CHAPTER 1

INTRODUCTION

During the recent Presidential campaign, President Carter raised a number of issues regarding the Nation's energy policies and promised some new initiatives and legislation during the 95th Congress. Some of the issues raised during the campaign included:

--The priority that should be given to conservation and advanced energy supply technologies, such as solar energy.

--The pace and timing for expanding the use of
nuclear fission, including questions about the
nonproliferation of nuclear weapons from
peaceful uses of atomic energy.

--The need to reorganize the Federal energy agencies.

--The possible need to decontrol domestic crude oil and natural gas prices.

--The possibility of expanding the use of coal
consistent with solving any environmental and
socioeconomic problems.

--The role the Liquid Metal Fast Breeder Reactor
(LMFBR) and synthetic fuels from coal play in
meeting energy needs.

Because of possible new initiatives by the Carter Administration, the Chairman, Subcommittee on Energy and Power, House Committee on Interstate and Foreign Commerce, asked us to assess current major energy programs. He said that the Subcommittee needed such an assessment to respond effectively to new initiatives as well as develop alternatives of its own.

This report provides our assessment of the major energy issues and problems facing the 95th Congress and the major energy agencies based on our past efforts during the 94th Congress. It should be used with our report entitled "National Energy Policy: An Agenda for Analysis" (EMD-77-16, 1/27/77) which discusses major concerns and questions in the context of eight broad issue areas which we believe are most in need of attention if this Nation is to develop a sound, cohesive energy policy. Because this report discusses the major issues as they apply to each major energy agency,

it will serve to augment the previous report and hopefully will aid the Congress in setting priorities for reviewing each agency's programs and in formulating energy policy.

Over $11 billion will be spent in fiscal year 1977 on Federal energy programs. Currently, five executive agencies are responsible for carrying out the majority of these programs.

--Federal Energy Administration (FEA)
--Department of the Interior

--Federal Power Commission (FPC)
--Nuclear Regulatory Commission (NRC)

--Energy Research and Development Administration (ERDA)

In addition, other Federal agencies--such as the Departments of Commerce and Housing and Urban Development, General Services Administration, and the Tennessee Valley Authority-either have their own internal energy-related programs or have an interagency agreement with one of the five major agencies to carry out their programs. For example, the National Aeronautics and Space Administration carries out part of ERDA's solar energy research and development program.

Also, there were several programs recently enacted by the 94th Congress and other proposals which would substantially expand the activities and the cost of the Federal energy effort. These include:

--The Energy Conservation and Production Act
(Public Law 94-385), which established a number
of new programs with authorized funding of
about $360 million. Included was a program
for obligation guarantees of up to $2 billion
to encourage energy conservation measures
and renewable resource energy measures in
private, State, and local buildings and
industrial plants.

--The Energy Policy and Conservation Act
(Public Law 94-163), which established a
number of new programs, including the
Strategic Petroleum Reserve which has an
estimated Federal cost of $8 to $20 billion,
and a $750 million loan guarantee program
to develop new underground coal mines.

--The Federal Coal Leasing Amendments Act
(Public Law 94-377), which established new
policies for leasing coal on Federal lands.

--The Naval Petroleum Reserves Production Act of

1976 (Public Law 94-258), which opened some of
these reserves for production and sale on the
open market.

--The recently proposed Surface Mining Control and Reclamation Act of 1977 (H.R. 2 and S. 7) which, if passed, will establish strong environmental controls over surface mining and will provide for reclamation of previously mined land.

-- Recently proposed amendments to the Outer
Continental Shelf Lands Act (S. 9 and H.R. 1614),
which would significantly alter the present
system of leasing oil and gas resources on
the Outer Continental Shelf.

--The proposed Energy Independence Authority
(S. 2532 and H.R. 10267-94th Congress) which
would administer Federal loan and loan guarantee
programs with a potential total of $100 billion.

--The proposed synthetic fuels program (H.R. 1211294th Congress), which would involve Federal guarantees of obligations estimated to total about $3.5 billion.

--The proposed uranium enrichment program (S. 2035
and H.R. 8401-94th Congress), which would authorize
ERDA to contract with private industry to produce
enriched uranium and guarantee up to a commitment
of $8 billion that uranium enrichment technology
supplied by the Government will work.

Some of the programs proposed in the 94th Congress have been reintroduced in the 95th Congress. For example, several bills have been introduced to provide ERDA with broad loan guarantee authority for non-nuclear technologies, including synthetic fuels (e.g., H.R. 36, H.R. 37, H.R. 38, H.R. 1142, S. 37, and S. 429). On the other hand, bills to establish an Energy Independence Authority and to authorize contracts with private industry to produce enriched uranium have not yet been reintroduced. Whether these bills will be introduced in the same form is uncertain.

Over the past 3 to 4 years, the strength of the Organization of Petroleum Exporting Countries (OPEC) has grown starting with the oil embargo by those countries in 1973. As a result, international oil prices have increased by over 400 percent. In that time the Federal Government