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[General Correspondence - Hodsoll, Frank]
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[General Correspondence - Hodsoll, Frank]
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James Cicconi's General Correspondence Files
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NATIONAL
A Federal agency
advised by the
ENDOWMENT
National Council
on the Arts
FOR
THE ARTS
Frank Hodsoll
Chairman
12/30
Jun-
attached is a note to JAB
on the NEA budget
I would be ixery grateful
if you could bring it to
his attention, alsofor any
suggestion many thanks & lest
for the new year.
Irank
NATIONAL
A Federal agency
ENDOWMENT
advised by the
National Council
FOR
on the Arts
THE ARTS
Frank Hodsoll
Chairman
12/30
Jun -
I know you want to stay
out of the but as as you
can selfrom the attached I am,
as / mentioned to you, solliciting
mikes help
I would abrovisly very much
appreciate yours as well. of
I could se any benefits to
the administration certainly
none have been expressed to
me by ONB I'd be, as I have
been, a a good wlder But PTO
NATIONAL
WASHINGTON
ENDOWMENT
D.C. 20506
FOR
THE ARTS
A Federal agency advised by the
National Council on the Arts
MEMORANDUM
December 29, 1983
TO : THE HONORABLE MICHAEL DEAVER
DEPUTY CHIEF OF STAFF
THE WHITE HOUSE
FROM: F.S.M. HODSOLL, CHAIRMAN
Brank
NATIONAL ENDOWMENT FOR THE ARTS
SUBJ: ARTS ENDOWMENT FY '85 BUDGET
In accordance with your request, this memorandum summarizes the
essential points I made to Bill Sitman regarding our budget. I regret
bothering you, but feel strongly that the President is not well served by
the OMB FY '85 budget mark of $140 million for the Arts Endowment. I have
proposed $162 million (the same as FY '84). I understand the equivalent
agency in science (NSF) is getting a raise over FY '84. Operating agencies
like the Smithsonian are being held even. It is a case, in my view, of no
political or budgetary advantages, coupled with political and possible budget
disadvantages. If necessary, and subject to your advice, I would seek an
opportunity to bring this to the President's personal attention.
You can justify the Arts Endowment budget at a variety of levels. There
is no magic level. But if we are serious about restraining the budget, the
Administration's budget proposal should be in the ballpark of what is politically
inevitable. Otherwise, the Executive Branch is irrelevant to the determination
of this small agency's budget, and the Congress becomes the Endowment's Board
of Directors.
The facts are:
1) For three years, we have proposed low Endowment budgets and
failed: $88 million in FY '82, $101 million in FY '83, and
$125 million in FY '84. The actual budgets passed by the Congress
and signed by the President for those years are: $143 million in
FY '82, $144 million in FY '83, and $162 million in FY '84.
2) Last year (FY 1984) is instructive: we proposed $125 million;
the Senate came in at $143 million; the House came in at
$165 million; our approved budget is $162 million. Last year
I urged $144 million (FY ' 84 budget) and got a raise from $101
million to $125 million. Had the Administration proposed $144 million,
I think (but cannot prove) that we could have held the NEA budget to
$150-155 million, instead of $162 million. We would also have gotten
significant credit in the highly visable arts world, particularly
with the trustees of arts organizations who are largely supporters
- 2 -
of the President and who would have helped us hold the line
had we been in the ballpark.
3. This year, I have urged on OMB a budget of $162 million; their
mark is $140 million. The arts lobby is discussing $200 million.
I have discussed with the relevant Senate Committee the lowest
number they would consider for FY '85; I am told $160-165 million.
$140 million is not in the ballpark.
4. Government support for the arts has a strong political following.
Notwithstanding very tight budgets in many states, state arts
agency support continues to increase. A particularly dramatic
example involves Governor Thompson of Illinois: Thompson tried
to abolish the state arts agency; the trustees of the major
Chicago arts organizations held his state income tax increase
hostage; the end result was continuation of the arts council and
a doubling of its budget. Similarly the Los Angeles Music Center
prevented substantial reductions of the California Arts Council
budget.
The bottom line is:
1. We look ridiculous proposing slightly increasing, but nonetheless
irrelevant, budgets. The substance of our proposals causes a
sour taste among arts organization trustee supporters of the
President and the many women volunteers who help the arts --
not helping the gender gap. Irrelevance on the budget also
reduces the Administration's capacity to fashion agency programs
in a way that encourages more attention to quality and stimulation
of additional private support. It strengthens the hand of the
full-time paid arts lobby and House Democrats and weakens our
ability to make a difference. It shifts power from the Executive
Branch to the Congressional Branch. For example, the President of
the American Association of Museums told me last week that our
budget positions had for the first time in 16 years caused arts
organizations to go directly to the Hill, as opposed to working
through the Endowment.
2. Based on my soundings and our experience over the past 3 years,
the OMB mark of $140 million will be considered irrelevant. Given
the likely Senate position on our budget, the OMB mark will not
result in a lower House and Senate compromise; the bargain will
be between the Senate and House without regard to the Administration
(like 82, 83, and 84). Conversely, if we come in at $162 million
(the same as last year), we have a good chance of holding the
eventual outcome close to that; otherwise I will simply, as last
year, be forced to respond to House requests for budget allocations
at increased levels after the fact.
3. Administration proposal of $162 million will recognize the
inevitable: provide us with important political credit, and
put us in a position for the first time both to hold the budget
- 3 - -
line and become a more positive force in the arts. I
cannot see any costs; there are no trades in this area.
It is a small theoretical price ($22 million) for an actual
political and possibly budgetary gain.
SUGGESTED ACTION
Call Stockman to urge holding the Endowment budget to
$162 million, not cutting it disproportionately. (Stockman
may not fight if the West Wing is politically interested.) The
essential point is: what does OMB think we will gain by forcing
the Endowment to espouse a budget which will automatically be
ignored by Republicans as well as Democrats?
I would welcome the opportunity to discuss this with you, Mike. Last
year, the Budget Review Committee denied my appeal. Doing the same thing again
this year just doesn't make any sense!
GC. (Nodsoll)
Australian Atomic Energy Commission
File no actioneded. of
Cliffbrook, 45 Beach Street, Cooges, N.S.W.
OUR REFERENCE
YOUR REFERENCE
BOX 41, POST OFFICE. COOGEE. N.S.W., AUSTRALIA, 2034
CABLES: ATOMCOM. SYDNEY TELEPHONE: 665-1221
2nd February, 1981.
PERSONAL AND CONFIDENTIAL
Dear Frank,
May I first wish you a successful 1981 and hope
that the new administration has settled in smoothly.
I appreciated the opportunity to talk to you last
year on the subject of the history of the INFCE study and
my book. I have to admit that the work on the book is
proceeding slowly due to the pressure of other work. I
have therefore decided to try to speed it up by spending
at least three months on it full-time early this year.
To this end I am applying for a grant equivalent to
three months salary so that I can take leave without pay,
plus an amount to pay for an overseas trip to interview
a few additional people, especially Mr. Jimmy Carter,
who I was unable to see last year.
I've started by applying to the Rockefeller
Foundation last week when I found the deadline for
applications was the 1st February, 1981, and I will be
applying to others, such as the Ford Foundation. I took
the liberty of including your name on a short list of
referees to whom the Foundation could refer to check my
bona fides, so I hope this is acceptable to you.
I enclose a copy of a brief outline of the book
for which I've chosen the provisional title of "Nuclear
Conflicts", for your background information.
Yours Sincerely,
(C.J. HARDY)
Chief Scientist, Nuclear Fuel Cycle
Encl"
Mr. Frank Hodsell,
Department of State,
C Street,
WASHINGTON. D.C. U.S.A.
Proposal for Grant (Continued)
Appendix 1. Draft Book Cover
Back Cover
"NUCLEAR CONFLICTS"
On the 7th April 1977 President Carter made a major policy
speech on nuclear energy. In it he called for an International
Nuclear Fuel Cycle Evaluation Study to assess how to promote the
peaceful uses of nuclear energy whilst minimising the risks of
proliferation of nuclear weapons.
This study became known as
INFCE.
The study commenced at a conference in Washington or the 19
October 1977. It ended 29 months later on 28 February 1980 at
a conference in Vienna. During that time over 100 technical
meetings were held, over 500 experts in technical and internat-
ional affairs took part from 66 countries and over 20,000 pages
of reports were written. The results were published in 1980 in
9 volumes totalling over 2,000 pages.
INFCE was claimed throughout to be a technical fact-finding
and assessment study, not a political negotiation, It had the
aim of better informing national governments and aiding them in
the formulation of their future nuclear policies.
Dr. Hardy presents INFCE as a series of conflicts and as a
technical study interwoven with political considerations and
national interests. He documents the many factors in the years
leading up to 1977 which provided the incentive for the United
States Administration to conceive the idea. He' discusses the
conflicts between the USA and the many nuclear nations in the
western world during 1977 before the concept was accepted. He
shows the conflicts that arose between the uranium producers
and consumers, signatories and non-signatories to the Nuclear
Non-proliferation Treaty, North and South, governments and nuc-
lear industries, and departments within governments. He shows
how the various interests were finally combined into a consensus
report and where the differences remain in the fine print. He
discusses finally "Where do we go from here?".
Dr. Hardy sees INFCE as a worthwhile but never-to-be-rep-
eated exercise, a technical tour-de-force that will have a sig-
nificant impact on future international nuclear relations. If
the INFCE reports become accepted as the "Bible" of the nuclear
fuel cycle, "Nuclear Conflicts" will be the "Concordance" and
provide valuable insights into it.
Proposal for Grant (Continued)
Appendix 1. Draft Book Cover
Front and Back Flaps
"NUCLEAR CONFLICTS"
is the background story and
guidebook to the International
PHOTO
Nuclear Fuel Cycle Evaluation
(INFCE) Study initiated by
President Carter in 1977. An
outline of the study is given
on the back cover.
The author describes why the
D::, Hardy was born in England
study was started, how it was
in 1931. He graduated from the
carried out by experts from
University of Bristol with BSc
66 countries for 29 months,
Honours in Chemistry in 1952
and how the results were pres-
and a Ph.D. for research in
ented in 9 volumes of over
1955. He received a D.Sc. in
2000 pages. He discusses the
1971 for his extensive public-
conflicts which occurred on
ations in the nuclear field.
many levels before and during
the study, how many of them
He worked with the UK Atomic
were resolved and how the
Energy Authority from 1955 to
nuclear fuel cycle is likely
1970 n the development of
to develop now that INFCE is
nuclear fuel processes and
over.
the application of nuclear
techniques in British non-
nuclear industry. He spent
two years in 1965-66 as a
200 pages
$20.00
guest scientist at the Oak
Ridge National Laboratory in
the USA, a centre for US nuc-
lear fuel cycle research.
Cont. from inside back flap:
leader of the Australian dele-
Dr. Hardy joined the Austral-
gation to several of the Work-
ian Atomic Energy Commission
ing Groups at meetings in the
in 1971 as Chief of the Chem-
USA, Europe and Japan.
ical Technology Division. He
is now the Chief Scientist
Dr. Hardy wrote "Nuclear
for the Nuclear Fuel Cycle
Conflicts" as a private init-
and principal adviser to the
iative outside of his work as
Commission and the government
a senior government official.
in this field. He played a
He travelled widely to gather
major part in INFCE and was
material and to interview some
of the principal persons in-
volved in INFCE.
Continued inside front flap
fee
the
December 19, 1980
Mr. James D. Kohlmann
19520 N.W. 12th Avenue
Miami, FL. 33169
Dear Mr. Kohlmann:
On behalf of Jim Baker and the President-elect, many
thanks for your letter of December 2. Rest assured that
we will take your views into account as we develop the
agends of the Reagan Administration.
Sincerely,
F.S.M. Hodsoll
Assistant to the Chief of Staff,
Designate
FSMH/kc
December 2, 1980
Mr. James Baker
Office of the President-elect
1726 M Street, N.W.
Washington, D.C. 20270
DEC 5 1980
Dear Mr. Baker:
As an American and Republican, I am naturally delighted with
the triumph of November 4th. For the first time in many
years I feel it may be possible to hope for genuine respon-
siveness from the Government on matters that concern us all.
The enclosed letter is directed to President-elect Reagan
with the understandable hope that he will find time to read
it personally. If this is not possible, I am told you are his
close confidant and in a position to bring matters to him for
consideration.
That being the case, please read my letter to him and if,
upon evaluation, you feel my observations have merit, please
bring them to the President-elect's attention. I would hope
that he may see thereby areas of grave concern not currently
on his priority agenda and may even perhaps make them so.
Were such a thing to happen, I believe the interests of the
American people would be well served.
I appreciate very much your consideration of my request and
hope you will find it possible to speak for me in this matter.
May God give you, our new President Reagan and his entire
Administration wisdom and strength for the tasks that lie
ahead.
Very truly yours,
Janu NW D. FL Kohlmann 12th 33169 Ave.
December 2, 1980
Dear President-elect Reagan:
I would first like to congratulate you on your stunning victory.
It is, along with the Republican sweep in the Senate, a cause
for celebration for ordinary Americans like myself unequalled
in 25 years of bureaucratic encroachments on our freedom. May
God give you the strength and uncommon wisdom needed to begin
turning our beloved country back into the America we once knew.
In the flurry of media speculation about what you will do next,
little has been said about two areas which I believe are of
great importance. I should like to express my concern and hope
that you may be moved to take action.
As one having a degree in economics I am familiar with the
basic supply and demand problem usually referred to in intro-
ductory courses as "guns or butter.' The Soviet Union apparently,
with the appalling help of former U.S. Administrations, has
solved the problem neatly. They consume our "butter" and use
their own resources to make guns. My impression is that they
don't pay for the butter but they do train the guns on us. Of
all the foolish and dangerous things the U.S. Government has
permitted in recent years, the flow of American technology, man-
ufactured goods and foodstuffs to a nation firmly committed to
our destruction is, in my judgement, the worst.
Please, for the sake of America, install a Secretary of Commerce
who recognizes this and will put a halt to such a suicidal pro-
gram. If the Russians have to provide for their own people they
may be distracted somewhat from building armaments. Let us put
a stop to this continuous subsidy of our own downfall.
The other concern I have begins with Paul Volcker, Chairman of
the Federal Reserve Board. There is speculation that you may
retain him and I ask you to reconsider. His performance in office
has not been encouraging and further, he was appointed by Jimmy
Carter whose economic ideas are diametrically opposed to yours,
regardlss of past campaign rhetoric from him. Lastly, he is
a member of the Trilateral Commission, the low-profile organiza-
tion of powerful men which seems to have an unusual number of its
people in high government office.
To my mind, there is something inherently sinister about a small,
almost publicly unknown group such as this exerting overwhelming
influence upon our national affairs. I'm sure you are well aware
of the names and titles of those in power now. I find the lack
of media attention to this situation peculiar. Were any other
homogeneous group - Irishmen, Christians, Freemasons, most re-
cently Georgians, etc. - so heavily represented in positions of
power, the news media would relentlessly inform the world.
Page 2
About the Trilateral Commission and its activities, we hear
nary a word. It is left to small conservative tabloids to
inform us of this and the general public views such relatively
unknown forums with distrust. Hence these people exercise
their power untroubled by public scrutiny and the majority of
Americans remains uninformed. Nevertheless, I have become aware
of this concentration of power from enough independent sources
to feel concerned and vaguely threatened.
May I suggest very seriously that the Federal Government needs
to be cleansed of members of the Trilateral Commission for the
good of the United States. Paul Volcker should very definitely
be among those invited to resign.
I appreciate the time you have taken to let me express these
concerns. If my letter has somehow motivated you to consider
action in these matters I will be most pleased. I believe that
today our country needs a strength of leadership perhaps un-
equalled in American history to solve the immense problems that
lie before us. Because of November 4th, I and many other working
Americans look to you and your new Administration with eagerness
and renewed hope for the future.
James truly NW D. Kohlmann 12th yours, Ave.
FL 33169
Dun wave
December 19, 1980
Mr. Anthony Alonge
81-15 268th Street
Floral Park, N.Y.
Dear Mr. Alonge:
Mr. Baker has asked me to respond to your letter of
November 16. He thanks you for your congratulations
and your thoughts.
The objectives of your "Plan Growth to the People" are
shared very much by Governor Reagan. You can be sure
that he will make every effort to move towards goals
such as these.
Thank you again for taking the time to write us.
Sincerely,
F.S.M. Hodsoll
Assistant to the Chief of Staf
Designate
FSMH/kc
anthony alonge
J
81-15 268 Street
DEC 4 1980
Floral Park, new york
november 16, 1980
James a Baker Cheif Staff
I lar mr Baker,
may l extend my profound
Corgratalations. your tenacity and
difficult times working for
President rerald ford, George
Bush, and then success of
President Elect, Ronald Reagan.
Caroline and l wish you
and your Family good health
and happiness in your new
appointment.
should you not recall my
name from the many letters
advising and suggesting my
"Growth to the People Plan would
win the Presidency for Gerald
Ford, Include me with the other
half of our citizeno, I cried with
them in his loss of the Presidency.
move than twenty five years.
a "Research analyst stock analyst,
mergers and acquistions. Companing
2)
to many "named Prominent Economists
who have failed in solving
the Dilemmas of our Country."
l will bear any challenge
that my Plen Growth to the People
will
Reduce-" Inflation,
2) Energy needs and pressure from 5)
O.P.E.C.31 Pollution," 4) Crime, Dangers
from nuclear Waste, of anger of
Possible War and the Slaughter of
our youth. How can any decent
and intelligent man or Women ignore
these benefits.
Would you believe three
optimum size Corporations rejected
and lacked americanism no wards
can I write the anger expressed
upon them.
Working on a plan the nation
needs. Firstly what do me have
to offer in the next two years
before winning the majority in
the house of Representatives for
President Ronald Reagan and set
up the future of Republicanism
3/
The Plan" centers on how
to reduce, Sufty (60) to Eighty (80)
Billion Hollars in Interest Costs
On our national debt,
Non't despan clear friends,
these are my cup of teas.
Hope this better gets to you
soon. Would like to hear
from you.
Sincerely
anthony alonge
P.S. From the Plan" there will
be millions for Campaigns "or
Profit for those who will help
"Banbroll," and get the Plan
started with my associates
Sending you a copy of my
last
response from Preseduit rerald
Ford.
GERALD R.FORD
March 16, 1977
Dear Mr. Alonge:
On behalf of President Ford, I would like to
thank you for your recent letter.
While President Ford appreciates the interest
which prompted you to write, I regret to advise
that he will be unable to become involved with
the Growth to People" program you described,
For reasons which I am sure you can understand,
President Ford has decided to limit his activities
to more broad-ranged concerns.
President Ford is grateful for your thinking of
him, and he asked me to convey his best wishes.
Sincerely
Robute. Robert Banitt E. Barrett
Executive Director
to President Ford
Mr. Anthony Alonge
1254 Gracia
Camarillo, California 93010
General Motors Corporation
JAMES D. JOHNSTON
DIRECTOR
GOVERNMENT RELATIONS
August 6, 1981
Mr. Francis S. M. Hodsell
Deputy to the Chief of Staff
The White House
Washington, D. C. 20500
Dear Frank:
Thanks for convening the meeting last week with the
auto industry to discuss the Clean Air Act. For our
purposes, it was most worthwhile. I hope it was helpful
to you and your colleagues.
Now that the tax and budget legislation is completed --
and we were pleased to help in that effort -- I am glad to
note the Cabinet decision yesterday on amending the Clean
Air Act. As you know, we consider this to be the single
most important regulatory reform action that needs to be
completed this year.
The first problem I dealt with after leaving the
Foreign Service many years ago for the auto industry was
clean air and it will probably still be at issue when I
retire. In the interim, if you think I might be helpful in
supplying any information or folklore on the subject, don't
hesitate to call.
Again, thanks for the meeting.
Sincerely,
James D. Johnston
JDJ:cb
1660 L Street, N.W. Washington D.C. 20036
CHRYSLER
CORPORATION
CHARLES T. CUDLIP
VICE PRESIDENT
July 31, 1981
WASHINGTON OFFICE
Mr. Frank Hodsoll
Deputy to the Chief of Staff
The White House
Washington, DC 20500
Dear Frank:
I would like to thank you for taking time from
your busy schedule to discuss amendments to the Clean
Air Act.
As you know, it is very important to our industry
that we see legislative action on this issue in the
Fall. I appreciate your interest and your concern
and please know that I am always available to be of
assistance as we proceed with these necessary changes.
Continued best wishes to you.
With regard,
thich
CTC:pt
1100 CONNECTICUT AVENUE, N.W. WASHINGTON, D.C. 20036
SUPERVISOR, THIRD DISTRICT
CONNOT ORANGE
BRUCE NESTANDE
VICE-CHAIRMAN OF THE BOARD OF SUPERVISORS
ORANGE COUNTY HALL OF ADMINISTRATION
CALIFORNIA
10 CIVIC CENTER PLAZA, SANTA ANA, CALIFORNIA 92701
PHONE: 834-3330 (AREA CODE 714)
File clean and
June 30, 1981
Mr. F.S.M. Hodsoll
Deputy Assistant to the President
The White House
Washington, D.C. 20500
Dear Frank,
Thanks for putting together the Clean Air Act meeting.
Hopefully, it will be possible to assist the Administra-
tion's proposal. Enclosed is the most recent press
regarding the Waxman position. This article appeared in
the editorial page of Sunday's L.A. Times.
When you have formulated your game plan, please let me
know what I might do to assist. I'll do whatever is
possible and most helpful. I await your response.
Chica Best wishes,
BRUCE NESTANDE
Supervisor, Third District
BN:kc
Enclosure
Los Angeles Times
Sunday, June 28, 1981 V
5
Clean Air Act: Just Another Trinket for Reagan to Dust Off?
By HENRY A. WAXMAN
Representatives of industry, environmental lobbyists,
bidder. Even where clean-up technology is available
members of Congress and concerned citizens have been
and needed, industry would no longer be required to use
'waiting for some time to see the Reagan Administra-
it. New factories could be built without adequate pollu-
tion's proposal for amendments to the Clean Air Act.
tion-control equipment; for example, coal-fired power
Enacted in 1970, our clean-air laws have established
plants would no longer have to use scrubbers to remove
air-pollution standards designed to protect the health of
dangerous sulfur emissions.
the American people; they have forced industry to con-
It would do nothing to alleviate the ominous threat of
strol pollution from their plants and required our cars to
"acid '-precipitation loaded with industrial conta-
become progressively cleaner.
minants that can fall to earth hundreds of miles from
I recently obtained a draft of the proposal the Admin-
istration intends to submit to Congress this week. Even
the source, sterilizing lakes and spoiling forests.
though it is only a draft, it provides the most definitive
And the proposal would erect new obstacles to federal
indication to date of the direction Interior Secretary
enforcement of the law against polluters. Prosecution
James Watt and the Cabinet Council is contem plating.
and fines against violators would be made optional rath-
In a word, the proposal would end the federal govern-
er than mandatory.
ment's decade-long commitment to cleaning the air in
All of these proposals contradict the basic policies
our nation's cities. If this proposal becomes law, 140 mil-
that have served us well over the past decade: First,
lion people who live in dirty-air areas will be permanent
that we should make sure that new sources of pollution
victims of air-pollution levels that threaten health by
be as clean as possible. Second, that we should not allow
aggravating the incidence of heart disease, lur g disease
the states to compete with each other by offering len-
and cancer.
ient pollution-control policies. Third, that measures
do This proposal goes well beyond the changes that in-
must be taken to control pollution that crosses state and
dustry has publicly advocated. It goes far beyond even
national boundaries.
Vice President George Bush's publicly expressed goal of
Air pollution is a problem that cannot be controlled by
"mid-course corrections" to make application of the law
the states alone, and is a problem that will not be con-
more efficient and equitable, to eliminate bureaucratic
trolled by industry:The only effective guarantee of a
delay, and to ease somewhat the regulatory burden on
clean environment is a coherent national policy to curb
industry. Instead, the Administration is proposing noth-
air pollution. The Administration's proposals would es-
ing less than a blueprint for the destruction of our
sentially repudiate that guarantee.
clean-air laws.
The Administration's philosophical approach to pollu-
There is no doubt in my mind that if the President
LYONS/STIEGER /for The Times
tion control appears to center no longer on what hap-
persists in this course, there will be a furious and acri-
pens to the health of the American people, but on what
monious battle in Congress that only will delay the pas-
the cost might be to industry.
sage of the changes that the law truly needs.
But this draft proposal, currently under consideration
proposal would allow, for example, a doubling of the
If everyone who has a stake in clean air made his or
There is, after all, no reason for fundamenta changes
at the highest levels of the Administration, would dras-
current output of carbon monoxide, and would take no
her views known, perhaps this Administration would
in the Clean Air Act. It has done much to improve air
tically limit the federal government's ability to protect
further measures to control "nox" (oxides of nitrogen).
understand that the American people do not want to
quality across America without hindering our economic
the public health of America from air pollution.
It would permit areas that are currently cleaner than
live in a land irreversibly covered by a blanket of fac-.
and energy development. The President's Commission
It would do away with the federal program 10 clean
the law requires-areas that have special protection to
tory smoke and auto exhaust that threatens their well-
on Coal and the National Commission on Air Quality
up the air in cities where it is worst, such as Los An-
prevent significant deterioration in air quality-to be-
being.
both have concluded that we can vastly increase our use
geles, by repealing requirements that industries reduce
come polluted to the maximum level now allowed under
of domestic energy reserves without sacrificing the
their emissions until clean-air standards are met,
the law.
Henry A. Warman (D-Calif.) is the chairman of the
Clean Air Act. This law also enjoys the broad support of
It would turn back the clock on auto-pollutic a stan
It would permit states, acting on their own, to relax
House energy and commerce subcommittee on public
the American people-86% of them, accord to a
dards, actually allowing cars in the future to pollute the
poilut controls for industs setting an ugly
and the environment, which has jurisdiction over
Harris Survey released earlier this month
air more than many of those being sold today O.
The
which
industrial
Air Act.
ANDREWS, KURTH, CAMPBELL & JONES
ATTORNEYS
1747 PENNSYLVANIA AVENUE, N.W.
2500 EXXON BUILDING
File
WASHINGTON, D.C. 20006
HOUSTON, TEXAS 77002
(713) 652-2500
(202) 861-7400
Engy CABLE ADDRESS
ANKUR
May 1, 1981
Mr. Frank Hodsoll
Deputy to the Chief of Staff
The White House
Washington, D.C.
Dear Frank:
I enclose a copy of Platt's Oil Regulation Report
which will give you some idea of the guerrilla warfare that
is continuing at the Department of Energy. I don't think
the problem is anywhere near under control but I don't think
anything can be done until some appointments get made.
Sincerely,
Mircal
Michael F. Butler
Enclosure
PLATT'S
OIL REGULATION
MONITORING FEDERAL ACTIVITIES IMPACTING ON PRICES AND SUPPLIES
REPORT
Vol. 6, No. 7
April 24, 1981
DOE WAGES CAMPAIGN TO PRESERVE ENFORCEMENT EFFORTS
Dept. of Energy enforcement and special counsel officials, concerned about Reagan Ad-
ministration attempts to trim their operations, are waging an intense
campaign to preserve their cases against oil companies over at least
the next several years. Moreover, according to sources, the campaign is
showing signs of succeeding, and companies of all sizes should beware.
Reportedly, enforcement and special counsel officials are examining every opportunity
for expanding and prolonging enforcement cases--a crucial exercise now
that Congress is examining the proposed DoE budget for the next fiscal
year. Included in this process is a tactic that began during the clos-
ing months of the Carter Administration--reopening old audits wherever
/
possible. For example, one small downstream firm was recently contacted
by the agency regarding its product sales during the last two months of
1973. In this case, an audit had already been conducted covering the
period in question--in 1976. Apparently, DoE has uncovered new informa-
tion requiring a reexamination. Many such examples have emerged over
the past several weeks.
The idea of reopening old audits, according to sources, is to pad DoE's list of unre-
solved cases to strengthen its argument for sufficient funds to main-
tain its operations. Ironically, this same tactic had been used unsuc-
cessfully by the agency earlier this year with chief White House bud-
get-cutter Stockman, who even publicly ridiculed DoE for inflating the
amount of money involved in overcharge cases. But DoE officials now
seem to be employing the strategy with better results on Capitol Hill,
where they reportedly have won commi tments from several key legislators
for a higher funding level for enforcement efforts than had been re-
quested by the White House.
The current DoE enforcement situation is mirrored all over the federal bureaucracy at
the moment. Officials are fighting White House attempts to curtail
their programs. Unfortunately, the White House can't possibly keep
track of all the independent actions of the agencies. Furthermore,
there is still a substantial constituency in Congress that supports en-
forcement of the now-defunct oil price regulations. Given these two
factors, the current survival campaign by both the enforcement and spe-
cial counsel offices at DoE is given a fair chance of succeeding.
'V' factor middle lingers
Page 2
Copyright 1981 by McGraw-Hill, Inc.-All Rights Reserved
Platt's Oil Regulation Report
'V' FACTOR MUDDLE LINGERS
Despite a decision made weeks ago by the Reagan White House to drop the matter
permanently (see February 27 REG/REPORT), the question of whether the "v" factor in
the refinery cost allocation rules was valid and is enforceable continues at the Dept.
of Energy, the product of a fierce internal effort by DoE enforcement people to pre-
serve the issue.
Furthermore, unless new attention is devoted to the matter by the White House, or
unless the courts somehow strike down the "v" factor rule once and for all, the issue
may persist for some time to come.
The "v" factor rule required assignments of increased costs to price-controlled
products to be based on the volumetric proportion of output of each product to total
refinery output. The rule was made necessary when the government began the long pro-
cess, in 1974, of decontrolling selected refinery products. The long controversy over
the "v" factor began because it was originally implemented as an emergency rulemaking,
with no prior opportunity for public review. The emergency action was taken to "cor-
rect" a final rule, not a proposal, an action that was ruled as improper by the U.S.
Supreme Court last year.
When we last reported on the status of the "v" factor, DoE had just announced it
was reviewing its recent new proposed rulemaking--which would have retroactively im-
posed the "v" factor beginning in 1974--in response to President Reagan's order for a
temporary moratorium on new regulations. Meanwhile, a U.S. District Court in Texas had
issued a temporary restraining order against the new rule until a decision could be
reached on a new suit brought by Mobil.
The combined effect of those two new developments was to arouse hopefulness among
refiners that the issue was about to sink out of sight. No such luck.
*
*
*
COURT DECISION NO HELP. The Texas court, ruling on Mobil's claims, reached the
same decision as the U.S. Supreme Court last year, namely, that the old Federal Energy
Office improperly implemented the "v" factor rule in 1974. Then, more recently, the
Temporary Emergency Court of Appeals--the "temporary" judicial body set up in 1971 to
rule on wage and price freeze matters--upheld the Texas decision.
If left to stand, the TECA action probably would wipe out much of DOE's current
remaining enforcement effort against refiners, because an invalid "v" factor rule
would add billions of dollars to refiner cost banks. Unfortunately, the 1974 "v" fac-
tor rule is only one of three DoE could bring to bear against refiners. The other two
are the new proposed rule, and a reimplementation of the original rule imposed by the
Federal Energy Administration on February 1, 1976. The 1976 rule wasn't addressed di-
rectly by the TECA decision.
DOE lawyers, buoyed by the apparent TECA omission, are now claiming that even if
the original 1974 rule was invalid, the 1976 rule was properly implemented and there-
fore a "v" factor limitation applies at least from February 1, 1976 through the Janu-
ary 27, 1981 end of decontrols. On the other hand, the TECA decision declares that the
"v" factor rule was invalid from 1974 through decontrol--in essence invalidating the
1976 rule as well. Both DOE lawyers and outsiders acknowledge that it probably will
require another round of litigation to resolve this discrepancy.
*
*
*
CAPITALIZING ON INATTENTION. At this point, it appears that the "v" factor issue
could be resolved in favor of the DoE enforcement people, thereby insuring many re-
maining months of litigation for refiners with pending enforcement cases. At the very
April 24, 1981-3
least, the issue apparently will remain unresolved for some time, mainly because en-
forcement officials will be able to pursue the matter on two fronts--by declaring that
the 1976 rule is valid and enforceable, and by attempting to implement the new propos-
al.
Regarding the proposed rule, several sources find particularly perplexing the
fact that DoE is still pushing the matter because, they say, the new "v" factor pro-
posal was supposed to have been dropped outright under direct orders from the White
House Office of Management & Budget. Top Administration officials, who had been study-
ing many federal regulations considered unnecessary or overly burdensome, recommended
elimination of the new proposal. That recommendation was translated into a directive
to DOE.
So why is the "v" factor proposal still under active consideration? Basically,
there are two reasons:
+ According to sources, DOE enforcement officials have waged an "un-
precedented campaign" within the agency to preserve the rulemaking
--or at least escape the certain death the suspension would have
provided--despite orders from the OMB.
+ Also according to sources, the White House is currently so preoc-
cupied with broader matters--such as the president's health after
the assassination attempt and his overall economic package--that
administration officials simply haven't had time to concentrate on
"tiny" details such as an obscure petroleum regulation.
Does the latter item mean that the White House has left resolution of the new "v"
factor proposal up to DOE? Not at all.
Rather, top administration officials are apparently unaware that the issue is
still active. This indication has been confirmed in a recent letter from a White House
official to an oil company representative, in which the official declared that the "v"
factor rulemaking had been "repealed."
"It's amazing," says one source. "Those guys at the White House don't have any
idea what's going on at DoE. And at the rate the (president's) economic package is go-
ing through Congress, DoE could have the new rule out and conduct several years' worth
of enforcement before they find out."
*
*
*
ENFORCEMENT NOT DEAD. The advantage DOE enforcement officials have now is that,
even if the White House manages to return its attentions to the "v" factor proposal
long enough to eliminate it, the recent TECA decision still leaves open the possibili-
ty--for now at least--that the rule may be enforced from February 1976 through decon-
trol. Trimming two years from the "v" factor restriction would still leave enormous
refiner cost banks. But DOE should find sufficient room to pursue recovery of over-
charges for several years--a process that sources say DoE enforcement people consider
essentially as important as the outcome.
Incidentally, the Reagan Administration may not be able to curtail DOE enforce-
ment activities easily. The agency has found a new willingness by Congress to appro-
priate money for DoE enforcement efforts (see story on page one). Consequently, assum-
ing DOE either pursues the latest proposed "v" factor rule or has its 1976 rule upheld
in the courts, enforcement officials will have the resources to pursue refiners for
quite some time.