Office of Emergency Preparedness - New Dimensions of Civil Emergency Preparedness, 1969 - 1973: A Report to the President

l{ew Dilnelrsiolt$ of

SIUIt ElUlEROEIIGY

PREPARED}IE$$

1969-1973

A Report to the President

EXECUTIVE

()FFICE t)F

t)FFICE ()F

EMERGENCY

THE PRESIDENT

PREPAREDN ESS

New Dimensions of

CIVIT EMEBGENCY PREPAREDNESS

r969-r973

A BEPORT TO THE PBESIDETUT

EXECUTIVE OFFICE t)F THE PRESIDENT

OFFICE ()F EMERGENCY PREPAREDNESS

WASHINGTON, D.C.

January 20, 1973

By

George A. Lincoln

0irector

EXECUTIVE OFFICE OF THE PRESIDENTOrrlce oF EMERGENCY PnEpEREOTESS

WASHINGTON, D.C. 2O5OT

OFFICEOF THE DTRECTOR

.

January 20, L973

The PresidentThe l^Ihite House ,

I{ashington, D. C.

Dear Mr, Presideut:

I constder 1t approprlate, on completLon of four years'servLce as DLrectot of your 0fftce of EmergencyPreparedness, to render a brief report on my stewardship.

These have been four challetging, eventful and rewardLngyears. Very signlflcant changes have occurred duringthose years ln 0EPrs mLsstons, priorlties, organizationand management. The report that follows htghltghts thechanges 1n direction, the problens encountered, and theaccompLishments during the perlod of my service.

Our progress and successes are directly a product of theleadership and unflagging support whLch you have gLven me.I am confldent that you wtlL continue that leadershlp andsupport for governmentwLde efforts ln the field of clvilemergency preparedness.

RespectfulLy,

A,Direc

q,$*htor

Enclosure

CONTENTS

Letter of Transmittal . .

INTRODUCTION

I. NEW DIRECTIONS AND NEW CONCEPTS

tr. ORGAI.IIZATION AND MANAGEMENT .

Organizational DevelopmentsThe National OfficeThe Regional Structure.... ......Funding and Staffing Levels

Program Planning and ManagementFederal Agency Emergency Assignments . . . .

OEP Leadership and Coordii'rating Role . -.:..'Use of Interagency and NonCovernmental GroupsImproved Management and Decisionmaking

M. DISASTER ASSISTAT{CE AND PREPAREDNESS

Basic Guidelines for Disaster ReliefExpanded Scope of the ProgtamImproved Responsiveness to Major Disasters

Increased Emphasis on Disaster Preparedness . . .

Long-Range Rebuilding

ry. OEP AIID NATIONAL ENERGY PROBLEMS . ..

The Energy CrunchThe Oil Import ProgramCorrecting Short-Term ImbalancesLonger-Term Concerns. .

V. RESOURCE CRISIS MANAGEMENT

Fuel and Energy Crises

Transportation Crises

Benefits for Emergency Readiness . .

Page

iii

1

7

710l2t2t2t415

16

l7

t718

19

2t23

24

2425

2626

28

283132

vI. MANAGING THE WAGE-PRICE FREEZE

OrganizationAdministrative Management . . ..:i. . .

Policy GuidanceExceptions and Exemptions .

Compliance and EnforcementInforming the PublicTransition to Phase IIOverall Assessment

uI. INDUSTRIAL PREPAREDNESS FORNATIONAL EMERGENCIES

Page

33

34

Productive Capacity for NationalMaintenance of the Mobilization

SecurityBase

35

353636363737

39

40404t42

46

46474748

484849494950

5l

52

525253

55

Priorities and Allocations .

The Strategic Stockpile . . .

WII. C,OVERNMENT PREPAREDNESS FOREMERGENCY OPERATIONS

Civil Defense PolicyContinuity of Government . .

Resource Management . ...Health and Manpower Resotrces . . .

The Resource Management Structure . . .

Economic Stabilization ...The National Defense Executive ReserveParticipation in International Planning

NATO Civil Preparedness ActivitiesCommittee on the Challenges of Modern Society

Review and Evaluation of Preparedness Efforts

x. ANALYTICAL AND COMPUTATIONAL SUPPORT

Technical DevelopmentsApplication to Economic and Resource ProblemsData Acquisition and Management

CONCLUDING OBSERVATIONS

ILLUSTRATIONS

Figures

1-

a

3-

Tables

l-.'l

Office

Office

Crisis

of Emergency Preparedness

of Emergency Preparedness

(Organization Chart).

Regions

Page

8

lt

29Management Situations

OEP Funding and Staffing Levels, FY 1969 - FY 1974.

Summary of Government Inventories of Strategic andCritical Materials as of September 30, 1972.

t3

44

ul

INTRODUCTION

This report highlights the progress which has been made in civil emergency

preparedness from January 1969 to January 1973 - the four-year period of my

service as Director of the President's Office of Emergency Preparedness (OEP). Itcoyers the Agency's basic missions, encompassing a wide range of activities. Althoughdiverse, they are interlocking and mutually supporting, and have as their centralpgrpose the planning, direction, ffid coordination, on the President's behalf, of the

capabilities of the many Federal departments and agencies in dealing withemergencies.

These four years have produced significant improvements in readiness and

capability to respond to various emergencies, extending from natural disasters and

resource crises, to the ultimate of nuclear war. Higlrlights of these accomplishments

are:

o We developed a broader perspective and a versatile but integrated

approach to the total range of problems for which preparedness and

responsive performance in emergencies are essential.

o OEP, with the wholehearted cooperation and support of other Federal

agencies, became an improved staff instrument for dealing with the civilaspects of a broad spectrum of emergencies that affect or threaten toaffect our national strength and security.

o Within OEP itself, we strengthened our organization by a closer

integration of program activities, by furthering decentralization ofexecution, by making better use of our resources, and by drawing on

the Federal family, State and local governments, and non€overnmentalgroups for assistance in carrying out the Agency's responsibilities forquick response to emergencies and for improving the Government's

preparedness posture.

o We have gone to a l0-region field structure, moved our Regional Offices

to the Federal Regionat Council cities, and established interagency Field

Boards in the OEP Regions, all of which steps improved our ability todeal with emergencies.

o The President's disaster assistance progrilm was broadened in coverage

and greatly improved in responsiveness, with increasing attention tohelping people and with a growing focus on preparedness measures tomitigate the effects of natural disasters.

. We implemented your assignment to me of policy responsibility for theoil import program, a task which has also required oEP to make an

increasingly significant contribution to studies and other efforts to deal

with the country's serious eneryy problems.

o In conjunction with other Federal departments and agencies, OEP

responded effectively to recurring resource-crisis situations - power

deficiencies, fuel supply problems, transportation disruptions, and other

actual or potential domestic economic crises. Through this resource crisis

management, we obtained valuable experienOe and techniques and

developed doctrine which have been embedded into the structures and

operations contemplated for activation and expansion to meet the

challenge of possible war emergencies.

. OEP administered the 90-day wage-price freeze, under the policyguidance of the Cost of Living Council, relying on a large number ofother Federal agencies to disseminate information, provide technicalassistance, monitor progress, and enforce compliance with the fteeze.

OEP's role in managing the freeze is a dramatic illustration of thepayoff that can come from advanced planning for emergencies and fromhaving in being the essential elements of a flexible organization able todraw on the capabilities of many agencies of the Federal Government.

o We developed and helped to ensure the implementation of n'ational

policies looking toward an adequate supply of basic materials, industrial

equipment, and of plant capacity to meet projected national security

requirements.

. We have made very substantial plogress in carrylng out ourresponsibilities for ensuring the preservation of govemment leadership,

authority, and operational capabilities in emergencies. We have inreadiness the nuclei of structures, prograns, and procedures to provide a

functioning government, support the Nation's defense effort, and sustain

its economy under any foreseeable conditions of future warfare. Our

emergency plans and programs have been subjected to continuing reviews,

tests, and exercises. And we have moved ahead in joint planning withthe North Atlantic Treaty Organization and with Canada to ensure

necessary international cooperation in emergencies.

. OEP enhanced very substantially its analytical and computer capabilities

in support of all program activities.

Though not singled out for separate treatment in this report, general

administrative support, Congressional liaison, public information, and legal advisory

seryices similarly run through all OEP programs and have been crucial to the success

of these programs.

From, the foregoing highlights and from the fuller discussion that follows, Ibelieve it is evident that OEP and all Federal departments and agencies holdingExecutive order delegations of emergency preparedness responsibilities have

accomplished a great deal over the past four years. A sound basis has beenestablished for further prcgress in providing improved civil emergency preparedness.

I

NEW DIRECTIONS AT'{D NEW CONCEPTS

My four years as Director of the Office of Emergencj, Preparedness (OEP)under your leadership brought enlarged responsibilities to the Agency and newconcepts in civil emergency preparedness.

On instructions from you, I gave highest priority initially to my role in arevitalized National Security Council (NSC) system. You also instructed me to takea positive approach to my disaster assistance responsibilities and to be "foresightedand forehanded" in dealing with problems. And you stressed the need to bolster theNation's civil emergency prepilredness.

As time went by, other tasks fell to OEP concern with the extremelycomplex and delicate oil import problem and with longer-term solutions to theNation's "energy crunch"; avoiding or easing the effects of domestic electric powerand fuel shortages .and transportation disruptions; and managing for 90 days,beginning in mid-August 1971 , a freeze on wages, prices, and rents throughout thenational economy.

Of necessity, the.se tasks, along with growing responsibilities under the Federaldisaster assistance program, also demanded priority attention. In the face of theseurgent demands and of budgetary and manpower stringencies, traditional civilemergency preparedness tasks could not be given as much attention as would beideal. These responsibilities were not neglected, however; indeed, the Nation'snonmilitary readiness posture has been greatly enhanced during the last four years.

There emerged new emphases and directions in civil emergency preparedness.Viewed separately, OEP's wide range of activities may in some cases seem to bedisparate. When seen in the light of possible emergencies and the need for Federalresource management, however, a common pattern runs through all of thesefunctions. All are concerned directly or indirectly with preparations for, or responsesto, situations that can be described as emergencies, crises or disasters. These, whensevere, are necessirily matters for Presidential attention.

Another characteristic common to most OEP functions is that the Agency's rolehas been generally one of policy and program development, coordination, andguidance. With only some 300 people on its rolls, OEP generally relies on legislativeand Presidential authorizations to direct and coordinate other departments andagencies to carry out the operational aspects of the programs for which it isresponsible. Leadership and coordination of government-wide planning for civilemergency preparedness, on behalf of the.President, was specifically placed on OEP(and its antecedents) by its organic charter, the National Security Act of 1947. Thesame concept of serving the President and easing his burdens extends to theDirector's role in disastel assistance and other crisis situations. OEP and its Director

have been charged with wide-ranging responsibilities for preparing for emergencies,mitigating the effects of natural disasters, and .helping to assure a sound resourcebase from the standpoint of national security; and they have been called upon toundertake special assignments as described below.

Thus, "civil emergency preparedness" now encompasses far more than "iivildefense" and mobilization preparedness as these terms had been previously used. Itembraces a whole gamut of nonmilitary activities necessary for preparedness andresponse of the Nation's population and economy to various contingencies includingnatural disasters and peacetime resource crises, as well as the problems traditionallyassociated with international tensions and limited or nuclear war.

From the outset I sought to promote practical and realistic approaches toOEP's preparedness and response mission. Preparedness goes well beyond planning. Ifplans are to have any value in an emergency, they must be attuned to the realitiesof day-to'day operations. Emergency preparedness must be built into Federal, State,and local governments, not as a barely tolerated appendage, but as an integral partof the governmental structures. And if the plans are to be realistic and hold outany prospect of utility in an actual emergency, they must have the support andinvolvement of "operators" - the key decision makers in govemment, communities,and industry, the very people who are best equipped to deal with the fast-moving,very specific problems that must be quickly grasped and solved

These ideas of "built-in" preparedness and- close links with operations have beenincreasingly applied to all OEP missions. Underlying OEP's active involvement incurrent resource "crisis management" problems is the recognition of the relationshipbetween emergency planning and the current, ongoing resource problems and actionsthat have an impact on the economy and can affect the Nation's ability to meetthe requirements of war.

This recognition of the need to mesh plans with current or potential resourcecrises inevitably drew OEP into the oil import, electric power, energy fuels, andother presentday problems. Hence I emphasize the importance of the dual role OEPhas had for planning and for responding in an actual resource management effort.We planned for resource lmanagement in a limited war or gerieral-war emergency;but we also acted in resource management for current or potential economicemergencies that might threaten our national well-being - in effect, a dual-purposeexecution.

The same linkage of emergency preparedness and operations applies to ourmanagement role, on behalf of the President, in natural disasters. To be zure, thedisaster assistance prcgram has little to do with national security directly; yet it hashad an important interface with OEP resource management responsibilities, andutility in promoting preparedness generally. The essentials of planning andpreparedness for emergencies (shelter, food, medical care, power, telecommunications,transportation, etc.) apply to a natural disaster as well as to a nuclear attack; andthey are the same for the national government, for States, for local govemments,

and for industry. Both situations present similar resource management problemsinvolving scarcities and many resource agencies and claimants. Taking care of thepeople in major disasters and getting the communities and the economies going againinvolve the provisioll, use, and control of scarce resources, and thus provide practicalexperience that helps to sharpen war-emergency plans. The more OEP was involvedin natural disasters, the more clearly this relationstrip emerged.

Thus, while OEP's programs are different in content, the skills and proceduresneeded for one area have often been found to be applicable to another. Thisconcept of "mutually supporting skills and procedures" has been the central focusof OEP management whether it dealt with war planning, serious domestic economicor resource crises, or major natural disasters. The Agency directed its efforts towardavoiding disasters and emergencies when possible and responding quickly andeffectively in mitigating their effects when they occurred. As a component of theExecutive Office, often holding delegations of the President's authority, OEP servesas the President's inskument in planning and in coordinating the vast resources andcapabilities of the Government to achieve an integrated response to emergencies,crises, and disasters.

This development of mutually zupporting skills and procedures applied not onlywithin OEP, but also within the large operating agencies of the Government. Headsof all departments and agencies involved were urged to give continuing and increasedemphasis to dual-use plans, procedures, and preparedness. Every opportunity was tobe taken to exercise emergency systems and to use personnel trained in emergencyproiedures. And these plans, procedures and preparedness activities were to bedirected toward a wide range of contingencies including natural disasters andshortages or disruptions of vital resources, as well as potential nuclear attacksituations. This emphasis on a dual capability of plans and programs to servepeacetime as well as wartime emergencies helped the Nation to achieve significantadvances in preparedness for both current emergencies and possible mobilization forwar sifuations.

tr

ORGANIZATION AND MANAGEMENT

Over the past four yezlrs, OEP's organization and programs were subjected tocontinuing review and adjustment in- response to your guidance, to changes in theAgency's responsibilities, and to modifications in judgments concerning nationalsecurity needs. The organizational changes made in OEP sought generally tostrengthen top level direction and control, bring related functions together, avoid

duplication, ensure a better allocation of resources to programs, and achieve

increased effectiveness in program performance. There was particular emphasis on

responsibility for response at the Regional Office level. These changes made OEP a

more productive and vital agency and enabled it to respond quickly and positivelyto crisis situations.

ORGANIZATIONAL DEVELOPMENTS

The National Office. In providing overall executive leadership for OEP, I have

shared responsibilities with the Deputy Director. The Deputy Director has provided

direction to daily operations of OEP, and has represented me in interagency

activities, particularly in disaster assistance, stockpile, and import programs. The

Deputy Director and I have drawn support from two Assistant Directors (one ofwhom also serves as General Counsel), and from Special Assistants and an Executive

Assistant.

I moved first to strengthen executive direction of OEP and to give greater

impetus to the Government's preparedness activities. An Assistant Director has

assisted me and the Deputy Director in overall supervision and direction of OEP's

planning responsibilities. To support me in my role as a statutory member of the

NSC, I assembled a small, highly professional Planning Review staff. The central role

which you immediately gave to the NSC mechanism in advising you on national

security matters gave special importance to the work of this group. The Planning

Review staff supported my participation in all NSC meetings and in carrying out myspecial institutional responsibilities in such areas as civil defense policy, continuity ofgovernment, emergency resource management, stockpile policy, and the national

security aspects of international trade. From an initial concentration on NSC

zupport, this vital staff element soon broadened its scope to encompass general

coordination of planning and programming activities within OEP.

Several other major organizational changes over the years brought extensive

realignments of functions and personnel. Figure 1 depicts the OEP National Officeorganization at the end of the calendar ..1year 1972. The more significantorganizational developments are highlighted below.

To achieve a better integration of effort in planning for the continuity and

emergency operations of Government, I established a Government Preparedness

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Office. Activities involving continuity of government, mobilization planning,operational readiness, review and evaluation of plans, and the conduct of tests andexercises were thus brought together. The n"* Government preparedness Officeprovided a better focus for planning and for the coordination of the efforts ofother agencies in the emergency preparedness field. That Office also provided staffsupport to a Health Advisor, enabling OEP to have a more effective impact on thedevelopment and coordination of emergency health and medical programs.

A number of steps were also taken to strengthen the administration of thedisaster assistance program. In view of its continued growth and increasingcomplexity, this activity was raised organizationally, in June 1971, to become theDisaster Programs Office. Within this structure, we provided coordinating andmonitoring capability for disaster relief, an organizational element devoted topreparedness, and an analytical capability focused on all disaster program problems.

An "Emergency Operations Center" was organi zed. and equipped to serve as acombined information center and command post for responding to nafural disastersand other emergencies. That Center was staffed by appropriate personnel from OEpand other Federal agencies when emergencies Oevetopea 1o u ievel requiring suchcoordinated Federal response.

Until the spring of 1970, OEP had one Assistant Director in a special category;he served also as Director of Telecommunications Management @TM)'*J ur SpecialAssistant to the President for Telecommunications. Under Reorganization plan No. Iof 1970, effective April 20, 1970, the Office of the DTM was removed from OEpand reconstituted as a new Office of Telecommunications policy (OTp) in theExecutive Office of the President. Pending this organizational decision, I stronglysupported staff augmentation for the telecommunications activity, and cooperatedItlv i, effecting the necessary transfer of fersonnel, funds, and functions to theOTP. OEP zubsequently worked closely with the OTP on emergency preparednessaspects of telecommunications systems.

A Resource Analysis Office provided staff direction and guidance in theperformance of analytical studies as a basis for the development of policy relatingto emergency preparedness. One area that has brought particularly pr.rrirg demandson OEP has been the oil and energy field. These demands gr"* oui of your specialassignment to fre, in February lg7}, of responsibility for policy direction,coordination and surveillance of the oil import progr"-, with the advice of aninteragency Oil Policy Committee under my chairmurrrt ip. The committee has beenassisted by a working Group of key members of the agencies.

To support the Director in these new responsibilities, an Oil and EnergyWorking Group was established in January 1971, ;ithin the oEp staff. The groupundertook studies to assess more definitively the impact of the oil import programon national security, and to develop policy options based on considerations ofnational security, domestic investment, and

'costs and benefits to the consumer. The

group was reconstituted as an Oil and Energy Division in the Resource AnalysisOffice in October 1972.

The oil import program inevitably involved governmental concerns with bothlong-term and current domestic energy problems. In July 1970, I was designated a

member of a newly=formed Domestic Council Sub-committee on the National Energy

Situation. And in September of the same year, you established a Joint Board on

Fuel Supply and Fuel Transport, under my chairmanstrip, to identify emergency

problems in this area and to coordinate remedial actions by Federal departments and

agencies concerned. In this work, I drew support from the Government Preparedness

staff at the National Office and from specially-constituted interagency Field Boards

for each of the Federal Regions, chaired by the respective OEP Regional Directors.

On December 15, 1972, I established a new staff position, that of Assistant tothe Director for Science and Technology. The incumbent provides the Director withinformation, advice and recommendations concerning scientific and technologicaldevelopments as they relate to the emergency preparedness functions of OEP. [naddition, he conducts studies and analyses that contribute to policy formulation.

The Regional Structure. Until mid-August lgll, OEP functioned in the fieldthrough eight Regional Offices. Staffed with specialists in emergency preparedness

and disaster assistance, these offices carried out OEP field activities with otherFederal agencies and with the States and their political subdivisions. They were

located with the regional offices of the Office of Civil Defense (later redesignated

Defense Civil Preparedness Agency), sorfe in remote locations. These Regional Officesprovided for the day-to-(ay operations of the agencies and were designed to serve as

focal points for the coordination and direction of operations in a nationaleme{gency. Consistent with policies and progrilm guidelines of the National Office,OEP Regional Directors girided and assisted Federal field agencies in their emergency

readiness efforts, and they directed and coordinated Federal disaster relief at the

field level.

Adjustments in - the OEP regional structure were made in response toAdministration efforts, beginning early in 1969, to improve the efficiency ofgovernment activity in the field. To this end, you prescribed common regional

boundaries for a number of agencies engaged in programs requiring interagency orintergovernmental cooperation. You directed the establishment of Federal Regional

Councils at uniform federal regional cities to serve as coordinating bodies and ensure

a consistent approach in dealing with Statcs and localities, with private organizations,

and with the public. In addition, you called for the placement of greater

decision-making responsibility on the field organizations.

Early in lg7l, OEP took a first step to realign its regional boundaries so as tocorrespond with the trniform system established for other agencies. Full correlationwith the uniform Federal regional structure was achieved in mid-1971, followingassignment to OEP of the responsibility for administering the wage-price freeze. Twonew regional offices were created to permit operation on a lGregion basis, and OEP

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Regional Offices were moved to the major cities where the Federal Regional

Councils were in existence, and where regional offices of other agencies were

generally located. The close association with these Councils, whose membership

included representatives of major Federal agencies, gave OEP Regional Directors a

vehicle for calling on these agencies. for support and for coordinating more

effectively Federal responses to emergency situations. Ffture 2 shows the OEP

regional botrndaries and the location of the 10 Regional offices.

Funding and Staffing Levels. Throughout the period under review, OEP

operated with a modest budget and a small staff (see Table 1). Cognizant of the

uiual criticism of expanding personnel and expenditures of Federal agencies, I have

deliberately managed my office for four years on the premise that we would find

ways to do the tasks required, without any significant expansion. Even when

burdened with managing the wage-price freeze, OEP absorbed a 5 percent cut inpersonnel (other than disaster assistance personnel) prescribed for FY 1972 under

the President's New Economic Policy.

While any precise quantitative measure is impracticable, I believe that OEP

during the past four years carried a workload vastly gfeater than in the immediatelypreceding years. There has been no significant expansion in personnel nor, taking

into account prescribed pay increases, in costs. The general approach was to "make

do" by reassigning people to the most pressing tasks, by drawing on the know-how

within and outside the Government, by emphasizing the dual use of staffs inpreparedness and crisis management operations, by enhancing OEP's analytical

capabilities, and by promoting sound management and responsive Agency

decisionmaking.

PROGRAM PLA}..{NING AI{D MANAGEIT{ENT

The size of the staff of OEP was held to a minimum by striving to maximize

the effectiveness of that staff combined with using the staffs and informationavailable in other departments and agencies. Because of the broad range ofresponsibilities and diverse programs of OEP, I drew on all participating agencies and

on non-governmental groups for advice and counsel in formulating OEP programs.

Federal Agency Emergency . Assignments. One of the basic tenets of the

National Security Act of 1947 was that emergency preparedness was a Presidential

responsibility to be carried out on a Govemment-r,ride basis. In 1962 and 1963,

President John F. Kennedy had given special force to this concept by issuing a

series of Executive Orders setting forth major emergency assignments of Federal

departments and agencies, defining their planning functions, and relating theiremergency roles to their normal missions. For the few emergency functions with no

peacetime counterpart, such as emergency information and economic stabilization,

OEP did the specific planning, including provisions for specially created agencies tocarry out these functions in an emergency.

t2

Table I

OEP FI.INDING AND STAFFING LEVELSFr 1969-FY 1974

FY

t969

1970

1971

t972

L973

t9'14

Funds for OEPSalaries and

Expenses

$4,9s0,000

5,255,000

6,019,000

6,288,000

6,404,000

6,250,000(requested)

Funds fortTelecommunicatbns

Manryement

$2,175,000

1,79s.000

Funds appropriatedto the President

for Disaster Relief

$ 45,000,000

245,000,000

90,000,000

8s,000,000

492,500,000'

100,000,000. (requested)

Funds for DefenbeMobilizationFunctbns of

Federal Agencies

$3,130,000

3,28s,000

3,360,000

3,314,000

3,47t,000

3,370,000(requested)

Total OEP Personnel3

290 (+ 50 for Telecom)

291 (+ 63 for Telecom)

309

315

326

326 (requested)

I OEP's Telecommunication functions had been separately budgeted since FY 1966. These functions werereasigned to new OTP in the Executive Of.fice of the President, by Reorganization plan No. I of 1970,effective April 20, 1970.

2 Does not incfude a $100,000,000 supplemental request before C-ongress at time of printing.

3 Does not include seven positions financed by funds received from other agencies.

Source: OEP Budget and Fiscal DMsion

13

On my recommendation, you signed an omnibus Executive Order in lateOctober 1969, which reemphasized and strengthened the assignments of emergencypreparedness responsibflities to Federal departments and agencies. This ExecutiveOrder consolidated and updated 2l previous orders to reflect many organizationalchanges in the Government, such as the establishment of the Department of Housingand Urban Development and of the Department of Transportation, since the earlierassignments of planning responsibility. By this Order you vested 32 Federal agencieswith primary and support responsibilities for the major emergency preparednessactivities of the Government. It is especially significant to note that Section 102 (c)of the Order specifically directs the heads of departments and agencies to "giveappropriate consideration to emergency preparedness factors in the conduct of theregular functions of their agencies..."

This Executive Order marked a significant step in clarifying and modifying theemergency preparedness functions of the Executive Branch. Eight departments andagencies (the Departments of Agriculture, Commerce, Health, Education and Welfare,Interior, Labor, Transportation, and Treasury and the Interstate CommerceCommission) required special funding to implement their preparedness assignments;and this has been provided through a special "Defense Mobilization" appropriationto OEP, which has then allocated the appropriated funds to the respective agencies.

OEP Leaderstrip and Coordinating Role. OEP's role as the central point ofleadenhip and coordination on behalf of the President in the area of civilemergency preparedness had been set forth in Executive Order 11051 of September27, 1962, which prescribed the Agency's responsibilities. The Presidential assignmentsof emergency preparedness functions to Federal departments and agencies, broughttogether in Executive Order ll490, made explicit the requirement that the"continuity of Government activities" of these departments and agencies "shall be in'accordance with guidance provided by, and subject to evaluation by, the Director ofthe Office of Emergency Preparedness." This order further reaffirmed the Presidentialadvisory role assigned to the OEP Director. Section 103 states:

The Director of OEP . shall advise and assist the President indetermining national preparedness goals and policies for theperformance of functions under this order and in coordinating theperformance of such functions with the total nationalpreparedness program.

OEP exercised this coordinating role by guiding the agencies, establishingpriorities of effort and emphasis, reviewing the status of preparedness programs,gathering information and advice, recommending policies, and conveying Presidentialdecisions. OEP represented you in working with State governors to stimulate Stateand local participation in emergency preparedness measures. This in turn increasedconsiderably OEP's ability, particularly through its Regional Offices, to foster Stateand local capabilities for possible emergency management in support of Federalpolicies.

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Use of Interagency and NonGovernmental Groups. Many interagency and

non*ovemmental grcups helped OEP to carry out its missions. Of partiiularimportance at the national level was the Interagency Emergency Preparedness

Cornmittee (IEPC), established in October 1962 to assist in coordinating emergencypreparedness efforts of Federal agencies. Chaired by the OEP Deputy Director, IEPC

was composed of senior staff members of all departments and agencies with assigned

preparednes reqponsibilities. IEPC deliberations covered a wide range of subjects,

including "The National Plan for Emergency Preparedness," objectives and prioritiesfor the planning program, improved reporting procedures for claimancy and theemergency management of resourees, as well as full-scale presentations by memberagencies of their preparedness programs.

Each of the OEP Regions had a Regional Preparedness Committee (RPC),

chaired. by the OEP Regional Director and composed of senior regional officials ofFederal agencies with responsibilities for emergency " preparations or disaster reliefoperations. The RPCs performed at the regional level in a manner similar to thenational-level IEPC. OEP Regional Directors also participated as ad hoc members inmeetings of the Federal Regional Councils established by the President in each ofthe 10 standard Federal regions to achieve greater coordination of the services ofFederal agencies to Governors, mayors, and the public.

Another advisory body was the interagency National Council on Federal DisasterAssistance. Established by you in the spring of 1970 under the chairmanstrip of theDirector of OEP, the Council brought together senior officials from Federal agencies

with disaster assistance responsibilities or capabilities. It provided a means ofimproving coordination at the policy level, and helped to improve the total Federalresponse to disaster emergencies.

I also chaired a National Civil Defense Advisory Council, a group of State andlocal officials and private citizens, established by law, which you appointed to advise

me with respect to general and basic policy matters relating to emergencypreparedness and civil defense. At the Council's twenty-second meeting (the flrst tobe held under your Administration) on June 26, 1970, a major item for discussionwas a study of the national civil defense program which I had undertaken at yourdirection. The meeting provided another external view of the Government'spreparedness policies and programs.

In the oil and energy field, as was indicated earlier, there was significantinteragency activity at both the national and field levels. I chaired an interagencyOil Policy Committee, which met 47 times since its establishment on February 20,1970, and which provided advice on major issues in the oil impo{ field. The JointBoard on Fuel Supply and Fuel Transport, also under my chairmanstrip, providedinvaluable assistance in developing procedures and. action plans for use in coordinatedgovernment reqponses to short-term fuel and energy problems. In the RegionalOffices, Field Boards, chaired by our OEP Regional Directors and comprised ofsenior representatives of the major departments and agencies, served as field

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counterparts of the Joint Board, coordinating Federal and State activities in copingwith energy, transportation, or other resource crisis sifuations.

One non-governmental group that was of special significance was the ProgramAdvisory Committee (PAC). Composed of leaders in industry, the professions, andthe academic community, PAC had been serving since 1954 as a confidentialadvisory group. It evaluated OEP's mission and programs, srlggested new courses ofaction in civil emergency preparedness, advised on the design and techniques ofeconomic analysis, and concemed itself with other substantive problems ofnonmilitary defense.

OEP also drew on consultants with expertise in particular fields and enteredinto contracts with private organizations and research instifutions for studies onproblems within their special competence. The National Academy of Sciences, forexample, conducted a number of studies for OEP on technological and otherproblems bearing on national security and emergency preparedness. These outsidecontacts not only supplemented Government sources for necessary data and technicalexpertness, but afforded essential public narticipation in the planning process.

Improved Management and Decisionmaking. A number of significantmanagement improvements were put into effect during the past four years. Therehas been a clearer ordering of priorities so that the limited personnel resourcesavailable are focused on the most urgent tasks. To ensure that resources areproperly assigned to activities within progam areas that are central to OEP'sresponsibility, we instituted a systematic and intensive program and budget reviewprocess. This annual review assesses the requirements and contributions of all partsof the Agency, and changes in priorities or in allocation of resources are made asrequired.

Systems analysts, computers, and mathematical models have been employed toassess needs and capabilities, to develop non-military defense options, and todetermine cost-effectiveness. Through more efficient use of OEP's computer capabilityand of related techniques, OEP was able to give increased analytical support notonly to its emergency preparedness programs but also to its oil policy and disasterassistance activities.

In dealing with the OEP Regional Offices, an objective was to strengthen theirleadership and staffing. Standard organizational structures were prescribed and broadpolicy guidance was provided to all Regional Offices. At the same time, I sought todivest the National Office of excessive centralization of management. I maintainedclose contact with the Regional Directors, calling and meeting with them frequentlyfor the exchange of ideas and experience. The Regional Directors were encouragedto question traditional ways of doing things, and they were delegated as muchauthority as was practicable, eqpecially for making decisions and ensuring responsiveaction in emergencies. Among my last official acts as Director, I designated aSpecial Assistant to review assigned arqu of OEP activities, starting with anindependent review of OEP's regional programs and of the Regional Offices.

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DISASTER ASSISTANCE AI.ID PREPAREDNESS

When I assumed the directorship of OEP, there had been a long history ofFederal assistance in major natural disasters. From 1951 rthrough 1968, there hadbeen 260 Presidential declarations of major disasters; and allocations from thePresident's Disaster Relief Fund over those 18 years totaled approximately half a

billion dollars. Federal moneys had, however, been channeled primarily to the publicsector to assist State and local governments. Assistance to individual disaster victims,except in extraordinary cases, was viewed for the most part as a responsibility ofprivate relief agencies. Furthermore, only a modest start had been made towardconcem with disaster preparedness.

Early in your Administration, you stressed the need for readiness to respondeffectively when nature goes out of control and victimizes our citizens, In my fouryears at OEP, you declared a total of 111 major disasters upon myrecommendations. Presidential relief funds earmarked for these disasters in this periodtotal about a billion dollars. The program evolved rapidly, due to someextraordinarily seyere disasters, a large number of major disasters, intensiveCongressional interest translated into legislation, and basically, your concern for the

lunfortunate victims of ,tlese occurrences. The major lines along which the program hasbeen developed are: (1) a vast broadening of its scope, with greater concern for theneeds of individual disaster victims; (2) increased capabilities for prompt andeffective response when disasters do occur; and (3) a concerted drive to upgrade theNation's disaster preparedness.

Federal performance in disasters, supplementing the efforts of the State andlocal governments and of the people themselves, improved zubstantially-with newauthorities, new programs, and new techniques.

BASIC GUIDELINES FQR DISASTER RELIEF

First, there evolved from the experience in 1969 and earlier years the followingfundamental guidelines which served as the basis for legislative proposals and foradministrative actions to improve the responsiveness and effectiveness of Federalassistance:

1. Initial and primary responsibility for disaster assistance rests with local andState governments; Federal assistance is supplemental, but it should be providedquickly and effectively when authorized and appropriate.

2. The end purpose of Federal disaster assistance is to help people, and zuehassistance must be provided equitably to all.

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3. Timely action by local and State governments, assisted by the Federal

Government, serves to prevent major disasters or mitigate their effects. One example

was Operation Foresight in 1969, when expenditures of $20 million for flood dikes

and levees prevented untold human suffering and an estimated $200 million indamages.

4. Effective public information programs are needed to apprise all concerned

of the assistance available after a disaster'

5. Large-scale disasters pose unusual problems, but they also create

opportuniti.. for long-range rebuilding; and the Federal Govemment should be better

pi"pareO to assist States and local governments in this rebuilding' when such an

effort is required.

6. Regularly constituted govemmental structures should be used and reinforced

after a disaster, rather than special or littlecxercised organizations. Some 20 Federal

departments and agencies, administering more ttran 100 different programs, can

prorid" specialized forms of assistance following disasters. Disaster-caused needs can

best be met when these agencies perform emergency tasks that are similar to those

which they perform in normal circumstances.

7. It is important that there be a small central coordinating organization

functioning directly under the aegis of the President and acting on his behalf in

directing and coordinating . the departments and agencies of the Government indealing with disaster Problems.

E)(PANDED SCOPE OF TTIE PROGRAM

Several successive legislative enactments made the Federal disaster assistance

program more of a 'opeople's prcgram" reflecting the humanitarian spirit of our

Nation in times of crisis. When Hurricane Camille struck the Gulf Coast and the

Virginias in the mid-summer of 1969, new legislation came quickly. The Disaster

Relief Act of 1969, approved October 1, 1969, added new features to Federal aid

in disaster situations, especially in individual assistance.

Early the following yeff, you took the initiative to strengthen the Federal

disaster assistance program. In a special message to Congress on April 22, 1970, you

proposed legislation to make permanent some of the temporary provisions of the

1969 Act and to augment program authority. After months of close cooperation

between the Executivp and Legislative branches, Congress enacted the Disaster Relief

Act of 1970 @ublic Law 9l-606), which you signed on December 31, 1970. This

Act was comprehensive, and had no expiration date. It repealed previous disaster

laws, but continued practically all disaster relief activities authorized in these

statutes, making some more explicit and adding new provisions based on the

Government's experience with disasters. Public Law 91-606 continued the

Government's commitment to provide assistance to individual victims of disasters as

well as to States and local governments.

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During the flrst year and a half that the 1970 Act was in effect, 38 majordisasters were declared; and some, like the San Femando earthquake of February 9,1971, afforded rigorous tests of the Act's effectiveness. The Act was seen generally

as an effective tool for alleviating the hardship and suffering of disaster victims andfor administering and coordinating Federal assistance efforts.

In June 1972, Tropical Storm Agnes struck seven Southern and Eastern States.

The widespread damage caused by this disaster required Federal assistance estimatedat $2.3 billion. In the face of the Agnes floods and the unparalleled misery and

destruction which they brought to more than 500 communities and half a millionpeople, the 1970 Act no longer seemed adequate. A number of legislative changesensued.

The major piece of legislation associated with the Agnes disaster was PublicLaw 92-385, approved August 16, 1972. Ttre Act substantially liberalized the termsof disaster loans made by the Small Business Administration and the Farmers HomeAdministration. It also provided emergency assistance' for nonprofit privateeducational institutions damaged or deskoyed by the Agnes disaster, comparable toassistance already'provided for public facilities. Further, Public Law 92-385 directedthe President to conduct a thorough review of existing disaster relief legislation andproposed specific legislative changes.

Mr. Frank Carlucci, Deputy Director of the Office of Management and Budget(OMB), and I led a joint OEPOMB task force that undertook to prepare this reportfor the Congress. This task force is addressing the major disaster assistance issues.

The study is based on a wide range of field investigations of recent disasters and

special analyses. The Executive actions and new legislation that will flow from thisstudy wil, no doubt, sigrrificantly reshape the policies and management of theFederal disaster assistance program.

IMPROVED RESPONSTVENESS TO MAJOR DISASTERS

The following are among the most important of the positive steps takenOEP, in cooperation with other Federal agencies, to ensure improved responsefuture disasters:

1. National Council on Federal Disaster Assistance. To improve coordination,I proposed the formation of a council, under my chairmanship, to bring togethersenior officials from Federal agencies with disaster assistance responsibilities to advise

me on the development of a strong and responsive program. You established thisCounc-il by Executive Order 11526, dated Aprtl 22, 1970.

2. Broadened Authority of OEP Regional Directors. From the first, theRegional Directors were encouraged to move into crisis situations and to coordinatethe use of available Federal resources, without waiting for a Governor's request fora major disaster declaration. To streamline administration and operations, broaddelegations of authority and responsibility were made to the Regional Directors. At

byto

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your direction, Regional Directors have been included as ad hoc members of the

Federal Regional Councils in order to improve long-range response to large-scale

disasters.

3. Improved Field Structures. Recognizing the need for increased attention tothe individual disaster victim, OEP ridjusted its procedures to provide an effective

response to the requirements for financial assistance, housing, unemployment

assistance, and other forms of aid. After each major disaster, a Federal Coordinating

Officer (required by law), supported by a fully staffed multi-agency disaster Field

Office, coordinates all Federal disaster relief work in the field. Individual Assistance

Centers are also opened in many affected communities, so that the people in the

disaster areas can obtain at one place the services of all Federal agencies involved.

Establishment of these "one-stop" service centers and of mobile teams of experts

from various Federal agencies has become a standing procedure in OEP disaster

operations.

4. Expanded Public Information Activities. An important objectivs in major

disasters is to inform individuals of the assistance that is available and where itcould be obtained. Every appropriate means of communication has been used-radio,

TV, press, civic action groups, local agencies, churches, neighborhood volunteers-all

with one common goal-to make certain that every disaster victim receives the

assistance to which he is entitled. OEP prepares and distributes pamphlels, posfs1s,,

and signs-often bilingual-describing the aid available and procedures for obtaining it'In Pennsylvania alone, some 5 million copies of a leaflet, "Do You Need HELP?,"

were mailed to boxholders in areas affected by Tropical Storm Agnes. In the past

few years, OEP also expanded its public information coverage of advance hurricane

and flash flood warnings and other activities that have been undertaken in the area

of disaster preparedness.

5. Improved Communications Capability. An Operations Center at OEP's

National Office was established to facilitate the Federal reponse to all disaster

threats or occurrences. To ensure emergency communications support to OEP in any

emergency situation, special arrangements were made with the Department ofDefense and the General Services Administration, making maximum use of Federal

resources "in being." Continuing improvements were sought by field testing the

latest in communications capabilities and adopting those techniques best suited tothe disaster assistance Program.

6. Disaster Management Information System. OEP undertook the development

of a computeized Disaster Management Information System to provide rapid

retrieval of critical disaster records for use in the management of declared disasters

and in the review of costs and effectiveness of operations.

7. Closer Cooperation with the States. Improved procedures were developed

for continuous working relationships with State and local governments on disaster

legislation and other aspects of the program. Under the cost-sharing provisions ofpublic Law 91-606, the States, with OEP help, have been developing comprehensive

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plans and programs for State and local government assistance to individuals sufferinglosses in disasters. OEP conducted orientation and training conferences and hasreviewed State programs in light of ongoing disaster studies and new legislation. TheCouncil of State Governments and such organizations as the International CityManagement Association, the National Association of Counties, the National Leagueof Cities, and the United States Conference of Mayors have assisted in this effort.

8. Streamlined Procedures. Project application forms, guidelines and manuals,and administrative policies and procedures have been revised to simplify and speed

up the rendering of help to stricken comrnunities and individual disaster victims.Considerable effort has been .directed toward reducing delays in processing projectapplications, the time involved in final inspections, and in making cash advances andfinal payments. Regional Directors have delegated authority to staff members so as

to assure timely processing of project applications. Emergency support teams have

been established to perform damage assessinents, estimate the need for Federalassistance, and follow through to final inspection of completed work.

9. OEP-DCPA Agreement. Early in your Administration, I sought to effect a

closer relationship with the Defense Civil Preparedness Agency (DCPA) (then calledthe Office of Civil Defense) and to use its capabilities more effectively in supportof OEP's disaster and crisis management responsibilities. At your direction, aninteragency study was undertaken of the relationship between the Federal disasterassistance and civil defense activities as these related to the work of State and localgovemments in these areas. The two agency staffs worked closely together andcompleted specific agreements for using DCPA resources, under OEP guiilance, toimprove preparedness for disasters generally. Under these agreements, the DefenseCivil Preparedness Agency now provides guidance to local govemments onorganization and preparednes to meet the effects of disasters, to train localgovernment officials in disaster operations, and to provide staff augmentation toOEP's Federal Coordinating Officers when required in declared disasters.

INCREASED EMPHASIS ON DISASTER PREPAREDNESS

Early in my experience as Director, it became apparent that it is not enoughsimply to respond to disasters. More had to be done to prevent disasters, mitigatetheir effects, and be better prepared to meet the challenges of disasters that couldnot be avoided. As early as the spring of 1969, at your direction, I undertook thecoordination of a comprehensive Federal effort to prevent or reduce the effects offlood damage threatened by massive snow packs in the northern and western partsof the Nation. This effort {peration Foresight-saved lives and millions of dollars ofproperty when the floods did come. Another Operation Foresight in l97l againpointed to a high benefit-to-cost ratio for initial flood preparedness and earlyemergency actions.

-In a comprehensive report to the Congress in January 1972, we identifiedactions and additional steps that could be taken to improve the Nation's disasterpreparedness. This Disaster preparedness report analyzed the causes and effects of

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natural disasters and offered findings and potential solutions to prevent or minimize

loss of life and damage to property. Ten types of nafural disasters were coveted:

river floods, tornadoes and windstorms, hurricanes and storm surges, forest and grass

fires, earthquakes, landslides, tzunamis, volcanoes, frosts and freezes, and droughts.

Copies of the report were provided to all Federal agencies having an interest inthe findings, with the request that they keep OEP informed of actions related tothese findings so that OEP can, from time to time, provide an account of Federal

progress. The report was also sent to Govemors, key State legislators, disaster

specialists, and institutions that can further disaster preparedness in the public and

private sectors.

The findings of this comprehensive study became our blueprint for the further

development of a concerted disaster preparedness program. The following are

highlights of these efforts:

1. We improved our systems for warning of impending disasters.

Z. The Army Corps of Engineers,. the U.S. Geological Survey, the National

Oceanic and Atmospheric Administration (NOAA), and other Federal agencies are

engaged in performing vulnerability analyses and in the preparation of risk maps forvarious areas. NOAA, under contract with OEP, completed a study of probable loss

of life and damage to critical facilities in the San Francisco Bay area for a range ofearthquakes of various magnitudes. OEP subsequently organized a planning group

representing 29 Federal agencies to prepare an earthquake response plan for that

area. Concurrently, the State of California, under contract with OEP, is developing a

State response plan for the Bay area. Similar efforts are contemplated for other

high-risk areas.

3. We authorized Federal grants to States to develop disaster preparedness

plans.

4. OEP has recently formalized responsibilities for nuclear incident planning,

with the Atomic Energy Commission taking the lead operating role in such planning

by Federal agencies and in Federal assistance to State and local governments in this

field.

5. OEP has been working with the National Academy of Sciences, the

National Science Foundation, and with other agencies engaged in disaster-related

research, with a view to enhancing coordination and focusing endeavors to reduce

hazards and improve preparedness.

.6. Under a mission assignment from OEP, the Defense Civil Preparedness

Agency is assisting local governments in disaster preparedness planning. Some 270

communities in practically all 50 States are presently participating in this on-site

assistance program.

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LONG-RANGE REBUILDING

Along with advance preparations and immediate relief and recovery efforts, wehave considered what the Federal Govemment can do to assist States andcommunities with the problems of long-mnge rebuilding after major disasters. In areport to you early in 1970, I recommended, among other things, use of theFederal Regional Councils to coordinate Federal assistance in support of long-rangerecovery efforts; appropriate emphasis on environmental control and disastermitigation measures; and a coordinated effort to get necessary data for bothshort-range assistance and long-term r@overy programs. These proposals have sincebeen implemented.

The severe and widespread damage brought by the Agnes disaster compelledextensive consideration of measures for long-term recovery. While the planning andfunding machinery for long-term recovery from the Agnes disaster are fully inmotion, our current review indicates that more work must be done in this area,with increased emphasis on the roles of the State.and local governments.

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IV

OEP AND NATIONAL ENERGY PROBLEMS

The Director of OEP has had a central role in the energy field during the firstfour years of your Administration. My responsibilities have included policy direction,coordination and surveillance of the Oil Import Program with the adyice of aninteragency Oil Policy Committee; chairmanship of that Committee and of the JointBoard on Fuel Supply and Fuel Transport; membership on the Domestic CouncilSubcommittee on the National Energy Situation; and such OEP civil preparednessand emergency management and planning measures as are needed to cope withdisruption of energy supplies. Over 30 percent of my personal time has been takenup with oil and energy matters. The concern has been with broad policy matters,with the coordination of Federal efforts to identify and resolve problems, and, to alesser degree, with the day-to-day "trouble-shooting" of emergency and potentialemergency situations similar to OEP's handling of natural disasters.

THE ENERGY CRUNCH

These responsibilities have been carried out with due recognition of the extremecomplexity and the indivisibility of our energy fabric - a fabric comprised of thecombined energy sources (natural gas, coal, oil, hydro and nuclear power) woven inthe context of national security, consumer prices, foreign policy, new technologicalendeavors, and economic and environmental considerations. Pursuit of nationalobjectives in the energy field often seems to conflict head-on with equallycommendable efforts to reach national goals in other areas. Oil and energyconstifute continuing and expanding critical problems; I am deeply concerned aboutthe overall energy future of our country.

Many factors have contributed to this situation. Briefly, these relate to: thesurge in demand for electric power; changes in patterns of demand and resultingshortages of energy fuels; the growing concern over environmental degradation; thelimited nature and scope of research and development efforts; the unique problemsin both the structure and operations of the complicated energy industry; ourconsidegable and increasing dependence on insecure foreign sources of fuels; and thediffused responsibilities for establishing public policy in this field.

A major advance in the past four years has been the recognition of the needto view our expanding energy requirements as a whole, and to move in acoordinated way on many fronts if *e are to meet these requirements within areasonable time frame. Your "Clean Energy" Message of June 4, 1971, alefied theNation to the seriousness of the situation and to the urgency of pressing forwardon, programs to increase the domestic energy supply. This Office has availed itself ofevery opportunity to promote and expand the new initiatives which you projectedto provide adequate energy under acceptable arrangements for our ever-expandingeconomy.

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TI{E OIL MPORT PROGRAM

The United States has been, for the most part, a high-cost producer of oil. Ifnot controlled, imports of lower-cost oil would enter in such volume and in such

ways as to impair the national security. This situation could have made the Nationheavily and quickly dependent on insecure foreign sources of supply and thus posed

a threat to the national security. Hence, the limitation of imports by bothquantitative and qualitative restrictions is a national security prcgram. It has as itsobjective the maintenance of a healthy domestic petuoleum industry with adequate

reserves in order to avoid undue dependence on foreign sources in ways and to a

degree that would be detrimental to the national security.

Oil import controls were started on a voluntary basis in 195?. They were made

mandatory two years later following a finding by the director of a predecessor

agency of OEP (and accepted by the President) that oil imports were threatening toimpair the national security.

In March 1969, you created a Cabinet task force to conduct a comprehensivereview of the ten-year old program. The task force, of which I was privileged to be

a member, in its report of February 20, 1970, agreed, among other things, that oilimport controls continued to be vital for national security and that a newmanagement system was essential to make needed policy changes in the program. Atthat time, you charged the Director of OEP with responsibility for providingdirection, coordination and surveillance of the oil import program, with the advice

of a Cabinet-level Oil Policy Committee.

The program's national security objective is defined only in part by militarythreats and requirements; it encompasses also such vital national objectives as assured

eneryy for our economy and society and Continued freedom of action for ourforeign policy. Energy security is a component of national security.

Although pointed primarily to these broad national security considerations,which to my mind should override, when necessary, other desirable objectives, theprogrirm has taken into account other public considerations. Among these are theinterests of the consumer; the economic well-being of the oil industry; theinternational balance-of-payments situation; the legitimate interests of friendlycountries; the objective of free competition; and the need to take into accountfairness and equity toward all concerned. It is, and has been, possible to effect aconsiderable amount of reconciliation between the national security objectives of theoil import program and these other policy considerations.

The oil import program has been by far the most complex of OEP's resource

management programs. Many of the changes made since 1970 were in response torecommendations by the Cabinet task force. Some changes have been made toremove ambiguities or anomalies, such as eliminating technical barriers to importroutes from Canada and Mexico. Others have had more significant effects, notably,the imposition of formal quotas on Canadian crude oil imports, the establishment of

f

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a special quota for No. 2 oil for the East Coast,- the interim removal of controls onasphalt imports east of the Rockies, and establishment of import-for-export andheavy feedstock import'programs for the petrochemical industry

The basic premises for the oil import program have undergone major changes inrecent years. These include the cartelization of most'of the oil exporting countries,the transition of the U.S. to an oil and energy deficient country,

-the severe

balanc+of-payments situation, and the rapid awakening of our Nation to our severeenergy problems in the future. I have attempted to manage the Oil Import Programin a direction which meshes with the overall energy program now developing andthe greatly increased emergency energy capability illustrated by the tight fuelsituation this winter - which our country will need.

It does not appear that we can avoid increasing our dependence on foreignsources in the short term. For the mid-term and longer-term future, however, wemust continue our present efforts and adopt new measures to limit and tailor thatdependency to a level and pattern consistent with the needs of our nationalsecurity.

CORRECTING SHORT-TERM IMBALANCES

As will be indicated more fully in Section V, power deficiencies and fuelsupply problems have been matters of continuing concem and have led to recurringcrises. The Joint Board on Fuel Supply and Fuel Transport at the national level andthe interagency Field Boards at the regional level have been established to help meetthese problems and have served as instrumentalities of the Federal Government inresource crisis management. Since the creation of the Joint Board, under my

. chairmanship, in September 1970, the member agencies have worked intensively withthe electric power, fuel, and transportation industries and with State and localgovernments to prevent or alleviate the impact of anticipated or actual fuel orenergy shortages, particularly in high use and peak load periods.

IONGER-TERM CONCERNS

Shortly after you charged me with responsibility for the Oi1 Import Program,with the advice of the Oil Policy Committee, I became convinced that tha! programwas incapable alone of meeting the developing energy situation facing our country. Irecommended that a much more systematic, positive effort be undertaken. TheDomestic Council's Energy Subcommittee did initiate analyses of the total energyproblem for the first time in our country's history. Your Clean Energy Message ofJund 4, 1971, followed. That Subcommittee has continued to study the overallenergy situation and future problems.

Your Energy Message was designed to accelerate the Nation's efforts to headoff the impending energy crisis. In this message, you directed that oil and gas leaseson the Outer Continental Shelf be granted; emphasized commercial production ofshal-e oil and gasification of coal; stressed eneryy conservation; provided for an

26

accelerated breeder reactor program as part of the means for assuring an adequatesupply of clean energy in the future; and called for enactment of legislation bywhich an "Energy Administration" would be established within a Department ofNatural Resources. This message represented a major step toward a coordinatednational energy policy.

Although our long-term capabilities are reasonably encouraging, we can

anticipate severe problems in the near- and mid-term in all forms of energy. We are

dealing here with long lead-times: it takes three to seven years to discover anddevelop oil and gas fields; two to five years to open new coal mines; and up toten years to make nuclear power generating plants operational.

Your Clean Energy Message announced steps toward making the energy gap

acceptable and manageable in the long term. We must move rapidly along thatcourse, harmonizing our environmental and energy programs and designing a betternational management of both our energy supply and our energy demand.

The management of energy demand has received minimal attention untilrecently. As one effort to deal with this problem, we recently published an

interagency study which identified many possible alternative measures that mightserve to induce energy conservation in the four major consuming sectorstransportation, residential/commercial, industry, and utilities. A second studyexamined the possibilities for substitution of our one abundant energy resource --

coal - for scarcer eneryy sources.

Energy conservation, however, cannot be a substitute for developing new sourcesof eneryy supplies. This will take the combined efforts of both the public andprivate sdctors of the economy. Throughout the Executive Branch and among thepublic generally, there is an increasing recognition of the seriousness of the energycrisis. Energy policy is in the same magnitude of importance as, and overlaps with,national security and foreign policy. Time is running out on our ability to prepareto meet safely the future energy needs of this Nation.

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v

RESOURCE CRISIS MA}.IAGEMENT

On a number of occasions in. r.pcent years, the Federal Government has been

confronted with resource crisis situdiions where actual or impending shortages ofessential resources or disruptions of essential services threatened the Nation'swell-being or security. Power deficiencies, fuel supply problems, and transportationand coal strikes, particularly, brought OEP into what has come to be termed "crisismanagement" (See Figure 3). In this area, OEP has acted in a special leadership rolefor the President in coordinating Federal activities at the national and regional levels,

in informationgathering and problem analysis, and in the initiation of promptactions to avert or overcome shortages and direct the flow of critical resources tomost essential needs.

FI.'EL AND ENERGY CRISES

The need for Presidential staff leadership in resolving current problemsassociated with vital resources has been most pronounced in the fuel and energyfield. Responding to White House interest, OEP took the lead in developing studiesof the Nation's coal and electric power situations early in 1970. I formed andchaired an interagency committee to deal with possible fuel and eneryy shortagesanticipated in the summer of that year. The actions of that committee, togetherwith those of .industry and public utilities, played an important part in guardmg

against severe intemrptions in electric power serrice.

At the same time, OEP actively supported the Domestic Council Subcommitteeon the National Energy "Sifuation and its working $oup and subgroups. ThatSubcommittee was formed on July 30, 1970, to develop for your considerationpossible Federal actions to alleviate the acute shortage of clean fuels for theupcoming winter and to ensure an adequate fuel supply for the next five years. OnSeptember 29, 1970, the Subcommittee, with White House approval, charged OEPwith responsibility for'short-term fuel supply and fuel transport problems, while itfurned to consideration of longer-term energy policies. As indicated earlier, the JointBoard on Fuel Supply and Fuel Transport under my chairmanstrip and the FieldBoards chaired by the OEP Regional Directors served as the basic instruments forOEP and Federal agency resource activities in crisis situations.

The efforts in the summer of l97O established a pattern of response forelectric power problems in the two ensuing summers. Inadequate generation andtransmission capacity, rather than fuel supply shortages, appeared to be the majorbottleneck in those summer crises. Additional capacity expectefl from new nuclearand fossil-fueled plants had not materialized because of delays resulting fromconstruction, technical and licensing difficulties, and environmental constraints. TheJoint Board promoted extensive conservation programs by government, industry, and

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Figure 3

CRISIS MANAGEMENT SITUATIONS(In Whidt OEP Played a Coordinating or Resource Management Role)

Transportation Stoppages... ....April 1969

Transportation Stoppages (Threatened) . .December 1969

CoalShortages.. ....Jan.-Feb. 1970

Postal Stoppage .March 1970

Transportation Stoppage (Threatened) ...:. ..April 1970

Power Availability ... Summer l97O

Transportation Stoppage.... ...December l97O

Fuel Problems .. .Winter 1970-71

Organization of Petroleum Exporting Countries (OPEC)Negotiations.... ..December l97GFebruary l97l

Transportation Stoppages ... ...May & July 1971

Transportation , Stoppages (Longshoremen) on East and

West Coasts.... .... July 1971-May 1972 (lntermittent)

Stabilization of Prices, Rents, Wages, and Salaries . . . . . . .Rrg.-Nov. lgll

Coal Strike . Oct.-Nov. 1971

TransportationStoppage.... ..Jan.-Feb.1972

Power Situation . ... Summer 7972

Fuelproblems.. ..winter rg72_73

29

the public during the critical summer months. In addition, action plans were drawnand placed in readiness for implementation in the event electric power problemsbecame more acute.

The problem during the winter months was one of acfual or potential shortagesin zupply of the energy fuels, particularly natural gas, residual and distillate fuel oil,and bituminous coal. The situation required action on a wide front with thoseinvolved in fuel production, distribution and consumption. Programs for theconservation of energy were also used in responding to the recurring winter crises.

A potential fuel oil shortage in New England in the fall of 1970 and theensuing winter was the first test. It was in response to this problem that OEPactivated its first Field Board. In that instance, Government action was effective inresolving spot fuel shortages by bringing suppliers and users together, encouragingincreased production of fuel ofl, expediting movement of coal hopper cars, andimproving fuel inventories at power and utility plants. By early winter, the supplywas adequate; all known shortages were met.

From October 1 to mid-November 1971, the Joint Board monitored a coalstrike that might well have created serious fuel supply problems. The Board drewcontingency plans and assisted electric utility companies and industrial firms thatwere dangerously short of co4l. Fortunately, the Joint Board earlier had encouragedindustry to increase inventories. The improved inventories, coupled with reasonablymild weather, enabled the Nation to sustain the 444ay coal strike without majoradverse effects.

While the coal situation was thus eased, the fuel situation was tight throughoutthe l97l-72 winter season, particularly with respect to natural gas. Several interstatepipeline companies were forced to curtail deliveries to firm contractual customersafter curtailing all serrice to customers on intemrptible contracts (e.g., contractspermitting cut-off in a period of scarcity). Some gas companies denied new requestsfor service, and many local distributors placed restrictions upon sales to newcustomers. Once again, Federal action plans were prepared for implementation in theevent the sifuation worsened, and various nieasures were taken to bolster fuel andeneryy zupplies. Federal installations conserved fuels, and industrial users andconsumers received guidance in conservation practices. Appropriate adjustments weremade in'the oil import program. Rail hopper cilrs were made available in increasingnumbers for moving god, and labor-management disputes in the coal and railindustries were monitored to have advance waming of possible intemrptions ofessential supplies and services. The Joint Board and the Field Boards againstimulated action to build inventories, facilitate movement, and conserve fuels.

The approach of the 1972-73 winter season again found OEP and the JointBoard in a fuel crisis situation. Early in September 1972, the Working Group of theJoint' Board began an analysis of the fuel situation for the upcoming winter season;and on November 16th, the Joint Board issued its appraisal of the situation andurged industry to increase its production of distillates to insure adequate supply

30

during the winter. That late fall and early winter were periods of severe weatherand low temperatures, particularly in the Midwest.

These conditions created a combination of factors which aggravated an alreadytight fuel situation. Intemrptible natural gas customers experienced earlyintemrptions, which placed great pressure on the altemate fuels, propane and heatingoil. The demand for propane for crop drying was at an unprecedented level,particularly in the States of Illinois, Indiana, Iowa, Ohio and Nebraska. Normally thecrops would have been dried with natural gas, but the harvest was late and wet,and crop drying did not get under way until after the supply of gas had beenintemrpted.

OEP and the Joint Board monitored the supply situation. The EmergencyOperations Center at OEP headquarters was manned beginning December 12, 1972,for the duration of the shortage, OEP also kept watch on a threatened strikeagainst the Penn Central Railroad which carries one-fifth of the Nation's generalfreight and fuels. The Department of Agriculture, the Department of the Interior,the Federal Power Commission, the Department of Transportation and the InterstateCommerce Commission were particularly active in attempting to resolve distributionand transportation problems. Oil import quotas were again eased to add to thepetroleum supply and make No. 2 heatrng oil more generally available during theremainder of the winter. OEP and other agencies repeatedly urged the refineries tomaximize the production of distillates. Pipeline firms were encouraged to increasethe movement of critical fuels, such as propane gas, needed for grain drying in theMidwest. Industries were urged to examine their capabilities to cpnvert to fuels thatwere more generally available. In addition, OEP encouraged State and local officialsto implement strong eneryy conservation measures.

TRANSPORTATION CRISES

Transportation, of course, comes into play in coping with fuel shortages, naturaldisasters, and other crises. Indeed, transportation is a particularly sensitive areabecause transportation stoppages, unlike stoppages in most industries, tend quickly tohave cumulative effects on commerce, public life, and the national security whichcould be ruinous. Labor-management disputes in the transportation industry,therefore, received particularly- close attention in OEP for possible implications forthe national well-being and security.

Rail strikes and strike threats occurred in April and December 1969, in Apriland December 1970, and in May and July 1971. On each occasion, the deterioratingsituation triggered concerted efforts by OEP and other Federal agencies to avoid orminimize disruptions. Executive orders were drawn to authorize the Secretary ofTransportation, under policy guidance from OEPI to exercise central direction in theuse of priorities to apportion remaining available transportation among essential users.Movement priority lists were developed to guide this allocation process. In the mostcritical of these strike sifuations, OEP's Emergency Operations Center and several ofthe Regional Offices were manned round-the<1ock, with the assistance of expert

31

personnel detailed from the other agencies. In connection with a strike on 10

iailroads between July 16 and August 2, 1971, OEP applied computerized techniques

for the rapid collection of data and analysis of economic impacts, and submitted

daily reports to the White House. In all these transportation disruption situations,

the Regional Field Boards performed most effectively in spotting and alleviating

critical supply shortages.

BENEFITS FOR EXVTERGENCY READINESS

These activities have direct parallels with resource management strategy planned

for war emergencies. In both types of situations, full reliance is placed upon existing

departments and agencies to carry out their designated tasks to the extent possible

under their own authorities and responsibilities. Agency activities are coordinated

through national and regional boards. Further, industry and local authorities

undertake preventive and corrective measures without undue Federal involvement or

interference

As a rezult of these crisis management efforts, OEP and all agencies concerned

now have greatly improved action plans -- for fuel and energy problems, power

conservation, intemrptions to transportation, and petroleum contingencies' These

plans, supported by necessary enabling and implementing doqrments, are being used

io update- and improve operational plans in all resource areas. Through their concern

with current problems, OEP and other agencies' planning staffs have been

contributing substantially to the solution of problems actually facing us today. Their

efforts in dealing with these resoufce contingencies help to develop and test

preparedness plans and resource allocation programs. This crisis management activity

ihrri ,"*., to improve preparedness to meet the needs of resource management in

wartime emergencies.

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VI

MAI\AGING TIIE WAGE.PRICE FREEZE

on August 15, lg7l, you announced a "New Economic Policy" acomprehensive program of measures designed to bring inflation under conhol,stimulate the economy, and correct the acute disequilibrium that had developed inthe Nation's intemational economic position, Included in ttris program was aprovision for a 9Gday wage-price freeze as a necessary first step to curb thepersistent inflation and to buy time during which a longer-term and more flexiblepolicy for reasonable wage and price behavior would be worked out.

In prescribing the 90day freeze, you set. down several guiding principles: wewould move toward a greater stability of wages and prices, but we would do thiswithout fastening a permanent strait jacket of controls on the Nation and withoutcreating a huge bureaucracy. These principles prompted the establishment of theinteragency .Cost of Living Council (CLC) under the chairmanstrip of the Secretaryof the Treasury; the designation of OEP as the central inskument to administer thefreeze; and extensive reliance upon the coordinated teamwork of existing Federaldepartments and agencies.

For those 90 days the overriding objective of OEP was to make the wage-pricefreeze work. [n addition to being a member of the CLC in a policy formulationposition, I also had formal instructions giving me the responsibility and theauthority for implementing, administering, monitoring, and enforcing the stabilizationof prices, rents, wages and salaries. oEP management of the freeze involved:

1. Providing overall management and direction from Washington for theoperations based there and for field operations, generally through lO RegionalOffices. These were to work in cooperation with 360 local offices of the InternalRevenue Service (IRS) and 2,819 local offices of the Agricultural Stabilization andconservation service (ASCS) of the Department of Agriculture.

. 2. Developing, in conjunction with other agencies, critical policy questions andissues and suggesting to the cLC the answers to these questions and issues.

3' Responding to queries at both the national and local levels on theapplication and interpretation of policy.

4. Ensuring, through the OEpassistance of IRS, that there wascompliance when neeessary.

network of Regional Offices and with thecompliance with the freeze, and enforcing

5' Receiving and considering requests for exceptions and exemptions.

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6. Keeping the public fully and promptly informed of the freeze policies and

procedures and of the decisions and guidelines iszued in response to questions raised,

and gaining general public understanding and acceptance of the progfam.

7. Monitoring the progress of the program, determining how well and how

rapidly requests for exceptions and exemptions were being processed and how

promptly inquiries were being answered, and maintaining a full record of these

activities for analysis and formal reporting.

8. Collaborating with other Federal agencies in planning the post-freeze policy

and procedures and gving advice and assistance to the Council in this regard-

On very short notice OEP reordered its priorities and assumed its new

responsibilities. There was no lead time to organize the operation fully before the

nooO of queries descended upon the OEP National and Regional Offices. Yet, withina few days, OEP had in place a functioning nationwide administrative, information,

and compliance network.

Some measure of the management challenge facing OEP can be obtained from

the volume of actions involved in the administration of the freeze. More than one

million public inquiries were handled - just over 10,000 per day on the average.

Some Sb,OOO letters were answered in the OEP National and Regional Offices.

Nearly 46,000 reports of alleged violations were received, and about 5,500 letters

concerned with exceptions and exemptions were considered. Its time-tested capability

for rapid response to demestic resource crises and natural disasters and its smooth

interaction with other agencies and effective cofilmunication with the public on these

matters all stood OEP in good stead in meeting the challenge'

ORGANIZATION

At the beginning of the freeze, OEP had about 240 people in its National

Office and 70 people in its eight Regional Offices. The National Office staff was

immediately doubled, and the field staff was expanded sixfold, by borrowing

personnel from more than 40 other Federal agencies. The response to the demands

of the freeze was made possible in large part by the extensive assistance of the

General Services Administration and the Civil Service Commission, and by the

wholehearted cooperation of other Federal Agencies in lending highly qualified

personnel to OEP.

The eight OEP Regional Offices were informed of their new mission on the

evening of August 15, and were directed to move the following day from their

dispersed locations to the Uniform Federal Regional Council Cities. At the same

time, two new Regional Offices were established so that the OEP field organization

conformed to the 10 Federal Regions. These OEP Regional Offices formed the field

nuclei of the nationwide administrative, information, and compliance network.

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The substantial reliance on borrowed professional Federal personnel and onexisting organizational resources was a decision taken deliberately in view of therequirement for immediate response, the temporary nature of the freeze, and thedesire to avoid building an unnecessary bureaucracy. The professionalisrn of thepersonnel, from the beginning of operations, made a central contribution tosuccessful management of the freeze.

OEP used to a significant degree the emergency organization across the FederalGovernment - personnel, coordination, and liaison arrangements which it isaccustomed to calling upon in fulfilling many of its day-today functions. Thisincludes the use of the procedures and techniques of disaster assistance coordinationand other crisis management experience, as well as the specific resources, such asthe oEP operations center, already in being for these purposes.

ADMINISTRATTVE MANAGEMENT

OEP's freeze responsibilities generated a major requirement for a greagyincreased volume of rapid communications, particularly between the National Officeand the Regional Offices. Upon the Regional Offices fell a great part of the burdenof achieving effective communication with the public. Shortages of co**rrnicationsfacilities, encountered during the initial days of the freeze, were soon overcome.

The freeze further emphasized the need for the immediate establishment of astrong link between headquarters and field offices in freeze operations. This was theessential function of the Operations Center at OEP headqurrt".r. The OperationsCenter functioned occasionally around-the-clock but generally on a two-shift basis,receiving inquiries; reviewing, processing, and distributing them to headquarters staffdivisions and other govemment agencies; furnishing information and decisions to thefield offices; and following through to ensure prompt action.

Another management device for achieving coordination was the dailyCoordination Meeting of key officials from all participating elements of the OEpNational Office. Chaired by an Assistant Director, these meetings served as a focalpoint for intra-agency contact. They helped to keep the program coherent and onthe track. Early institution of this coordinating mechanism contributed notably toOEP's effectiveness in the administration of the freeze.

POLICY GUIDANCE

The success of the Phase I operations depended in no srnall measure on thetimely and effective formulation, dissemination, and interpretation of policy. In thefirst few days of the freeze, the urgent need for guidance *"s *"t, in part, bygiving wide publicity to standard answers to the most common questions. It becameapparent that there would be a need quickly to disseminate policy decisions andguidelines to the field. A looseleaf manual which could be updated immediately asthe Cost of Living Council made its rulings was the most appropriate way to meetthis need.

35

The core of this Stabilization Program Guidelines manual was compiled anddistributed in the first week, and new policy issuances were added to it every fewdays. The OEP General Counsel played a vital role in the policy area, and his inputbecame all the more evident as he expanded his legal staff to the level needed toensure the legality and. consistency of proposed policy papers, answer complexinquiries, provide needed interpretatiibns, or have the issues referred to CLC forresolution.

EXCEPTIONS AND EXEMPTIONS

Only five requests for exceptions and exemptions were granted, while 3,230were denied. This stringent policy admittedly caused hardships. The difficulties,however, did not stem from the fact that particular decisions were unfair but ratherwere a reflection of a policy to put a lid on the pot that was boiling too fast andto keep the lid on for 90 days. A freeze simply precluded the latitude and dynamicadjustments that would come under a system of controls such as that planned forPhase II.

In retrospect, it would appear that most people were willing to accept personaldeprivation and even a sense of inequity if they were all in the same boat. Thefact that requests for exemptions were comparatively few may have reflected a senseof futility, but it also suggests that few firms and individuals were seriously injuredby the freeze. The Government's hard line met with a favorable response from thegeneral public. By keeping exemptions to a minimum, OEP prevented requests fromsnowballing and thus helped to ensure continued public acceptance of the freeze.

COMPLIANCE AND ENFORCEMENT

With the progmm so heavily dependent on public confidence and support, itwas especially important to ensure widespread compliance. We relied primarily onvoluntary compliance, but this was supplemented by a system for reporting andinvestigating complaints of alleged violations. Informal persuasion generally broughtviolators into line; orrly 45 cases out of approximately 46,000 complaints receivedover the three-month period were referred to the Justice Department for legalaction-

The available statistics attest to a very high degree of compliance with thefreeze. Surveys by IRS and several consumer groups uncovered some violations, butthese appeared to have been relatively minor exceptions to the general adherence tothe rules of the freeze.

INFORMING TIIE PUBLIC

. Despite some complaints aboutexemptions, public support for thefree1e. The wide public supportadministration of the freeze.

undetected violations and the firm policy onprogram remained strong to the end of the

was of prime importance in the successful

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Congressional relations were handled through telephone responses to inquiriesand dissemination of all available information to Congressional offices. OEP'sCongressional and Public 'Affairs Office arranged press and broadcast interviews withOEP officials, issued a total of 89 press releases to local and nationpl media,coordinated the activities of press officers serving at OEP's 10 Regional Offices, andworked closely with the IRS and the ASCS in providing information to the public.A press and public reception room was established to meet heavy demands for OEPand Cost of Living Council press releases and policy issuances.

A Speakers' Bureau, composed of OEP staff and members of the NationalDefense Executive Reserve, was established to meet the demand for officialspokesmen to address civic, trade, ffid professional associations. By the end of the9Gday period, the OEP National Office had arranged 95 speaking engagements, withOEP Regional Offices filling a large number of additional requests. Liaison was alsoestablished with civic, trade, and professional organizations and associations of Stateand local officials to ensure the widest possible dissemination of information on thefreeze through communications channels available to these groups.

TRANSITION TO PHASE II

Even though preoccupied with the day-today problems of administering thefreeze, OEP staffers contributed concepfual and analytical papers for consideration inthe early planning for the postfreeze stabilization program. During the later stages ofthe freeze, they devoted zubstantial effort to working with IRS, the Pay Board, thePrice Commission, and the CLC staff in preparing to shift to those agencies the-policy formulation and management responsibilities that OEP exercised during PhaseI.

Of special importance was the OEP contribution in terms of personnel, bothpermanent and detailees, who had their baptism of fire during Phase I. Thisexperience had given them all some sense of what the contol effort was about, andsome "feel" for the problems and for their resolution. With my approval, manywere detailed to the new Phase II agencies; they gave these agencies the advantageof their experience and contributed significantly to getting these organizations offthe ground.

OVERALL ASSESSMENT

The freeze had the desired effects: it checked the upward surge of prices andwages, began to dampen the inflation psychology, and afforded the Administrationthe breathing space needed to design and put in place its Phase II program.

Indices of economic activity provided evidence that the frceze had achieved itsprimary goal of reducing the rate of inflation. The Consumer Price Index (CPDshowed a dramatic slowdown in the rate of inflation. In the 3 months of thefreeze, the CPI rose only 0.4 percent, compared to the 1.0 percent in the previous3 months - a decline of more than half.

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More dramatic evidence of the role of the freeze in cracking the inflationproblem could be gleaned from the Wholesale Price Index (WPf. The WPI declinedat an annual rate of 1.3 percent from August through November 1971.

Reductions in interest rates afforded further evidence that the New EconomicPolicy during the freeze period was moving in the right direction. Further, therewere signs of improvement in economic activity.

During the freeze, OEP's capabilities to meet emergency situations were testedand proven sound. The varied skills possessed by OEP, the exceptional ability andresourcefulness of the support staff provided by the Federal departments andagencies, the adaptability of OEP's organization, its field structure and

communications capability, and its coordinating experience within the Federal familyall were important elements in making the administration of Phase I of the

economic stabilization program a success. In the final analysis, the success inadministering the freeze can be ascribed to the overwhelming zupport and continuingcooperation of the American public.

A comprehensive historical record of the management of the wage-price freezewas compiled at my direction. This history, titled Stemmins Inflation: The Office ofEmergencv Preparedness and the 90-Dav Freeze. was iecently published by the U.S.Government Printing Office.

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vII

INDUSTRIAL PREPAREDNESS FOR NATIONAL EMERGENCTES

In your state of the union Message on January 20, 1972, you said: ..strongmilitary defenses are not the enemy of peace. They are the guardians of p.".".;Without an ability to bring industrial support to an expanded military force in anemelgency, these guardians would be found deficient. A strong mobilizationcapability complements our national strategy of deterrence against attack. Thismobilization capability includes many elements, but none perhaps is more importantthan the readiness of industry to meet the needs of the Armed Forces and of thenational economy in wartime.

Four tenets have formed the frame of reference within which OEp hasdischarged its responsibilities for industrial mobilizatio4 planning:

(1) The Nation must be prepared for varying degrees of mobilizationcontingencies ranging from increased intemational tension to a general war involvingan attack upon the United States.

(2) Emergency preparedness measures must be effectively coordinated withnational economic policies and objectives.

(3) The established roles and capabilities of Federal departments and agenciesprovide the most effective basis for accomplishing mobilization readiness and civildefense activities.

(4\ A central point of leadership and coordination is needed, since emergencypreparedness involves virtually every agency of the Federal Government.

Industrial mobilization problems assumed a new urgency in recent years. Since1968, there have been downward trends in outpui and employment in theaerospace, ordnance and shipbuilding industries, as well as in the major defenseresearch facilities. Questions arose as to whether sufficient industrial .upubitity wouldexist to meet future emergency needs. This situation, together with reJuctions inbudgets, impelled a reassessment of existing policies concerning the industrial basefor mobilization.

A number of programs have been reviewed, and some have been substantiallyredesigned, to ensure that sufficient industrial capacity is available in time ofnational emergency. These programs have related to such matters as industrialpreparedness planning; the synchronization of 'war procurement plans with currentprocurement actions; the maintenance of the mobilization base; ,"liurr"" on domesticrathSr than foreigrr sources; use of government-owned facilities and equipment;contingency orders for machine tools; the administration of production and

39

distribution control. systems; and the accumulation and management of stockpiles ofstrategic and critical materials.

PRODUCTIVE CAPACITY FOR NATIONAL SECURITY

OEP has been working closely with the Department of Defense (DOD) toensure the maintenance of a viable industrial base for mobilization. We participatedin studies of the DOD Industry Advisory Council on the extent of reliance on thenormal marketplace; the adequacy of past and current mobilization base planning;the need for clearly defined mobilization requirements; the need for developmentcapability; and plans for achieving an adequate base for industrial mobilization.

The work of the Industry Advisory Council's Subcommittee on the IndustrialMobilization Base, completed in June 1971, brought forth some 40recommendations; and a steering group has since been guiding their implementation.It is anticipated that future planning with industry will be more selective, morethorough, and more realistically attuned to current procurement operations than hasbeen the case in the past.

OEP also participates in the work of the interdepartmental Industry EvaluationBoard (IEB), established by NSC directive in January 1951, to (1) identify productsand industrial services which are of exceptional importance to the national security;(2) determine the national capacity to produce the products and services thusidentified; and (3) establish the relative importance of the plants and installationsproducing such products. These objectives are realized through industrial analyses ofspecific products or of entire industrial segments. The analyses are kept up-todate,and the results are made available to the DOD and other Government agencies aswell as OEP for their mobilization and postattack planning activities. Computerprintouts derived from the IEB analyses have been deposited in OEP RegionalOffices and relocation sites for use in the event that resource management must beaccomplished independently of centralized direction.

MAINTENANCE OF THE MOBILIZATION BASE

It has long been OEP policy to support measures that tended to presewe andstrengthen the mobilization base and thus guard against potential shortages ofindustrial capacity in an emergency. In the case of jewel bearings, we considered thecontinued operation of the Government-owned William Langer plant at Rolla, NorthDakota, to be essential to the national security. Production at this plant was keptup by orders from defense suppliers, supplemented with orders for the NationalStockpile.

The machine tool "trigger order" contracts program is another case in point.Under this program, pattemed after the World War II and Korean War experience,the General Services, Administration entered into firm, standby contracts withmachine tool builders for the prompt production of a predetermined number oftools immediately upon the onset of an emergency. Upon due consideration in light

40

of the large production capacity of the machine tool industry and our large reserves

of industrial equipment, and after coordination with the agencies concerned, thisprogram was terminated in 1969. At the same time, I asked the Department ofCommerce to continue to evaluate the industry's capability to zupport all essentialprograms in any future emergency. On the recommendation of the DOD IndustryAdvisory Council's Subcommittee on the Industrial Mobilization Base in 1971, Iinitiated a thorough review of the "triger-order" type program, both in terms ofthe need for such a program and the practicability of its effective implementation.

Still another significant case relates to the requirements for miniature and

instrument precision batl bearings. The Anti-Friction Bearing ManufacturersAssociation had requested that we investigate imports, under the terms of Section232 of the Trade Expansion Act of 1962, to determine whether these bearings werebeing imported in such quantities or under such circumstances as to threaten toimpair the national security. In May 1971, I reported in the negative, butdetermined that the companies producing these items were an essential part of themslilization base and that they were facing serious economic problems. To assist inmaintaining this base, the DOD adopted a policy that all miniature and instrumentball bearings used in military procurements must be obtained, to the maximumextent practicable, from U.S. or Canadian sources. In conjunction with the Defense,

Commerce, and Labor Departments, OEP is maintaining surveillance over thecapabilities of companies producing these bearings to meet mobilization requirements.

Further, under its emergency preparedness responsibilities, OEP has guided theGovernment departments on the retention of production equipment to meetpotential mobilization needs and on the leasing of such equipment. In line withlong-established policy, OEP promoted, wherever possible, the maintenance by privateindustry, rather than the Federal Government, of an adequate capability for defense

mobilization. In the interest of maintaining Government-owned equipment in plantswhere it would be used .during a mobilization period, OEP supported proposals tolease this equipment for Government-contractor or commercial use, as well as

requests for special rental rates for particular equipment. In the absence of special

considerations, OEP prohibited the use of Government-owned production equipmentfor commercial purposes in excess of 25 percent of the time available for all uses.

Under this policy, -contractors then using Government-owned equipment forcommercial purposes could continue such use for a period of time sufficient forthem to shift production to their own equipment.

PRIORITIES AI{D ALI-OCATIONS

We have used some aspects of our industrial mobilization planning even in theabsence of declared war emergencies. This has been the case, for example, withrespect to priorities and allocations for materials required for the production ofcritical items for ongoing defense and related programs. The administration of these

priorities and allocations by the Department of Commerce is subject to OEP policyguidance and coordination.

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OEP has worked closely with the Departments of Commerce and Defense toplan for the more pervasive controls that would be required in limited or generalwar. By utilizing the priorities and allocations authorities of the Defense ProductionAct, we have helped to insure the availability of a viable system for use in wartime.It has also been used to good advantage in nonwar situations, such as thetranspoitation disruptions of December 1970 and May 1971, and the nickel shortage

.:in 1969.

The strains and stresses experienced in certain sectors of the economy aftermid-1965, with the escalation of the Vietnam conflict, were eased considerably bythe existing priorities and allocations systems. There was no need to extend thesematerials controls to the civilian sector of the economy. In a more substantialemergency, these control mechanisms can be readily expanded to accommodate anydegree of resource management required.

THE STRATEGIC STOCKPILE

Stockpiling strategic and critical materials provides another important way toenhance the Nation's mobilization capability in an emergency. As far back as 1939,but especially between 1946 and 1953, the United States acquired and maintainedreserves of certain strategic and critical materials

These materials, acquired under several statutes, are held in three principalinventories: the National Stockpile; the Supplemental Stockpile; the DefenseProduction Act inventory. Sales from any of the three inventories are made only ifthe material involved is surplus to the requirements of the stockpile objectives or ifthe President orders the release of the materials for the cofirmon defense.

The Director of OEP is authorized to determine what materials are strategicand critical, and to set the quality standards and quantities of materials to bestockpiled. These determinations are made with the assistance of a group ofinterdepartmental advisory: committees. OEP looks to the agencies involved in thesecommittees and to other interested departments and agencies for advice,recommendations, technical information, and estimates. This assistance is invaluable,but decisions concerning items to be stockpiled and at what levels rest solely witJrthe OEP Director.

The General Services Administration is responsible, under policies established bythe Director of OEP, for acquiring materials for the stockpile; for storing,maintaining, rotating, and upgrading them; and for disposing of them when theybeeome surplus. Except in cases of obsolescence, most disposals of surplus materialsmust be expressly authorized by Congress.

In exercising responsibility for stockpile policy management, I felt strongly theneed to direct all efforts to two areas of major concern. First, we must continuallystrive to improve information and analysis so as to make certain that the stockpileobjectives call for only those materials that are vital to the national security.

42

Second, where a material is no longer needed for national security, we must proceedimmediately with disposal planning. Such planning must always be based on concemfor protecting the Government from avoidable losses and for protecting producers,processors, and consumers from disruption of their usual markets.

Stockpile policy has been reviewed on numerous occasions to assure itsconsistency with national security considerations. Such studies have led periodicallyto changes in existing guidance and in levels of desired inventories. In addition, OEPhas representation 'gii, the Interagency Steering Group that is now reviewing thenational stockpile as part of a broader study by the National Commission onMaterials Policy.

To set objectives, OEP has conducted analyses of the expected supply andrequirements situation for various materials in a projected three-year emergencyperiod. Estimated requirements are developed from an economic model for theperiod based on the capacity of industry to consume and taking into accountnecessary wartime limitation, conservation and substitution measures.

At present there are 79 materials for which we have stockpile objectives. Thereserves of these materials are valued at about $6.5 billion at current market prices.Of this amount, some $2.3 billion worth is deemed excess to national securityneeds. A summary of the Government stockpile inventories as of September 30,1972, appears on Table 2.

Throughout my four years as Director of OEP, I sought to eliminateunnecessary commodities from the stockpile and thus save storage and interestcharges and, hopefully, return much of the Government's investment to theTreasury. The market value of cumulative disposal sales since the inception of thestockpile disposal program in 1958 totaled approximately $3.9 billion by the end ofFY 1972. Disposal sales and commitments in the Fiscal Years 1969-1972 have beensomewhat in excess of $1 billion.

These disposals have been made in the face of many complex problems.Specific congressional authority is required for the disposal of most items, and incases where domestic industries have objected to sales, it has been virtuallyimpossible to obtain adthorizing legislation. The need to consider possible adverseinternational effects of sales has further added to our difficulties in seeking todispose of some items.

Although it is difficult to fix precisely the overall cost of the inventories overthe years, there can be no doubt that the stockpile has been worthwhile instrengthening our defense posture and in meeting critical needs of our expandingeconomy. Presidential releases of copper and quinine, for example, met basic defenseneeds; and sales of various materials like nickel, molybdenum, and aluminum helpedus to overcome threatened shortages. The stockpiles have provided a cushion in ourefforts to meet accelerated military production schedules without significantdisruption of the civilian economy. There are opportunities for further improvement

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TABLE 2

SI]MMARY OF GOVERNMENT IIYVENTORIES OFSTRATEGIC AND CRITICAL MATERIATS

Short Tons(In Millions)

As of Septanber 3O, 1972

iTotal Stockpile Objective $4,750,535,400

(Market Value as of September 30, 1972)

A. I.

IL

Inventories Reserved for Objectives

Uncommitted Excess Inventories

Total

Total Inventories in StorageNational StockpileSupplemental StockpileDefense Production Act

Total

lnventories in Storage Resewed for Objectives

Excess lnventories in Storage

AcquisitionCost

$3,999,790,7001,381,995,400

652,499,800

$5,034,285,900

$3,s01,069,600

$2,s33,216,300

MarketValue

$4,156,905,800

2,339,753,400

$4,873,706,7001,434,80s,600

365,702,900

$6,674,215,200

$4,1s9,8ss,100

$2,s14,360,100

$6,496,660,200

B. l

u.

ilI

19.816.9

5.6

42.3

22.3

20.0

Market values are computed from prices at which similar materials are being traded; or, in the absence of curtent

kading, at an estimatb of the price which would prevail in commercial markets. Market values are unadjusted fornormal premiums and discounts relating to contained qualities, or for inherent materials.handling allowances. Marketvalues do not necessarily reflect the amount that would be realized at time of sale.

The Uncommitted Excess excludes the unshipped sales; the Inventories in Storage include quantities that have been

sold but not shipped.

Source: General Services Administration

44

and greater economies in the stockpile program; but there is no doubt in my mindthat for the past quarter cenfury, the piogram has given us low+ost protectionagainst critical - perhaps crippling - shortages of essential materials.

2'1&

45

uII

C,OVERNNIENT PREPAREDNESS FOR EMERGENCY OPERATIONS

Having the industrial , plant, equipment, and materials rieeded for defenseproduction is, of course, of fundamental importance. But these resources are only a

part of the requirement in transforming the Nation's economic system in support ofa major military effort. The late Bernard M. Baruch, Chairman of the War Industries

Board in World War I, termed zuch a major transformation "economic mobilization."Readiness for the transformation is a major component of "civil emergency

preparedness."

OEP has had the responsibility for establishing the concepts for, and planning

the execution of the changes in, organization and procedures that would result insuch a transformation of government's working arrangements.

In carrying out its guidance and coordinating role in this field, OEP has

reviewed assumptions and plans, has updated and improved programs, and has guided

and stimulated Federal, State and local emergency preparedness efforts. Althoughfunding for this effort has been austere over the past four years, we have made

significant progress in our plans and programs for civil emergency preparedness. Thefollowing discussion spotlights accomplishments in several of these areas.

CTVIL DEFENSE POLICY

Since mid-l961, the basic responsibility for developing overall national civildefense programs has been assigned to the Secretary of Defense, with the Directorof OEP having the responsibility for advising and assisting the President indetermining policy for planning, directing and coordinating the total civil defense

program.

Early in 1969, you directed me to conduct a study of this program. Thissfudy drew on the analytical talents and experience of many agencies and covered

the broad spectrum of considerations involved in the formulation of civil defensepolicy. The completed study served as the basis of your decision that the UnitedStates shall maintain the current overall level of effort in its civil defense activities.You directed further that there should be increased emphasis, within the limitationsof existing authority, on plans, procedures, and preparedness activities that may also

be applicable to peacetime emergencies.

We are placing greater reliance on improved State and local capabilities to meetemergency needs and are striving for maximum use of available facilities forprotection of the populace. As part of the concept of dual-use of resources,facilities and talent earmarked for wartime use are also being used to supportcurrent mission requirements, especially for disaster relief. In addition, to reducepeacetime costs and prevent obsolescence, the resources of some ongoing programs

46

will be shifted away from systems that would only be implemented in a wartimecrisis situation.

CONTINUITY OF C,OVERNMENT

Plans for the continuiff of government are at the core of OEP preparedness fornuclear war. In the event of a threat or of an actual nuclear attack, howeverseemingly remote this prospect may be, what becomes of our govemmental systemas now constituted is a matter of central importance. To reduce vulnerability andbetter assure continuous performance of essential functions in an emergency, theremust be preparations for providing governmental authority and executive capabilityboth at the national level and at a number of other geographic locations.

To ensure continuous government operations under threat of, during, and afteran attack, OEP over the years had guided the Federal departments and agencies inrespect to various aspects of the program. On the basis of this guidance, theseagencies established required succession authorities and provided procedures forupdating succession lists to reflect changes in key officials and organizationalarrangements. Department and agency heads made predelegations of emergencyoperating authorities to principal field operating officials. All agencies establishedprogrilms for the preservation and prepositioning of records needed for emergencyoperations. The provision of emergency operating facilities and of the necessarysupport systems was a matter of continuing attention. Furthermore, the departmentsand agencies developed emergency action plans, and updated these from time to timeto reflect changing concepts and emphases in this field.

In 1969-70, we conducted an in-depth analysis of the problems related tocontinuity of government in a nuclear environment. Out of this sfudy came newinsights and formal guidance to other agencies on the measures required to reducevulnerability and ensure the performance of essential functions in an emergency.

The new guidance places greater emphasis on improved distribution of executiveleadership, increased operational capability at the national headquarters, and greaterflexibility in the transfer of authority and direction to places where they can becarried out more effectively.

RESOURCE MANAGEMENT

Along with survival of government, our emergency planning has been directedto the need to mobilize, allocate and manage scarce resources - a task we term"resource management." In this broad context, the military requirements, howevervital they may be, constitute only a part of the total needs for which we have hadto plan and program.

Our plans for resource management deal with radically different types ofcontingencies ranging from limited war to nuclear attack on the United States andincorporate Federal field, State and local entities, as needed.

47

Health and Manpower Resources. Among the many specific resources withwhich we are concerned in our planning, the health and manpower resources areahas had special emphasis. In this area, I was ably supported by the National HealthResources Advisory Committee (NHRAC), a Presidentially appointed committee whichalso functioned as the National Advisory Committee to the Selective Service Systemon the Selection of Physicians, Dentists, and Allied Specialists.

The NHRAC, whose chairman also served as my Health Advisor, advised me ona wide range of problems in the emergency health preparedness area dealing withthe allocation, improved utilization, conservation, and administration of healthresources in a wide range of dossible and actual emergencies and crises.

OEP's Health and Manpower Division, which provides the Secretariat forNHRAC, has been monitoring the execution by the Federal agencies of theirassigned emergency medical preparedness responsibilities. It has been examining alsothe level of medical preparedness at State and local levels to meet natural disasters.

The Resoure Management Structure. Resource management in nationalemergencies includes setting production objectives, programming production,establishing priorities, and resolving conflicting claims on resources; all these lie atthe heart of the resource managers' task. The Director of OEP is responsible fordeveloping "an overall emergency system for reaching central program decisions forthe utilization of resources on the basis that he will have the responsibility formaking such central decisions in the initial period of an emergency." He also ischarged with the responsibility for developing "policies and procedures for thecoordinated application by Federal agencies, in time of emergency, of priorities,allocations, and other resource control and distribution systems (including a systemfor the rationing of consumer goods) for the conduct of approved major programs."

In implementing this planning assignment, OEP has developed plans,organization, procedures, staffing and other" arrangements for an Office of DefenseResources (ODR) to be activated in an emergency, if the President should so

determine. Exercising essentially a coordinating role, the ODR would be a

comparatively small agency. The planning for ODR is based on the principle ofusing existing agencies and institutions to the fullest extent, and of maintaining andrestoring our democratic social and economic structure as effectively and as

expeditiously as possible.

ECONOMIC STABILIZATION

Another basic need in an emergency would be to maintain confidence in publicand private financial institutions, to combat inflation, and to help provide theequitable distribution ,of items Among individual consumers. OEP's EconomicStabilization Division, in conjunction with other Federal agencies and consultantsfrcim the private sector, has developed and coordinated government plans formaintaining and stabilizing the civilian economy under emergency conditions.

48

OEP's economic stabilization planning staff assisted in preparing for the 90-dayfreeze and provided support to the subsequent stabilization programs. Now that theexisting economic stabilization structure has been modified for Phase III and variousaspects of the present operational programs are to be phased out, there will be aneed for increasing attention to planning and preparedness for stabilizationrequirements.

THE NATIONAL DEFENSE E)(ECUTTVE RESERYE

In an effort to avoid past improvisations and intolerable delays in mobilizinggovernment in emergencies, a National Defense Executive Reserve (NDER) programhas been in existence since 1956, under the authority of a 1955 amendment to theDefense Production Act. Under this program, Federal departments and agencies withmajor mobilization assignments may establish units of the Executive Reserve anddetermine the number of reservists'-needed to fiil key positions.

Candidates for membership in the NDER are referred to the Director of OEpfor approval, and OEP evaluates each unit of the program and coordinates thetraining activities for all units. Enrollees receive periodic indoctrination and trainingin their emergency tasks, and are kept informed of current agency responsibilitiesand mobilization plans.

A total complement of 4,400 Reservists was estabtshed as an interim ceiling asthe result of an intensive review of this program in lg7\. Currently there are 3,388Resenrists enrolled in 19 units sponsored by nine Federal agencies. About 80 percentof the current membership come from industry; the balance come from organizedlabor, educational institutions, trade, professional associations, and other sources. Thispool of trained reservists is unique in American experience; it is one more vitalcomponent of the Nation's preparedness for emergencies.

PARTICIPATION IN INTERNATIONAL PLANNING

Because of OEP's broad staff responsibilities for U.S. civil emergencypreparedness, the State Department relies on OEP for policy and technical guidanceand for assistance in coordinating Executive Branch participation in internationalplanning for use of non-military resources. The more significant of OEp,saccomplishments in joint planning have been within the framework of the NorthAtlantic Treaty Organization (NATO).

NATO Civil Preparedness Activities. As OEP Director, I have served as theU.S. delegate to the Senior Civil Emergency Planning Committee (SCEPC), one ofthe principal committees of the North Atlantic Council. When requested by theState Department, OEP also provided positibn papers and representatives for SCEpC'sqpecialized zubcommittees. Through this participation, OEP has helped in theformulation of alliance policies and principles for cooperative emergency use ofessential resources, and in improving organizational mechanisms andinformation-gathering and evaluation techniques. The objective has been to enable

49

NATO member governments to work better as a team in mustering the resources of

the Alliance to support their collective action in crisis and in war'

In the spring of 1969, OEP provided leadership in planning a ryA1g-seonsoredcivii-logistic exercise (CIVLOG-69) conducted simultaneously at Orlando, Florida, and

in Brussels, Belgium. Among other things, this exercise pointed up deficiencies in the

available information system which precluded effective decisions in the supply and

Iesource management fields. After the exetcise, OEP invited members of the

International Staff to study its computeiaed resource data system' In recent years'

NATO,s data base and information systems have achieved an improved capability to

serve emergency needs of the North Atlantic Council'

In addition, through its work with the senior civil Emergency Planning

Committee and the Industrial Planning Committee, OEP has helped to broaden the

scope and improve the effectiveness of NATO efforts in the entire civil emergency

preparedness field. Progress has been made in the design of a system for processing

toti military and essential civilian requirements and resource availability data as a

necessary basis for effective NATO coordination of international supply in wartime'

Regional planning within the framework of NATO has been conducted actiyely

with Canada under the provisions of the L967 U.S./Canada Agreement on Civil

Emergency Planning. under the policy direction of the u.S./canada civil Emergency

Planning Committee, of which the Director of OEP is a member, substantial progress

has been made toward achieving compatibility of U.S. and Canadian non-military

defense plans, and in developing cooperative alrangements to ensure effective mutual

assistance in the resources field "in the event of armed attack on either country in

North America."

committee on the challenges of Modern society. In April t969, on the 20th

anniversary of the signing of the North Atlantic Treaty, you declared, and the

Foreign Ministers ugr..d, - thut o'the Alliance of the west needs a special

dimension to deal with our concern for the quality ofllife in this final third of the

20th century." The committee on the challenges of Modern Society (ccMS) was

established to '..examine how to improve, in every practical way, the exchange of

views and experience among the Allied countries in the task of creating a better

environment for their societies."

At the first CCMS meeting in December 1969, I presented a proposal for a

study progfam on disaster assistance and prevention. Three projects were undertaken

early the following year flood mitigation, earthquake hazard reduction, and

impioved procedures ior coordinating disaster assistance among member nations of

the Alliance. oEP "piloted" these projects for the u.S. Government, with the active

cooperation of the i;ou"*-.rrts of Italy and Turkey- At the plenary session of the

Committee in April 1972, the Deputy Director of OEP presented the findings and

recommendations of the intemational interdisciplinary meetings of experts gathered at

a flood mitigation conference held in venice, Italy, in october l?70, and a

follow-on conference on earthquake problems, held at San Francisco, California' in

50

May 1971. The report on these meetings formally brought the study phase of thecCMs project to a close, leaving the implementation of the project'srecommendations by NATO member nations as the next step.

REVIEW AND EVALUATION OF PREPARED]{ESS EFFORTS

As part of its general coordinating responsibilities, OEP conducts periodicreviews of the preparedness programs of the Federal departments and agencies. Thesereviews, based on analyses of progress reports and on staff visits, have provided anopportunity for examining jointly with the agencies the state of their preparations inrelation to their assignments and programmed objectives. Attention was focused onthose aspects of the program that were most urgently in need of updating andimprovement.

Tests and exercises also served as an essential vehicle for determining theadequacy and effectiveness of our plans and programs. Supervised and supported byOEP, these tests and exercises at all levels of government provided a means wherebyplanned emergency programs, policies, organizations and procedures could besystematically tried out, and their adequacy and effectiveness determined. In additionto the Federal departments and agencies, States participated in exercises with a viewto both keeping their plans current and ensuring their compatibility with the plansof neighboring States.

In 1971, OEP and the Executive departments and agencies participated in anexercise, conducted by the Department of Defense, which paralleled a simulation ofa war emergency. Civilian agencies evaluated their abilities to meet Defenserequirements, exercised plans for continuity of government, and considered theproblems of resource allocations which resulted from the disruptions of nuclearattack.

OEP has also managed theNATGsponsored exercises. Thesecooperative arrangements developedfor future efforts to improve thepreparedness.

planning and conduct of the U.S. portion ofare designed to test civil wartime agencies andwithin NATO. Lessons learned become the basiseffectiveness of NATO plans for civil emergency

51

xAI{ALYTICAL AND COMPUTATIONAL ST'PPORT

The processes of formulating and " implementing civil emergency preparednessprograms have been improved, and the pace has been quickened in recent years bythe application of modern analytical techniques, including computer support. Thesetechniques have helped OEP to keep preparedness programs in step with changingrequirements and have provided a valuable capability for producing and evaluatinginformation in an emergency.lThey are integral to many OEP programs, although therehas been concentration on oil and energy policy, disaster assistance, nationalmaterials policy, and the maintenance of the base for industrial mobilization.

TECHNICAL DEVEI.OPMENTS

When I assumed the directorship of OEP, the Agency had a significantanalytical capability, a newly acquired computer, useful mathematical and economicsmodels, and various computer languages available from prior research anddevelopment projects. This analytical and computational capability had previouslybeen used primarily to support studies of the wlnerability of U.S. resources tonuclear attack and plans for economic recovery from such attack. During the pastfour years OEP has made sigrrificant strides in further developing this analyticalcapability and applying it to the wide'ranging problems with which the Agency hasbeen concerned.

APPLICATION TO ECONOMIC AND RESOURCE PROBLEMS

OEP has employed computerized models to simulate the broad interactionsamong production, employment, national income, and other dimensions of oureconomy under conditions of stress: relating the flow of products from oneindustrial sector to another, and assessing various economic impacts on the 10Federal regions within the United States. Projected national and regional economicimpacts of the July l97l rail strike were produced in a 72-hour period by usingthese capabilities.

During the 9Gday wage-price freeze, theimpacts of wage and cost increases; theseOEP's recommendations for the next phase

selective industry and company coverage.

staff made simulations of inter-industryanalyses proved helpful in developingof controls, particularly proposals for

In formulating oil import policy, it is useful, and at times essential, to simulatein advance the approximate impacts of various potcy alternatives. Some of theqpecific applications included studies of the impacts on the refinery industry ofmandatory environmental provisions and of emergency capacity, development of a

macro€conomic energy model to forecast energy demands for petroleum products bymajor economic. sectors, and analyses of effects of changes in the system of

52

distributing import licenses. As another example, a model was developed to automatemuch of the calculations of stockpile objectives. This computerized model was usedin a major study of stockpile requirements and, drawing also on data from theDepartments of Commerce and of the Interior, it contributed to a number ofsupply-requirements studies of critical materials.

The development of our capability for economic analysis was facilitated bystudies conducted with other agencies, primarily the Bureau of Economic Analysis ofthe Department of Commerce and the Office of Tax Analysis of the Department ofthe Treasury. As an outgrowth of the cooperative studies with the TreasuryDepartment, OEP provided computational support for the initial distribution ofrevenue sharing funds.

Other analytical techniques have been developed as well. Among them has beenthe mathematical simulation of large resource networks applied to the solution ofproblems related to emeryency preparedness. Experiences with current problems, zuchas GSA's telephone network costs and the electric power network in the westernUnited States, have advanced the reliability of this technique for possible use infuture studies of nuclear war and other emergency situations.

The capabilities of the computer were also devoted to a number of managerialtasks. A notable example was the development and use, within a few days, of acomputer-assisted information system which linked together the l0 OEP RegionalOffices and helped in managing the wage-price freeze. At the National Office, alarge volume of freeze correspondence was managed with the assistance of acomputerized log.

Regional Directors now have available a computerized record of Federal disasterassistance expenditures.'Other disaster program applications are in various stages ofdevelopment to assist in the managenient of the Federal response in a disaster area.One of these is a computerization of the individual applications for assistance, whichis designed to increase the efficiency of the individual assistance programs in disasterrelief.

A management information systemresource crises in conjunction with andata bases are being developed tomanpower.

is being developed to help monitor majoractive operations center. In addition, specialsupport specific programs, such as health

DATA ACQUISITION AND MANAGEMENT

OEP has developed a large resource data base for use in classified sfudies ofnuclear war, in exercises of the Government's response to a nuclear contingency, ffidfor assessing damage and planning economic recovery from such a war. There hasbeen increased emphasis on steps to reduce the cost of using these data forexercises and .studies and to ensure that only vital emergency information is kept in

53

the Federal data base. The large data base now available for emergency purposes ismore useful; and an adequate sample is available for exercises and studies.

Over the years, OEP has acquired considerable experience in dealing with otherFederal agencies on the format and the content of the emergency data base. Theknowledge so gained has helped in the recent acquisition of data on oil and energyand has facilitated OEP use of the much greater resources of the departments andagencies of the Gdvernment.

54

CONCLI.]DING OBSERVATIONS

The foregoing review of OEP's accomplishments over the past four years has

emphasized three particularly significant concepts: (1) the development andorganization of a staff of "critical mass" size oriented toward and skilled in dealingwith crises, disasters and nonwar emergencies; (2) the dual use of resources for bothwartime and peacetime preparedness and response; and (3) the involvement of theFederal family, its resources and knowledge in dealing with problems of a nonwaremergency and crisis nature. These nonwar contingencies put our concepts to thetest as much as they helped in developing our expertise. The emergency systems ofthe Federal Government -- their operations centers, their communications, theiremergency plans, and their staffs -- have been put to effective use in day-to-dayactivities, with the extra dividend of improving the Nation's capability to respond towartime emergencies.

Looking to the future, I cannot overemphastze the importance of this newerpphasis for the Federal Government on adequate responsiveness to nonmilitarycontingencies and on dual use of resources. With growing concentrations ofpopulation and the increasing social and economic interdependence, the range ofcontingencies to which we can reasonably expect to be subjected will grow even

wider, and the disruptive effects of these contingencies on the Nation's well-beingand security will also increase. In a time when the requirements of our militaryforces remain'heavy and when the demands of the domestic economy grow rapidly,a most compelling case must be made on behalf of any programs that seek scarce

resources. Emergency preparedness can best justify its. share of the Nation's resources

by demonstrating utility in many emergency sifuations, war and nonwar. In theirability to respond to any crisis, the agencies charged with emergency preparedness

missions have fully justified their share of allotted resources.

While we must thus view the increased preparedness for crises of intemationalorigin as "a bonus" resulting from our arrangements to meet non-militaryemergencies, we should not court the risk of downgrading the importance ofreadiness to deal with external threats to our national security. Just as prudence

dictates the need for insurance in our private affairs, so must we be prepared tomeet possible external challenges to our vital national interests.

Four years Ego, I assumed a responsibility, among others, for civil preparedness

against the ultimate contingency, nuclear war. I wish I could say that thiscontingency no longer exists. Hopefully it is even less likely today than it was then.Still, the capabilities for vast destruction, or threat thereof, even with ftrll allowancefor the agreements reached in Strategic Arms Limitation negotiations, have increased;

and our obligation to plan and prepare accordingly continues to exist.

In the future, as in the past, civil preparedness plans and programs willeffective only if they have the confidence of the public, the involvementgovernment at all levels, and, most important, the full and understanding backing

beofof

55

the President himself. Along with readiness to meet any extemal threats to ournational security, we must be continuously prepared to deal with internal problemsthat vitally affect our welfare and strength as a nation-natural disasters, fuel andeneryy shortages, spiraling inflation of wages and prices, and dismptions oftransportation and other vital public services.

I am convinced that there will be a continuing need for coordinatedpreparedness and response by the Federal Government in meeting a broad range ofcivil emergency contingencies.

56

i U. S. GOVERNMENT PRINTING OFFICE ! l9?3 O ' 72CJA2 (r88)