Some Questions for a Questionable "Project Independence"

Project Independence is President Nixon's response to the Arab oil embargo and the subsequent energy crisis. Nixon's goal is to achieve self-sufficiency of energy supply in the United States by 1980 or before by the least costly means possible. The oil embargo demonstrated that relying upon foreign oil supplies which may be stopped by a hostile sovereign, subjects this nation's energy supply to its foreign policy decisions and vice-versa. In order to break this relationship, Nixon launched Project Independence on January 19, 1974. A blueprint or masterplan designed to fulfull this goal is being worked upon by the Federal Energy Administration (FEA) and numerous other agencies. While planning for energy policy is laudable, it appears that this program may merely be paying lip service to environmental and consumer interests.

The dollar cost of foreign oil has been less than domestic oil. As a result, increasing amounts of oil have been imported so that foreign oil has come to constitute a steadily rising percentage of total American consumption of energy. A report of the Council of Economic Advisers¹ predicts that foreign oil will soon be more expensive than domestic oil. Governmental action would then be unnecessary, presuming that market factors would cause a shift toward reliance upon domestic sources. However, the weight of evidence indicates that, in fact, domestic oil will remain more expensive than foreign oil. If no action is taken, it seems likely that the United States will return to its previous reliance on foreign oil supplies.

Market forces fail to account for the fact that the "costs" of foreign oil include more than just dollars. Added to the bill are threats of an oil embargo if United States foreign policy deviates too widely from the interests of the oil producing nations. This imposition upon American foreign policy may be considered a "political cost" which, although not accountable in monetary terms, could have the effect of making the total cost of foreign oil too high to be heavily relied upon.

Under Project Independence, prices will be the primary determinant of what policy is pursued. To the extent that non-monetary factors wuch as higher prices to consumers, environmental damage, and impositions on foreign policy can be given a monetary value in the over-all cost/benefit analysis, such factors will be considered and evaluated. Since impositions upon foreign policy form the crux of the problem, they will be considered. However, it is likely that non-monetary factors other than foreign policy, such as consumer and environmental consequences, may be relegated to a lower priority in an effort to attain independence at the lowest monetary price.

By May (if not before) those familiar with the project, both inside and outside of the FEA task force directly working on it, realized that the goal of complete self-sufficiency in energy resources was both unrealistic and undesirable.² Officials responsible for Project Independence therefore changed the goal to devising a plan which would increase domestic supplies and reliable foreign supplies so that long run security of supply would be maximized while costs would be minimized. In this sense, "independence" is a better characterization of the project's goal than is "self-sufficiency." Hence, Project Independence is evaluating foreign sources of energy rather than eliminating them from consideration. Such evaluation is made from the standpoint of how foreign supplies can be made more reliable without disrupting either the domestic or the international market equilibrium.³

More specifically, Project Independence has three objectives: (1) to determine what combination of foreign and domestic supplies of energy would result in the minimum cost, all things considered; (2) to determine what legislation — both to regulate and to provide incentives — is necessary to achieve this desired combination; and, (3) to determine what is the most desirabletimetable for achieving this combination.⁴

The project will begin by estimating the gap between domestic demand for energy and domestic supply (including nuclear and solar sources) in 1985. FEA plans to determine the monetary cost of closing that gap under three different assumptions regarding the price for world crude oil to compensate for the fact that the world price of oil is to some extent unknown. The next step will be to evaluate the reliability of foreign sources and to assess the possible implications of relying on certain sources.⁵ This evaluation should be completed by midsummer 1974 and be followed by consideration of possible actions to alleviate the problem.

FEA will assess four general policy options available to the United States and formulate specific recommendations from them.⁶ The first option is to increase domestic supply of energy relative to both domestic use and imported supply. This might include tax incentives and subsidies to increase the supply of oil and gas as well as to develop commercial application of alternative sources of energy. The second option is to decrease domestic demand. Lowering demand would involve fewer government [4 ELR 10112] incentives and more government regulations than would the first option. Closely related to the second option is a system of stockpiling oil, which would provide a means of stabilizing the nation's supply if foreign sources were cut off. The final option is to take such political and diplomatic steps as are necessary to diminish the probability of embargoes and other disruptions of oil supplies.

A number of procedural problems with Project Independence may limit the positive response that environmentalists give to the effort. Since no recommendations or reports have, as yet, come out, it is too early to evaluate the substance of the project. Yet, if Project Independence proceeds unquestioned until FEA issues its substantive findings, opportunities for challenging it may prove to be too late to have effective impact.

The first problem is that the information on which consumer or environmental input into the project must be based, has not been available. The Consumer Affairs Office of FEA has been unable to get significant information of the project despite efforts to obtain it. Correspondingly, the Consumer Advisory Committee staff within FEA has received no information.The Project Independence task force has not permitted citizen and private organizations to submit relevant data, information, or opinion; nor has it disclosed relevant information to such groups.⁷ To meet this problem head-on, a group of public-interest organizations has now retained an attorney to proceed with a suit under the Freedom of Information Act in order to obtain desired information.

FEA has responded to demands for increased public input by creating the Project Independence Advisory Committee. It does not appear, however, that this group will be able to represent environmental or consumer interests effectively. Its membership is heavily dominated by industry personnel. Moreover, in its early stages, it has had no access to needed information.It will meet on a bi-monthly basis only, and got a late start, meeting for the first timeon July 10.

The second problem is the inadequacy of mechanisms designed to offer the general public an opportunity to influence the project. FEA has proposed a schedule for public hearings, but they are to be held in ten cities only: Atlanta, Boston, Chicago, Denver, Houston, Kansas City, New York, Philadelphia, San Francisco, and Seattle.⁸ Only those people living close to one of the hearing sites will be able to participate in them conveniently. FEA offices in these cities lack personnel experienced in handling public hearings. As a result, no format has been defined, no proper notice and publicity has been given, and as of yet, no persons have been named to coordinate the hearings. Even if the hearings are procedurally improved, FEA may only issue selected parts or summaries of the preliminary report to the public before hearings are begun. This makes it difficult for would-be participants to prepare intelligent questions. Finally, there is no indication that whatever public input is made will be taken into account by FEA policy-determination whatsoever. In fact, it is unlikely that FEA will keep transcripts of the hearings much less include them in the final Project Independence report.

There are also substantive problems with Project Independence. High consumer prices will be considered relevant only as they relate directly to energy costs. Indirect ramifications of these costs in prices for transportation, food, shelter, and petroleum products will not be seriously weighed. FEA will not consider potential unemployment, forced eviction of large groups of people from areas of energy resource development, and impacts on education or welfare systems. Environmental issues will receive no systematic evaluation. Individual environmental impact statements will accompany individual policy recommendations, but FEA will make no assessment of the project's environmental implications as a whole.

The most worrisome feature is the legislation that may emerge from the project. Establishment of strip mining standards to provide for reclamation is the Administration's proposal for raising coal production. The President has already urged relaxing of air quality standards to allow greater use of coal. Another proposal is to allow the Secretary of the Interior to license construction of deepwater ports.⁹ Legislation to pour funds into development of nuclear energy may be the most serious outcome of Project Independence. Alternative energy sources appear to be relegated to a lower priority as the Administration develops nuclear power, despite the danger of accidents and the hazards associated with radioactive byproducts.¹⁰

Up to this time, the desirability of planning for energy policy has protected Project Independence. Opposition to it is characterized by the project's backers as tantamount to calling for an energy crisis. If Project Independence weighs factors aside from reliability and price of energy then it deserves praise.However, it appears that the project will continue to exclude environmental or consumer input. Even congressional input will be minimized. Recommendations will probably go to the Hill individually, and Congress may not be presented with thefull context of the program being promulgated. The New Office of Technology Assessment which should evaluate the entire subject will, at best, examine two or three of the subtopics of the general policy. The President's energy policy may escape critical and comprehensive evaluation. Only some time in the future, after the nation has lived with Project Independence, will the public become fully aware of the magnitude of its benefits and costs.

1. A Report of the Council of Economic Advisers: Economic Developments and Policies, May 28, 1974.

2. Center for Science in the Public Interest Memo: Project Independence Blueprint, June 14, 1974.

3. Office of Management and Budget Memo: "Energy Independence, An Overview."

4. Id.

5. Id.

6. Id.

7. Center for Science in the Public Interest Memo, supra.

8. Id.

9. A Report of the Council of Economic Advisers, supra.

10. Bering, Charles, "U.S. Trading Oil Dependency for Unreliable Nuclear Power" in Environmental Action, June 22, 1974.