Senator BAKER. Dr. Schlesinger, we thank you very much for your testimony.

The hearings are adjourned until March 7, 1972, at 9:30 in the morning.

(Whereupon at 1:30 p.m. the hearings were recessed to reconvene Tuesday, March 7, 1972, at 9:30 a.m.)

NATIONAL ENVIRONMENTAL POLICY ACT OF 1969

TUESDAY, MARCH 7, 1972

U.S. SENATE,

COMMITTEE ON PUBLIC WORKS AND

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D.C.

The committees met, pursuant to recess, at 9:30 a.m., in room 4220, New Senate Office Building, Hon. Howard H. Baker, Jr., presiding.

Present: Senators Baker, Fannin, Stafford, Dole, and Buckley. Senator BAKER. The hearing will come to order.

The Committee on Interior and Insular Affairs and the Committee on Public Works resume this morning a series of joint hearings on the operation of the National Environmental Policy Act of 1969. This is the second of 4 days that have been scheduled in the present

series.

On March 1, I made an effort to emphasize the fact that these hearings are strictly exploratory and informational.

Neither of the two committees has before it any specific legislative proposals on which testimony is being taken.

The two committees are particularly interested in the relationship between NEPA and the activities of Federal regulatory agencies.

There have been more than 60 Federal court decisions involving NEPA. Virtually all of the opinions written in these cases have dealt with the procedural requirements of section 102 of the act, rather than with the broad substantive mandate of section 101.

This procedural emphasis was borne out in testimony received by the two committees last week from Russell E. Train, Chairman of the Council on Environmental Quality, and James R. Schlesinger, Chairman of the U.S. Atomic Energy Commission.

Both witnesses expressed a general approbation of NEPA itself, while each identified certain areas in which procedural adaptations had generated conflict.

We are fortunate today in having three witnesses that should be in a position to give the committees the view from three different vantages.

Our first witness is the Honorable John N. Nassikas, Chairman of the Federal Power Commission.

It was, perhaps inevitable that the most prominent controversy over the operation of NEPA should have come to the fore in the energy field.

Energy is perhaps the fundamental element of our modern industrialized, technological society.

Our energy demands are presently growing at exponential rates.

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There are a number of overlapping governmental jurisdictions that control various links in the energy production chain.

Most forms of conversion from fuel to consumable energy involve potential insults to the environment of considerable significance.

The AEC and the FPC are two Federal agencies directly charged by statute with major regulatory responsibilities in the energy field. Having heard from the AEC on March 1, it is now our pleasure to welcome FPC Chairman Nassikas.

We are glad to have you with us, and we look forward to the proceeding of your testimony in whatever way you wish.

STATEMENT OF HON. JOHN N. NASSIKAS, CHAIRMAN, FEDERAL POWER COMMISSION, ACCOMPANIED BY GORDON GOOCH, GENERAL COUNSEL; T. A. PHILLIPS, CHIEF, BUREAU OF POWER; FREDERICK H. WARREN, ADVISER ON ENVIRONMENTAL QUALITY; DREXEL D. JOURNEY, DEPUTY GENERAL COUNSEL; DANIEL GOLDSTEIN, ASSISTANT GENERAL COUNSEL; FRANKLIN P. GOULD, STAFF ATTORNEY, OFFICE OF GENERAL COUNSEL; EMMETT J. GAVIN, ASSISTANT TO THE CHAIRMAN; JAMES J. SIMES, DEPUTY CHIEF, BUREAU OF NATURAL GAS; WILLARD W. SAVOY, ASSISTANT DIRECTOR, OFFICE OF PUBLIC INFORMATION; ALBERT V. CARR, ATTORNEY, OFFICE OF GENERAL COUNSEL; KENNETH LUCAS, ASSISTANT TO THE CHAIRMAN

Chairman NASSIKAS. Mr. Chairman, your press release of February 24, 1972, announcing these hearings, indicates that your "Committees wish to explore the relationship of NEPA to Federal environmental regulatory activities and to other Federal licensing and regulatory activities*** and *** to determine how effectively various Federal agencies are carrying out the mandate and the responsibilities with which they were charged by the Act."

First, I will concentrate on the relationship of NEPA to Federal environmental and licensing regulatory activities specifically as they affect the timely development of our energy resources and facilities.

In addition, in response to your second major area of concern, Federal agency implementation of NEPA, I will provide an overview of FPC efforts in this area since NEPA became law on January 1, 1970. The most urgent conditions in the electric utility industry are short-range-in the coming months and through the winter of 1973-74. Administrative action by the Atomic Energy Commission, the Corps of Engineers, the Council on Environmental Quality and the Environmental Protection Agency will be essential to a resolution of these short-term power needs.

There must be adjustments in NEPA procedures to cope with energy emergency situations precipitated by delays in Federal authorizations.1

1 Izaak Walton League v. Schlesinger, F. Supp. (D. District of Columbia, Dec. 13, 1971). The court granted a preliminary injunction against the AEC's issuance of a partial operating license for the Quad Cities nuclear plant pending completion of NEPA review of the application for a full operating license. The court decided that the partial license was a major action requiring a 102 statement.

Senator BAKER. Mr. Chairman, interrupting you at this point, do you later in your statement deal with specificity on what changes you recommend?

Chairman NASSIKAS. If I do not, I will.

In the legislative area, I believe some concept of interim licensing as discussed in the statement of Chairman Schlesinger of the AEC on March 1, 1972, will be necessary if the Quad Cities decision is sustained on appeal.

Legislative action may also become urgent if the Kalur case's holding on discharge permits is not reversed.2

The long-range power supply problem to meet electric energy requirements to serve our Nation's economy compatibly with environmental protection can be resolved by the development of environmental standards consistent with the capacity of clean energy technology to comply with such standards and through appropriate powerplant siting legislation consistent with the principles of NEPA and the need for electric power. In my opinion, the Administration's Power Plant Siting Act, S. 1684, offers a rational approach to resolution of the problem. I will outline later in my statement my concept of the essential principles of any powerplant siting legislation.

In the natural gas area, the problem is basically that of predictability of what NEPA may require.

There has been no U.S. Supreme Court decision interpreting the application of NEPA to regulatory agencies or the regulated sector of industry.3

Here the affected projects of pressing national concern are large and they involve, basically, approvals or licensing by other departments or agencies of Government, not the Federal Power Commission.

For example, the Alaska Pipeline Service Company was formed in August 1970, but the final environmental impact statement concerning the Department of the Interior's decision on granting the pipeline right-of-way over Federal lands from Prudhoe Bay to Valdez has not yet been released. Tanker transport of oil may also be affected. If NEPA or its procedures prevent the location of refineries along the west coast, or if tanker routes are restricted, the volume of oil from Alaska that is available to market may decrease.

Because production of North Slope Alaskan gas is largely predicated upon the production of Alaskan oil, the development of gas resources has been delayed. Estimates of the total undiscovered potential natural gas reserves in the United States (including Alaska) range from 1,178 trillion cubic feet forecasted by the Potential Gas Committee (PGC) * to the 2,100 trillion cubic feet estimated by the U.S. Geological Survey (USGS) of the Department of the Interior.

2 Kalur v. Resor, F. Supp. (D. District of Columbia, Dec. 21, 1971). In an action to review the Army Corps of Engineers' regulations under the Refuse Act permit program, the court held that the regulations were invalid in two respects: (1) the regulations permitted the issuance of permits for discharges into nonnavigable tributaries of navigable waters; and (2) they failed to require 102 statements for the issuance of permits. The court enjoined the issuance of any additional permits under the program.

3 Cf. Committee for Nuclear Responsibility v. Schlesinger, 92 S. Ct. 242 (Nov. 6, 1971) (Amchitka case).

The Potential Gas Committee is sponsored by the Potential Gas Agency, Mineral Resources Institute, Colorado School of Mines. The Potential Gas Committee and its work committees are composed of members from the gas producing, pipeline, and distribution industry, observers from State and Federal regulatory bodies, American Gas Association. American Petroleum Institute. Independent Natural Gas Association of America, and National Association of Regulatory Utility Commissioners.

The estimates for Alaska range from 327 trillion cubic feet (PGC) to 500 trillion cubic feet (USGS) and indicate clearly the importance of these reserves to our overall supply base.

As a matter of national policy, we must decide, and soon, whether to take the environmental risks associated with the exploration and development of these reserves in exchange for the known benefits to the environment and economy of the cities and regions where the gas will be consumed.

In 1970, based upon data as identified in the footnotes, 14.6 percent of the proved reserves of natural gas in the lower 48 States were located in the Gulf of Mexico, as were 10.1 percent of the lower 48 States' oil reserves. As of December 31, 1970, 28 percent of the potential reserves of natural gas in the lower 48 States were offshore."

However, on December 16, 1971, a preliminary injunction was obtained by three conservation groups against a proposed December 21, 1971 sale of 78 oil and gas leases off the eastern Louisiana coast. The injunction was granted because the court held that the Interior Department's impact statement did not present sufficient analysis of alternatives to the lease sale, including those outside the Department's jurisdiction. The U.S. Circuit Court of Appeals for the District of Columbia in Natural Resources Defense Council v. Morton upheld that court decision on January 13, 1972, and the unopened bids, anticipated to amount to $500 million in revenues, were then returned to the respective companies on January 20, 1972. Over 350,000 acres of potential oil and gas-producing offshore lands were involved.'

We presented through Thomas Joyce, Chief of the Bureau of Natural Gas, a full affidavit of conducting this as part of a district court case as presented by the Department of the Interior.

Outer continental shelf gas is dedicated to the jurisdictional interstate market and cannot be diverted to serve intrastate markets without prior authorization by the FPC. Gas discovered as a result of development of offshore lands in the Gulf of Mexico would flow downstream through major pipeline facilities to meet market demand and improve environmental quality at the point of consumption. There are seven major pipeline companies in curtailment, some of which draw a significant part of their supplies from this area. I recognize the contributions of NEPA to improved environmental discipline in analyzing and deciding applications for major facilities to serve public needs. At the same time, it is essential to consider the effects of NEPA procedures on the readiness of environmentally beneficial facilities to serve the public on a timely basis and the administrative and cost effects of such procedures.

A significant aspect of the problem is due to the fact that the procedures of implementation have gone through a series of adjustments in response to changing guidelines and court decisions.

The fundamental problem is the lack of definitive standards by which agencies can authorize imperatively required fuel and power

5 As derived, data as shown in "Reserves of Crude Oil, Natural Gas Liquids, and Natural Gas in the United States and Canada and U.S. Productive Capacity as of Dec. 31, 1970," vol. 25, May 1971; American Gas Association, American Petroleum Institute, and the Canadian Petroleum Association, pp. 23, 114.

As derived, data as shown in "Potential Supply of Natural Gas in the United States" (as of Dec. 31, 1970), a Potential Gas Committee report, October 1971, p. 15.

7 The importance of this potential supply is emphasized in data set forth in the affidavit of the Chief, Bureau of Natural Gas, Thomas J. Joyce, in the District Court Civil Action No. 2397-71, Natural Resources Defense Council, supra.