This is in the face of the fact that hearings are still going on even this coming weekend and won't be complete until October 10 in San Francisco. It is sad, but blatantly obvious, that this Project Independence Blueprint will not bear even the slightest tokenism to a supposedly significant part, contributions from the public hearings. To quote from this month's National League of Cities report:

Perhaps the most disturbing aspect of this entire Federal venture-meaning Project Independence is the fact that local elected officials, the chief managers of the Nation's urban environments where virtually all of the social, economic, and environmental consequences of expanded energy source development will become manifest, have been effectively excluded from meaningful participation in the development of this plan. The apparent closed nature of the development of the Blueprint and the difficulty of obtaining information on the substance of Project Independence could well jeopardize the broad-based support that legislation of this magnitude will require in Congress and with public officials throughout the Nation.

Gentlemen, Mr. Sawhill is not fooling anyone but himself if he truly believes this brand of central control with no opportunity for rebuttal will be ignored in today's political climate.

To summarize, the scheme of the Federal Government to lease offshore areas of southern California for petroleum and natural gas extraction reveals itself to be a haste and waste scheme violating guidelines, laws, and oven our republican principles of government for both the southern California leasing and on a large scale, the Blueprint Report for Project Independence.

Ladies and gentlemen, so far we have covered only the specific tactics of attack on a local problem. Let's shift our attention for a moment to a more strategic perspective through looking at the demand. at large for petroleum created through the pricing mechanism.

I believe in the efficiency and equity of the pricing mechanism, if there is a genius to a free capitalistic system, this is it: That those who are willing to pay the price for a good or commodity have instant knowledge of what they are going to have to forego with their limited resources, and I stress the word limited for what follows in a few moments, in order to get the good or commodity they want. They can know exactly how many cans of soup a jar of jam is worth, or how many cars a house is worth, or in this case, how many bus rides a gallon of gas is worth.

With respect to fossil fuels, the effectiveness of the pricing mechanism has shown its efficiency to a much greater degree than even the most optimistic forecasters have predicted. With the price of gasoline having climbed over 40 percent in the last year, we have seen annual consumption through this summer flatten out and even drop a solid 6 percent, and this even with more cars and greater gas guzzling per car on the road. Even this week, the Royal Dutch Petroleum Consortium reported an annual drop of 12 percent in their sales.

Our former President said, "The days of cheap energy are over." Gentleman, I submit to you they were never here; we just weren't facing reality. Taking oil for instance, our tax structure has been such that 22 percent of gross income has been deductible from taxable income for oil and gas producers. This saving from taxable income had a great incentive effect. It made production of oil and natural gas cheap. It was an incentive to produce more oil/gas and indeed, this saving was passed on, at least in part, to us the ultimate consumer.

I was pleased to read that Mr. Mill's House Ways and Means Committee voted last week to reduce this 22 percent deduction to 15 percent this year, 8 percent next year and eliminate it completely in 1976. Gentleman, I urge you, too, to pass this measure ending the oil depletion deduction, for up until now, the reason we have had cheap energy is because its production has been subsidized through this resource depletion tax gimmick and energy production has also been the beneficiary of other false economies. Oil and gas producers, along with almost all industry, have not had to pay for cleanup of the polluted water, earth and air they spawn during extraction, production, or transportation. The pollution has merely been pumped down current, downstream, downwind, or overboard.

Gentlemen, we all now realize that this has been true shortsightedness, that if any of us are to survive to enjoy life, we must pay all the costs of production for things we consider progress, including the indirect cleanup or social costs so that all of us, including the pelicans, seals, and scavenging seabirds, may survive to enjoy life.

To summarize the last few moments, we have had apparently cheap energy to date because of the subsidy of production allowed through the resource depletion reduction, and by not paying the indirect cleanup costs of energy production. Now that we are on the road to paying the true and full costs of production through ending the depletion deduction and enforcement of the National Environmental and Protective Quality Acts, we are going to continue to see substantial-even dramatic-rises in the cost of energy. And this is as it should be for we will be paying the true and full costs of production and consumption. And the effect?

We've already had a glimpse. With the price of gasoline going to 70 and 80 cents a gallon-and Ford Motor Company's chief enonomist last week predicted it would hit 83 cent a gallon in today's values by 1980-we're going to see the magic of the pricing mechanism in action. We're going to see people doing more walking, more bike riding, more riding the bus and maybe, just plain more staying home. The net effect of this is that the overall demand for gasoline and other petroleum produced products is going to be inhibited to a great degree and we're going to reach Energy Independence even before 1980. We won't even need the oil offshore of southern California if we (1) eliminate the depletion deduction as Chairman Mills' House Ways and Means Committee voted to do last week, and (2) start enforcing the National Environmental and Protective Quality laws so that we all-producers and consumers-pay the true and full cost of energy production and consumption.

At the risk of getting off the subject, I want to close with a few remarks about a related matter, something we politicians (whether it is a councilman or a U.S. Senator) all speak loudly about in private, but very quietly about in public: namely, taxes.

Gentlemen, you are our representatives-whether we look to you as from the California constituency or from the national constituency. We look to you for leadership and guidance. Gentlemen, we want you to stop hedging against inflation with promises of deferred spending and cuts in spending in the budget whose first day of spending is still more than 9 months away.

Gentlemen, we want you to end inflation and we want you to stop it in its tracks. We want you to raise income taxes progressively for

those who can afford to pay-those with higher incomes. We all know that inflation strikes hardest at the small and the poor-these are not the ones to hit. Hit the bigger and richer, both individually and corporate or proportionately with their ability to pay. Not only will this stop inflation tomorrow, it will have the side effect of balancing that big budget of all of us and perhaps even lead us to a surplus, which brings me to my truly final point.

Gentlemen, instead of having as a hard-and-fast goal, independence from energy want, wouldn't it be a far better goal for our Nation as we embark upon our third century, to launch a national campaign to free ourselves from the most basic liability and want of all-the national debt, our $1,500 for every man, woman, and child alive today? Wouldn't it restore our confidence in ourselves if we, the most wealthy Nation on Earth who have demonstrated our technology in putting man on the Moon, can also demonstrate our wisdom for ourselves, not to mention our friends and adversaries throughout the world, by burning the mortgage papers taken out in the 1930's? Wouldn't it be a much truer expression of independence to ourselves, our friends, and our competitors for allegiance of the human spirit to demonstrate our true independence from want by ending this confidence game? This confidence game may not take us down this time, but is setting us up for an even bigger fall next time when there is some slack in the system. If we can get together enough to set our house in order with thisending the public debt-as our national goal, I'm sure our energy problems will be solved in the process. We thank you again for giving of your time and for coming to Santa Monica.

Senator TUNNEY. Our next witness is Pat Russell, councilwoman from Los Angeles.

Mrs. SEIDENBERG. May I interrupt, Senator Tunney. I am giving two brief resolutions which will take only 2 minutes. I am wondering if I can't turn over some of my time to the other statements here, so they could finish.

Senator TUNNEY. You certainly can. You will be next and if you want to yield part of your 10 minutes to anyone, you may.

Mrs. RUSSELL. Thank you, Mr. Tunney and Mr. Stevens for coming to southern California and having a meeting on this important issue with us this morning.

I am here as Councilwoman to the Sixth District and I represent an area with more coastline than any other person of Los Angeles, running from Santa Monica to El Segundo. I represent people with obvious stakes in the offshore leasing. I represent the Los Angeles City Council, which unanimously passed a resolution which calls on the Federal Government to delay the leasing until the coastal commission has completed its plan for the coastal area.

I am proud to represent a whole collection of southern California cities who have developed a recent statement, again opposing the granting of leases until after the plans have been completed for the coastal area.

Finally, I represent Mayor Tom Bradley this morning, who deeply regrets he could not be here himself to address you. As president of the National League of Cities, he has gone to Chicago today to preside over an extraordinary session they are holding today.

Because I have worked at all of these levels and also have worked with the mayor, I will present his statement which I would be glad to present as my own.

46 037--75-2

There can be no question that we as a Nation must rapidly reduce our dependence on foreign energy resources and in the short term, this will entail increased extraction of domestic fossil fuel deposits.

At one time, last December, we found ourselves facing an apparent deficit in the ability to supply electrical power of more than one-third the anticipated annual demand. This was a result of our dependence on Middle East resources for half of the oil we thought we would need to meet the demand.

Today, the remarkable conservation efforts of our citizens, business, and industry have eased the crisis. We reached the point of 17-percent reduction in energy use in the city through voluntary methods. We still must establish reasonably assured supplies in the long term. An essential factor in achieving the assurance is that future needs are supplied by domestic sources.

Especially in the charged atmosphere of compelled necessity, we should take care to avoid the irreparable damage and loss of limited resources which would result from a hasty reaction.

As you know, the industry at the invitation of the Secretary of the Interior, is selecting areas for leasing scheduled to occur in the spring of next year. These preparations are proceeding under the same law modified only by administrative regulations as that which permitted the tragedy of the Santa Barbara oil spill of 1969.

We may be moving ahead today with greater haste. I think more alarming is the greatly increased geographic scale of the administration-proposed leasing program. Here in southern California, the oil industry was taken by surprise at the Secretary's original invitation for nomination within the 7.7 million acre area off Los Angeles. This has subsequently been reduced to a primary area of 1.6 million acres, most of which are adjacent to the coastal area.

To move so rapidly to exploit so great an area with little concrete information concerning consequent environmental impacts, drilling technology in relation to the local circumstances, oil spill containment and cleanup capability, the relative priorities for the several national OCS areas, the alternative sources of energy, the Federal and State coastal management plans, it would be to play fast and loose with a natural resource of immense demonstrated value to all the people of this Nation.

For instance, it is regrettable that the vital work of your National Ocean Policy Study to articulate Federal policy concerning appropriate use of the ocean and of mineral and energy resources beneath the ocean floor will not have been completed prior to such a sweeping and irreversible commitment.

It is further regrettable that the national policy framework cannot be adequately formed and considered within the time schedule for leasing laid by the Department of the Interior.

Finally, at the Federal level, it would be a grave error to proceed with the commitments under a law conceived and enacted during a period of national ignorance to the implementation of limited resource supplies and period of headlong postwar expansion and development. I urge you in the Congress to take strong action to assure further extraction from the Outer Continental Shelf will be subject to carefully considered constraints to be incorporated as an amendment to

the Outer Continental Shelf Lands Act of 1953 before the Congress and to be reintroduced in the coming session.

Such amendment must be developed with utmost concern for environmental hazards and resource recovery. We must establish national priorities for exploitation based on weighing of relative hazards, as well as hazards within each area.

Although offshore oil recovery may be more environmentally acceptable than onshore shale mines, for instance, this should not lessen the resolve to give the project close scrutiny. Technical information is incomplete. Oilspill containment and cleanup capabilities are subject to controversy as to their adequacy.

Information must be supplied before any contractual commitment is made. Government credibility and management resources are emerging as a major issue.

Some of the legislative amendments proposed contain congressional guidelines and criteria which will constrain the procedures of the Secretary of Interior in the administration of the program. Events of years passed since the enactment of the 1953 law seem to indicate the need for more accountability, even if it means less administrative efficiency.

It is clearly the responsibility of the Congress to balance the executive authority. Here at the State level, we need to point out the concerns of Californians for the future of the California coastline. The passage of the California Coastal Zone Act indicates the will of our people to assure continuation of the extraordinary benefits of the great resources to present and future generations.

Recreational use includes not only beaches and coastal lands, the environment, but pleasure boating and commercial marine operations of every description.

A matter of particular concern is the future of the channel islands of the Outer Continental Shelf. The potential of these islands as a resource to the burgeoning recreational needs remains largely untapped.

They are, of course, under the jurisdiction of the coastal commission but are far enough at sea to be separated by a strip of ocean under Federal jurisdiction.

The channel islands are a part of life in southern California, though they are in danger of being isolated by a river of development operations between them and the mainland.

To anticipate such emerging factors as this, to weigh alternative development and conservation proposals and to laydown policies which would guarantee all Americans and their descendants the full benefit and experience of the remarkable resources, the coastal zone management commission plans to develop a plan to be submitted to the legislature in 1976. Preparation of the plan is proceeding. The development of offshore oil deposits would be likely to impact on the planning jurisdiction and will be included in the commission recommendation. Mr. Chairman, I would like to give you our recommendations which are two: I urge you, the U.S. Congress, to suspend any Federal action to grant new leases in this area pending completion and adoption of the California coastal zone conservation plan and, second, to increase Federal funding assistance to the commission under the Federal Coastal Zone Management Act of 1972.

Thank you very much.