One of President Carter's key anti-inflation officials suggested last March that the administration impose sanctions against Mobil Oil Corp. that would have gone far beyond previously announced penalties for alleged guidelines violators.
R. Robert Russell, director of the Council on Wage and Price Stability, suggested a wide range of possible penalties from reimposing oil-price controls on Mobil to denying the company import licenses and prohibiting it from selling entitlements.
Russell also proposed that the administration begin cutting off federal contracts for all firms that violate the guidelines, not just those which do more than $5 million worth of business with the government, as Carter announced.
Russell's recommendations came to light in an internal memo to top policymakers made public yesterday by Sen. Bob Dole (R-Kan.). The wage-price council confirmed the memo was genuine, but declined to comment on its contents.
Had Russell's proposals been adopted, they would have marked a major stiffening of the administration's previous enforcement policy, which was to limit any sanctions to denial of federal contracts, and only for very large firms.
As it turned out, the administration negotiated a settlement with the oil company in which Mobil agreed to reduce its prices temporarily to "pay back" a portion of the $45 million the White House said the company had overcharged.
A separate memo, this one by Terrence O'Rourke, energy aide to White House inflation adviser Alfred E. Kahn, also urged the administration to organize a consumer boycott against Mobil, to bar the firm from importing oil and to stop export credits.
O'Rourke's proposals also were rejected by presidential policymakers. The dispute involving Mobil stemmed in part from arguments over how to calculate the firm's profits, and wasn't regarded as a very strong case.
Even after the flap with Mobil, the administration hasn't invoked sanctions formally against any firm. Most have compiled with the guidelines anyway, however, in part for fear of adverse publicity.
Russell urged the stepped-up enforcement action in part to provide a visible show that the administration was ready to stand behind its guidelines effort. The White House had been under attack then for vacillating on the issue.
Carter has approved an agreement with the AFL-CIO not to invoke formal sanctions in any case involving violation of the council's wage guidelines. The administration's Price Advisory Committee has called the pact unfair.
Dole had cited the Russell and O'Rourke memos as evidence that the administration was overstepping its bounds in the guidelines program. A Dole proposal to prohibit Carter from using sanctions came within a few votes of passing the Senate.
The Senate voted on Monday to deny Carter's request for enough money to triple the staff of the wage price council and also agreed to repeal the president's authority to impose credit controls as of mid-1981.
The memos came to light as, separately, Carter met at the White House with representatives of the nation's major food-processing firms to urge them to continue holding down their price increases even though food prices may rise.
The session, organized by Kahn and White House consumer affairs adviser Esther Peterson, didn't result in any promises by the industry. However, spokesmen said later that price competition probably would help keep increases moderate.
Carter lambasted the processors last year after White House economists charged that food packagers were adding on more than their fair share to already rising farm prices. Since then, farm prices have declined.
Russell's memo to the cabinet-level Economic Policy Group included these proposals:
"Prohibiting an oil company that violates the standards from selling entitlements or earning entitlement credits.
"Reimposing mandatory price controls on crude oil and/or petroleum products of an oil company that violates the standards.
"Prohibiting the phased decontrol of crude production by an oil company violator.
"Reallocating relatively-low-cost crude oil and/or petroleum products from violators of the standards to those that comply.
"Denying import licenses for, or imposing stiffer fees on, oil imports by oil companies that violate the standards."
Russell also suggested that the administration consider denying federal grants or benefits to violators. He said the council already had compiled a list of such programs from various cabinet departments.
The government's energy entitlements program is a plan intended to equalize crude oil costs among refiners. It involves requiring refiners with access to low-cost domestic crude to make payments to those which must rely heavily on imports.