The power of the lobbies

er to change the way in which the cost is allocated among users. It appears to be a proposal for massive intervention from the federal level into the states which regulate electricity through public utility commissions. It appears to be a set of public guidelines which would force those public utility commissions to be involved in major income redistribution schemes. Use of the utility system as a substitute for the tax and welfare system may well appear to be politically expedient. One myth that has been advanced is that the price of electricity is promotional and is designed to favor the industrial user (who pays less per kilowatt hour) at the expense of the residential user. In the vast majority of public utility pricing cases, the rate of return to the utility from its industrial business is substantially higher than is the rate of return from the residential business. This is true because the industrial user both takes electricity at a higher voltage which requires less expensive transmission systems and takes it in a more uniform way. Looking at the pattern of electricity usage, one finds that it is air conditioners, not industrial plants, which have both increased the use and increased the peak load of the systems. In order for the pricing schemes advocated to be effective, they would have to be applied to every household and the householders would have to run their air conditioning at night when it is cool and turn them off in the day when it is hot. Utility rate restructuring is a key element of the Carter Energy Program. The motives for such realignment are mixed, with some conservation and some social income redistribution factors clearly involved. The historical record, however, does not support the notion that the declining block rates promote excessive consumption. Thus we conclude that the utility rate restructuring proposed in the national energy plan is more an attempt to use utility rates as an instrument of income redistribution than an attempt to make more efficient use of our electricity generating capacities. A third serious question about the energy plan is whether the United States can afford an energy bureaucracy to administer the program. The new Department of Energy, which pulls together various regulatory bodies, will cost $ 10.6 billion. That $ 10.6 billion is somewhat higher than the profits of the entire oil industry. It amounts to 164

about $ 3.50 per barrel of oil produced in the US. This figure does not include the cost of the oil industry reporting requirements to the federal government, which are sizable. The Commission on Federal Paper Work indicates that the cost to all US industry of keeping up with federal paper work is between $ 25 and 32 billion a year. Here we are with a federal regulatory agency which costs each year more than the entire profits of the industry it set up to regulate. We are looking at mandated investments in protecting the environment and mandated investments in technology which not only doesn't work, but which creates environmental problems of its own. We see industries across the country putting together costly organizations to cope with federal

government regulations, all of which adds to the cost of our products and is inflationary in nature. Thus, we conclude that the U.S. probably cannot afford the type of regulation proposed in the national energy plan. Not only are the direct costs staggering, but the indirect costs in terms of reduced flexibility in private decision making will be substantial as well. As the Wall Street Journal pointed out ". .... speed, at the expense of sanity, has characterized the energy program from the start." We should be careful not to pay one penny more for energy than we need to. We should let a competitive market do its work and not try to substitute regulation from the center for the regulation implicit in competition. []

The Power of the Lobbies The United States time-table for the reduction of the toxic levels in automobile exhaust fumes has yet again been prolonged. As a result of massive pressure exercised by the automobile industry and the United Automobile Workers, Congress has approved an amendment to the law, delaying application of the stricter 1978 levels from one to seven years. From the technical and economic point of view this postponement was not necessary. Several foreign producers have already shown how, with relatively small additional costs, cleaner and cheaper cars can be brought onto the market. The recent deferment of this timetable followed immense activity on the part of conservationists and the autoAmerican Motors Corporation will pay California $ 1.1 million in settlement of a law suit which charged the company with selling smog producing cars and with submitting false test reports to California. The fine is the largest ever collected in California for violation of the air pollution laws. HMD mobile industry. Senator Edmund Muskie, President of the Senate's Commission on the Environment, described the pre-congressional battle as the most vehement in all his years in Congress. The automobile industry had not contented itself with mere lobbying, and the presidents of the industry had themselves personally appeared in the offices of Congressmembers and in the congres-

sional lobbies. On the opposing side, the conservationists had managed effectively to activate their grass roots, who had bombarded with letters and telephone calls from all over the country; they also had the support of President Carter who had very clearly stated his interest in a strict regulation for automobile exhaust. This tough approach from the side of the automobile industry is in strange contradiction to the keen background activity of some U.S. producers who have long acknowledged that the days of the big American car are numbered, and who have shown a marked interest in future cooperation with foreign producers in the production of smaller, more economical automobiles. They now show, however, that their present interests can best be served by forcing a delay in the time-table. The amendment allows the industry until 1981 to meet the limits set for hydro-carbon and carbon monoxide emissions. The level for nitrogen oxide, in general regarded as being the most dangerous component of exhaust fumes, will not again be reduced until 1981. All the more disappointing, as in comparison with non-detoxicated motors, the existing 1977 limits already mean an improvement of about 80% in the case of hydro-carbon and carbon monoxide, and of approximately 20% in the case of nitrogen oxide. During the dispute fundamental questions were raised which went far beyond the aspect of clean air alone. For example, why should the American Congress not be able to force the indus-

Environmental Policy and Law, 3 (1977)

try to accept provisions which had been recommended by the Environmental Protection Agency (EPA) and the Federal Energy Administration (FEA) as being reasonable and desirable and which foreign producers have shown can be met without any problem? The decision reached by Congress was regarded by many as further disturbing proof of the combined power of American big business and big labour. As the Senate has not followed the action of Congress, some sort of compromise will have to be found. MJ [] Physician

Sentenced

A U.S.A. physician who pleaded quilty to possession of 11 freshly killed ducks in the closed hunting season was sentenced to operate a medical clinic free for two weeks for anyone who needed medical help. The judge noted that he would ordinarily sentence the physician to at least 11 days in jail, however, because the jails were full the judge accepted the defense attorney's suggestion that the doctor hold an open clinic. The doctor's shooting companion, a college student, was sentenced to work four Saturdays for a charitable organization. [] 6, Pa;f~.tv

Courtesy S/)ddeutsche Zeltung

Environmental Policy and Late, 3 (1977)

Environment Activities of the Marshall Fund The German Marshall Fund of the United States was created in 1972 "to assist individuals and organizations in the United States, Europe and elsewhere to understand and to resolve selected contemporary and emerging problems common to industrial societies, both domestic and international". Clearly environmental affairs fall within this mandate and the Fund's five-year report, published recently, gives an overview of activities to date in this field. The Fund received an initial fifteenyear funding commitment from the German government which provides approximately DM 10 million annually. Not all of this is to be spent, and in May 1977 uncommitted residual assets were expected to amount to more than 12 million. The fund's five-year report presents an excellent opportunity to assess its success in developing a program consistent with its goals in relation to environmental affairs. The Fund's program is divided into three parts: A Domestic Problems Program, an International Problems Program and an European-American Studies Program. Each of these programs again comprises several subheadings which are generally divided again into sections under which the individual grants and projects are grouped. Overall, there are twenty-three sections. While Urban Affairs, Employment, the Conditions of Work or even Economic programs can be relevant to the environment, only two of the twenty-three sections concern topics which are directly oriented towards environmental considerations. In the context of the Domestic Problems Program a three-year international comparative project is being undertaken to analyse land use policies, laws and practices of eight countries. The Fund has in effect put all its environmental eggs into this particular basket, awarding a total o r s 671,311 to the project which has thus received 11.2% of all grants made by the Fund to date. The results of this large commitment are just beginning to appear in published form so that it is difficult to judge whether the results justify the funding level. In the International Problems Program, a special section is reserved for "Resources and the Environment". Four

projects have been supported in this program area: - in 1974 the Fund co-sponsored an international workshop on alternative energy sources at the Alfred P. Sloan School of Management, MIT ($ 25,000); it sponsored a study of alternative world food reserve arrangements at the Brookings Institution ($ 25,000); - it co-sponsored an informal two-days meeting of key delegates to the U.N. Law of the Sea Conference to discuss compromise possibilities for institutional and practical arrangements concerning development of the deep sea beds ($1,187); under a Fund-managed project, William D. Ruckelshaus, former Administrator of the Environmental Protection Agency, conducted a study in 1974-75 of possible new institutional mechanisms to provide improved international evaluation of serious threats or potential threats to the environment in cooperation with the United Nations Environment Programme and other regional and L a c k o f Sites Safe sites for the disposal of wastes contaminated with low levels of radioactivity may run out in the near future, the United States National Research Council announced in its recent report: The Shallow Land Burial o f Low-Level Radioactively Contaminated Solid Waste. At the moment radioactive contaminated wastes are buffed in shallow trenches under strict regulation. However, in some regions of the US, particularly in the east and the northeast, land that is geologically and economically suitable for burial is limited and as more commercial nuclear plants are built the amount of contaminated rubbish could exceed the capacity of the available burial sites. HM [] international environmental programs ($ 40,863). The Fund also provided $ 40,000 for an exchange of 24 younger parliamentarians from the U.S., U.K., Germany and Norway in June 1977 which focused on energy policies of common concern to the legislators. • 165