The decision was reversed by the Court of Appeals for the Second Circuit on December 29, 1965, in a case entitled Scenic Hudson Preservation Conference vs FPC, 354 F. 2d 608. This happened, by the way, to be my last day of work as Chairman of the Federal Power Commission, and the decision added nothing to the pleasure of the occasion. The opinion of the Court of Appeals set for the Commission a standard of perfection in passing upon hydroelectric applications. It was required to "probe all feasible alternatives," before granting a license, whether or not those alternatives were presented to the agency in a concrete and timely manner. Thereafter almost three months were required to call a prehearing conference. All activity thereupon ceased while Consolidated Edison vainly sought a writ of certiorari from the United States Supreme Court. The writ was denied on May 16, 1966. The company amended its application on May 31, 1966. Hearings did not begin for almost six months and they continued for an additional six months until May 23, 1967.

The Hearing Examiner's decision was not handed down until August 6, 1968, more than 141⁄2 months later, although in fairness I must say that a one-day hearing concerning a statement by the Connecticut State Board of Fisheries and Game presented a small complication. Two and one-half months later-no movement having occurred in the meantime the City of New York petitioned for leave to intervene and to reopen the proceeding on account of possible damage to the New York City Aqueduct. The Commission reopened the case on November 19, 1968 and a new set of hearings began, extending from March 4, 1969 to May 12, 1969. It required the Examiner an additional 72 months to file his second initial decision, which confirmed his original conclusion. The Examiner, therefore, spent a total of 22 months simply in writing his opinions, exclusive of the time devoted to the hearings themselves. The FPC required almost 41⁄2 additional months to set the case for argument, which was held on May 4, 1970. Three additional months have now elapsed while the company-and the publicawaits the Commission's second verdict. We may confidently expect a petition for rehearing whatever the result, followed perhaps by another round of judicial review. The end of this case is not yet in sight.

I submit that an early and effective disposition of this proceeding, one way or the other, would have been far better for the people of the State of New York than the consequences which have resulted from the delays themselves. The estimated costs to complete the project have mounted year by year. The company has been unable to firm up plans for alternative power sources. It has been compelled to rely on old and inefficient equipment with very high operating costs, and to purchase a vast amount of gas turbine capacity, despite high operating costs, in order to carry its loads. Above all, these delays have helped to create the power shortage from which the City of New York now suffers.

I do not mean to rake old coals. My point is that no legislation proposed by this committee will achieve its purpose if it does not address itself to remedying the weaknesses in regulatory procedures of which the Cornwall case is an outstanding example.

If administrative paralysis is to be avoided, the Subcommittee should not only direct its attention to the Scenic Hudson line of cases but also to the line of cases represented by Mchigan Consolidated Gas Co. vs FPC, 283 F. 2d 204, decided in 1960, which permits intervenors to come in at almost any stage of a case, even after a so-called final decision, with applications for reopening which the Commission must heed, without regard to the Commission's own judgment on the merits. A combination of a requirement to study exhaustively every "feasible" alternative which opponents may suggest, and to reopen proceedings after years have already been spent in efforts to dispose of a case, are destructive of the regulatory process. One line of cases holds that administrative proceedings cannot be confined and the other that they cannot be closed. The combination is devastating to regulatory performance.

I need hardly explain that these precedents apply not only to the FPC but to all federal administrative agencies. They account for the delays in AEC, as well as FPC, proceedings. Federal agencies fear to circumscribe any proceeding, or to reject any motion for expansion of the record or for delay, in fear of reversal.

What is at stake is the capacity of the Government to make decisions. It is ironical that the regulatory agencies, which were established in order to permit prompt and effective disposition of technical controversies by expert bodies, have now become so burdened with judicial restraints and internal lag that they

cannot meet a public need for administrative processes which have a terminal point as well as a beginning. Because S. 2752 ignores this problem, and would superimpose a comprehensive licensing system without considering the effect on the ability of the industry to meet its loads, it seems to me that it would be counter-productive in its present form.

The most solemn responsibility of the AEC is to assure the protection of the American public from radiation hazards. I am not suggesting that it should subordinate this responsibility to any other consideration. The FPC, similarly, shoulders a responsibility for assuring that licensed projects will not do violence to the environment. Nothing that I have said is intended to suggest that it should fail to give environmental values their deepest and most sympathetic consideration. I am addressing myself to administrative procedures and to the question of the ability of administrative agencies to reach prompt decisions, and not to the outcome of particular cases.

Every thinking person must realize that meeting the world's growing requirements for goods and energy places great strain on this planet's basic resources of land, air, water and minerals, including hydrocarbons, and that man's ultimate survival is at issue. This need not mean, however, that vital services must collapse because of our inability to make decisions. It does not mean that administrative agencies should be crippled to the point of ineffectiveness. What is required is a workable means of reconciling environmental values with the demands of an increasingly urban and industrialized society. It means, also, that in looking for solutions we must have primary regard to the overall public interest, and must reject efforts to delay and defeat administrative proceedings as a vehicle for forcing acceptance of the views of any of the parties.

The problems which I have mentioned are not confined to the Federal level. The States face the same complexities. In its last session the New York Legislature adopted a measure for the purpose of assuring that any electric power or natural gas transmission lines hereafter built within the State, and not subject to FPC licensing as an element of a hydro project, will pass the test of overall public need and justification, including—indeed, emphasizing the environmental aspects.

The measure attempts to secure such a comprehensive review, which was entrusted to the Public Service Commission, in an administrative framework which would assure reasonably prompt answers. How this legislation will work out in practice only time will tell. With respect to the problem of steam plant siting, the Legislature in the same enactment provided for the creation of a nine-man temporary Commission to recommend appropriate measures to the next Legislature, which meets in January 1971. I am submitting a copy of this legislation for the records of the Subcommittee, together with a copy of the Commission's regulations1 issued thereunder.

1

If the Subcommittee will permit, there is one other point which I should like to make. I have spoken of reconciling environmental values and energy needs. Too often what will become necessary will not be a reconciliation but a compromise. In the present stage of power technology there may be no practical way in a particular situation to avoid a measure of air pollution or thermal pollution, or some other environmental damage, if energy needs are to be met. Many people who live in lovely country surroundings are distressed by the prospect of construction of overhead transmission lines, and yet the cost of undergrounding high voltage lines for long distances is prohibitive. It seems wrong and unnecessary, with all the scientific and technological resources which are available in this country, that we cannot improve energy technology so that reconciliation will involve the avoidance of any substantial environmental damage while still maintaining adequate and reliable power supply in growing amounts.

Unfortunately, the power industry consists of 3,600 separate units in four institutional segments-private, cooperative, State and municipal, and Federal They devote a pitifully small amount to research. There is a degree of industry coordination now, through the Electric Research Council, but the coordination is incomplete and the scale of its activities is too small. The electric equipment manufacturers carry on individual research programs, but mostly on problems having immediate commercial potential. The federal government's own budget

1 Retained in subcommittee files.

for research is squeezed by competing claims for available money to meet immediate problems.

There is need in the energy research area for institutional innovation. I recommend that the Subcommittee consider the establishment of a Federal institute for research in energy technology, which would be jointly administered by government and industry representatives, and which would be funded by a tax of 1% on electric sales at retail by all segments of the electric power industry. In time, no doubt, most, if not all, conflicts between environmental and energy considerations will yield to technological solutions, but we do not have the time to let nature take its course. I am aware that tax measures must originate in the other House, but if this proposal commends itself to the members of the Subcommittee, it will be a long step closer to reality.

I am grateful to the Subcommtitee for the invitation to appear before you. Mr. SWIDLER. If the subcommittee will permit, I would like to say a word about the coal problem. I think Mr. Watson, who will testify after me, will also deal with it, and I won't trespass too much on what he has to say.

You will find in the weekly reports that I made to the Governor appended, in several cases, reports on the coal supply situation in New York, and you will see that it is deteriorating very fast.

The prices of fuels are going up, and their simple availability is a great problem. There are extensive coal car shortages, partly as a result of the pile-up of cars at Newport News and Norfolk in the coal trade with Japan.

We not only face summer power shortages, but possibly winter shortages as well, and I hope that the subcommittee in its deliberations will see if it can be of some help to the utilities of this country in assuring the fuel supplies that they very badly need.

I appreciate the time you have given me, Senator Muskie, and it has been a pleasure to testify.

Senator MUSKIE. I appreciate your testimony, Mr. Swidler. I think it is excellent testimony, even though it does not express approval for

the bill.

Mr. SWIDLER. I am sorry, Senator, it expresses approval for the objectives of the bill.

Senator MUSKIE. That reminds me of a question I wanted to ask. What changes would you make in the bill to overcome some of the objections to it in its present form? Would you have some

Mr. SWIDLER. Senator, I hope you will give further thoughts to the question of duplication of approvals. In the New York State legislation the legislature attempted to focus responsibility on the public service commission, but provided that all other agencies should have a hearing before the Commission, should be made parties, and any individual or any group could intervene and could introduce evidence, but that this was the one channel for reviewing a project and determining whether it made sense in the overall public interest.

The decisions of the commission must be made within whatever statewide limitations are imposed by the department of conservation or other agencies of the State with statewide jurisdiction over environmental matters. But within the range permitted by these statewide standards, and on the basis of the record made in this very open way, the commission would make the decision. It would not be subject to collateral attack, and the commission would be free, in an appropriate case, on the basis of explicit findings, to override local objection.

This was the New York Legislature's effort to find a path that would traverse the ground between environmental protection and security of power supply.

The problem at the Federal level is more complex. I cannot tell you now, Senator Muskie, exactly what I would do to revise the bill. It is obvious that when it was written your primary thought was to assure that environmental matters were adequately considered, and it does indeed do that.

However, it sets up two additional levels of approval, from the regional board as well as from the agency, unnamed in the statute, and it does not specify that those approvals are in lieu of any other required approvals, but instead says expressly that any State or, I believe, locality, is free to impose even stricter requirements. I cannot visualize a powerplant or a transmission line getting itself born under that statute.

Senator MUSKIE. Thank you, Mr. Swidler.

Our final witness this afternoon is Mr. James E. Watson, Manager of Power for the Tennessee Valley Authority.

Mr. Watson, it is a pleasure to welcome you this afternoon. It has been a long afternoon, but we are delighted to have you as a witness. STATEMENT OF JAMES E. WATSON, MANAGER OF POWER, TENNESSEE VALLEY AUTHORITY, ACCOMPANIED BY ROBERT H. MARQUIS, GENERAL COUNSEL; AND FRED CHAMBERS, ASSISTANT MANAGER OF POWER IN CHARGE OF ENGINEERING

Mr. WATSON. I can assure you, Senator, it is real pleasure to appear before you and your subcommittee.

I would like to introduce first here on my right, Mr. Marquis, who is our General Counsel, and on my left, Fred Chambers, who is Assistant Manager of Power in charge of engineering.

I do not have a prepared statement. First, I did not have very much time and, second, I was not quite sure of the appproach that you wanted to take.

I would like to take this opportunity, though, to emphasize a point that Mr. Swidler made with reference to the coal supply because I think the Nation is facing a real crisis from the standpoint of coal and other energy sources.

We have a large system. We burned last year roughly 32 million tons of coal. By 1972 we will burn each year in the neighborhood of 37 million tons of coal. So when I talk in terms of tons of coal stockpile that we have on our system, they will sound large to the average person, but they are very, very short with reference to a system the size of TVA's.

For instance, at the present time we have about 2 million tons of coal in stockpiles at our various plants, 2 million tons which, as I say, sounds like a lot of coal, but actually that is only 12 days' supply. If we did not get any coal, we would be out in 12 days.

It is actually even more critical than that because this coal is not distributed evenly among our plants. The transmission that you talked about today does help us in shifting loads and generation around our system, but there are limitations to what you can do with that, and we have plants now with as low as 4 days' supply of coal.

This does not result from the fact that we do not have coal under contract or have not purchased enough coal. It results primarily because of a shortage in rail cars.

We are, on the average, short about 100,000 to 150,000 tons a week because of lack of rail cars. There are several reasons behind this. Mr. Swidler mentioned one of them. That is, that a good many cars are tied up in coal going to the coast and out for export.

The primary reason, however, is that there is such a slow turnaround on the use of cars. We went to the ICC staff back in September and asked that they put out an order which would require the return of coal cars without a load; in other words, that they go to their destination and come back as soon as they could be unloaded.

We asked also that there be a penalty put in there. At the present time, the demurrage charge on a coal car is $5 a day on the normal type of hopper car. If it were several times that, I think we would get some action.

Now, ICC finally did issue an order in the last 30 days or so, but it did not change the demurrage rates. It is too early to say whether or not we are going to get any action out of this order-and I hope we do, and I believe that the ICC thinks that this will cure the problem. However, in the last 26 weeks we have been short by rail shipments of 212 million tons of coal, and if the situation does not improve we are going to have four to five plants completely out of coal this winter. Irrespective of our big interconnections and that sort of thing, our part of the country and, as far as that goes, the eastern United States, cannot stand to have that much capacity in an inoperable condition. There is another thing that is behind the coal business that concerns me a good deal, and that is the fact

Senator MUSKIE. What percentage of your capacity now is hydroelectric and what percentage

Mr. WATSON. We have about 4 million kilowatts of hydro out of a total system capacity of 19,300,000. We also have 10 million kilowatts of nuclear and coal-fired plants now under construction. So the 4 million hydro is becoming a relatively small piece of our total system.

If you look at the Nation as a whole, there is less coal being mined than is being burned, and the burn goes up every year. Last year the Bureau of Mines indicated that the amount of coal actually mined was approximately the same as it was the year before. So something has to be done about getting new coal into production.

One of the things behind this problem is that practically all the reserves, especially in the Midwest, are controlled by relatively few parties. For instance, of the 10 largest coal producers in the United States, eight are owned by either major oil companies or by metal producers. So that while we used to send out invitations for coal bids and get bids back that would offer three or four times as much coal as we needed, with probably 50 different firms bidding on it, we now send out invitations and in some cases do not get any coal bid at all. For instance, we are now building a new plant at Cumberland City, Tenn., that will have a capacity of 2,600,000 kilowatts and a plant like that will burn about 140,000 tons of coal a week.

When we got bids in for coal to supply this plant, there were only 20,000 tons a week bid. So here we have a plant that burns 140,000 tons,