Energy and the 97th Congress: Overview

During his campaign, President Reagan called for a major shift in this country's energy policy. In particular, the President emphasized the need for more domestic production of energy and reliance on market forces to produce and distribute energy products. Now in office, the new Administration is employing executive, administrative, and legislative methods to implement these changes.

ENERGY AND T H E 9 7 T H CONGRZSS: OVERVIEW I S S U E a R P E F NUKBER I B 8 1 1 1 2 AUTHOR : Larry P a r k e r Environment and Natural R e s o u r c e s P ~ l i c yD i v i s i o n R o b e r t L. B a m b e r g e r Environment and Natural R e s o u r c e s Policy Division Carl S e h r e n s Environm2nt and Natural R e s o u r c e s Pclicy Givision T E E LIBRARY OF C O N G R E S S CONGRESSIONAL R E S E A R C H S E R V I C E MAJOR ISSUES S Y S T E M D A T Z O R I G I N A T E D 06/15/81 D A T E UPDATED 11/19/52 FOR ADDITIONAL INFORMATION C A L L 287-5700 1115 CRS- 1 I S S U E ZIEFINITION During hls c a m p a i g n , President Reagan called for a major shift in this country's energy policy. In particular, the President emphasized the need f o r c e s to f o r m o r e domestic production of energy and reliance on market p r o d u c e a n d d i s t r i s u t e e n e r g y products. Now in office, the new Administration is employing executive, administrative, and legislative A major vehicle for change has been the methods to implement these changes. budget. What a r e the major initiatives of the Administration? Are they significant departures from previous Administraitons? How i s the Congress rlsponding to these initiatives? S A C K G R O U N D AND P C L I C Y A N A L Y S I S INTRODUCTION The Administration has forecast departures from the energy policies a r t i c n l a t e d by t h e C a r t e r A d m i n i s t r a t i o n . B u t t h e d e p a r t u r e s ~ r o r n i s e to be a r e t u r n t o e a r l i e r p r i n c i p l e s -- a S i n i n i s h e d r o l e f o r t h e F e d e r a l Governmen: i n e n e r g y decision-rriaklng. For the most part, the new Administrarion has z r z c t i c e d i t s e n e r g y p h i l c s o p h y d u r i n g i t s f i r s t d a y s by decon:roll;ng crude c i l a n d g a s o l i n e , a n d by p r o j e c t i n g s h a r p r e d u c t i o n s i n s p e n d ~ n g o r supporx the Carter f o r energy programs in FP82 that were created cr expanded under .Administration. T h e decision to decontrol o i l and gasoline appeared to have a substantial philosophical component. The spending cuts may reflect the Reagan A d m i n i s t r a t i o n ' s s t r o n g p u r p o s e t o r e d u c e F e d e r a l s p e n d i n g in r e s p o n s e to e c o n o m i c c o n d i t i o n s , b u t i t i s l i k e l y r h a t r e d u c t i o n s f o r many programs may b e d r i v e n by a b r o a d e r p h i i o s o p h i c a l c o m m i t m e n t t o r e i n v i g o r a t e the private sector and diminish governmental functions. I t may be difficult to distinguish the dynamics each will bring to individual policy decisions. Nor will it necessarily Se important to make the distinction. Ths -- which Administration's energy policy Complements its fiscai policy suggests that massive Federal s p e n d i n g i n t e r f e r e s w i t h t h e e p e r a t i o n of markets and the private sector and contributes to inflation. T h e " h a r s h reality," a s d e s c r r b e d by President C a r t e r , of Americans n a v r n g t o u s e l e s s e n e r g y a n d p a y m o r e f o r l t c o n t r a s t s s h a r p l y w ~ ~t h eh e n e r g y v l s r s n o f t h e n e w A d m l n ~ s t r a t ~ o nw,h ~ c h s e e s an A m e r l c a wrth vast energy r e s o u r c e s r e a d y t o S e exploited by a d y n a m l c a n d l m a g l n a t l v e e c o n o m r c s y s t e m , ~f o n l y t h e G o v e r c m e n t w l l l q e t o u t of t h e way. As stated b y Pres~dent 3 e a q a n l n h l s a c c e p t a n c e s p e e c h a t t h e Republican c o n v e n t ~ o n ,A m e r r c a : and n u s t g e t k o w o r k p r o d u c r n g m o r e e n e r g y . . . . L a r g e a m o u n t s o f 01: n a t u r a l g a s I l e b e n e a t h o u r l a n d a n d off o u r s h o r e s . . . . C o a l o f f e r s g r e a t potential. S o d o e s nuclear enerqy proCuced under rlgorous safety standards. ;t m u s t n o t be t h w a r t e d by a t ~ n ym r n o r ~ t y o p p o s e d to econornlc g r o w t h w h l c h often frnds frlendly ears ~n r e g u i a t o r y a g e n c l e s f o r ~ t s obstructlonls: CRS- 2 In a s e n s e , t h i s p h i l o s o p h y is a r e t u r n to t h e "old-time religion" that characterized energy policy before 1973. I t i s b a s e d o n t h r e e main tenets: * T h e country has the energy resource base for growth in the N a t i o n ' s e n e r g y S u p p l y a n d t h a t g r o w t h c a n be m a n a g e d i n a n e n v i r o n m e n t a l l y a c c e p t a b l e manner. * Market economics and the private sector e f f i c i e n t m e a n s of exp-loiting t h e r e s o u r c e . are the quickest and most * T h e G o v e r n m e n t ' s role ~n energy policy is supplemental: providing l o n g - t e r m r e s e a r c h a n d d e v e l o p m e n t , o p e n ~ n gF e d e r a l l a n d s f o r e x p l o i t a t i o n by t h e private s e c t o r , a n C p r o m u l g a t i n g o n l y t h o s e cost-effective r e g u l a t i o n s that a r e necessary. In c o n t r a s t t o t h e p r e v i o u s A d m i n i s t r a t i o n , w h i c h c o n s i d e r e d conservation the cgrnerstone of its energy policy, the Reagan Administration Selieves conservation i s insufficient to a s s u r e economic growth: more incentives for i n c r e a s e d p r o d u c t i o n of e n e r g y are required. In the near t e r m , the Administration believes that conventional fuels can add more to energy supplies than other sources at less cost and a t acceptable environmental risk. T h e i n c e n t ~ v ef o r i n c r e a s e d e n e r g y p r o d u c t i o n i s z o b e in a free aarket system and unobtrusive government incentives such a s tax credits, in preference to direct subsidies. Such a system is expected to a l l o w c h e marketplace to sort o u t the cheapest and most efficient alternatives. This, :he A d m i n i s t r a t i o n b e l i e v e s , w i l l g e n e r a t e m a x i m u m econonic efficiency and e n s u r e t h a t t h e c o u n t r y ' s l i m i t e d c a p i t a l r e s o u r c e s a r e i n v e s t e d in t h e m o s c cost-effective manner. Such a n economic philosophy dictates a reduced role for government in energy policy. By de-emphasizing public policymaking for energy, the A d m i n i s t r a t i o n h o p e s t o c o r r e c t d i s t o r t i o n s i n t h e market. c a u s e d by previous Federal actions, and t o promote economic growth. T h e n e w Fed.era1 r o l e i s t o s u p p l e m e n t a c t i o n u n d e r t a k e n i n d e p e n d e n t l y by individuals and institucions providing access by: (1) p r o v i d i n g l o n g - t e r m r e s e a r c h a n d d e v e l o p m e n t , ( 2 ) zo public lands for energy exploracion, and (3) reviewing and assessing r e g u l a t i o n s t o d e t e r ~ i n et h a t t h e y a r e c o s t - e f f e c t i v e a n d n o t unnecessarily Surdensome. Other energy activities, such a s commercializaticn of new z e c h n o l o g i e s , w o u l d be l e f t to p r i v a t e i n d u s c r y a n d t h e m a r k e t p l a c e . T h e R e a g a n A d m i n i s t r a t i o n ' s a p p r o a c h to i m p l e m e n t i n g this "free market" phiiosophy is threefold: (1) d e r e g u l a t e , ( 2 ) d e c e n t r a l i z e , a n d ( 3 ) d e c r e a s e direct qovernment subsidies. Some efforts to alter the State-Federal r e l a t i o n s h i p i n e n e r g y p o l i c y a n d to C u t g o v e r n m e n t s u b s i d i e s to v a r i o u s energy technologies will require congressional a c ~ i o n . S o m e issue3 may therefore test the pervasiveness of the Administration's philosophy within the Congress. Needless to s a y , there is large-scale opposition to the Reagan t h e o r i e s a n d p r o g r a m s o n both p h i l o s o p h i c a l a n d e c o n o m i c g r o u n d s . The primary vehicle the Reagan Administration i s employing its energy policy i s the budget and some executive actions. to implement rn L h e primary CRS- 3 IB8lli2 UPDATE-11/10/82 A f o c u s of Congress d u r i n g 1932 has Seen t h e President's budget request. d i s c u s s i o n s f t h e p r o p o s e d FYS3 b u d g e t , a l o n g w i t h o t h e r recent legislative and e x e c u t i v e a c t i o n s , i s d i s c u s s e d below. OIL W i t h i n d a y s o f i t s a c c e s s i o n t o power, t h e Reagan A d m i n i s t r a t i o n , meeting t h e p r o m i s e o f i t s f r e q u e n t c a m p a i g n vow t o r e d u c e F e d e r a l e n e r g y r e g u l a t i o n , exempted g a s o l i n e and crude o i l from p r i c e and a l l o c a t i o n coritrobs effective Jan. 2 8 , 1 9 8 1 . The Energy P o l i c y and C o n s e r v a t i o n Act (P.L. 94-163, EPCA), e n a c t e d i n December 1 3 7 5 , had p r o v i d e d f o r e v e n t u a l d e c o n t r o l . Ratherthan had opted to exempt t h e p r o d u c t s remaining under c o n c r o l , P r e s i d e n t C a r t e r p h a s e o u t c o n t r o l s b e g i n n i n g i n May 1 9 7 3 a s a m e a n s o f cushioning consumers from t h e p r i c e s3ock of an o i l d e c o n t r o l a c t i o n . P r e s i d e n t s Ford and C a r t e r nad t h e statxtory option to l l f t controls, -- t o a l t h o u g h t h e C o n g r e s s rrlght have p a s s e d e n a c t m e l t s -- L C s t ~ l L c o u l d a m p o s e o r l a f t c o n t r o l s a t a n y t ~ m e . T h e d e c ~ s l o nt o d e c o r t r o l ln January, times, antlcrpat~ng as ~t dld a t h e n , was c e r t a i n l y l n k e e p i n g w i t h t h e s c h e d u l e d e v e n t by 8 m o n t h s . The d e c o n t r o l a c t l o n was a l s o ~ n ~ e e p i n g w l t h t h e new Adm;nistratronls economlc and political phllosophy that market economics a r e t h e q u l c k e s t a n d s u r e s t m e a n s to promote supply and govern demand. a e s p i t e t h e u p r o a r o v e r t h e e f f e c t o f d e c o n t r o l on gasollne price, - h e d e c o n t r o l c i e c ~ s l o n was m o r e s y m b o l i c t h a n s u b s t a n t i v e . Evldence suggests t n a t t h e sharp increase in gasollne prlces durlng February 1981 were attributable m o r e t o p a s s - t h r o u g n s o f f o r e l g n c r u d e c o s t ~ n c r e a s e s than zo decontrol. However, t h e zlmlng of these pass-throughs appears to have mas~ed the fact that, r e f l e c t e d b a d l y upon t h e A d m r n l s t r a t l o n and t o have w h l l e t h e d e c o n t r o l d e c l s l o n e x p r e s s e d t h e p h l l o s o p h y of t h e Adninlstratlon, ~t a p p a r e n t l y a f f e c t e d c h e s h o r t - t e r m p r ~ c ep a t h o f g a s o l i n e m a r g i n a l l y . The p e t r o l e u m r e s e a r c h a n d d e v e l o p m e n t b u d g e t w i t 9 i n DOE i n c l u d e s programs f o r enhanced o i l r e c o v e r y , development of o i l s h a l e r e s o u r c e s , d r i l l i n g and o f f s h o r e technology, and advanced process technology. In i t s proposed Fv83 budget, t h e Administration proposes t o c u t t h e budget authority from $40.9 Spending f o r o i l shale would be m i l l i o n i n FY82 t o $ 1 6 . 1 m i l l i o n i n F P 8 3 . s h a r p l y reduced, from $18.2 millicn zo $6.3 million, and enhanced oil Reduced FP82 t o $5.3 million in FY83. r e c o v e r y from $15.5 m i l l i o n in spending l e v e l s r e f l e c t the Department's realignment of the program co c o n c e n t r a t e on "more g e n e r i c t e c h n o l o g y b a s e r e s e a r c h a n d d e v e l o p m e n t " whiie "leaving to industry the task of bringing technology to commercial the Congress held the zotal readiness." In i t s F i r s t Budget R e s o l u t i o n , -- $ 4 3 5 m i l l i o n - - f o r authorization for fossil fuels a t existing levels FP83-85. EMERGENCY PREPAREDNESS On S e p t . 3 0 , 1 9 3 1 , t h e a u t h o r i t y d e l e g a t e d By C o n g r e s s t o t h e P r e s i d e n t ~ n - h e Z m e r g e n c y P e t r o l e u m Allocation A c t o f 1 9 7 3 t o l m p o s e p r l c e a n d a l l o c a t r s n Controls expired. D u r l n g t h e f ~ r s cs e s s l o n , a number of bills have Seen introduced t o t a k e ~ t psl a c e . Some w o u l d r e s t o r e t h e E P A A authority; others One 5111 would p r o v i d e f o r dispersal o f t h e Strategic P e t r o l e u m R e s e r v e . r n s u l a t ~ n g consumers from the l n s t l t u t e a r e v e n u e recycling r n e c h a n l s m f o r e c o n o m l c s h o c k s t h a t wouid l r k e l y accompany a s h o r t a g e of p e t r o l e u m p r o d u c t s . CRS- 4 IB81ll2 UPDATE-11/10/82 The Administration has expressed unqualified opposition to the extention of price and allocation controls, and to any Federal intervention in the shortage, the marketplace during petroleum shortages. In .the event of Administration proposes: (1) m a x i m u m reliance on the free market to determine the price and allocation of energy supplies, and (2) f u l l participation in the international oil-sharing program of the International Energy Agency. In t h e m e a n t i m e , t h e A d m i n i s t r a t i o n s u p p o r t s r a p i d g r o w t h o f the Strategic Petroleum Reserve, and is seeking measures to encourage stock buildup in the private sector during times when supply is secure, The Administration believes there i s no necessity f o r , or practicality in, articulating a n emergency response plan in advance of a disruption; the a p p r o p r i a t e a c c i o n w i l l be u n d e r t a k e n a s w a r r a n t e d s h o u l d a n e m e r g e n c y o c c u r . The Administration is opposed to controls, and contends that the mere signal to e s t a S l i s h m e n t of a c t h o r i c y t o i m p o s e t h e m s e n d s a n i n a p p r o p r i a t e t h e p r i v a t e s e c t o r t h a t i t may p o s s i b l y c o u n t u p o n F e d e r a l i n t e r v e n t i o n t o protect i t s access to crude or products during a shortage. M a n y K e m b s r s of Congress shared the Administration's perception that controls had proven largely ineffective and inefficient, but were skeptical t h a t a n u n r e g u l a t e d m a r k e t p l a c e w a s t h e s u i t a b l e resporise t o s h o r t a g e s o f a l l magnitudes. The Administration cited a number of standing statutory authoritiss that would afford the Federal Government flexibility to respond t o energy s h o r t a g e s , but none of these authorities provided unambiguously f o r the implementation of Comprehensive price and allocation auchorities. Although the Administration expressed n o interest in having this option in a severe shortage, Congress believed that a discretionary standby authority s h s u l d b e a v a i l a s l e , a n d d e i i b e r a c e d o v e r a n u m S e r of l e g i s l a t i o n o p t i o n s . C o n g r e s s p a s s e d t h e S t a n d b y P e t r o l e u m A l l o c a t i o n A c t of 1982 (S. 1 5 0 3 ) which, among other provisions, would have authorized the President to implement standby c r u d e or product allocation regulations in t h e event of a s e r i c u s s h o r t a g e o r i f t h e y w e r e n e e d e d t o m e e t U.S. o b l i g a t i o n s t o t h e I E A . The legislation would have authorized price controls if necessary to achieve the objectives of the allocation regulations. The bill also provided for Federal preemption of conflicting State and local price and allocation programs. Passage of the legislation reflected c o n g r e s s i o n a l s k e p t i c i s m of t h e suitability o f a n E n r e g u l a t e d m a r k e t r e s p o n s e s h o r t a g e s of a l l m a g n i t u d e s . - LC y T h e c o n f e r e n c e r e p o r t w a s a p p r o v e d by t h e H o u s e a n d S e n a t e i n e a r l y M a r c h , b u t :here w e r e i m m e d i a t e w a r n i n g s of a P r e s i d e n t i a l v e t o . Senators McClure a n d B a k e r s e c u r e d a priVa;e a u d i e n c e w i t h t h e P r e s i d e n t t o t r y to dissuade him f r o m v e t o i n g t h e b i l l , but w e r e u n s u c c e s s f u l . The veto message stated that Federal intervention could not assure "an equitable and orderly response t o a supply 'interruption." Controls, the President s a i d , "can only shift losses from o n e set o f Americans to o t h e r s , with vast dislocation and loss of efficiency." O n Karch 24, Sen. McClure attempted to persuade hls Senate colleagues t o overrlde the President's veto, but was unsuccessful. euite apart from the n u m b e r of senators who o r ~ g i n a l l y l e g l s l a t l v e i s s u e s u n d e r contention, a voted f o r c h e bill were reluctant to o p p o s e t h e P r e s ~ d e n t , w h o l o b b i e d personally to prevent an overrlde. The motlon falled to gee the requlred t w o - t h r r d s v o t e , 58-36. CRS- 5 The d e f e a t of t h e SPAA renewed attention on the Strategic Petroleum preparedness Z e s e r v e , w h i c h was p e r c e i v e d a s t h e f o c u s o f n a t i o n a l e m e r g e n c y policy. The Znergy Securi=y Act (P.L. 96-294) stipulated a minimum annualized daily f i l l rate of lC0,000 b d Subsequently, the Omnibus R e c o n c i l i a t i o n Act of 1961 (P.L. 97-35) r e q u i r e d t h e P r e s i d e n t to nndertake at an average annual crude o i l a c q u i s i t i o n and i n j e c t i o n i n t o t h e Reserve r a t e of 300,000 b/d. That same b i l l also resolved debate over means of R@serve financing the Reserve, creating an off-budget Strategic Petroleum the Secretary of Energy can A c c o u n t w i t h i n t h e U.S. T r e a s u r y , f r o m w h i c h a u t h o r i z e expenses f c r t h e a c q u i s i t i o n , t r a n s p o r t a t i o n , and i n j e c t i o n of o i l an emergency. An i n t o t h e SPR, a n d a n y c o s t s f o r drawdown i n t h e e v e n t o f a d d i t i o n a l o n - b u d g e t a u t h o r i z a t i o n i n t h e DOE b u d g e t c o v e r e d a s s o c i a t e d c o s t s construction of additional o f o p e r a t i o n s , m a i n t e n a n c e , a d m i n i s t r a t i o n , and storage capacity. F o r FYE2 t h e s e a c c o u n t s w e r e u l t i m a t e l y b u d g e t e d a t 3.684 b i l l i o n and $191.4 million, respeczively. The f i l l rate during F Y 8 1 was 292,000 b/d, b u t h a s been lower d u r i n g 1982 ( a v e r a g i n g 174,000 b/d through the l i m i t s of currently e a r l y August) because t h e Reserve i s approaching available capacity. requested much less money for the off-budget The A d m l n i s t r a t l o n h a s f l l l rate durlng a c c o u n t ( 2 . 0 7 b l l l ~ o n )f o r F Y S 3 , p r o l e c t l n g a 2 0 9 , 0 0 0 b / d c h a t f l s c a l year, but d l d l n c r e a s e t h e request f o r t h e on-budget account t o The A d m l n l s t r a t l o n c b a ~ m s 5 2 4 2 . i m l l l l o n f o r developing additional c a p a c l t y . ~ n a t~ t r se q u e s t f o r l e s s f u n d ~ n g1 s a reflection o f c o n s t r a i n t s o n c a p a c l t y , b u c some ~ n C o n g r e s s h a v e u r g e d t h a t a c q u l s i t l o n s b e a c c e l e r a t e d o h l l e crude 01: prlces are soft. O n e o p t ~ c cu n d e r c o n s l d e r a t l o n was to lease ~nterlm above-ground scorage tanks or ldle s t o r a g e f a c l l l t i e s , e ~ t h e rcommercial tankers. The S e n a t e Znergy COmFlttee v o t e d l n March 1962 t o lncrease the storage o n - S u d g s c a c c o u n z t o $ 3 9 2 m l l l i o n t o p r o v l e e f o r l e a s ~ n g additional f a c l l z r c ~ e s . T h e c o m m ~ t t e e a l s c v o z e d t o r e s c o r e f u n d ~ n gf o r =ne i f f - c u d g e t a c c o u n t t o $ 3 . 7 S l l l l o n ~ n FY83 t o f l n a n c e p u r c h a s e s a t 3 0 0 , 3 0 0 b / d so that t h e 3 e s e r v e mlghc r e a c h a t o t a l o f 500 m l l l l o n barrels ~n storage by the upon szmllar recommendations c l o s e o f FY83. F u n d l n g recommendations b a s e d were bezng developed l n t h e House. emergency preparedness C o n g r e s s a d d r e s s e d i t s c o n c e r n s a b o u t t h e SPR a n d i n new l e g i s l a t i o n , S . 2 3 3 2 , t h e E n e r g y E m e r g e n c y P r e p a r e d n e s s A c t of 1982, A s reported from conference i n l a t e J u l y which was i n t r o d u c e d i n A p r i l 1 9 8 2 . 1 9 8 2 , S . 2332: ( 1 ) e s t a b l ~ s h e sa m l n l n u m SPR f ~ l rl a t e o f 2 2 0 , 0 0 0 b / d . The Senate nad r a t e o f 3 0 0 , 0 0 0 b / d a n d t h e H o u s e P.ad p r o p o s e d 200,000 b/d. p r o p o s e d a fl;: The h d m l n l s t r a t l o n opposed ralslng the mlnlmum f ~ l lr a t e ac a l l , but eventually ~ n d ~ c a t el dt w o u l d a c c e p t a f i g u r e a t , or close to, the level The A d m i n ~ s t r a t l o n a r g u e d that lts commitment t o proposed i n t h e House. f i l l l n g t h e R e s e r v e was a p p a r e n t , a n d t h a t t h e c o s t s o f a c c e l e r a t ~ n gf r l l by T h e new fill j u s t a f e w y e a r s outweighed t h e b e n e f l t s t o n a t l o n a l security. rate w ~ l l requlre securlng lnterlm srorage capacity. The leg~slatlon authorizes expenditures f r o a t h e o f f - b u d g e < account for leaslng temporary scorage f a c l l l t ~ e s . The Administration ( 2 ) r e q u i r e s p r e p a r a t i o n af a new S?R d r a w c o w n p l a n . h a s b e e n r e l u c t a n t t o i n d i c a t e t h e c i r c u m s z a n c e s u n d e r w h i c h SPR o i l m i g h t b e would dlscourage t a p p e d , a r g u l n g t h a t f o r e c a s t ~ n qhow t h e SPR m l g h t b e u s e d t h a t rche prlvate sector preparedness actlvitles. Congress recoqnlzed hlghly A d m i n l s t r a t l o n w o u l d p r o b a b l y h a v e v e t o e d a n y l e g l s l a t ~ o nr e q u l r l n g a s p e c l f ~ cd r a w d o w n p l a n , 3ut nas a s ~ e d :hat the Admlnlstrat-on descrlbe che o p c ~ o n sf 3 r s a l e a n d d i s t r r b u t ~ c no f SPR 011 C u r l n q a c e r o e r g e n c y , a n d l n CRS- 6 absenee of the system of price and allocation controls that during oariier shortages. were in effect ( 3 ) =description of available legal authorities a n d h o w they might be implemented=. T h e legislation requires the Administration t o s u b m i t by mid-November 1 9 8 2 a "memorandum of law" describing the "nature a n d extent" of the authorities available to the President under existing law which might be B y . Dec. 31, 1982, the invoked in responding to a supply emergency. Administration i s required to submic another report describing the "comprehensive energy emergency r e s p o n s e procedures1' t h a t w o u l d be used pursuant to those authorities extant. Aaother study, a l s o to be submitted by t h e end o f 1 9 8 2 , i s t o e x a m i n e t h a t c o s t s a n d b e n e f i t s o f regionalizing the SPR. T h e P r e s i d e n t s i g n e d S. 2 3 3 2 (P.L. 9 7 - 2 2 9 ) o n A u g . 3 , 1 9 8 2 . C o n g r e s s w a s a l s o c o n c e r n e d o v e r t h e p r o p o s e d d i s m a n t l i n g of D O E , w h i c h , a s origina:ly s u g g e s t e d , p l a c e d t h e o p e r a t i o n o f t h e S?R i n t h e D e p a r t m e n t o f Interior while vesting policy decisions governing its u s e in Commerce. Many policymakers questioned the practicality of this fragmentation of the SPR, particularly in a supply emergency. In r e s p o n s e , S e c r e t a r y o f E n e r g y E d w a r d s indicated in l a t e February 1 9 8 2 chat the SPR would be transferred entirely t o Commerce. The Administration proposal t o dissrnantle D O E , which was transmitted to Congress in l a t e May, does indeed propose transfer o f the SPR wholly to Commerce. For further information see I38llOi -- Planning for Energy Emergencies: The Administration and the 97th Congress. For further i n f o r m a t i o n , s e e I 8 7 9 1 2 1 -- E n e r q y : T 5 e S t r a t e g i c P e t r o l e u m R e s e r v e . )iATUilAL G A S Not long after decontrolling petroleum, the Reagan Administration strongly indicated its intention to seek e a r l y d e c o n t r o l o f n a t u r a l gas. The Prssident's Energy Policy Task Force report, prepared and released in . .notwithstanding present December 1980, urged "phased price decontrol. ' d e c o n t r o l ' l e g i s l a t i o n , " a r e f e r e n c e t o t h e N a t u r a l G a s P o l i c y Act. As a matter of economic principle for the Administration, decontrol of and even natural gas should be a straightforward matter. But politically e c o n o m i c a l l y -- i t i s n o t . T h e deliberation over the Natural G a s P o l i c y Act o f 1 O 7 8 w a s e x h a u s t i n g , s u s t a i n e d by t h e n o p e t h a t C o n g r e s s w o n l d n o t n e e d t o address the issue for several years. The Administration and Members of Congress with special interest in natural gas decontrol recognize how little appetite either party would have for a major confrontation. It can be expected, then, that any major proposal introduced in the 97th Congress will be f u r t h e r a l o n g t h e p a t h of c o n s e n s u s t h a n w a s c h e N a t u r a l G a s P o l i c y A c t i n its original form. -- of the new Administration, If consistent w i t h t h e e c c n o m i c p h i l o s o p h y decontrol would b e inconsistent with its economic golicy. Though the impact w o u l d be d i f f i c u l t t o c a l c u l a t e a n d w o u l d v a r y w i t h t h e s p e c i f i c s o f p-olicy, d e c o n t r o l c a n b e e x p e c t e d t o c o n t r i S u t e t o i n f l a t i o n a n d o f f s e t s o m e of the t a x r e d u c t i o n s t h a t w e r e d e s c r i b e d a s f u n d a m e n t a l tc t h e A d m i n i s t r a t i o n ' s program. Fost importantly, any significant decontrol measure would likely not survive congressional consideration without passage of a windfall profits t a x , a p o l i c y w h i c h t h e A d m i n ~ s t r a t i o n d o e s no: support because windfall profics taxes a r e archetypical examples of government clamSering upon the private sector Sack. However, ehe Reagan Administration has been held reasons c a p t i v e by t h e w i n d f a l l p r o f i t s t a x on o i l - - f o r o b v i o u s p o l i t i c a l -- m a d e s o m e w h a t l e s s d i s t a s t e f u l by t h e h e l p f u l b u d g e t - b a l a n c i n g r e v e n u e s i t provides. S o m e s p e c u l a t e t h a t n a t u r a l g a s d e c o n t r o l accoiripanied by a windfall proflts tax might commend itself to the Administration f o r the same reason, but the initiative for a windfall proflts tax would clearly be left to the Congress. F o r t h e m o m e n t , n a t u r a l g a s d e c o n t r o l c o n t i n u e s t o be the object of various studies, position papers, and discussion. The debate Will center o n determining what categories (and, therefore, what volumes) of gas should be decontrolled; and whether some categories of gas are decontrolled immediately or subject to phased decontrol. If t h e l a t t e r , a n a d d i t i o n a l i s s u e w i l l b e d e c i d i n g w h a t t h e " t a r g e t , " u n c o n t r o l l e d p r i c e s h o u l d be. One concern about industrial a n d decontrolling g a s is that rising gas prices could prompt utility users t o switch to oil. Tne Presrdent's Cablnet Councll on Natural Resources and the E n v ~ r o n m e n t reportedly pressing f o r the President t o reach some d e c l s ~ o n on accelerating g a s p r l c e d e c o n t r o l ~ y l a t e September or early OctoDer, but preoccupation wlth t h e s e c o n d r o u n d of ~ u d g e t c u t s a n d tFLe p r o p o s e d d l s r n a n t l ~ n g o f D O E w a s e x p e c t e d to d e l a y release of che A d m l n ~ s t r a t ~ o n ' s proposal untll 1982. In the absence of an Admrnlstratlon proposal and an eye introduced the to qettlng the decontrol process underway, Senacor Johnston 8, 1982, N a t c r a l G a s P r o d u c t i o n a n d N a r k e t A d ~ u s t m e n t A c t (S. 2 0 7 3 ) o n F e b . whzcn would have provlded that gas produced from wells d r ~ l l e d after e n a c t m e n t of c h e legislation would be p r l c e d a t 70% o f d o m e s t ~ c refiners' a v e r a g e c r u d e a c q u l s l t ~ o n c o s t . O t h e r categories of g a s u n d e r contro: wouid perlod; c o n ~ r o l s wocld Se be p h a s e d u p t o t h e n e w price over a t w o - y e a r a l t ~ g e t h e r e l l m l n a t e d o n Jan. 1 , 1952. Bu: ~ n t h e e a r l y s p r l n g o f 1 9 8 2 , c h e A d m a n ~ s c r a t l o n indicated l t w o u l d n o t s e e k n a t u r a l g a s d e c o n t r o l :his y e a r , a d e c l s ~ o nprobably motivated by awareness o f the p o l ~ t l c a l o p p o s l t l o n to d e c o n t r o l ~ n a s l u g g ~ s he c o n o m y . was COAL DEVELOPMENT The new Administration appears confident that market conditions favor coal and that what i s most needed is for the Government t o g e t out of t h e way. T h i s c o n f i d e n c e i s r e s u l t i n g in p r o p o s a l s both t o p r o m o t e p r o d u c t i o n and to remove some direct subsidies that prpmote production. The Administration is e x p e c t e d to e n c o u r a g e exploration a n d proc2uction o n F e d e r a l l a n d s , t o s u g g e s t s o m e c h a n g e s i n t h e C l e a n Air A c t , a n d t o r e d u c e F e d e r a l regulations o f l a n d reclamation. However, the Administration has a l s o called f o r c h a n g e s in the F u e l Use Act provisions prohibiting utility and industry use of o i l a n d g a s The Fuel Use Act) and a trimming of the (see I375046 - - Power Plants: synfuels efforts (see IESll39 -- Synthetic Fuels Corporation a n d Technology). T h e O m n l b u s R e c o n c l l l a t l o n Act o f 1 9 5 1 (H.R. 3 9 8 2 ) deal^ w l t h t w o of the m o s t c o n t r o v e r s ~ a la s p e c r s of t h e F u e l U s e Acz. One 1s sectlon 301, a s t a t u t o r y p r o h l b l t i o n against burnlng n a t u r a l g a s l n e x ~ s t l n g p o w e r p l a n t s beginning i n 1 9 9 0 (and r e s t r l c c l n g i t s u s e p r ~ o r: o t h e n ) . T 9 e o c h e r 1 s :he f a c t t h a t u t l l i t l e s w i s h l n g :o c o n v e r t o i l o r g a s f a c i l l t l e s t o b u r n coal m u s t m e e z m o r e str;ngenc requirements b n d e r t h e C l e a n Air A c t ;f :hey l a c k a n they are o r d e r f r o m t h e D e p a r t m e n t of E n e r g y t o m a k e t h e conversion t h a n if ordered to d o so under FUA. CRS- 8 IB81112 UPDATE-ll/l0/82 The Reconciliation Act repeals the general prohibition against burning g a s in e x i s t ~ n g p o w e r p l a n t s , a s w e l l a s t h e a u t h o r i t y o f t h e S e c r e t a r y o f E n e r g y t o pr0hibi.t t h e b u r n i n g o f o i l o r g a s i n a n e x i s t i n g p o w e r p l a n t i f h e f i n d s the p l a n t capable of using c o a l or' o t h e r a l t e r n a t e f u e l . Instead, it substitutes a new section 301, allowing a uEility to certify to DOE that a powerplant burning o i l or gas i s capaDle o f burning C o a l , or a coal/oil or coal/gas m i x t u r e , a n d g i v i n g t h e S e c r e t a r y a u t h o r i t y t o p r o h i b i t b u r n i n g of oil or g a s in such plants a s a r e certified. Prohibition orders issued under the n e w s e c t i o n 3 0 1 , a s u n d e r t h e o l d v e r s i o n , w o u l d e x e m p t t h e u t i l i t y from Eeeting n e w source performance standards under s e c t i o n 113(d) ( 5 ) of the Clean Air Act. An a d d i t i o n a l a i d t o x t i l i t i e s c o n v e r t i n g o i l o r g a s p l a n t s t o c o a l , a n d t o t h e C O n S t r ~ ~ t i O onf n u c l e a r p l a n t s a n d n e w C o a l p l a n t s r e p l a c i n g o i l o r g a s p l a n t s , w a s p a s s e d a s p a r t o f t h e E c o n o m i c R e c o v e r y T a x A c t of 1 9 8 1 ( H . R . 4232). T h e bill allows accelerated cost recovery of those facilities, for t a x p u r p o s e s , of 1 0 y e a r s , a n d 1 5 y e a r s f o r o t h e r f o s s i l f u e l p l a n t s , transmission and distribution a n 8 hydroelectric facilities. Existing regulations limited t h e cost recovery for nuclear plants to a minimum of 16 y e a r s , o t h e r szearn e l e c t r i c p l a n c s t o 22.5 y e a r s , a n d h y d r o t o 40 y e a r s . Regarding the Coal research and development budget, the Administration intends t o use F Y 8 2 funds to phase o u t many coal programs in FY83 in an "cr3srly" manner. T h e coal program, which represents the bulk of the f o s s i l fuels D u d g e t , would be cut significantly i n the proposed FY83 program, from $363.2 m i l l i o n t o $93.8 million. Such reeuctions would eliminate the c o a l - m i n i n g R&D p r o g r a m , t h e h e a t - e n g i n e a n d h e a t - r e c o v e r i n g programs, and tke m z g n e t o h y d r o d y n a m i c s p r o g r a m s . Most other programs would be reduced to = h e point t9at the remaining money would be scfficient ozly ro close down r e s e a r c h o r c o m p l e t e n e a r l y f ~ n i s h e dp r o j e c t s . H o w e v e r , in action on t h e F i r a t B u d g e t R e s o l u t i o n , t h e C o n g r e s s d e c i d e d b a s i c a l l y t o f r e e z e c o a l R&D funding a t i t s current F Y 8 2 levels. The action was finalized in the stop-gap Continuing resolution which will fund the Government until December. T o i m p r o v e c o a l ' s m a r k e t p o s i t i o n , recominendations t o a l t e r t h e C l e a n A i r Act a n d Federal reclamation l a w s h a v e been suggested. The Reagan transition team r e c o m m e n d e d r e v i e w o f t h e A m b i e n t A i r g u a l i t y S t a n d a r d s a n d e l i m i n a t i o n of t h e r i g i d e m i s s i o n iimitations set by the New Source Performance Standards. T h e H e r i t a g e F o u n d a t i o n r e p o r t a t t a c k e d D O I ' s O f f i c e of Surface Minlng (OSM) for its "incredible zealotry" in promulgating regulations far i n excess of the requirements of the Surface Mining Control and Reclaxation Act. The Foundation recommended that OSM return to "its intended role of facilitating.an early t r a n s f e r of reclamation planning and enforcement activities t o t h e S t a t e s , " a n c a c c m p l e t e r e v i e w o f a 1 1 O S M r e g u l a t i o n s . To facilitate increased Coal production, the Administration has advocated multiple u s e of F e d e r a l l a n d s , i n c l u d i n g a h i g h priority to energy In this regard, che new Administration wants the Department of development. Interior and Secretary Watz are taking the lead with significant leasing zctivity in the W e s t , a n d proposed massive leasing o n the Outer Continental Shelf. T h e a d m i n i s t r a t i o n h a s p r o p o s e d s h i f t i n g t h e f o c u s of governrnenc synfusls p r o g r a m s t o t h e U.S. S y n t h e t i c F u e l s C o r p o r a t i o n . This would elirinate the D O E c o m m e r c i a l i z a t i o n a n d d e m o n s t r a t i o n p r o g r a R s ( i n c l u d i n g S R C I). After taking a dramatic cut in funding i c F Y 8 2 , the Administration i s recommending The proposed F P 8 3 budget fcr coal another dramatic cut for FY83. l i q u e f a c t i o n w o ~ l dD e c u t $ 2 2 8 m i l l i o n t o $26.2 m i l l i o n . For surface coal g a s i f i c a t i o n , t h e c u t would S e from $ 5 3 . 1 m i l l i o n t o S1C.5 m i l l i c n . Finally, for ln situ coal gasification, the cut was from $8.3 million to $700 noted above, the budget thousand. No f u n d i n g i s r e q u e s t e d f o r S2C 1 , A s r e s o l u t i o n f r o z e s y n t h e t i c f u e l s R&D a t i t s FYE2 l e v e l . House a n d S e n a t e c o m m i t t e e h a v e r e p o r t e d l e g i s l a t i o n e n a b l i n g c o a l slurry p i p e l i n e s t c a p p l y f o r e m i n e n t domain a u t h o r i t y . A t some point in their j o u r n e y , c o a l p i p e l i n e s w o u l d i n v a r i a b l y c r o s s l a n d owned by the railroads, which have r e f u s e d t o g r a 3 t rights-of-way t o the pipelines. The proposed l e g i s l a t i o n would e n a b l e p i p e l i n e s to be granted rights-of-way over the o b j e c t i o n s of t h e r a i l r o a d s . Coal pipeline legislation has been introduced in several previous has in the 97th Congress. Congresses and h a s never. advanced a s f a r a s i t T h i s i s a t t r i b u t e d t o t h e e n a c t m e n t i n t h e 9 6 t h C o n g r e s s o f :he S t a g g e r s R a i l Act which, co consi'derable e x t e n t , d e r e g u l a t e d r a i l r o a d t r a n s p o r t a t i o n r a t e s . ~ * ~ i l i t i e sc o, n s u m e r g r o u p s , a n d t h e coal industry have joined forces to s u p p o r t e m i n e n t domain l e g i s l a t i o n . -7 h n u m c e r o f c o n f u s ~ n gc l a l m s a n d counterzlains have beer made zn t3e c o u r s e o f :he d e b a t e a b o u t t n e e f f l c l e n c y and cost of the plpellnes and Other w h e t h e r c o n s u m e r s w o u l d t r u l y r e a l i z e s a v l n g s on t n e l r u t r l l t y b l l l s . resources, the prlmacy of i s s u e s have been t h e u s e and d l v e r s l o n of w a t e r t h Tallroads S:a=e l a w g o v e r n r n g w a t e r u s e , a n d t h e p r o z e c t e d i m p a c t s u p o n should t 3 e p i p e l i n e s be b u l l t . T h e A d m a n ~ s t r a t l o n e x p r e s s e d ~ t ss u p p o r t of late 1981, c o a l s l u r r y p l p e l l n e s l n g e n e r a l , b u t o p p o s e d t h e l e g l s l a t ~ o nl n was a vloiatlon of States' rlghts. L C -r 1s a r g u ~ n gt h a t e m l n e n t d o n a b n the e x p e c t e d t h a t t h e b i l l w l l i b e c o n s i d e r e d when C o n g r e s s r e c o n v e n e s a f t e r N o v e m ~ e r e l e c t l o r > . --4- ,1 s n o t a S s o l u t e l y c e r z a l n tnat the Presidnnt would v e ~ zt n e 5 ~ 1 1 ,i f p a s s e d . C. the A f t e r 4 y e a r s of belng t r e a t e d a s che energy s o u r c e of l a s t r e s o r t by C a r t e r A d r n l n l s t r a t i o n , n u c l e a r p o w e r 1 s r e g a r d e d by :he R e a g a n A d r n l n l s t r a t l o n mix. a s a p o t e n t i a l l y l a r g e a n d l o n g - t e r m contributor z o t h e n a t l o n a l e n e r g y T h e C a r t e r A d n ~ n l s t r a t i o n l o o ~ e do n u r a n l u m a s a n I m p o r t a n t f u e l l n t h e near renewable energy sources. t e r m , b u t v l e w e d 15 a s a t r a n s ~ t l o nt o l o n g - t e r m an "essentrally The Reagan A d m l n i s t r a t ~ o n , however, vlews f l s s ~ o n as inexhaustible e n e r g y s u p p l y - " As a r e s u l t , t h e d e v e l o p m e n t a n d d e m c n s t r a t i o n of b r e e d e r r e a c t o r t e c h n o l o g y , whlch t n e C a r c e r A c m l n l s t r a t l o n had deferred essenc~al. rn -he coca1 nuclear flsslon d e e m p h a s ~ z e d , 1 s considered and a p p r o p r l a t l o n f o r FY82 w a s $ 1 . 1 1 3 b 1 l l i c n , c o m p a r e e t o $ 1 . 0 4 9 b l l l l o n r n FY81 -- o n e o f t h e f e w D O E p r o g r a m s t n a t w a s i n c r e a s e d , r a t h e r t h a n s h a r p l y c u t . million, plus $185 m l l l r o n ln F o r FVS3 t h e budget request was $e30.5 borrowing authorzty t o s t a r t a u t ~ l l t y - f ~ n a n c e dN u c l e a r Waste FJdnC. The nuclear S e n a t e , i n ~ t Fs l r s t B u d g e t Resolution, f r o z e t h e a u t h o r l z a t ~ o n f o r f r s s l o r a c t h e FY82 l e v e l . The House budgec r e s o l u t ~ o n rncluded energy chan s u p p l y r e s e a r c h a n d development f u c d l n g t n a t 1 s a b o u t $ 4 5 0 million l e s s ~ h Se e n a t e , b u t d i d n o t s p e c ~ f l c a l l ym e n t i c n f ~ s s ~ oR 6n 3 . S p e c l f r c a l l y , t h e Clrnch Rlver Breeder Reaczor Pro:ect (CRBR), which was a u t c o r l z e d i n t h e 9 1 s t C o n g r e s s , and whlch Carter unsuccessfc;ly trled to r e v ~ v e d by the c a n c e l l n h l s f ~ s c a l1 9 - 8 - 1 9 8 2 b u d g e t r e q u e s t s , 1 s b e l n g C R 3 R 2 s o n e o f t n e f e w e n e r g y p r o ~ e c c st h a t rece~ved Zeagan A d n ; n i s t r a t i o z . 3eagan Admlnlstration a n r n c r e a s e o f f u n d i n g - - o f $ 2 5 ; m ~ l l l o n- - f r o m t h e over the Carter request f o r PY82. However, although the Congress had i n s i s t e d o n f u n d i n g :he p r o j e c t d e s p i t e C a r t e r r e q u e s t s to c a n c e l i t , t h e R e a g a n p l a n t o f u n d i t p a s s e d by o n l y a t w o - v o t e m a r g i n in the S e n a t e D O E appropriations vote, and raised serious opposition i n the House. The Administration's FY83 budget request includes $252 million for CRBR, compared to $190 million approved f o r FY82. In passing the continuing resolution for F Y 8 3 (H.J.Res. 5 9 9 1 , t h e S e n a t e n a r r o w l y r e f r a i n e d f r o m c u t t i n g o f f f u n d i n g for the Clinch River project. An a m e n d m e n t t o t h e m e a s u r e w a s d e f e a t e d o n S e p t e m b e r 2 9 by a v o t e o f 48-49. F o r f u r t h e r i n f o r m a t i o n , s e e I B 7 7 0 8 8 -Breeder Reactors: The Clinch River Project. In f u n d i n g C R a R , t h e R e a g a n Administration i s including the breeder program a m o n g "technologies judged to b e outside the range of normal industry risk t a k i n g , " a n d thns i n need of Government support. In this regard the breeder program differs from the Reagan Administration's position on the Barnwell (south Carolina) Fuel Reprocessing facility, a plant designed and b u i l t by a p r i v a t e c o r p o r a t i o n f o r c o m m e r c i a l r e p r o c e s s i n g o f spent nuclear f u e l a n d r e c y c l e of p l u t o n i u m - i n p r e s e n t - d a y Light Water Reactors. The Barnwell plant has been in limbo for 4 years because of the Carter deferral o f c o m m e r c i a l r S p r o c e s S i n g , a n d i t h a d b e e n s u g g e s t e d :hat r h e p l a n t c o u l d be bought by D O E t o d e m o n s t r a t e c o m m e r c i a l p l u t o n i u m recycle. But the Administration instead i s proposing that reprocessing and recycle, which are much farther along technologically than t h e breeder, be carried o u t , if a t a l l , by p r i v a t e i n d u s t r y . F o r f u r t h e r i n f o r m a t i o n , s e e I B 8 8 1 2 6 -- N u c l e a r Ecerqy: E n r i c h a e n t a n d R e p r o c e s s i n g of N u c l e a r Fuels.) 2utside of the budget actions to promote development of advanced nuclear technology, the Administration has concerned itself with supporting the IFa n Oc:. E, 1951, statement, existing commercial nuclear industry. President R e a g a n c a l l e d n u c l e a r pow?r " o n e of t h e b e s t p o t e n t i a l sources of nek electrical energy supplies ln the coming decades," and announced a number of actions t o help i t recover. In a n a p p r o a c h t h a t h a s b e c o m e familiar in many policy areas, however, the 2eagan statement limits Federal action f a v o r i n g c o m m e r c i a l n u c l e a r p o w e r t o two: economic recovery to "improve the climate for capital formation" through tax and fiscal restraint, and e l i m i n a t i o n o f t h e " m o r a s s o f r e g u l a t i o n s t h a t d o n o t e n h a n c e s a f e t y but. ..do cause extensive licensing delays and economic uncertainty." The statement It m e r e l y o r d e r e d did not make specific licensing reform proposais, however. co recommending the Secretary to " g i v e immediate priority attention improvements in the nuclear regulatory and licensing process," and "anticipated" more expeditious action by the Nuclear Regulatory Commission o n near-term licensing applications. T h e A d m i n i s t r a t i o n d ~ dr e q u e s t l e g i s l a t i o n t o a l l o w N R C t o i s s u e i n t e r i m operating licenses, a n d to amend exiscing licenses in ways that involve no significant safety conSideratiOnS, before completion of all hearings on the matter. These provisions were included in the NRC authorization legislation f o r F Y 8 2 a n d FY83. T h e H o u s e p a s s e d i t s v e r s i o n of t h e a u t h o r i z a t i o n b i l l o n Nov. 1 1 , 1 9 8 1 (H.R. 2 3 3 0 ) ; t h e S e n a t e p a s s e d i t s v e r s i o n o f R . 2330 (S. 1 2 C 7 ) o n Mar. 3 0 , 1 9 8 2 . T h e c o n f e r e n c e b i l l r e p o r t e d S e p t e m b e r 1 6 w a s a g r e e d t o by r h e S e n a t e o n O c t o b e r 1 , b u t t h e H o u s e did n o t a c t on it before fcr recessing. S e e 1 3 8 0 0 8 1 - - N u c l e a r P o w e r P i a n t S a f e ~ ya n d L i c e n s i n q details. The Administration has a l s o supportee iniziatives in the Congress to pass a comprehensive bill dealing with nuclear waste management, particularly one t h a ~w o u i d s e t u p a s y s t e m o f u s e r f e e s t o pay f o r t h e w a s t e managemen: program, and formalize the r o l e of S t a t e a n d local authorities in r h e siting of a permanent waste repository, ( S e e I B 7 5 0 1 2 -- N u c l e a r W a s t e Management, f o r details.) The Senate has passed o n e version of a nuclear waste bill (S. 1562). In t h e H o u s e , s e v e r a l b i l l s w e r e r e p o r t e d by t h e I n t e r i o r , E n e r g y a n d Commerce, and Science and Technology Committees. On September 24 a c o m p r o m i s e b i l l , H . R . 7 1 8 7 , w a s i n t r o d u c e d . On S e p t e m b e r 3 0 t h e H o u s e b e g a n d e b a t e o n H.R. 3 8 0 9 , w h i c h w a s e x p e c t e d t o b e a m e n d e d t o i n c o r p o r a t e t h e 4 t o t a l of 3 4 a m e n d m e n t s w e r e ruled in order by the compromise measure. Rules Committee, and the House did not complete consideration of the bill before ehe recess. CONSERVATION Conservation was a primary tenet of the Carter Administration's energy policy. The Reagan Administration, a s noted e a r l i e r , h a s eecideci t o emphasize conventional fuel development, a n 8 is pursuing a reduction in the Federal role for conservation. W i t h t h e d e c o n t r o l of o i l , i t i s f e l t t h a t some Federal conservation programs a r e now unnecessary; the rising cost of energy, the Administration believes, shoule be sufficient incentive to pronote conservation. Reductions in the conservation bucget will total $ 2 - 4 b i l l i o n by t h e e n e of 1 9 8 6 . T h i s r e p r e s e n t s p r o g r a m outlay r e d u c t i o n s of F o r f u r t h e r i n f o r m a t i o n , s e e I B 7 5 0 2 0 -a b o u t 1 0 % i n F Y 8 1 a n d 40% i n F Y 8 2 . Energy Conservation in Residential and Commercial Building: The Future Federal Roie. - - R & D , regulation, a n d All t h r e e c a t e g o r i e s of c o n s e r v a t i o n p r o g r a m s Reflecting t h e philosophy that gran: p r o g r a m s -- a r e to b e r e d u c e d . g o v e r n m e n t r e s e a r c h a n d d e v e l o p m e n t s h o u l d f o c c s on long-term needs, the A d n ! ~ n ~ s t r a t ~ opnl a n s t o t e r r ~ n a t es e v e r a l R h D p r o ~ e c t so c the p r e m ~ s e tnac =hey should stand the test of market viabilrty wrthout government assistance. T h e s e ~ n c l u d eu r b a n W a s t e , c o n s u m e r p r o d u c t s , a d v a n c e d automotive e n g l n e d e s l g n , e l e c t r l c a n d h y S r ~ dv e h i c l e s , a n d i n d u s t r i a l p r o c e s s e s p r o ~ e c t s . T h e conservation R&D b u d g e t w o u l d b e c u t t o $ 1 7 . 2 million ln FY83 from $143.8 m;ll~on in FY82. Regulatory programs, for building energy performance standards, appliance efficiency standares, and utility conservation services, are not great burdens o n the D O E budget. However, reflecting its belief in d e r e g u l a t i o n , t h e A d m i n i s t r a t i o n i s c a l l i n g o n c e a g a i n f o r t h e t e r m i n a t i o n of these p r o g r a m s , a r g u i n g f u r t h e r t h a ~t h e y i m p o s e t o o g r e a t a b u r d e n on private indusrry. Finally, DOE conservation grant programs to States and local communities Management at the State and Local w o u l d b e c u t ( s e e I B 7 9 0 6 4 -- E n e r g y Levels). Indeed, energy conservation grants to State a n d local governments woulc be effectively eliminated with a funding levei of $4.6 million, down f r o m $ 2 4 0 m i l l i o n i n FY8.2 a n d $ 4 3 0 m i l l i o n i n F Y E l . In C O n g r e ~ ~ i O n ablu d g e t a c t i o n , t h e b u d g e t r e s o l u t i o n s e t s a f o r FY83. In action o n the stop-gap continuing f u n d i n g w a s f r o z e n at t h e ? Y 8 5 l e v e l u n t i l iJecem5er. $ 3 % 7 million ceiling of resolution, 3EPARTMENT O F E N E R G Y T h e c o n c e p t sf t h e D e p a r t m e n t of E n e r g y 5 e l d Sy =he Zeagac Administration, a n d r e v e a l e d i n t h e FY82 b u d g e t p r o p o s a l s u n d e r Secretary of Energy James Edwards, i s v e r y d i f f e r e n t from t h e c o n c e p t o f t h e Departmen: envisioned by C o n g r e s s when t h e DOE w a s e s t a b l i s h e d by P r e s i d e n t C a r t e r ( s e e i B 8 1 0 1 5 -- T h e Department of Energy: Is Further Reorganization Needed?). Instead of p e r c e i v i n g t h e department as t h e f o c a l p o i n t f o r major Federal involvement i n energy decision-making and promotion of specific alternative energy overly t e c h n o l o g i e s , t h e R e a g a n Administration e v i d e n t l y p e r c e i v e s D O E a s a n l a r g e D e p a r t m e n t w h i c h s h o u l d b e s i g n i f i c a n t l y s c a l e d down a n d subjected to The conditions in which the intensive review f o r potential termination. Department has o p e r a t e d i n t h e 3 1 / 2 y e a r s of i t s e x i s t e n c e have l e f t i t w i t h the middle of contending few d e f e n d e r s , s i n c e i t has c o n s i s t e n t l y been i n f r o u p s , f u l l y s a t i s f y i n g none of i t s c o n s t i t u e n c i e s . ln the preceding sectlons of this revrew, the Reagan As discussed of A d m l n ~ s t r a t l o n l n t e n c s t o r e f e r much o f t h e d e c l s l o n - m a k l n g o n production energy and development of a l t e r n a c l v e energy sources t o t h e private sector. energy programs was presented ~n January, the When t h e F Y 6 3 b u d g e t f o r proceeding w ~ t h plans to send Congress proposed A d m l n ~ s t r a t l o n was dismantle the Department of l e g r s l a t l o n , l n tandem wlth the budget, to and a Energy. T n e President h a d p r o p o s e d a S o l r s h i n g D O E l n S e p c e m ~ e r 1 9 8 1 , p l a n f o r d ~ s p e r s ~ n~ g t fsu n c t i o n s w a s a n n o u n c e d by E n e r g y S e c r e t a r y Edwards ~ n December. T h e FY83 b u d g e t r e f l e c t s t h e a r r a n g e m e n t o f p r o g r a m s t h a t w o u l d be l n effect after a d o p t ~ o n of the proposed r e o r g a n ~ z a t l o n of energy ln energy research and funcclons. T h e r e f o r e , t 5 e b u l k o f DOE'S functions emergency preparedness, d e v e l o p m e n t , n u c l e a r w e a p o n s , ~ n c e r n a t l o n a l issues, a n d e n e r g y ~ n f o r m a t ~ o nw, h l c h w o u l d b e t r a n s f e r r e d t o t h e C o m m e r c e D e p a r t m e n t The u n d e r t h e p r o p c s e d r e o r g a n l z a t l o n , show u p ~ n c h a t D e p a r t m e n t ' s b u d g e t . Reserve fundznq p c w e r marketing a d m l n l s t r a t i o n s a n d t h e Strategic P e t r o l e u m show up ~n t h e Interlor Department's budget. As requested by some DOE c o n g r e s s l o n a i c o m m l r ~ e ec h a l r m e n , t h e e n e r g y S u d g e t ~ u s t l f l c a t ~ o n sf o r w e r e p r e p a r e d f o r t h e D e p a r t m e n t a s ~t 1 s now o r g a n l z e d , but the operatzve budget f l g u r e s r e f l e c t the reorganlzaclon. S u b s e q u e n t t o s u t ~ m i s s i o no f t h e budget, the Administration experienced with Members of Congress on p o l i t i c a l S i f f i c u l t i e s i n reaching agreement a s p e c t s o f t h e r e o r g a n i z a t i o n , a n d i n some c a s e s on t h e b a s i c p o l i c y q u e s t i o n a s t o w h e t h e r e n e r g y had f a d e d from t h e r o s t e r of i m p o r t a n t national issues The A d m i n i s t r a t i o n ' s a t t e m p t s to d e s e r v i n g of a Department t o d e a l wich i t . a l l a y c h o s e m i s g i v i n g s o f Members of Congress led to continuous delays. with Senate S o w e v e r , i n l a t e May, t h e A d m i n i s t r a t i o n r e a c h e d an agreement 2552, follows c o m m i t t e e c h a l r m e n on a d i s m a n t l e m e n t p r o p o s a l . The b i l l , S . the original d~smantlement proposal fairly closely. Differences inciude consolidating the emergency planning function under the Department of "EXTAW concept -- t h e Department ~ l l i Ccmmerce, a n d e l i m i n a t i o n o f the i n s t e a d b e expanded t o i n c l u d e a Deputy S e c r e t a r y f o r D e f e n s e Program and a Deputy S e c r e t a r y f o r Energy. Hearings have been held i n t h e Senate, Sut no a c t i o n h a s been t a k e n . Also, i n August R e p r e s e n t a t i v e s B r o y h i l l and Houston i n t r o d u c e d t h e d i s m a n t l e m e n t p r o p o s a l i n t h e House. No hearings have been h e l d i n t h e House. for reduclng the I n d e e d , r a t h e r ~ h a na c c e p t z n g A d m l n l s t r a t r o n p r o p o s a l s In the Supplemental Departmen:, t h e C o n g r e s s h a s p r o v i d e d s u p p o r ~f o r D C E . the Congress delineated personnel floors for the A p p r o p r l a c l o n f o r F-2, the Department. v a r l o u s o f f l c e s , agencies, o r categories o f a c t l v l c y w ; t h l n T h e s e i e v e l s a r e h l g h e r t h a n t h o s e e n v r s l o n e d by t h e A d m l n l s t r a t i o n f o r F Y 6 3 . A s p e c l a 1 P r e s l d e n t l a l m e s s a g e a n d congressional a c c l o n 1 s r e q u i r e d t o c h a n g e the personnel floors. S e v e r a l after b i l l s h a v e b e e n i ~ t r o d u c e d i n t o t h e 9 9 t h C o n g r e s s t o either The P r e s i d e n t ' s speech e l i r n l n a t e o r d i s m a n t l e D O E ( s e e LEGISLATION, b e l o w ) . o f S e p t e m b e r 24 a n n o u n c e d a r e n e w e d e f f s r t t o d i s m a n t l e DOE and distribute i t s functions t o other agencies i n the Sureaucracy. A s currently envisioned, In doing many o f D O E ' S f u n c t i o n s w o u l d S e p u t u n d e r t h e C o m m e r c e D e p a r t m e n t . s o , OMB h a s e s t i m a t e d s a v i n g s o f $ 1 0 0 m i l l i o n for FY83. This savings is d i s p u t e d b y m a n y who b e l i e v e s u c h a d i s m e m b e r m e n t w o u l d b e s y m b o l i c and not s a v e money s i n c e t h e D e p a r t m e n t ' s f u n c t i o n s w o u l d s t i l l h a v e to b e carried o u t by some o n e . LEGISLATION GENERAL ENEZGY LEGISLATION P.L. 97-12, H . R . 3512 Supplemental Approprlatlons and R e s c i s s ~ o n Act of 1981. Maklng s u p p i e m e n t a l a p p r o p r l a t ~ o n sa n d r e s c l n d l n g c e r t a r n S u d g e t a u t h o r ~ t yf o r F Y 8 l . I n t r o d u c e d May 6 , 1 9 8 1 ; r e f e r r e d zo C o m ~ l t t e e on Approprlatrons. Passed House, amended, May 13. Reported to Senate by Senate Committee on A p p r c p r ~ a t l o n s ( S - R e p t . 9 7 - 6 7 ) Kay ~ 4 . Passed Senate, amended, Kay 2:. Conference repor: f r l e d ~ n House (H.Rept. 97-124) June 3 . Signed lnto law June 5, 1981. P.L. 97-33, H . R . 4242 Economlc R e c o v e r y Tax Act of 1 9 8 1 . Introduced J u l y 23, 1981; referred t o C o m m l t t e e o n Ways a n d M e a n s . Passed House, amended, with text of H.R. 4260 L n s e r t e d , J u l y 2 9 Passed S e n a t e , amended, wlth t e x t sf B.J.Res, 256 ( a s a m e n d e d ) ~ n s e r ~ eJ ud l y 3 1 . Conference r e p o r t f ~ l e d i n Senate (S.Rept. 9 - - 1 7 5 ) A u g u s t 1. C o ~ f e r e n c er e p o r c f i l e d ~ n H o u s e ( H . R e p : . 97-215) Augxst 3. S ~ g n e dl c t c l a w A u g . 1 3 , 1 9 8 1 . , P.L. 37-35, H . R . 3982 Omnibus B u d g e t R e c o n c i l i a t i o n Act o f 1 9 8 1 . Introduced June 19, 1981; r e f e r r e d t o Committee on Budget. P a s s e d House, amended, w i t h t e x t of S. 1397 inserted, July 13. C o n f e r e n c e r e p o r t f i l e d i n House (H-Rept. 97-208) July Measure 29, 1981. House and S e n a t e a g r e e d t o c o n f e r e n c e report July 31. s i g n e d i n t o l a w Aug. 1 3 , 1 9 8 1 . 4144 P.L. 97-88, H.R. Energy and Water Development A p p r o p r l a t l o n s Act. Introduced Jan. 15, 1 9 8 1 ; r e f e r r e d t o Commlttee on A p p r o p r l a t l o n s . Passed Souse, amended, Zuly 24. P a s s e d S e n a t e , a m e n d e d , November 5 . Conference r e p c r t flled ~n House ( 3 - R e p t . 9 7 - 3 4 5 ) NovemSer 1 9 . House a g r e e d t o C o n f e r e n c e r e p o r t Kovember 2 1 . M e a s ~ r es l g n e d l n t o l a w D e c . 9 , 1 9 8 1 . P.L. 9 9 - l 0 0 , H . R . 4035 Department of I n t e r l o r A p p r o p r l a t l o n s Act. Introduced Jan. r e f e r r e d t o C o m m l t t e e o n Appropriations. Passed House, amended, P a s s e d S e n a t e , amended, O c t o b e r 27. Conference report f ~ l e d ln ( H . R e p t . 9 7 - 3 1 5 ) November 5 . Youse a g r e e d to conferecce report 2ec. 10, 1981. S e n a t e a g r e e d t o c o n f e r e n c e r e p o r t ( a m e n d e d ) Dec. K e a s u r e s l 3 n e d ~ n t ol a w D e c . 2 3 , 1 9 6 1 . 15, 1981; July 22. the House (amended) 10, 1951. E K E R G E N C Y PREPAREDNESS H.R. 4700 ( S h a r p ) A m e n d s t h e E n e r g y P o l i c y a n d Conservation A c t t o a u t h s r l z e t h e P r e s ~ d e c z mandatory sllocatlon 3f any petroleum t o provlde, Sy r e g u i a c l o ~ ,f o r t h e p r o d u c : ~ n a m o u n t s a n C a t p r l c e s s p e c i f ~ e e~ n s u c h r e g u l 2 t l 3 r S . Permits the i m p l e m e n t a t i o n o f s u c h r e g u l a t i o n s if: (1) t h e P r e s i d e n t d e t e r m i n e s t h e r e i s a severe petroleum supply interruption; and ( 2 ) Congress does not disapprove the regulations. I n t r o d u c e d Oct. 6 , 1 9 8 1 ; r e f e r r e d t o Commi-ttee on E n e r g y and Commerce. P a s s e d H o u s e , a m e n d e d , D e c e m b e r 14. M e a s u r e l a i d o n t a b l e ; S. 1 5 0 3 p a s s e d in l i e u D e c . 1 4 , 1 9 8 2 . S , 1 5 0 3 ( M c c l u r e e t al.) Authorizes the President, if a severe petroleum supply shortage e x i s t s , to provide for the nandatory allocation of crude oil, residential fuel o i l , a n d any refined petroleum product. Referred to Committee o n Energy and Natural Resources July 2 0 , 1981. Hearings held July 2 8 and 30. Reported Passed Senate, amended, October 29. Passed Oct. 1 , 1981 (S.Rept. 97-199). H o u s e , a m e n d e d , i n l i e u of H.R. 4 7 0 0 , D e c . 1 4 , 1 9 8 1 . V e t o e d D y t h e P r e s i d e n t Mar. 2 0 , 1 9 8 2 ; a t t e m p t t o o v e r r i d e v e t o f a i l e d xar. 2 4 , 1 9 6 2 . S. 2 3 3 2 (McClure) Amends the Energy Policy and Conservation Act to extend the authority for oi3 companies to participate in the international energy program. Introduced Apr. 1 , 1962. Amended in committee to require f i l l r a t e f o r SFR of 3 0 0 , 0 0 0 b/d. R e p o r t e d f r o m t h e S e n a t e C o m m i t t e e on E n e r g y and Katural R e s o u r c e s , May 1 3 , 1 9 8 2 (S.Rept. 97-393). Passed S e n a t e , May 25, 1982 (88-7). PETROLEUM H.R. 1755 ( M o o r h e a d , C., e t al.) S i m i l a r t o S. 4 1 0 , a b o v e . Introduced Committee o n Energy and Commerce. Feb. 5, 1981; referred to S . 4 1 0 ( J o h n s t o n e t al.) Pe'roleum G i s p l a c e m e n t A c t of 1981. Would amend the Powerplant in Industrial Fuel Use Act of 1 9 7 8 tc repeal certain prohibitions and limitations on the use of natural gas as a primary energy source in electric powerplants. I n t r o d u c e d Feb. 5 , 1 9 8 1 ; r e f e r r e d t o C o m m i t t e e on Energy and Natural Resources. S u b c o m m i t t e e h e a r i n g h e l d Apr. 2 3 - 2 4 , 1 9 8 1 . NATURAL GAS H.R. 2 0 1 9 ( D a n n e m e y e r ) Amends the Natural Gas Policy Act of 1 9 7 8 to repeal Federal price a n d a l l c c a t ~ o nc o n t r o l s o v e r n a t u r a l g a s . I n t r o d u c e d Feb. 24, 1931; referred to Subcommittee o n F o s s i l a n d S y n t h e t i c F u e l s . H.Con.Res. 77 ( D o n n e l l y et al.) Expresses the sense of Congress chat the schedule for domestic natural gas price deregulation should not be accelerated. Introduced Feb. 25, 1981; referred to Subcommittee o n Fossil and Synthetic Fuels. S. 2 9 ( i u g a r et dl.) Repeals the Federal requirement of incremental priclng under the Natural G a s P o l i c y A c t of 1 9 7 8 . I n t r o d u c e d J a n . 5 , 1 9 8 1 ; r e f e r r e d t o C o m m i t t e e o n Energy a n d Natural Resources. NUCLEAR H.R. 2 3 3 0 ( U d a i l ) , E . R . 4 2 5 5 ( U d a l l , D i n g e l l ec al.)/S. 1 2 0 7 ( s i m p s o n ) N R C a u t h o r i z a t i o n f o r F Y 8 2 a n d FY83. Includes provisions for interim E.R. 2330 licensing of nuclear plants prior to completion of hearings. p a s s e d ( a s a m e n d e d t o i n c l u d e H.R. 4 2 5 5 ) Nov. 1 1 , 1 9 8 1 ; p a s s e d S e n a t e i n l i e u o f S. 1 2 0 7 Mar. 3 0 , 1 9 8 2 . CONSSRVATIClN S. 1 5 4 4 Replaces D O E categorzal grant programs with block grants to I n t r o d u c e d J u l y 3 0 , 1 9 8 1 ; r e f e r r e d t o Committee o n E n e r g y a n d Resources. States. Natural DEPARTKENT O F ENERGY H.R. 6 4 7 ( W h i t e h u r s t ) Terminates t h e Department of Energy. T h e D e p a r t m e n t w o u l d be t e r m i n a t e d Its l a w i s enacted t o c o n t i n u e it. o n Jan. 1 5 , 1 9 8 2 , unless a prior f u n c t i o n s w o u l d b e t r a n s f e r r e d a c c o r d i n g t o a plan to be submitted to C o n g r e s s by t h e P r e s i d e n t . T h e plan would g o into effect if Congress does the f u n ~ t i o n s otherwise. Introduced Jan. 5 , 1981; n o t act t o t r a n s f e r r e f e r r e d to C o m m i t t e e o n E n e r g y a n d N a t u r a l R e s o u r c e s . M . 2 , 330 ( C o l l i n s ) Abolishes t h e Department of Energy. Functions identified in t h e b i l l w o u l d be t r a n s f e r r e d t o o t h e r a g e n c i e s , i n m o s t c a s e s t o t h e a g e n c i e s f r o m w h i c h ;hey o r i g i n a l l y c a m e . W e a p o n s f u n c t i o n s w o u l d b e t r a n s f e r r e d t o t h e D e p a r t m e n t of D e f e n s e . Functions a n d programs not named in t h e A c t , such a s t h o s e of t h e E n e r g y I n f o r m a t i o n Administration, t h e E c o n o m i c R e g u l a t o r y 13, 1981; A d m i n i s t r a t i o n , a n d o t h e r s , w o u l d be t e r m i n a ~ e d . I n t r o d u c e d J a n . referred to Committee o n Government O p e r a ~ i O n s . E.R. 9 7 2 ( G u y e r ) Terminates t h e D e p a r t m e n t o f E n e r g y . to Commitzee on Government Operations. Introduced Jan. 2 0 , 1981; referred S. 2562 ( R o t h e t al.) Blll to reorqanize the energy functions of the Department cf Znergy. Introduced Kay 24, 1982; referred to Senate Committee o n Governmencab Affairs.