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Energy (5)
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Energy (5)
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
subjects
U.S. Congress. (1789 - )
Energy Research and Development Administration. (01/19/1975 - 10/01/1977)
Federal Energy Administration. (06/27/1974 - 10/01/1977)
Synthetic fuels
Energy policy
Presidential messages
Nuclear energy
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1977-01-01
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1977
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1976-08-01
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8
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1976
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The original documents are located in Box 13, folder "Energy (5)" of the James M. Cannon
Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
[sept 1976]
SIGNING STATEMENT
Today I have signed H.R. 13655, a bill which
establishes within the Energy Research and Development
Administration, a program to develop alternatives to
existing automobiles which could operate with no adverse
impact on the environment and with greater fuel economy.
The program includes a five-year $100 million project
involving research and development of integrated test
vehicles, with emphasis on advanced propulsion systems.
The legislation also provides for a study of the feasibility
of Federal loan guarantees for advanced automobile R&D --
ERDA is required to report their findings and recommendations
for appropriate legislation within one year.
The program will augment programs already established
in ERDA and the Department of Transportation and will
accelerate ongoing efforts of ERDA to develop new energy
efficient and virtually pollution free propulsion systems
with industry.
I believe that there should not be Federal intervention
where there are incentives and willingess for the private
sector to assume responsibilities and this legislation
specifically provides that the research and development of
the integrated test vehicles are not to supplant or duplicate
efforts of the private industry.
FORD LIBRAR i GERALD
Digitized from Box 13 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
{Sept. 1976?]
Eurgy Wudson Instruction
#31 FORD
LIBRARY & GENALD
won Brown
name of Fature
100,000 Quods of Natad too?
That the
July 1469 / tot Pu
Jonel of
[sept at 1976?]
Energy
THE WHITE HOUSE
WASHINGTON
TO:
GLENN SCHLEEDE
FROM:
JIM CANNON
FORO LIBRARY + GERAL
Please talk to me about this.
Technology
Facing the Challenge of Nuclear Waste
By VICTOR K. McELHENY
The disposal of past and future nu-
gResumption by the Nuclear Regula-
clear reactor waste is moving to the
tory Commission of all authority, now
forefront of the nuclear industry's
partially delegated to the states, for
many technical, economic and social
licensing waste disposal.
problems.
gIncluding the waste-disposal issue
A report. on nuclear wastes by Dr.
in the much delayed N.R.C. proceeding
Mason Willrich, an independent expert
that is considering the safety of recy-
who moved this month to the Rockefel-
cling plutonium extracted from used
ler Foundation, revealed several
nuclear fuel back into existing power
dramatic proposals to resolve the ques-
plants.
tion of the wastes, which Dr. Willrich
GA nuclear waste commission under
calls a "permanent challenge to govern-
the International Atomic Energy Agen-
ment."
cy to pass on deep-sea disposal projects
Drafted for the United States Energy
and review national plans.
Research and Development Administa-
qa California law, passed in May
tion, and still circulating for comment,
just before the defeat of an initiation
the report indicates that the waste
nuclear power, ties resolution of the
issue is chiefly one of institutions rath-
waste problem to future approvals of
er than technology and that prompt
nuclear electric stations in that state.
action now would avoid collisions with
Moratorium on Licensing
vested interests-such as a large nu-
clear fuel reprocessing industry-that
Decisions in July by the United States
don't exist yet.
Court of Appeals in the District of
Columbia requiring deeper considera-
Waste Increase Expected
tion of waste disposal by the N.R.C.
Dr. Willrich proposed:
before issuing licenses for power plants
GA federally chartered national
has resulted In a de facto licensing
radioactive waste authority. This would
moratorium similar to one that lasted
take over from ERDA the large existing
17 mon 15 in 1971-72.
stock of military wastes and the civil-
Improvements in the light-transmit-
ian power-station waste expected to in-
ting power of hair-thin glass Roers and
crease rapidly in the years ahead. The
in the lifetime of the tiny semiconduc-
authority would handle both highly
tor lasers that can send infrared light
radioactive wastes and the lower-level
rays through such fibers, have been
wastes contaminated with such
so rapid that lightwave communica-
An engineer examines a cut-away of a cylinder of dark glass in which
"transuranic," man-made elements as
radioactive waste could be stored. This method of long-term storage is
plutonium.
Continued on Page 67, Column 4
being studied by the Governemnt. The wastes are dissolved in molten glass.
GERALD
d
FORD
LIBRARY
for Thels
THE WHITE HOUSE
WASHINGTON
September 8, 1976
FORD LIBRARY & CERALD
MEMORANDUM FOR: JIM CANNON
FROM:
JIM CAVANAUGH P
SUBJECT:
GAO Synthetic Fuels Report
Apparently GAO has a copy of a report on the
synthetic fuels program. Would you get one to
me as quickly as possible. I suspect Glenn Schleede
is on top of this. Thanks very much.
Called Schlude
Sent 9/10/76 to J.C.
090919
THE WHITE HOUSE
WASHINGTON
September 8, 1976
MEMORANDUM TO: JIM CANNON
and
FROM:
GEORGE W. HUMPHREYS
SUBJECT:
CEQ REPORT ON ERDA
As you requested, I am attaching the newest CEQ
draft after Schleede's comments were reviewed.
FORD LIBKARY
090818
THE WHITE HOUSE
WASHINGTON
September 7, 1976
MEMORANDUM TO: ART QUERN
and
FROM:
GEORGE W. HUMPHREYS
SUBJECT:
CEQ Report on ERDA
FORD LIBRARY & GERALD
You asked the status of the ongoing discussions.
Schleede is reviewing CEQ's newest draft to see to what
degree his original objections are being met. I do not
believe that Glenn will find the new draft completely
acceptable, based on my understanding of his original
problems.
I do not think that the overriding issue is whether the
report does or does not follow Administration policy.
I believe it to be a mistake for us to hold up the issuance
of this report. Its existence, and substance, is already
known and the charge of "heavy-handed White House pressure"
will create more problems than will the report.
Without arguing the merit of Glenn's objections, I strongly
recommend we do nothing further to delay CEQ's release.
SUMMARY
When the federal government began a major restructuring of energy
research, development, and demonstration programs in late 1974, a new
Energy Research and Development Administration was established --- with
a nonnuclear energy RD&D mandate to complement existing nuclear programs.
In the implementing legislation, the Nonnuclear Energy Research and
GERALD FORD LIBRARY
Development Act of 1974, the Congress paid particular attention to
two areas that had been largely neglected in nonnuclear energy technology
development: environmental protection and energy conservation.
The act gave the Council on Environmental Quality unique responsibilities
with respect to federal nonnuclear energy RD&D programs: to conduct an
ongoing analysis of the adequacy of attention to energy conservation
methods and to environmental protection and to report to the President,
the Congress, and the Administrator of ERDA on Council findings. This
report is our first under that mandate; it covers activity through March 1976.
Our principal focus here is the Energy Research and Development
Administration. We also examined related programs of the Environmental
Protection Agency. ERDA's far-reaching goals and strategies, with implications
for both the environment and energy conservation, are expressed in
A National Plan for Energy Research and Development (ERDA-48) in 1975 and
in the 1976 version (ERDA 76-1).
The many projects and people shifted to ERDA from other agencies
brought with them programs and approaches that may well change under
ERDA direction. The agency is still organizing its planning system and
programs. To say that substantial improvements are necessary does not detract
from ERDA's accomplishments. Moreover, some of the improvements which this
report recommends are planned, and others are underway.
2
In approaching our review of the extent to which ERDA is taking conservation
and environment into account, we first identified certain factors which we
believe should characterize program planning and implementation. We then
compared programs, interviewing officials in both ERDA and EPA, reviewing
relevant documents, and undertaking special studies. The CEQ public hearings
in September 1975 provided useful information and insights. Public hearings
are planned on this report and the National Plan late this year.
In addition to overall assessment of planning and implementation,
we analyzed two areas in depth in order to determine the extent to
which environmental and conservation considerations are built into ERDA
programs. This year's analyses focus on coal technology and end use
conservation. It should be noted that federal conservation RD&D is but
one aspect of the overall national energy conservation effort. The private
sector can and must play a critical role in developing energy conservation
alternatives in response to rapidly growing energy prices and associated
influences upon demand for energy supplies. Conservation efforts can often
be applied at state and local government levels as well. And even within
the federal structure, conservation programs take many forms and involve
many agencies.
FORD LIBRARY
3
Adequacy of Attention to
Energy Conservation
The Council defines "adequacy of attention to energy conservation"
in federal energy research, development, and demonstration as the
capability to identify a range of possible energy conservation RD&D
options, to create a factual basis for comparing them to other energy
RD&D choices, and to develop programs that will ensure availability of
the best options.
The National Plan
In April 1976, ERDA published its second National Plan. ERDA 76-1
singles out conservation technologies, ranking them along with several
different supply technologies as a highest national priority. This step
represents a major shift in emphasis from ERDA-48, the first National Plan.
It is based on further analysis of conservation opportunities, is responsive
to public comment on the initial plan, and reflects ERDA's conclusions that
only moderate progress is being made to date on development of supply
technologies. To give effect to this priority, ERDA 76-1 establishes an
immediate 5-year planning period during which energy conservation
opportunities ready for commercialization will receive special attention.
Further, the President's FY 1977 budget increases ERDA's energy conservation
RD&D resources by 64 percent.
The Council assessment focuses on the revised National Plan and its
underlying analyses and assumptions. We believe that ERDA 76-1 represents
a substantial accomplishment for such a new agency:
4 FORD LIBRARY
4
The revised plan is a major improvement in addressing energy
conservation and can serve as a benchmark from which to begin
a systematic and complete approach to conservation RD&D.
The plan -- and its agenda for the future -- illustrate ERDA's
commitment to a rational and analytical approach to energy
RD&D. It is moving toward the systematic and explicit
identification of energy problems and the development of
technology to resolve them.
ERDA is actively seeking wide review and comment on its
programs and appears responsive to comment.
These developments are most encouraging. However, our assessment
raised a number of other issues which we believe were not adequately addressed
in ERDA 76-1 but which are essential to building energy conservation into
ERDA programs. These issues should be given high-priority attention and
should be addressed specifically in the next revision of the National
Plan in order to provide the basis for public review and debate which
ERDA recognizes is important:
Is the near-term priority role established by ERDA for
new energy conservation technologies --- primarily
stressing demonstration and application of existing end use
products and processes --- the appropriate one?
Is the energy conservation program for the mid-term and the
long-term adequate when measured against the potential benefits
of conservation-intensive energy choices?
Are all potential conservation RD&D options fully considered,
and are the energy conservation technology programs designed
with adequate technical focus?
FORD LIBRARY & GENNID
5
Identifying and Implementing Conservation RD&D Opportunities
To address these issues and to provide for building conservation
into federal energy RD&D adequately will require the following:
A task-oriented, energy systems definition of energy choices,
one which looks first at the nature of the tasks which energy
is to perform and compares ways of doing the work, from the
basic resource to end use
A process for deciding what RD&D should be done based upon
ongoing comparisons of all potential RD&D options, whether
they are supply or conservation oriented
Comparisons based on comprehensive assessment of the energy,
economic, environmental, and social impacts of the options.
Without ongoing comparisons of RD&D opportunities based on a
task-oriented, systems definition of choices and comprehensive assessment
of impacts, ERDA's RD&D priorities may be misplaced.
Perhaps the most critical facet of building conservation into
energy RD&D is development of the research programs. Individual
program design must consider the energy needs that a technical option
can fulfill, anticipate RD&D uncertainties, determine whether federal
sponsorship is appropriate, and provide a likelihood of technical and
commercial success. To do this, conservation program planning should:
Develop and use search and screening techniques for
identification of high-payoff conservation RD&D opportunities
Establish a work planning procedure which focuses on individual
high-payoff opportunities and ensures the availability of
sufficient resources to resolve technical uncertainties.
FGRO LIBRARY & GENALD
6
Energy conservation offers substantial environmental benefits.
Special care should be taken to develop environmental and other impact
information on conservation technologies.
Principal Findings
Although the magnitude and technical direction of an adequate
conservation program are not easy to determine, CEQ has serious concerns
about the pace of improvement:
Although ERDA undertook systemwide analyses which
considered the possible benefits of end use efficiency
improvements in establishing priorities in the National
Plan, it has not yet performed a task-oriented, systemwide
evaluation of a full range of technological opportunities or
made explicit side-by-side comparisons of RD&D options.
Improvements in its planning and analysis systems, now being
implemented, could provide the basis for the necessary comparisons.
Many of the basic agency policies and capabilities necessary
to give conservation the same level of planning and management
attention as supply enhancement, particularly for the more advanced
technologies such as nuclear and coal, are still in a very
rudimentary stage. Plans for improvement are vague.
Social, economic, and environmental information should
be developed and made available. More important, sufficient
research to provide this information is not built into
the RD&D of the supply and conservation program offices.
The search for RD&D opportunities is ad hoc and is not uniformly
applied over all time periods. It lacks the context of a
long-term conservation strategy and does not employ innovative
techniques to identify potential efficiency improvements. The
method for screening RD&D options for inclusion in the program
is more sophisticated but it lacks benefit, cost, and risk
information.
ERDA's planning and budgeting are not effectively linked at
all important levels. Without such linkage, broad agencywide
decisions about what RD&D should be carried out cannot be
translated with confidence into specific research projects.
LLBRARY
7
Conservation planning resources are limited compared with
those for the supply programs, which are supported by ERDA's
extensive field laboratory structure.
Needed Improvements
Conservation RD&D is one of ERDA's high priority programs for the
near term. Delay in building the capability to analyze, plan, and implement
energy conservation RD&D options could jeopardize the national effort toward
energy self-sufficiency in this period.
Equally important, there are potentially significant conservation
RD&D opportunities over the mid- and long-terms. These opportunities must
be fully considered in the critical formative stages of ERDA planning.
There is a momentum behind a number of supply programs, backed up by a
relatively sophisticated planning capability. Failure to give adequate
attention to mid- and long-term energy conservation programs will make it
difficult to redress the balance later.
To ensure adequate attention to energy conservation, the following
general improvements must be made within the next 2 years:
ERDA's analytical capability for planning, which is quite
advanced, should fully incorporate conservation technology
options. Information on economic, environmental, and social
impacts must be considered.
Guidance to ensure the generation of necessary impact information
and consideration of all the impacts of public concern should be
formalized.
In the planning process specific conservation and supply RD&D
opportunities should be compared across all planning periods;
the comparisons should be used in establishing priorities and
allocating resources.
FORD LIBRARY & GERALD
8
The conservation RD&D programs must identify conservation
RD&D opportunities over all planning periods, generate
information to analyze the opportunities, and organize
the research in order to realize the benefits of the best
opportunities.
ERDA should carefully evaluate the extent to which the
private sector can be expected to undertake the RD&D
necessary to attain the potential national benefits of
energy conservation.
ERDA appears to recognize these needs and is committed to a number
of improvements. Included among these are a comprehensive planning
system which is task oriented, will add economic data to its analytical
capabilities, and will employ market analysis to gauge the likelihood
of commercial success of the technologies. These improvements could
provide the basis for adequate consideration of conservation.
ERDA should prepare a detailed action agenda for making needed
improvements. Until improved analytical planning methods are used
to consider conservation programs equally with all other options in
establishing RD&D priorities, ERDA's National Plan should make clear
that priorities will be closely reevaluated annually.
FORD
&
All
LIBRARY
3.9
9
Adequacy of Attention to Environment
The success of any technology ultimately depends upon its acceptance
for economic, environmental and social reasons as well as for energy
production. To ensure the production of environmentally acceptable
technologies, environmental concerns should permeate all phases of
energy research, development, and demonstration. They must be a major
consideration for those charged with overall planning and administration
of ERDA programs. Although ERDA has an Assistant Administrator for
Environment and Safety, the environment should also be a major concern
of the other program offices - fossil fuels, solar, geothermal, and
conservation.
The Environmental Protection Agency -- which must develop
regulatory standards for new technologies -- shares the responsibility
for ensuring the environmental acceptability of new technologies. EPA's
environmental research and standard-setting programs, therefore must be
closely coordinated with ERDA's technology development programs.
To build environment into the RD&D planning and decisionmaking
process, comprehensive environmental information should be generated
for all aspects of the energy technology systems in the RD& D program,
and the information should be fully applied in making decisions. This
information should be used in selecting the most environmentally
acceptable technologies from the entire range of possible RD&D options and
within a particular set of options (for example, coal conversion
technologies). To do this, all RD&D programs should demonstrate the
following characteristics:
FORD
LIBRARY
10
Environmental effects associated with developing energy
technologies should be systematically assessed and
environmental research addressed to priority problem
areas. The technology and environmental research
programs should provide the basis for setting environmental
regulatory standards.
Technology RD&D should be scheduled to reflect availability
of environmental research information; environmental
research should be keyed to guiding hardware development;
and facilities for development and demonstration should
be designed to produce needed environmental data.
Decisionmaking for RD&D should incorporate procedures
for ensuring that all necessary environmental information
is available and that it is weighed in making commitments
to technology development. Environmental assessments and
environmental impact statements should be a major basis
for these decisions.
A system of checks and balances should exist so that
environmental information is developed when needed and
that it is fully used as technologies proceed toward
commercialization.
ERDA's National Plan recognizes that environmental protection
and enhancement are concepts which "must be fully integrated into
energy production and use." The National Plan makes a commitment to
an environmental policy strategy which, while lacking detail, appears
to include most of the characteristics set forth above. It also
outlines the elements of an environmental planning system. These
are important steps on ERDA's part toward adequately building environment
into its technology programs.
This evaluation ends with the first quarter of 1976. As of that
time, the environmental strategy had not been implemented nor had
procedures been issued for the environmental planning system. Yet many
technologies are proceeding toward the later stages of development. In
our view, implementation is too slow.
11
Principal Findings
Until recent years, little attention was given to identifying the
environmental problems associated with developing nonnuclear energy
technologies. This situation has been changing gradually. Since 1974
the federal environmental research program has devoted much more effort
to the environmental problems and uncertainties of these technologies. But
a well-defined and coordinated federal program does not yet exist. In
particular:
There is not an effective, systematic approach to
identifying priority environmental problems and to
establishing a research program specifically related
to developing technologies.
Coal technologies now being developed contain many
hazardous substances in their process streams. The
presence of these substances is poorly understood, and
there is too little information on health and ecological
effects. Possible effects from the end use of synthetic
fuels is receiving only limited attention.
Individual coal technology RD&D programs lack a coherent
approach to environmental concerns. Research to characterize
pollutants from developing coal technologies and to identify
potential health and environmental problems is not adequate.
ERDA and EPA have not developed procedures for setting
environmental and occupational health standards for new
coal technologies. Overall interagency cooperation and
research coordination need major improvement.
12
These are difficult problems which require immediate, high-level
attention. ERDA has initiated a major environmental planning effort,
the Balanced Program Plan, which could remedy some of these shortcomings.
In addition, proposed Environmental Development Plans for each RD&D
program area could provide the needed technology-focused approach
to environmental assessment and research.
Scheduling Environmental Research - We have a number of concerns
with the relationship between the status of environmental research and
the schedules for development, demonstration, and commercialization of
ERDA technologies:
Environmental research is not systematically linked to
schedules for technology research, development, and
demonstration, and no procedures have been instituted to
ensure that environmental information is available when
it is needed for key decisions. Procedures have been
proposed to improve this situation.
The necessary environmental information for standard setting
and other decisions on commercialization of coal-based synthetic
fuels probably will not be available by the mid-1980's.
In the pivotal area of process characterization, research in
the early and middle stages of development has been
inadequate to identify potentially harmful substances associated
with developing coal-based technologies. Recently initiated
efforts could lead to a program to achieve this result.
There is an equally critical timing problem with health
effects research.
EPA's programs to establish environmental standards are tied
to commercialization schedules only in the near term.
These inadequacies result in part from the fact that, at least
for coal-based technologies, the federal environmental research effort
is barely underway
FORD
LIBRARY
13
The proposed environmental planning efforts are designed to link
environmental research with technology development. But these efforts
are in the early stages, and with current schedules, significant effects
on research timing are not likely to be felt before FY 1980. Given the
complexity of some of the research, and given a sequence -- process
characterization to health effects to control technology -- which under
the best of conditions will take a number of years, additional efforts
should be made to ensure that sufficient information will be available for
projected commercialization of developing coal-based technologies.
Considering Environment in Decisions - In examining the present
approach to decisionmaking within ERDA, we find progress in some areas,
but a number of significant problems still exist:
The National Plan was developed with only superficial
consideration of the environmental effects of its
alternative planning futures and did not discuss the
environmental consequences of the technologies proposed for
priority attention. The review process for the National
Plan is good, but environmental information is lacking.
ERDA has committed itself to using environmental impact
statements as major decision documents. This commitment
is highly desirable and should be backed by uniform
guidelines and procedures directed explicitly at the problems
of nonnuclear RD&D.
Some programs are progressing in developing impact statements.
However, at the program level, commitments to demonstration of
technologies have been made without sufficient consideration
of environmental impacts.
Environmental considerations are not yet being adequately
factored into individual project decisions. There has been
no public or general federal agency review of program or
project decisions through the NEPA process or by other means.
Procedures are evolving which could provide the basis for
internal environmental checks on the planning and decisionmaking
of the technology programs. They are not yet functioning, and
decisions are being made with insufficient review.
14
We believe that well-defined procedures for preparation of environmental
assessments and impact statements and for consideration of environmental
information in decisions will result in more environmentally sound technologies.
Needed Improvements
ERDA should accelerate its efforts to implement the components
of proposed environmental planning systems. It should also make clear
how the various components --- Environmental Development Plans, the
Balanced Program Plan, and environmental impact statements -- will
fit together into a coherent program. In the coming year ERDA and EPA
should emphasize coordination of their programs. The following areas
should receive particular attention:
Technology-Environment Relationship
o
The technology RD&D offices under oversight of the Office
of Environment and Safety should establish a complete
environmental program for each technology encompassing
assessment, coordination with environmental research and
standard-setting agencies, and monitoring and control at
RD&D facilities.
A central coordinating point should be designated to review
the plans for technology development and environmental
research to ascertain difficulties in scheduling and to make
sure schedules are adjusted accordingly.
ERDA must carefully reevaluate its schedules for all
nonnuclear energy technologies -- near-, mid- and long-term -
to ensure availability of adequate environmental information
for informed decisions on commercialization, environmental
standards, control technologies, and other mitigating measures.
Providing environmental guidance to contractors in all
technology development programs should receive immediate
attention. It may be in the form of detailed regulations,
manuals of practice which are incorporated into the
contract, or contract specifications.
-15-
Process Characterization
All process characterization work should be systematically
organized and coordinated to ensure the generation and sharing
of necessary data.
Comprehensive programs for characterization of pollutants,
(as well as definition of effects and development of control
technology) should be in process for all pilot plants.
They should not be downplayed until the demonstration stage
on the grounds that only technical feasibility matters up
until that point.
Standard Setting
EPA should propose standards for new technologies when there is
adequate information to do SO.
EPA should establish criteria for identification and control of
classes of substances which may require regulation in the future.
ERDA and EPA should jointly develop environmental performance
goals for proposed demonstration facilities to be used in
evaluating contract proposals. Both agencies should monitor
and characterize the process streams to provide the basis for
regulatory decisions.
National Plan
The analysis underlying ERDA's National Plan should
consider the environmental implications of
program priorities in order to reflect the broad
perspective that the Congress mandated.
Environmental issues should be specifically addressed
in future revisions of the National Plan. ERDA should prepare
a detailed environmental assessment of the National Plan
and include it as part of its public review and comment.
NEPA Procedures
Implementation of proposed environmental impact statement
procedures and environmental development plans should be
greatly accelerated.
ERDA's procedures should carefully address the timing of
environmental impact statements for all technology programs.
Measures should be taken immediately to identify the program
and project statements likely to be required, and preparation
should begin as soon as possible to provide input into the
decisions that will be made.
16
In the absence of comprehensive environmental information
and detailed impact statements, ERDA should take great care
not to make decisions which irrevocably commit to a course of
action. There must be formal procedures for periodically
reevaluating all significant commitments based on new
information.
Health Effects Research
Additional attention should be given to rapid, inexpensive
toxicological screening methods.
Efforts should be made to understand better the precise
relationship between laboratory animal metabolism or
cell cultures and human experience to allow quantitative
estimates of health risks.
Better epidemiological studies and improved capability to
isolate and identify past and present exposures to chemicals
should be developed.
Research Coordination
A jointly constituted group should be established with
responsibility for overall energy-environment research
planning and establishment of program objectives and time
tables. The entire federal energy-related environmental
research program should be reexamined periodically to ensure
coverage of the important issues associated with developing
technologies.
10L WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: Synthels
Date:
September 10, 1976
Time:
FOR ACTION:
CC (for information):
Frank Zarb
Jim Cannon
FROM THE STAFF SECRETARY
DUE: Date:
Immediate Turnaround Pls. Time:
SUBJECT:
Recommended Telephone Call to
FORD
The Speaker and Representative Dick Boilling
re: H.R. 12112, the Synthetic Fuel Bills
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
9/10/26
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
telephone the Staff Secretary immediately.
For the President
191011
CLEARANCE SHEET
DATE: 9/10
JMC ACTION
Required by:
IMMEDIATE
STAFF RESPONSIBILITY Schleede
SUBJECT:
Recommended telephone call fm President Ford to
Speaker & Congressman Bolling
RECEIVED FROM: Connor
DATE RECEIVED: 9/10
STAFF COMMENTS:
Schleede recommends approval.
QUERN MOORE RECOMMENDATION:
APPROVE
REVIEW & COMMENT
DISCUSS
FORD LIBRARY &
CANNON ACTION:
DATE:
Material Has Been:
Signed and forwarded
Changed and signed
Returned per conversation
Noted per phone conversation
TSJ to Connor offer
JIM JMC
Comment:
Rle
THE WHITE HOUSE
WASHINGTON
Energy
September 9, 1976
Jim:
Here is the document you asked for
from Glenn.
See Item #3, P. 1
FORD LIBRARY & GERALD
THE WHITE HOUSE
WASHINGTON
September 9, 1976
FORD
&
MEMORANDUM FOR:
JIM CANNON
078830
LIBRARY
FROM:
GLENN SCHLEEDE
SUBJECT:
RESPONSES TO COMMENTS ON LAST WEEK'S
BRIEFING REPORT
In response to your marginal notes on my weekly briefing
report of September 1:
1. Director for NSF. Sending up the nomination of
Atkinson is a viable option and it appears to have
considerable support. However, I understand that
the Vice President and Doug Bennett have discussed
this matter over the last few days and concluded
that: (a) the attempt to appoint Hans Mark to the
job should be continued, (b) Hans has taken himself
out of running until after the election, and
(c) therefore, the only way of maintaining the
option for Hans is to leave the job unfilled.
You should be aware that there is considerable
opposition in the scientific community to Hans,
apparently based primarily on his past associations
with Dr. Teller.
2. Space Shuttle - Roll Out Ceremony. NASA's arrangements
permit about the fastest possible round trip to
California (leave 3:30 pm on September 16 and
return at 11:00 am on September 17). Can you afford
to be away for this period? Attendance by senior
White House staff would help show the President's
interest in the space program which, of course, is
SO important in California. Dennis Barnes will be
going. I have "signed up," but I may drop out
due to the time involved. I will get you a list
of others who plan to attend.
3. Uranium Enrichment - Mansfield. My sources indicate
that neither Pastore nor Baker has urged Mansfield
to move the bill -- despite their commitments to the
President last week to do SO. I also understand
that calls from them to Mansfield are critical.
I recommend a call from the Vice President to
Mansfield. I also understand that Senators Allen
-2- -
and Sparkman will be contacting Mansfield but that
will not be a substitute for any of the above calls.
4. Uranium Enrichment - ERDA letters. A copy of the
letter to Senator Glenn is attached. Others are
still in preparation.
5. Nuclear Policy Study. A copy of Bob Fri's final
decision paper -- 35 pages including tabs -- is
being provided to you separately (it is classified).
In addition to the decision paper, Bob has submitted
a 36-page report accompanied by about 80 pages
of tabs and 30 pages of agency comments in the
form of memoranda to the President. I am now
plowing through all these documents and attempting
to haul them down to a logical decision paper.
Attachments
FORD LIBRARY & GERAÇO
UNITED STATES
ADMINISTR
ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION
WASHINGTON, D.C. 20545
STATE
USA
SEP
3
1976
Honorable John Glenn
United States Senate
Dear Senator Glenn:
The following are responses to the questions posed in your letter of
August 16:
1.Q.
"What is your estimate of the amount of domestic and foreign
nuclear capacity, based on plants now under construction or on
order, that will be on line by 1985 and 1990?"
Response
A. Domestic Nuclear Power Plant Capacity
The following tabulation represents our best estimate for
nuclear power plant capacity in the U.S. in the years 1985
and 1990:
Domestic Nuclear Power Plant Capacity
(Gigawatts Electric)
1985
1990
Plants on line, under construction or on order
145-165
200-210
Plants projected
50- 80
Total projected domestic nuclear capacity
145-165
250-290
Utilities are now having difficulty in making firm decisions to
build additional nuclear power plants because final commitments
have not yet been made to build the uranium enrichment facilities
needed to provide fuel for these additional plants. In many cases,
utilities now have the economic incentive to choose nuclear power
over other feasible alternative sources of electricity supply. The
lack of firm commitments to build new uranium enrichment plants is
preventing decisions to order nuclear power plants that could
capitalize on these economic advantages.
FORD LIBRARY & GENALD
EVOLUTION
BICENTENNIAL
&
1776-1976
Honorable John Glenn
-2-
B. Foreign Nuclear Power Plant Capacity
The following is our best estimate of foreign nuclear power
plant capacity:
1985
1990
Projected foreign nuclear capacity, (excluding
Eastern bloc countries), gigawatts electric
230-325
425-620
In our judgment, the lower part of the ranges cited now appears
the more realistic.
In the past the U.S. has supplied virtually all the worldwide
demand for enrichment services for nuclear power plants outside
the eastern bloc countries. We believe the U.S. could and
should continue to be a major supplier of enrichment services to
the world. The U.S. should be able to compete effectively for
this, worldwide market due to our years of experience as a reliable
supplier of enrichment services and our clear lead in enrichment
technologies.
C.
Uranium Enrichment Capacity Situation
Existing uranium enrichment capacity was fully committed by mid-
1974 for the lifetime of existing ERDA enrichment plants (including
the planned capacity expansion now underway). The add-on enrichment
plant at Portsmouth, Ohio will be used to fulfill existing ERDA
contracts in the most economically efficient manner and to conserve
uranium resources. New nuclear power plants scheduled to come on
line starting in the mid-1980's must obtain uranium enrichment
services from enrichment plants which are not now in existence.
These services will have to be provided through long-term contracts
served by new enrichment plants. Private firms wishing to build
these uranium enrichment facilities will not make firm commitments
to construct or own commercial plants unless they have sufficient
fim orders from new customers to assure project viability. Thus
commitments to new enrichment facilities will follow real customer
demands and there need not be concern about "over capacity" of
enrichment services as a consequence of the passage of the Nuclear
Fuel Assurance Act. Our best estimate is that we will have a
significant shortfall of assured enrichment services in the 1980's
FORD
is
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Honorable John Glenn
- 3 -
to meet new domestic and U.S. supplied foreign needs if we do
not have a diffusion project. Further, we believe that the
proposed private diffusion project and all three proposed centrifuge
projects can proceed in accordance with anticipated schedules on
the basis of present demand forecasts if about one-third of the
projected new foreign market is obtained. On this basis, still
additional domestic capacity would be required no later than about
1990.
D. Effect on Proliferation
Foreign nuclear power growth is not dependent upon the availability
of new U.S. enriching capacity and will proceed whether or not we
build new plants. Several foreign enrichment projects already have
been committed; others are in the planning stages. Potential foreign
suppliers will be discouraged from proceeding if the way is clear
for expansion of enrichment capacity in the U.S. and the U.S. can
assume its role as a reliable and competitive supplier. This will
permit the United States to maintain greater influence in its
objective of strengthening safeguards worldwide against nuclear
proliferation.
2.Q. "What will ERDA policy be in the event that its customers have
insufficient capacity to use all of the enriched uranium they have
contracted for?
-Will there be another "open season," when all customers will be
allowed to renegotiate contracts without penalty?
Will there be a "variable tails assay option," so that contracted
SWUs may be used to reduce the tails assay?"
Response
ERDA uranium enrichment contracts with utility customers are of the
take or pay variety often used by utilities in long-term fuel contracts.
In theory, utilities have to take delivery of enrichment services even
if these services are not needed. In practice, however, the utilities
would attempt to dispose of these valuable assets to other licensees who
may have, or project, an enrichment shortage. The open season of a year
Honorable John Glenn
- 4
ago was designed to provide a useful addition to the ERDA stockpile.
It also served the added purpose of providing utilities relief from
their firm contractual commitments for enrichment services from ERDA
in view of the unforeseen and unique situation of lower energy growth
in 1974 and 1975. As noted above, it is desirable that adjustments in
actual utility need for enriched uranium be accommodated without
involving the Government. We do not foresee a repetition of the unique
circumstances which prompted last year's "open season". Therefore,
while we do not see the need at this time for another "open season" we
do intend to watch the industry carefully to remain alert to any changes
in circumstances. It should be noted that after the very low growth
rates for electricity consumption in 1974 and 1975, these rates now
appear to be increasing significantly, e.g., for the first 32 weeks of
1976 the electricity growth rates was 5.2% (compared to essentially zero
in 1974 and about 2% in 1975).
ERDA has stated that it will offer the "variable tails assay option" to
its customers. Under such an approach a customer might deliver less
uranium feed material and receive less enriched product for the same
number of SWUs specified in his contract with ERDA. ERDA plants would,
therefore, effectively operate at a somewhat lower tails assay. This
option likely would be acceptable to a customer only if any fuel deficit
that he might incur through exercise of the option could be satisfied
from a supplementary source.
3.Q. "How does ERDA determine the optimal stockpile level?
What percentage of the stockpile is desired for different purposes
(such as core loading)?
How much does it cost to keep this stockpile both in terms of SWU
and kilograms of enriched uranium?"
Response
The Government stockpile of enriched uranium will be used to assure that
ERDA can fully meet Government needs, meet its present contractual
commitments and provide backup assistance for the needed new domestic
enrichment plants by providing assurance to new customers that
commitments can be met during the early phases of new enrichment plant
projects.
Defining an "optimal" stockpile level is extremely complex. It requires
a management judgment which balances the probabilities of unexpected
Honorable John Glenn
-5-
needs, the consequences of not being able to meet those needs and
the costs of carrying the stockpile as "insurance" to protect against
them. We now base our consideration of the size of the desired enrich-
ment stockpile on the following factors 1) product inventory for routine
operation of our plants (about 3 months production, equal to about
7 million SWUs after the CIP-CUP expansion program has been completed);
2) the possibility that production expected from the CIP-CUP expansion
program might be delayed; 3) the possibility of natural disaster to
production or power supply facilities (power supply to Portsmouth from
the Clifty Creek station was interrupted by a tornado in 1974) ; 4) pos-
sibility of diversion of planned power from our plants (some of the
contracted power is "unfirm" power; in 1970 it was even necessary to
divert firm power to the northeast during the "brown-out" emergency);
5) maintaining capacity needed to "backup" new United States enriching
capacity (approximately the equivalent of a year's production for a
gaseous diffusion plant, and somewhat more for centrifuge plants, probably
should be available to protect against the contingency of delay in
achieving routine new plant operation).
It is not yet practicable to "allot", in effect, portions of a stockpile
to particular specified purposes. However, to the extent that particular
events which the stockpile is designed to protect against (e.g. delay in
scheduled new capacity) do not materialize, some portion of the stockpile
could then be sold. We should have much of this information in the mid-
1980's. However, even if none of the stockpile had been used to meet
contingencies by the mid-1980's, the available amount would still represent
less than one year's production from domestic enrichment plants.
ERDA now has a stockpile of 4700 metric tons of 3.2% enriched product
(about 18 million SWUs at 0.3 tails). We are now currently reevaluating
our long-range gaseous diffusion plant operating plans which will establish
ERDA's future stockpile objectives. For the purpose of addressing the
question of the costs associated with keeping a stockpile, we have made
the assumption that a stockpile of 6600 metric tons of 3.2% enriched
uranium (about 25 million SWUs at 0.3 tails assay) could be available
in the future.
The annual carrying charge associated with maintaining such a stockpile
is estimated to be about $140 million (in 1976 dollars). This includes
a separative work component of the inventory which has an estimated
annual carrying charge of slighly over $60 million (in 1976 dollars).
FORD
is
NERALD
LIBRARY
Honorable John Glenn
- 6 -
This carrying charge, which is borne by the customers, was calculated
assuming a 6.5% carrying charge rate as the average cost of money to
the Government. Maintaining a stockpile is relatively cheap insurance
to customers when the costs associated with a reactor not operating
due to lack of enriched uranium fuel are considered. For example, a
1000 MWe nuclear power reactor loses revenues of about $120 million per
year (at 20 mills per Kwh) if it does not operate. The ERDA enrichment
plants are under contract to supply the equivalent of about 325 such
reactors; a single new 9 million SWU enriching plant may support 75-85
such reactors.
4.Q. "What is the optimal tails assay in your view?
--How is the figure arrived at?
--How much does it cost to enrich tails as compared to the cost of
enriching natural uranium?"
Response
An economic "optimum" tails assay is the tails assay which results in
the minimum cost of enriched uranium product and is a function of the
cost of 1) enriching services and 2) uranium feed. Both of these costs
change with time. Therefore, the optimum tails assay is also time de-
pendent. The optimum tails assay to the customer would be a composite
determined over the period of the customer's contract with an enricher,
i.e., based upon future feed costs and future enriching service costs
over that period. The optimum tails assay as a function of separative
work and feed costs is illustrated in the enclosed chart. It is our
judgment that the average optimum long term tails assay for ERDA's
enrichment plants will probably be in the range of 0.20 to 0.25% U-235
for most customers. It should be noted, however, that each individual
utility could have a unique "optimum tails assay" that might or might
not fall within this range due to various circumstances. For example,
feed costs could differ since utilities have contracted for feed at a
multitude of prices.
The use of tails material instead of normal uranium as feed for a gaseous
diffusion plant would require the expenditure of more separative work
units (SWU) to produce a given quantity of enriched product. For example,
if a plant is operating at a tails assay of 0.25% U-235 and producing
enriched product at an assay of 3.2% U-235, it requires approximately
FORD LIBRARY &
Honorable John Glenn
-7-.
twice as many SWUs to produce a kilogram of product if 0.30% U-235
material is used as feed instead of normal uranium feed containing
0.71% U-235. Thus, recycling tails does result in the consumption of
more separative work. ERDA is currently recycling relatively small
amounts of 0.30% U-235 tails inventory to supplement the availability
of our limited normal uranium feed material. The operating costs
associated with using this 0.30% U-235 material are minimal, consisting
mainly of material handling costs. The feeding of our inventory of
this caterial should be completed in about 3 years.
5.Q. "How do you interpret Congressman Anderson's floor amendment to
H.R. 8401?
--Precisely how and when will technology be guaranteed?
--How does the amendment affect gas centrifuge as compared to
gaseous diffusion?
Response
It is assumed that you are referring to the following amendment -
"Provided, however, that the guarantees under any such cooperative
arrangement which would subject the Government to any future contingent
liabilities for which the Government would not be fully reimbursed shall
be limited to the assurance that the Governnent-furnished technology
and equipment will work as promised by the Government over a mutually-
agreed-to and reasonable period of initial commercial operation. Con-
sistent with the foregoing, such cooperative arrangements may include inter
alia, in
"
We understand that this amendment was intended to remove some ambiguities
concerning the scope of H.R. 8401 arising out of the legislative history
concerning the Bill. For example, we understand that the phrase
"mutually-agreed to and reasonable period of initial commercial operation"
was intended to reflect the possible need for technology guarantees to
extend for periods greater than a year after operation of an enrichment
project, which might be necessary for the gas centrifuge.
The scope of and duration of guarantees of technology are currently
under discussion with each of the four prospective private uranium
enrichment firms. Until the NFAA is enacted and negotiations are con-
cluded with these firms, we are unable to respond further to your questions
Honorable John Glenn
-8-
concerning this matter. However, the specific terms of these
guarantees would be spelled out in each contract, which cannot
be entered into without specific approval of the Congress.
The Bill as amended and as passed by the House does not distinguish
between the different processes for uranium enrichment. Instead,
it provides a framework which could accommodate arrangements covering
either gas centrifuge or gaseous diffusion projects. We expect,
however, that the scope and duration of guarantees of technology
will differ between centrifuge and diffusion (the centrifuge requiring
more) but that both processes can be accommodated under the amendment.
Sincerely,
/s/ Fri
Robert C. Seamans, Jr.
Administrator
Enclosure:
As stated
GERALD
FORDO LIBRARY 2 (6) TW
OPTIMUM TAILS ASSAY
0.40
$10
$15
0.35
$30
0.30
$50
0.25
OPTIMUM TAILS ASSAY, PERCENT U-235
0.20
$100
0.15
ORE COST, DOLLARS PER POUND U308
SERALD f. LEBRARY FORD
0.10
0.05
0
25
50
75
100
125
150
175
200
SEPARATIVE WORK COST, DOLLARS PER SWU
THE WHITE HOUSE
WASHINGTON
September 1, 1976
MEMORANDUM FOR:
JIM CANNON
FROM:
GLENN
SUBJECT:
WEEKLY BRIEFING -- ENERGY,
SCIENCE AND TECHNOLOGY
I.
Science and Technology
A.
Office of Science and Technology Policy. Guy Stever
is moving ahead with the organization and staffing of
the Office, but he has not made final decisions on
organization.
B. President's Committee on Science and Technology.
Doug Bennett is moving ahead with recommendations
for 13 members of the Committee. He expects the
memo to the President to go next week.
Director for NSF. Senator Kennedy has let it be
known that he would push through confirmation of
100 it
Dick Atkinson (currently the deputy) this session
if the President were to send up the nomination.
He would not push through anyone else.
National Science Board. Appointment of 7 new members
other
should be announced late this week or early next.
E. National Medal of Science. We are hoping to get a
tentative date for the awards ceremony within the
next few days. It probably will be in late September.
F. Space Shuttle. The "roll out" of the first orbiter
Claim
is scheduled to occur September 17 in Palmdale,
California. This should draw considerable attention
since it is symbolic of a return of manned space
flight activity.
SERALD E. LISARAY FORD
-2-
G. Earthquakes. House Science and Technology bill was
referred to the House Interior Committee until
September 8. Max Friedersdorf does not agree with
our opposition to the bill. Separate memo will be
forwarded on this subject.
H. Fletcher Meeting with the President. We are still
awaiting a favorable response to our proposal that
the President meet with Dr. Fletcher concerning
the space program, as Dr. Fletcher has requested.
II. Energy
A. Uranium Enrichment
Legislation.
President's letter to Senator Mansfield
been delivered by Bill Kendall.
Senator Mansfield indicated that he would
what he could do but would not make
promises.
can wonlin vi help House.
Senator Glenn seems to have lost some of his
enthusiasm for his amendment which is
identical to the Bingham amendment in the
good
&
Letters in support of legislation. Letters are
in preparation in ERDA: (a) to Senator Pastore
countering the "glut in capacity" argument, and
(b) to Senator Glenn answering a series of
questions that he has posed.
Budget Committee Action. The House Budget Committee
has voted to count the entire contingent liability
associated with contracts pursuant to NFAA as
"budget authority" for purposes of the budget
resolution. The Committee further cut the
$8 billion request back to $4 billion. On the
Senate side, the Administration position that none
of the contingent liability should be counted
as budget authority has been accepted. We will
have to watch this closely in conference.
Gleun
way these?
FORD LIBRARY & 076875
-3-
Blew Get w
B.
Nuclear Policy Study. Bob Fri is shooting for a
completed decision paper by this weekend. I
reviewed a draft issue paper earlier today and
I have doubts as to whether it will be in shape
Pls. a com
by this weekend.
C. Energy Conservation and Rationing Plans.
-- This item is due to come up on the ERC agenda
tomorrow morning. OMB has problems with the
four
rationing plan and are seeking some changes.
John Hill has indicated that he will agree not
Hight
to send up two of the plans (lighting and
weekend gasoline sales) if they can get
clearance on the other three.
-- You have received over 200 letters from the
hotel industry opposing the FEA contingency
The
plan which would restrict weedend fuel sales.
Boss.
We are developing a draft response which we
will forward for your approval.
D. Natural Gas Legislation. FEA is preparing draft
legislation that would provide some emergency
authority for use in the event of a severe
shortage this winter. This approach was
approved by the ERC last week. (Dick Dunham
concurs.)
E. State Nuclear Moratoria. Six more states will
have nuclear initial ives on their ballots in
November: Washington, Oregon, Colorado, Ohio,
Montana, and probably Arizona (though the
petitions will be challenged).
cc:
Art Quern
Attachment
Kn's note w w trip cont on dudule who dule
Pending
CLEARANCE SHEET
DATE: 9/11
JMC Required ACTION by: 9/14
STAFF RESPONSIBILITY A.Q
SUBJECT: Russ PETERSON LETTER
RECEIVED FROM:
DATE RECEIVED: 9/8
STAFF COMMENTS:
QUERN MOORE RECOMMENDATION:
APPROVE
REVIEW & COMMENT
We tath of then need about tath schledes Do this to of OMB Artor
DISCUSS
CANNON ACTION:
DATE:
Material Has Been:
Signed and forwarded
Changed and signed
Returned per conversation
FORD LIBRARY & DERALD
Noted
JIM CANNON
Comment:
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL ON ENVIRONMENTAL QUALITY
722 JACKSON PLACE, N. W.
WASHINGTON, D. C. 20006
September 8, 1976
Dear Jim:
Attached is a copy of the memorandum from Jim Mitchell
that you requested.
I understand that you plan to personally study the revised
summary of our report on non-nuclear energy R&D which I
previously submitted. This is the latest in a series of editorial
revisions which we have made in order to satisfy the concerns
of the many people in the Executive agencies who have reviewed
our draft. Wherever our draft required clarification or revision
because of improved understanding on our part, we have made
such revisions. However, when an agency requested that we
change our basic convictions that there was room for improve-
ment in the Federal energy R&D program from an environmental
and conservation standpoint, we have refused to do so. If appears
to us that OMB and Glenn Schleede want us to say that there is no
room for improvement in the Federal Government's program. I
am sure that Congress did not have in mind, when they gave us our
assignment, that we should just bless whatever the Administration
had previously decided to do. Nor do we have any intention to do SO.
When the Non-Nuclear Energy Research and Development
Act of 1974 was passed by Congress and signed into law by President
Ford, it was clear that the confrontation that we are now experiencing
was certain to occur. The statute directed CEQ to make this report,
not OMB or the Domestic Council. At this juncture, we have garnered
all the help and advice we need from other Federal agencies on this
report. Such advice has undoubtedly contributed to improving the
report.
Some agency almost certain other than CEQ leaked a copy of
our early draft to Jack Anderson. He has already had two columns
exaggerating our criticism of the energy program and forecasting
that the Administration will not let that report see the light of day.
At a recent hearing on the NNERD program, we testified - after OMB
clearance - that we would be making our report to Congress this Fall.
Incidentally, the two Democratic senators present at the hearing both
had copies of our draft report in front of them.
-2-
I recommend that the President plan a speech or press
release emphasizing the need for an all-out conservation effort
in our country and release it at the same time that he receives
our final report. He could thank CEQ for the report which they
prepared under the law he signed December 1974 and report that
he is asking his energy agencies to carefully review our recom-
mendations and reflect such review in their future plans for
energy R&D.
I am anxious, Jim, to discuss this with you at your earliest
convenience so we can go to press in the next few days.
Sincerely,
Russ
Russell W. Peterson
Chairman
FORD & LIBRARY CERALD
Mr. James Cannon
Assistant to the President
for Domestic Affairs
The White House
Washington, D.C. 20500
Attachment
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
August 30, 1976
MEMORANDUM FOR RUSS PETERSON, CEQ
FROM:
JIM MITCHELL
Subject:
CEQ report evaluating ERDA's Environmental
and Conservation Programs
As you know, OMB and Domestic Council representatives have
been reviewing the subject CEQ report--working with
Steve Jellinek and others of your staff.
Although considerable OMB staff time has been devoted to
suggested changes in the proposed CEQ report--a number
of which have been incorporated in successive drafts--there
are still fundamental problems that go beyond editing and
which are of a fundamental policy nature, particularly
in the conservation section of the report.
These fundamental policy problems arise because the
report tends, by its tone and emphasis, to call for an
expanded Federal role in conservation R&D that is
inconsistent with:
-- the Administration's policy on Federal VS.
private role;
-- the President's 1977 budget decision which
reflects the above policy; and
-- the ERDA "National Plan" which was
modified to reflect more carefully
the Administration's position, particularly
on the premise of the private role and
responsibility in conservation and
conservation R&D.
It will, therefore, provide the basis for further criticism
of the President for not requesting more funds for energy
conservation and, particularly will inhibit his ability to
consider the possible deferral of some or all of the
additional funds added by Congress.
2
There is one other section of the report, namely, the
chapter dealing with fossil energy R&D that gives us
a problem. The report takes the position that fossil energy
R&D should be slowed down until more work is done on
environmental impact by the Environmental Division of
ERDA. This suggests that the President's budget is too
high in the fossil energy area and, therefore, undermines
the Administration's program. Our view is that analysis
of the environmental impact of fossil energy technologies
is important, but that such work should be undertaken by
both the Environmental Division of ERDA and the technology
program people involved and, furthermore, that present
deficiencies in dealing with environmental concerns are
not serious enough to warrant slowing down the program.
I want to add my strong support of the views that have
been expressed by my colleagues in OMB and urge that you
undertake an extensive rewrite that will be more in keeping
with a realistic assessment of the Federal responsibility,
particularly in conservation R&D as expressed by this
Administration.
THE WHITE HOUSE
WASHINGTON
September 14, 1976
GERALD FORD LIBRARY
MEMORANDUM TO: DICK CHENEY
FROM:
JIM CANNON Dain
SUBJECT:
CEQ VS. OMB and The Domestic Council
We have an internal dispute, with Russ Peterson opposed
to Jim Mitchell and Glenn Schleede.
Section 11 of the Non-Nuclear Energy Research and
Development Act requires CEQ to perform an independent
assessment of the adequacy of attention to environment
and conservation in Federal Energy Research, Development
and Demonstration. The Act does not set a specific
time requirement for submitting this assessment. CEQ's
report of this assessment, which is required to be submitted
to the President, the Congress and the ERDA Administrator,
has been in preparation for over a year and is ready for
publication.
Jim Mitchell of OMB and Glenn Schleede of The Domestic
Council feel that the report, in its criticism of ERDA's
energy conservation program, is contrary to Administration
policy and will be used by certain groups to support
attacks upon the Administration.
Russ Peterson argues that the report does not violate
Administration policy, and in any event, he has done all
he feels he can do to meet any substantive objections
that Schleede and Mitchell have put forth.
The content of the draft report is already widely known
as Press reports have surfaced indicating the basic thrust
and suggesting Administration pressure to squelch it.
We have three alternatives:
A. Take no further action, thus allowing CEQ
to publish the report without further revision.
This would eliminate any charge of "high-handed
White House pressure."
-2-
B. Direct Peterson to rewrite the report in
such a way as to accomodate the objections.
This option may result in a confrontation
with Peterson that cannot be resolved, and
could create a public backlash, if he so
desired. His resignation is effective
September 30.
C. Continue to negotiate the differences.
The same problem exists as in option B.
Peterson feels he has done all he can do,
and there may be no further "give" in his
position.
Recommendation:
I recommend that we allow the report to be
published without further revision. There is merit
in the Mitchell--Schleede objections, but the down-side
risk of further efforts to rewrite the report is greater
than the possibility of the report being used effectively
as a basis of attack on Administration policy.
Approve
A
B
C
FORD LIBRARY &
CLEARANCE SHEET
DATE: 9/13/76
JMC ACTION
Required by:
STAFF RESPONSIBILITY Humphreys
SUBJECT:
In effort to resolve the CEQ/ERDA controversy
over CEQ's assessment of the adequacy of attention
to environment & conservation in Federal energy RD&D.
RECEIVED FROM:
DATE RECEIVED: 9/13/76
STAFF COMMENTS:
QUERN MOORE RECOMMENDATION:
APPROVE
Thingines a quick
REVIEW & COMMENT
presentation but adequate
DISCUSS
AND
CANNON ACTION:
DATE:
Material Has Been:
Signed and forwarded
FORD LIBRARY & 07VW39
Changed and signed
Returned per conversation
Noted
Comment:
JIM Inc CANNON
moded that returned
9114 promutions
CLEARANCE SHEET
- Energyful
DATE: 9/13/76
JMC ACTION
Required by: Immediate
STAFF RESPONSIBILITY Schleede
Deregulation of Naptha-Based Jet Fuel
SUBJECT:
RECEIVED FROM: Frank Zarb
DATE RECEIVED: 9/11/76
STAFF COMMENTS:
Schleede recommends concurrence with FEA proposal to
send up the deregulation proposal immediately. It must
go by 15th to become effective this year (assuming Congress
closes up on Oct 2nd). Congress has 15 legislative days
to disapprove. The DOD arguments are reasonably good but
QUERN MOORE RECOMMENDATION: should not override the commitment
to deregulate.
APPROVE
can' D deregalate
REVIEW & COMMENT
Jim agree, we then duck when which
DISCUSS
for I 7 something (DaD). To recomend
it comes affect we concerrence Acter
CANNON ACTION:
DATE: 91
Material Has Been:
Signed and forwarded
Changed and signed
FORD LIBRARY & GENALD
Returned per conversation
Noted
JIM CANNON
Comment:
Schleede
called in
Concurt with Due FEA
9/13
FEDERAL
ENERGY
FEDERAL ENERGY ADMINISTRATION
WASHINGTON, D.C. 20461
ADMINISTRA
ATION
OFFICE OF THE ADMINISTRATOR
MEMORANDUM FOR THE PRESIDENT
FROM:
FRANK G. ZARB
GERALD FORD VERARY
SUBJECT:
DEREGULATION OF NAPHTHA-BASED JET FUEL
F ACKGROUND
Pursuant to your direction when you signed the Energy Policy
and Conservation Act (EPCA) last December, the Federal Energy
Administration (FEA) initiated the process of removing from
price and allocation controls as many petroleum products as
possible. Since then Congress has approved conversion of
price and allocation controls to standby status for petroleum
products accounting for 40 percent of the yield from a barrel
of crude oil. These include residual fuel oils, middle
distillates (heating oils and diesel fuels), lubricants,
greases, and a number of intermediate products. The sequence
of decontrol has been determined by the supply and demand
conditions for products, the requirement to hold public hearings
and the necessity to avoid having more than one decontrol
proposal at a time before the Congress.
Based on these considerations the next product FEA proposes
to submit for exemption is naphtha-based jet fuel. This is
military grade jet fuel (JP-4), and accounts for approximately
2 percent of total U.S. refinery production. The Defense
Department consumes 98 percent of such fuel and small refiners
account for nearly 40 percent of its total production.
The Department of Defense has objected to submitting the naphtha
jet fuel (JP-4) proposal for exemption at this time for reasons
outlined in this paper.
- 2 -
FEA has completed its study, held public hearings with full
knowledge of DOD's opposition, and made the findings required
by the Act: adequate supply exists and minimal price impacts
will be experienced in the event of decontrol. FEA proposes
to transmit this action to Congress for consideration on
September 15, 1976. This is the last day that will allow the
required time for congressional consideration prior to
adjournment.
The remaining major fuels not yet decontrolled are kerosene-
based jet fuel, used primarily by commercial airlines, and
gasoline. Studies of these fuels are underway and they are
scheduled to be proposed for exemption early in the next
session of Congress, or later this year should Congress
reconvene after the elections.
FORD GERALD LIBRARY 9ERALD
DOD POSITION
The proposed unilateral decontrol of military JP-4 jet fuel
suffers from the following disadvantages:
A price disparity will be created between
decontrolled military jet fuel and commercial
jet fuel which will remain under price control.
When, following the Arab boycott a similar
disparity occurred, there was a congressional
investigation and both DOD and FEA were
severely criticized and accused of wasting
millions of dollars in excessive jet fuel costs.
Small refiners, the intended principal bene- *
a
ficiaries of JP-4 decontrol, cannot in fact
obtain price benefits until their current
contracts expire. A few of those contracts
will expire by March 31, 1977, but most
(61 percent of the contracts, accounting for
60 percent of total supply) run through
September 30, 1977.
Of six refiners holding JP-4 contracts with
clauses that permit termination of renegotiation
upon decontrol, only one is small. The others
that can gain immediate price relief from
decontrol are all large firms (Union, Getty,
Cities Service, Sun, and Continental). Another
- 3 -
large firm (Exxon) stands to gain early benefit
from decontrol to a lesser degree. At least
part of the contracts held by most large refiners
will expire by mid-FY 77.
O There will be unprogrammed DOD FY 77 expenditures
of $20 million.
The foregoing considerations indicate that the proposed
expedited unilateral decontrol of military JP-4 jet fuel will
serve no useful purpose and is contrary to the best interests
of the government. It will increase military fuel costs.
It will provide only limited price relief for a few small
refiners until FY 78. It will benefit large refiners, some
immediately and most by mid-FY 77. It will expose DOD to
higher jet fuel prices while continuing to protect commercial
airlines. In summary it conveys an impression of government
collaboration with big oil - an impression which is not in the
interests of either government or industry.
DOD recommends that the action to decontrol JP-4 at this time
be terminated. DOD's primary recommendation is that JP-4
should be decontrolled at the end of FY 77, when all current
contracts will have expired. An alternative proposal by DOD
is that the recommendation for the decontrol of JP-4 be for-
warded to Congress in conjunction with either or both the
proposals for the decontrol of kerosene jet fuel and motor
gasoline.
FEA POSITION
FORD LIBRARY is
O FEA's findings and views required bv EPCA and
supported unanimously in testimony at public
hearings held on September 3, 1976, indicate
adequate supplies and minimal price impacts
resulting from decontrol. Specifically, FEA
expects price increases of no more than 1 cent
a gallon on the average, with a maximum upper
limit of 2 cents per gallon. Since DOD buys
98 percent of all domestic JP-4 production,
FEA believes that through its contractual
commitments DOD can maintain an appropriate
price relationship between JP-4 and commercial
jet fuel, which will remain under price controls.
- 4 -
The extent to which large refiners benefit and
small refiners do not will be a function of
existing contractual relationships between DOD
and its suppliers. Thus, any budgetarv impact
will be minimized. In any event, refiners,
both large and small, testified unanimously at
the public hearings in favor of decontrol.
Decontrol now will encourage investment in small
and independent refineries, even though the
benefits for some refiners may be postponed
until their existing contracts expire.
Failing to decontrol JP-4 despite the findings
and public testimony conveys an impression that
the government is willing to risk higher prices
for other consumers but is not willing itself to
face the implications of decontrol. This will
weaken our argument for decontrolling kerosene
jet fuel and gasoline.
Deferring decontrol of JP-4 until the end of
FY 77 would cause this to be the last of the
products to be decontrolled. Thus, direct cost
increases would be borne by the airlines and
motorists from the decontrol of kerosene jet fuel
and motor gasoline before the Federal government
accepted the cost increase of decontrolling JP-4.
Coupling the proposal for the decontrol of JP-4
with either or both motor gasoline or kerosene
jet fuel would increase the complexity and un-
certainty of obtaining congressional approval for
the decontrol of any of these products. FEA's
strategy of sequential decontrol has proven effec-
tive to date, at least in part, by minimizing the
constituencies opposed to any one action.
'O DOD's recommendation to terminate or delay the
JP-4 decontrol action at this time would create
uncertainty as to the Administration's commitment
to decontrol and minimize governmental interference
in private industry.
GERALD FORD LIBRARY
- 5 -
AGENCY COORDINATION
PRESIDENTIAL DECISION
Send decontrol proposal as scheduled.
Do not send decontrol proposal at this time.
FORD :- LIBRARY 774839
file
THE WHITE HOUSE
Energy
WASHINGTON
September 13, 1976
MEMORANDUM FOR:
GLEN SCHLEEDE
THRU:
MAX FRIEDERSDORF m.b
FROM:
BOB WOLTHUIS RKW
SUBJECT:
Syn Fuels Legislation
The House Rules Committee is scheduled to take up the
Syn Fuel bill on Wednesday. Our assessment is that it
will be reported and then go to the floor on Thursday
and Friday. To prepare for this debate it would be most
helpful to have a new Presidential letter strongly endorsing
the legislation. It should be addressed to Chairman Teague
and outline the President's support.
If possible we would like to have this letter by close of
business Wednesday evening.
FORD i LUBRARY QERALD
The and
FYI
THE WHITE HOUSE
WASHINGTON
Energy
Synthetic Fuels
RECOMMENDED TELEPHONE CALL
TO:
The Speaker and Representative Dick Bolling (D-MO)
DATE:
Before Wednesday, September 15, 1976
RECOMMENDED
BY:
Max L. Friedersdorf
my
PURPOSE:
To urge the Speaker and Representative Bolling to
support a rule for H.R. 12112, the Synthetic Fuels bill.
BACKGROUND:
The House Rules Committee postponed action yesterday
until next Wednesday on the Synthetic Fuels bill.
Chairman Olin "Tiger" Teague has requested the President
call the Speaker and Representative Bolling to urge
their support for a rule.
Our vote count on the Rules Committee yesterday showed:
YES
NO
UNDECIDED
OUT OF TOWN
Delaney
Madden
Bolling
Sisk
Young (Tex)
Young (GA) Long (LA)
Matsunaga
Pepper
Moakley
Murphy
Quillen
Anderson
Latta
Lott
Clawson
SUGGESTED TALKING POINTS:
See TAB A
DATE SUBMITTED: September 9, 1976
ACTION:
FORD LIBRARY & GERALD
1.
As you know, the Rules Committee did not complete
action yesterday on the Synthetic Fuels bill,
H.R. 12112. We need House passage as soon as
possible of the compromise bill that Tiger Teague
has put forward on behalf of his committee, Ways
and Means, and Banking and Currency.
2. We must develop the capability to tap our vast
resources of coal and oil shale in a way that
is economic and environmentally acceptable. We
need to have a synthetic fuels industry in place
in the early 1990's to fulfill a significant part
of our energy needs:
- In 1972, we were importing 29% of our oil.
Today we are importing over 40%.
- Domestic production of oil and natural gas
are continuing to decline.
- We will still need a major contribution from
synthetic fuels even with (a) increased energy
conservation, (b) deregulation and decontrol
of oil and natural gas, and (c) increased use
of nuclear energy.
- Newer energy sources such as the breeder, fusion,
solar and geothermal cannot possibly make a major
contribution in time.
3. The action that is needed now is the commercial scale
demonstration of synthetic fuels technology.
Industry will not proceed on its own because of the
risks, high costs, and regulatory uncertainties.
Loan guarantees will provide the limited sharing
of risks needed by industry to proceed.
4. More delay by the Congress will mean greater reliance
on imports in the 1990's, greater vulnerability to
disruption from any future embargo, and increased
out flow of dollars and jobs.
FORD LIBRARY & GERALD