listed as programs which could be
funded from an energy trust fund.


Eliminate foreign tax subsidies so U.S. capital is
not encouraged to invest abroad.



Develop NPP's rapidly to make "estimated 10,-
000,0G0,000 to 40.000,000.000 bbl" available for
"storage or commercial use."
"Expedited consideration" of natural gas delivery
system from Alaska.
Revise OCS Act to accelerate "exploration con-
sistent with public interest", public data bank,
production under leases to prevent withholding,
mandatory unitization.
Change bidding system for all Federal leases "to
permit greater participation by small com-
panies." Similar possible concession on de-
pletion allowance. Strengthen antitrust laws to
promote free enterprise and competition.
Enact the Strip Mining Control Act








Tax incentives...................... -----------------No special provision, investment credit increased
for all investors to 12 percent for 1 yr.


Capital incentives---------.- ------. No special provision.......-----...-..... .... ..
Nuclear ..-------. ----.. ---------- Expedited licensing and siting (separate legisla-
tion) and 1976 budget increase of $41,000,000
for nuclear safeguards and waste management.
Alternate fuels...................... -----------------National synthetic fuels commercialization pro-
gram (announced Jan. 15, 1975) to produce
,000,000 bbl/d synthetic fuels by 1985 from
cil shale and coal.
Rely on ERDA for continuing program in other
fuels development.

Research and development-------..--. To be administered by and through ERDA and its
budget.


Energy management measures de-
signed to speed up development and
production of energy supplies.


Reform utilities regulation to allow increased rates
to finance capital expansion-readjust off-peak
ricing-allow full pass through of all costs.
Expedite energy facilities planning and siting:
FEA prepares a national plan; States prepare
related management plans.


5-yr amortization new coal mining and coal using
equipment and associated railroad expansion.
50-yr amortization gradings and bores "might
be considered."
"Capital must be raised for opening new coal
mines."
Tax incentives suggested to "encourage and
facilitate expansion" if environmental issues
are settled.
Recycled oil-tax incentives to encourage. Solid
wastes as fuel-tax and other incentives. Geo-
thermal-expand definition of intangible drilling
expense to include costs associated with geo-
thermal. Solar energy-tax incentives to encour-
age retrofitting. Synthetic oil and gas; "Be
alert" to possible encouragement measures.
To be financed in part through an energy trust
fund.
No special provisions..........................


No special provision: mentions "Coal conversion
incentives of major proportion" to induce shift
of all electric utilities and heavy industrial
boilers in 10 yr but coal mining not mentioned
as candidate for major loans, etc.

No special provisions.

National Energy Production Board to directly
undertake or finance on contract or joint venture;
commercial demonstration of synthetic fuels
oil shale; MHD; Geothermal; Solar.


To be financed in part through an energy trust fund,
similar to highway trust fund, into which 5 cents
gasoline tax would be paid.
Reform utilities rate structure and speed up FPC
and State regulatory procedures, but reject any
automatic pass-through on cost. Enact regional
planning mechanism in which States can par-
ticipate and resolve regional concerns through
other agencies.













/
/






















APPENDIX III

Energy Related Legislation-

Status as of March 18, 1976









THE 94TH CONGRESS AND THE ENERGY RECORD


STATUS AS OF MARCH 18, 1976
I. PROTECT AGAINST DISRUPTION IN OIL IMPORTS AND OTHER ENERGY SHORTAGES

Public Law; date
Goal and task bill No. and title House action Senate action signed

Energy Policy and Conservation Act; H. Rept. 94-340, July 9, 1 --- -- - - -
titles I(B), II, IV(B); H.R. 7014/S. 1975 (passed Sept. 23,
622. 1975).
Conf. Rept., H. Rept. 94-700 Conf. Rept., S. Rept. 94-516
(passed Dec. 15,1975). (Passed Dec. 17, 1975).
Standby energy authorities; title I; (1) ----------------------- S. Rept. 94-26, Mar. 5, 1975 Public Law 94-163;
S.622. (passed Apr. 10,1975 and Dec. 22, 1975.
Sept. 23, 1975).
Establish a National Strategic Reserve (1) --..--------------------- S. Rept. 94-260, June 26,
Office in Federal Energy Administra- 1975 (passed July 8, 1975
tion; S. 677. and Sept. 23, 1975).
Develop petroleum reserves on public H. Rept.94-81, pt. 1 Mar. 18, S. Rept. 94-327, July 24,
lands; H.R. 49/S. 2173. 1975; pt. 2 Apr. 18,1975; 1975 (passed July 29,
pt. 3 Apr. 22, 1975 1975).
(passed July 8,1975). (To
conference Oct. 2, 1975.)
Extend Defense Production Actthrough Passed Nov. 14, 1975----- S. Rept. 94-353, July 31, Public Law 94-152;
June 30, 1977; S. 1537/H.R. 10031. Conf. Rept., H. Rept. 94- 1975 (passed Sept. 15, Dec. 16,1975.
673, Nov. 18, 1975 (pas- 1975).
sed Dec. 3, 1975). Conf. Rept., S. Rept. 94-460
(passed Nov. 18, 1975).

II. RESTRAIN AND RESHAPE ENERGY DEMAND

Public Law; date
Goal and task bill No. and title House action Senate action signed


Energy Policy and Conservation Act;
Title ll; H.R. 7014/S.622.



Standby energy authorities; title II,
energy conservation policy; S. 622.


H. Rept. 94-340,1 July 9,
1975 (passed Sept. 23,
1975).
Conf. Rept., H. Rept. 94-
700 (passed Dec. 15,
1975).
- -(-- --)-- -


Truth in Energy Act of 1975; S. 349---.. (1) .........


Auto Fuel Economy Act of 1974; S.
1883.
Motor Vehicle Information and Cost
Savings Act; S. 1518.
Energy Conservation and Conversion
Act; titles II, 111, V; H.R. 6860.
Building energy conservation stand-
ards; H.R. 8650/S. 1483.2


(1).-- - - - - -

(Passed Jan. 22, 1976)----

H. Rept. 94-221, May 15,
1975 (passed June 19,
1975).
H. Rept. 94-377, July 22,
1975; Sept. 8, 1975.


Home Energy Disclosure Act; S. 2063---....- .......
Industrial Conservation Act; S. 1908 -- -----.....
Regional Rail Reorganization Act H. Rept. 94-7, Feb. 19, 1975
amended; S. 281/H.R. 2051. (passed Feb. 19, 1975).
Amtrack Improvement Act, supple- H. Rept. 94-119, Mar. 26,
mental funds, fiscal year 1975-77; 1975 (passed Apr. 24,
S. 852/H.R. 4975. 1975).
Rail Transportation System, provide H. Rept. 94-485 (passed
obs and funds to repair; S. 1730/ Oct. 23, 1975).
.R. 8672.3
Department of Transportation appro- H. Rept. 94-331, June 26,
priations through Sept. 30, 1976; 1975 (passed July 10,
H.R. 8365. 1975).
Conf. Rept. 94-639 (passed
Nov. 11, 1975).
Rail Services Act, comprehensive as- H. Rept. 94-725, Dec. 12,
distance to improve railroad serv- 1975 (passed Dec. 17,
ices, including regulatory reform 1975).
and $6,100,000,000 in aid; S. 2718/ Conf. Rept. 94-781, Jan, 23,
H.R. 10979. 1976 (passed Jan. 28,
1976).
Electric Vehicle R. & D. Demonstration H. Rept. 94-439, July 31,
Act; H.R. 8800. 1975 (passed Sept. 5,
1975).
See footnotes at end of table.
(71)


(1).-----------------------


Conf. Rept., S. Rept. 94-516
(passed Dec. 17, 1975).
S. Rept. 94-26, Mar. 5, 1975
(passed Apr. 10,1975 and
Sept. 23, 1975).
S. Rept. 94-253, June 24,
1975 (passed July 11,
1975).
S. Rept. 94-179, June 24,
1975 (passed July 15,
1975).
S Rept 94-155, May 22,
1975 (passed June 5,
1975).
Hearings, Finance, July 10,
to 18, 1975 (markup be-
gan July 21, 1975).
S. Rept. 94-86, April 18,
1975. S. Rept. 94-623,
Feb. 3,1976 (passed Mar.
9, 1976).
S. Rept. 94-265, July 8, 1975-
Markup underway-------
S. Rept. 94-5, Jan. 27, 1975
(passed Jan. 29, 1975).
S. Rept. 94-65, Apr. 9, 1975
(passed May 13, 1975).
S. Rept. 94-134, May 13,
1975 (passed May 16,
1975).
S. Rept. 94-291, June 22,
1975 (passed July 27,
1975).
Passed Nov. 12, 1975.
S. Rept. 94-499, Dec. 1,
1975 (passed Dec. 4,
1975).
Conf. Rept. 94-595, Jan. 27,
1976 (passed Jan. 28,
1976).


Public Law 94-163;
Dec.22,1975.














Public Law 94-5;
Feb. 29, 1975.
Public Law 94-25;
May 25, 1975.



Public Law 94-134;
Nov. 24, 1975.


Public Law 94-210;
Feb. 5, 1976.






72

II. RESTRAIN AND RESHAPE ENERGY DEMAND-Continued

Public Law; date
Goal and task bill No. and title House action Senate action signed

National Petroleum and Natural Gas .......................... ---------------------Hearings held...........
Conservation and Coal Substitution
Act: S. 1777.
Resolution declaring Senate support .......................... Passed Feb. 5, 1975.......
for a National Energy Conservation
Crusade; S. Res. 59.

III. INCREASE DOMESTIC ENERGY SUPPLIES (Measures include energy management and pricing issues)

Public Law; date
Goal and task bill No. and title House action Senate action signed


Tax Reduction Act of 1975. Includes
increases in investment tax credits
including public utilities, repeal oil
and gas depletion allowances for
large firms and changes in foreign
tax credits allowed in connection
with foreign oil extraction. H.R. 2166.
1st concurrent resolution on the budget
fiscal year 1976 Natural resources,
environment and energy outlays
assumed equal $11.,600,000,000.
H. Con. Res. 218.
Energy Policy and Conservation Act;
titles 1(A), IV, and V; H.R. 7014.4



Standby energy authorities; title I,
price increase incentives and title
Ill, conversion to other fuels; S. 622.*
Petroleum price increase limitation
(set ceiling for all except "old" oil
at about $11-$12 per barrel).' S. 621
(H.R. 4035, H. Res. 351).

Natural Gas Emergency Act of 1975,
including pricing revisions and
emergency conservation and alloca-
tion measures; S. 2310 H.R. 9464.
Strip Mining Control and Reclamation
Act; S. 7,H.R. 25.



Coal leasing and reclamation on Fed-
eral lands; S. 391 H.R. 6721.
Strip mining control, H.R. 9725-...
National park mining regulations; S.
2371.


H. Rept. 94-19, Feb. 25,
1975 (passed Feb. 27,
1975).
Conf. H. Rept. 94-120,
Mar. 26, 1975 (passed
Mar. 26, 1975).
H. Rept. 94-145, Apr. 15,
1975 (passed May 1,
1975).
H. Rept. 94-198, May 9,
1975 (passed May 14,
1975).
H. Rept. 94-340, July 9,
1975 (passed Sept. 23,
1975).
Conf. Rept., H. Rept. 94-700
(passed House Dec. 15,
1975).
(1)

H. Rept. 94-65, Mar. 14,
1975 (passed May 5,
1975).
Conf. Rept., H. Rept 94-
356, Jun. 14, 1975
(passed July 17, 1975).
H. Rept. 94-732, Dec. 15,
1975.
Supp. Rept. Feb. 3, 1976
(passed Feb. 5, 1976).
H. Rept. 94-45, Mar. 6,1975
(passed Mar. 18, 1975).
Conf. Rept., H. Rept.'94-189,
May 2,1975 (passed May
7, 1975); veto sustained
Jun. 10, 1975.
H. Rept. 94-681, Nov. 21,
1975 (passed Jan. 21,
1976).
H. Rept. 94-896, Mar. 15,
1976.


Oil shale revenues, enable States to .....--.---.---------
use for purposes other than public
roads and schools; S. 834.
Outer Continental Shelf development; Markup began Feb.
S. 521H.R. 6218. 1976.


S. Rept 94-36, Mar. 17,
1975 (passed Mar. 22,
1975 and Mar. 26, 1975).


Public Law 94-12;
Mar. 29, 1975.


S. Rept. 94-113 (passed
May 5 and 14, 1975).


Conf. Rept., S.
516 (passed
1975).
S. Rept. 94-26, I
(passed Apr. 1
Sept. 23, 1975
S. Rept. 94-32,I
(passed May
July 16, 1975


Report 94-
Dec. 17, Public Law 94-163
Dec. 22, 1975.
Aar. 5, 1975
10, 1975 and
I). _


Mvar. 7, 1975
1, 1975 and
L.


Passed Oct. 22, 1975......


S. Rept. 94-28, Mar. 5,1975
(passed Mar. 12, 1975,
Mar. 20, 1975).
Conf. Rept. 94-101, May 2,
1975 (passed May 5,
1975).
S. Rept. 94-296, Jun. 23,
1975 (passed July 31,
1975).
--------------------------
S. Rept. 94-567, Dec. 16,
1975 (passed Dec. 4,
1976).
S. Rept. 94-85, Apr. 18,
1975 (passed Apr. 22,
1975).


25, S. Rept. 94-284, July
1975 (passed July
1975).


Vetoed July 21, 1975.


Vetoed May 20, 1975.


Create a Select Committee on the Passed Apr. 22, 1975-----..----------.------------.
Outer Continental Shelf; H. Res.
412.
Provide funding for study of OCS by H. Rept. 94-231, May 20, -.....--------------
Select Committee; H. Res. 427. 1975 (passed May 22,


Coastal Zone Management Act amend-
ments: S. 5861,H.R. 3981.

See footnotes at end of table.


1975).
H. Rept. 94-878, Mar 4, S. Rept. 94-277, July 11,
1976 (passed Mar. 11, 1975 (passed July 16,
1976). 1975).


=--_






73


III. INCREASE DOMESTIC ENERGY SUPPLIES (Measures include energy management and pricing issues)-Con.

Public Law; date
Goal and task bill No. and title House action Senate action signed

Energy Research and Development H. Rept. 94-294, June 13, S. Rept. 94-104, May 6, Public Law 94-187;
Administration (ERDA) authorize 1975 (passed June 20, 1975; S. Rept. 94-332, Dec. 31, 1975.
appropriations for fiscal year 1976; 1975). July 24, 1975 (passed
H.R. 3474/S. 598. July 31, 1975).
Conf. Rept., H. Rept. 94- Conf. Rept., S. Rept. 94-
696, Dec. 8, 1975 (passed 514, Dec. 8, 1975 (passed
Dec. 11, 1975). Dec. 9, 1975).
Nuclear Regulatory Commission H. Rept. 94-260, June 4, S. Rept. 94-174, June 4, Public Law 94-79;
(NRC) authorize appropriations for 1975 (passed June 20, 1975 (passed June 17, Aug. 9,1975.
fiscal year 1976; H.R. 7001/S. 1716. 1975). 1975 and July 31, 1975).
NRC supplemental funding for im- H. Rept. 94-100, Mar. 20, S. Rept 94-500, Mar. 20, Public Law 94-18;
proved nuclear safety measures, 1975 (passed Apr. 10, 1975 (passed Mar. 24, Apr. 27, 1975.
$50,200,000; H.R. 4224/S. 994. 1975). 1975).
Revise method of public remuneration H. Rept. 94-648, Nov. 10, Passed Dec. 16, 1975------. Public Law 94-197;
in the event of a nuclear incident; 1975 (passed Dec. 8, Dec. 13, 1975.
H.R. 8631/S. 2568. 1975, Dec. 17, 1975).
Water and power development and H. Rept. 94-319, June 20, S. Rept. 94-505 (passed Public Law 94-180;
energy research, Public Works ap- 1975 (passed June 24, Dec. 6, 1975). Dec. 26, 1975.
propnriations for fiscal year 1976; 1975).
H.R. 8122. Ccnf. Rept., H. Rept. 94-711 Conf. Rept., S. Rept. 94-
(passed Dec. 12, 1975). (passed Dec. 12, 1975).
Energy trust fund, title IV of the H. Rept. 94-221, May 15, Hearings, Finance, July 10
Energy Conservation and Conver- 1975 (passed June 19, to 18, 1975 (markup be-
sion Act. 1975). gan July 21, 1975).
National Energy Production Board; S -..-.....-..-------------- Nearing markup ---------
740.
Provide loans to small businesses eco- H. Rept. 94-288, June 12, ..........................------
nomically injured due to disruption 1975 (passed June 17,
in service of public utilities; H.R. 1975).
4888.
Rural electrification loan program H. Rept. 94-353, July 14, S. Rept.94-424, Oct.9, 1975 Public Law 94-124;
amendments; H.R. 4888. 1975 (passed July 21, (passed Oct. 20, 1975). Nov. 4,1975.
1975 and Oct. 22, 1975).
Protect franchised dealers in petro- ...--------..-..----..------- S. Rept. 94-120, May 13,
leum products; S. 323. 1975 (passed June 20,
1975).
Energy Independence Authority; S. Hearings held---_--------- -------
2532/H.R. 10267.

IV. REDUCE DEPENDENCE ON FOREIGN OIL

Public Law; date
Goal and task bill No. and title House action Senate action signed

Energy Conservation and Conversion H. Rept. 94-221, May 15, Hearings, Finance, July 10,
Act; title I, establish oil import 1975 (passed, June 19, to 18, 1975 (Markup be-
quotas; H.R. 6860 (H.R. 5005.) 1975). gan July 21, 1975).

1 H.R. 7014 was passed in the House under the bill No. S. 622, went to conference with an amalgamated Senate draft
which included 4 previously passed Senate bills, S. 622, S. 1883, S. 349, S. 677.
2 Earlier debate and vote on these issues took place in connection with title III of the Emergency Middle Income Housing
Act, H.R. 4485/S. 1483, H. Rept. 94-64, Mar. 14, 1975. Passed House June 5, 1975, but the provision was dropped in
Conference. See Conference Report, H. Rep. 94-246, May 22, 1975.
3 Attempts were made to include $700,000,000 for railroad track repair in 2 other bills, Emergency Employment Ap-
propriations, H.R. 4481, and in a supplemental appropriations bill, H.R. 5899, but the provision was dropped from the final
version.
4 In addition to these bills, there was House or Senate action on several other bills, disapproving proposed Presidential
actions on existing price controls relating to crude oil, including H. Res. 439, H. Res. 605, H. Res. 613, S. Res. 145, H. Res.
641, and H. Res. 651.
































i.




UNIVERSITY OF FLORIDA
I11 11lll U Ill H II 111111111 I 111111
3 1262 09113 8189