In the beginning was the Federal Power Commission. Then came the atom bomb, which begat the Atomic Energy Commission, which begat the Energy Research and Development Administration. And the Arabs embargoed their oil, which begat the Federal Energy Office, which begat the Federal Energy Administration.
Then Jimmy Carter took these elements and begat the Department of Energy. "No agency, anywhere in the federal government, has the broad authority needed to deal with our energy problems in a comprehensive way," said Carter in his message to Congress proposing the new department. "The legislation I am submitting today will bring immediate order to this fragmented system."
The Energy Department, child of this confusion, firstborn of Carter's pledge to reorganize the federal government from top to bottom, came into being Oct. 1, 1977. More than a year and a half later, the promised order is nowhere to be seen. The Department of Energy is without form and void.
There is unquestionably a secretary of energy, the formidale James Schlesinger-former head of the Atomic Energy Commission, Central Intelligence Agency and Department of Defense, veteran of the Nixon, Ford and Carter administrations, perhaps Washington's most remarkable bureaucratic survivor.
There is also, in broad outlines, a Carter-Schlesinger energy policy, which can be roughly stated as follows: the world is rapidly running out of oil. New discoveries, such as Alaskan and Mexican fields, do not alter this fact. America needs more energy every year to maintain its economic position and standard of living. In the long run, technologies like fusion and solar power will fill the gap. But in the next 25 years, America must rely less and less on oil; oil prices will and should rise more each year. Until the new technologies are ready, the country must depend on nuclear power and various uses of coal.
The combination of spokesman and policy has proved sweepingly unpopular in the country. Schlesinger's unemotional, pipe-smoking style has made him the most visible-and probably the most widely disliked-member of the Carter Cabinet; and the policy, which Carter recently stated as "use less oil and pay more for it," has outraged voters and liberal congressmen, who bomb Schlesinger at almost every opportunity. White House sources insist that Carter has faith in Schlesinger and believes that his unpopularity stems from popular resistance to facing hard facts about energy. But a secretary and a policy - popular or not - do not constitute a functioning agency; and as a cabinet department, rather than an uneasy melding of three bureaucratic entities, the Department of Energy hardly exists. It has a budget of about $11 billion for fiscal 1979; it has nearly 20,000 full-time employes - plus about 100,000 people who don't show up in the personnel figures but who work full-time under contract on its research and development programs and special projects. But after 18 months of operation, it does not have a complete table of organization, and the staff has not finished writing Civil Service classifications for its employes. Its internal communications are so poor that Schlesinger's top assistants have sometimes not been told that their boss would appear on national television.
The department's standby gasoline rationing plan, due on Capitol Hill in 1976, was not sent up until March 1, 1979; congressmen were acerbic about the timing - during the middle of the Iran oil scare. The department's largest single project, the mammoth Strategic Petroleum Reserve, or SPRO in department slang, is at least a year behind schedule and far over original budget estimates. During the Iranian oil cutoff the nation discovered that the oil already stored by SPRO could not be used if needed; the department had neglected to install pumps to get it out.
In a series of recent interviews, Schlesinger and other top Energy officials insisted that they have done the best they could under difficult circumstances. "The world at large is alarmed at the little progress we have made in the last 18 months," says Deputy Secretary of Energy John O'Leary. "I am constantly amazed at the progress we've made in the past 18 months."
But others don't agree.A department-sponsored "management audit" by independent consultants released last month found that Energy's top management was poorly organized, its policy planning spotty, and its field structure was not integrated into the headquarters staff. "The public complaint that we haven't seen results is well-taken," said one source who helped prepare the report. "It is not the finest managed department in the world."
And at the department's lower level, there is confusion and a sense of leaderlessness. "DOE is about as well organized today as the Titanic was in its 11th hour," said one employe who asked not to be named, "and internal communications are about the same as in a cloistered monastery."
The Carter-Schlesinger energy policy may be the correct one; or - as dozens of critics insist - it may be neglecting the importance of solar energy, conservation, gasohol, or energy from biomass. But the travails of the Energy Department can teach us a great deal about the Carter administration's passion for reorganization - for drawing clean flow-charts and tidy boxes, and then trying to cram the government into them. The decision to create a Department of Energy was possibly ill-conceived and probably ill-timed; it has produced a department which is certainly ill-designed and unquestionably ill-managed. It has drawn the efforts of hundreds of well-meaning, well-paid, hard-working officials into tasks that have nothing to do with the energy crisis - clearing nominations with Congress, fighting over desk space, moving from one office to another, drawing and redrawing tables of organization, complying with Civil Service regulations.
Lincoln E. Moses, the gravely humorous former Stanford professor who now heads DOE's Energy Information Administration, tells an anecdote when asked what he has accomplished in his job. He recalls meeting another statistician and saying to him, "When I was head of the Stanford statistics department, I got hot water installed in the faculty washroom. What did you accomplish?" Replied the friend, "When I was head of my department, I got sound-proofing installed in the ceiling of the faculty office." Adds Moses, "I tell you this fable because it reminds me of working for the federal government."
Listening to Energy officials explain their efforts to bring order out of chaos, it is impossible not to conclude that, far from hastening a national attack on the energy problem, the creation of the Department of Energy has postponed it by three to five years. Although Carter seemed to promise bold surgery on the energy problem in his campaign speeches, he has in effect hired a somewhat dotty private nurse and told her to make the patient as comfortable as possible.
To begin with, the department does not have a cohesive, rational structure. Each of its prime bureaucratic components has had a distinctly checkered past. The Federal Energy Administration was begun as a temporary regulatory agency in response to the embargo; in five years of life it had two names and four chief officers.The Atomic Energy Commission had been a hard-line nuclear cheerleader, so much so that Congress decided in 1975 to take regulation of the reactor industry away from it by creating the Nuclear Regulatory Commission; as the Energy Research and Development Administration, it had begun to add solar energy research and other alternate sources to its research program. The Federal Power Commission was empowered to license new electric utility plants, set interstate electric rates, and regulate natural gas; it had acquired a reputation as a kind of never-never land, where legalistic procedures were able to protract simple questions into matters of almost infinite duration.
The theory behind the Department of Energy bill was that by combining regulation with research into all aspects of energy, the new department would enable the government to make coherent, centralized decisions about energy. The secretary of energy was to have broad, sweeping powers to make rules, set rates, apportion R&D funds and use a mixture of rewards and incentives to steer the nation away from costly or wasteful fuel technologies into cleaner, more rational paths.
But the concept of the secretary of energy as a true energy czar ran into problems on Capitol Hill. Said Rep. John Dingell (D-Mich.), chairman of the House Energy and Power subcommittee, "The age of the kings expired with the French revolution. I plead with this body, do not set up a new king here in Washington." The House of Representatives heeded, and by the time it had finished whittling the "king" down to size, he had less power than he started out with. Instead of abolishing FPC, Congress cloned the old body inside the new Energy Department, under the name Federal Energy Regulatory Commission (FERC) - a five-member body appointed by the president and not responsible to the secretary of energy or anybody else. Not only did FERC retain all of FPC's old powers - and its venerable slow-motion procedures - but it acquired broad authority to overrule the secretary on oil regulations and other matters. Indeed, because of FERC's quasi-judicial character, the secretary must be extremely careful in his communications with FERC and its members, and often must use his lawyers to communicate with the commission. So in the reorganizer's own terms, the final bill represented a big step away from centralized, rationalized energy planning.
Other parts of the department's design also seem questionable from a clean flow-chart point of view. For example, $2.6 billion in fiscal 1979 - about one-quarter of Energy's annual budget - goes to making bombs and nuclear fuel for the Pentagon. The defense programs section of the Energy Department is only tangentially related to the department's overall mission of managing our national energy supply. It had been a part of AEC since the agency was set up, however, chiefly because Congress did not want to give the Defense Department control over its bomb program. When AEC became ERDA, and later DOE, the defense programs came along for the ride.
Again, a key part of regulating the nation's energy supply - the Nuclear Regulatory Commission - was deliberately left outside of DOE from the beginning, largely because public confidence in atomic safety was low.
What emerged from the administration's political calculations - and Congress's revision of them - was thus less a rational governmental structure than an unwieldy agglomeration of functions under the loose control of a constitutional monarch. ERDA's research functions survived in the research and application programs; most of FEA's petroleum regulatory authority was centralized in an Economic Regulatory Authority (ERA); and FPC survived, with new commissioners, as FERC.
Once given its flawed charter, the new department faced some unavoidable problems of combining three large organizations. Because of its "high-technology" mission, ERDA had been exempt from Civil Service. When it became part of DOE, every ERDA employe had to be given a Civil Service classification. Independent contractors were hired just to write job descriptions, while DOE borrowed or hired "classifiers" from all over the government to translate these descriptions into classifications acceptable to the Civil Service Commission. As a result of this Herculean effort, Energy's director of administration William Heffelfinger says proudly, "Everybody is on a job sheet of some kind." Though classification was to becomplete by April 30, it is only 70 percent done. "We saved the harder ones for last," Heffelfinger says forebodingly.
There was also the problem of moving into the Forrestal Building. President Carter gave this modern, sightly building on the Mall to the department as a symbol of the administration's commitment to energy issues; but by April, only 1,508 of a projected 5,000 Energy Department employes had moved in. "We are slowly but very steadily moving in, like the waves that come with the tide," says Frank Pagnotta, the burly former CIA official who is in charge of the operation. "We established our beachhead April 1  and we have been occupying new lands as they develop."
The problem is that there aren't very many new lands and nobody wants to move out to create them. Defense Department employes already in the Forrestal didn't want to go, and they got Congress to investigate whether they should; residents of the neighborhood where many of them were to be transferred didn't want a large new federal presence, and they filed suit to stop it.
One casualty of the space warfare is the old ERDA headquarters at 20 Massachusetts Ave. NW, which had been renovated for ERDA just a few years before; because the Corps of Engineers would be displaced by the move into the Forrestal, DOE traded them to the old ERDA headquarters. Currently, DOE is gathering employes there to get them ready for the move to the Forrestal; for some, it will be their third move since "immediate order" was created in the energy field.
In addition to the built-in shocks of moving, getting new (and sometimes lower) job classifications, getting used to new bosses and learning new procedures, DOE's research and development side - the remnants of ERDA - were undergoing another jolt as Schlesinger redesigned its organization to fit the latest management theories. ERDA had been organized by fuel type - with a coal program, a nuclear program, a solar program, and so on. Under DOE, research and development has been shifted to an approach called "stage of application." Under this theory, basic research is shifted down the organizational line into an applications area as it becomes ready for commercial use. Various parts of the old solar office, for example, might find themselves under the assistant secretary for energy technology or the assistant secretary for conservation and solar applications, depending on how close to commercial usefulness they are judged to be. Because DOE is not in business to produce energy itself, but only to show private industry better ways to save and produce it, there is a special deputy undersecretary for commercialization, whose job is to market various techniques and inventions to private industry as they come down the line.
DOE officials insist this change was necessary to make sure administrators did not become lobbyists for their type of fuel - and that new ideas are released for commercial use when they are ready. On the flow chart, it looks good; it may even work the way it's designed to some day. But in the department's early days, it has unquestionably contributed to confusion and bureaucratic struggles. "Six months ago, I spent all my time on turf struggles - 'Is it ready or not?'" admits Deputy Secretary O'Leary. But he boldly predicts that "two years from now it will work automatically."
Beyond the natural shocks arising from reorganization, DOE has also had to put up with sloppy management. As Schlesinger sees it, his job is to be Carter's chief spokesman and adviser on energy. "The main business of this department," he said in a recent interview, "continues to be the development of national energy policies and the national consensus behind them - to the extent that is possible."
So Schlesinger has spent his time almost totally outside the department - lobbying on the Hill, speaking to industry groups and advising the president. Between January and April of this year, by DOE's count, Schlesinger appeared on Capitol Hill 17 times, made 12 major speeches, held three press conferences and appeared on three televised interview shows. This workload, Schlesinger's defenders point out, is down from the days just after DOE began, when the bitter fighting over the Carter energy bill kept Schlesinger up on Capitol Hill almost full-time.
Many Cabinet officers play a similar public role; but they usually turn over the running of their agencies to a strong "executive officer," who can sort out bureaucratic disputes and make sure the fine words announced in public bear some relation to what is being done at the agency. This leadership role is particularly important at a new organization, where attitudes and authority are fluid. But Schlesinger did not designate anyone to fill it.
When the DOE bill was proposed, it included one deputy secretary - theoretically the spot for the "executive officer" - and two undersecretaries; Congress eliminated one of the undersecretaries. Schlesinger's response was simply to treat the deputy and the under-secretary as equals, giving each charge of half the department's operation and leaving the "executive officer" job empty.
As deputy secretary, he named John O'Leary, a veteran energy bureaucrat who had been fired by Nixon as head of the Bureau of Mines but returned with the change of administration as Carter's choice to head FEA. Under Schlesinger's management, O'Leary was given charge of regulatory matters, policy planning and information systems. The undersecretary he named was Dale D. Myers. A former NASA official, Myers was given charge of programs which spent money-energy research and application, defense programs, and the Strategic Petroleum Reserve.
"It might have worked with three people who had worked closely before," said a former DOE official. "But these were three busy men - and they were practically strangers."
The result has been a confusing administrative jumble, in which, for example, the official responsible for assigning personnel slots reports to the deputy secretary, while the controller, who must approve salary payments, reports to the undersecretary.
The department's field structure, for another example, now plugs into headquarters almost at random. Asked who was in charge of the field structure, Schlesinger said he would have to check the organizational chart. In fact, no one is. Interviews with O'Leary, Myers and John M.Deutch, director of energy research, revealed a structure in which the DOE's regulators report to O'Leary, while the labs report simultaneously to various assistant secretaries, Deutch and Myers. It is worth remembering that these labs do much of DOE's most important - and costly - work. During the Three Mile Island nuclear crisis, for example, a DOE lab in Idaho Falls helped supply information that allowed technicians to disperse a dangerous hydrogen bubble in the reactor vessel without an explosion or catastrophic melt-down.
One casualty of Schlesingerhs casual approach to internal organization has been morale inside the department. The secretary is respected by those around him for his abstract intelligence and verbal agility; but subordinates say he has made little effort to befriend those beneath him, and he projects a chilly, authoritarian style which they find intimidating. In addition, he has staffed the higher echelons of DOE with large numbers of former military officers, Defense Department officials, or old CIA hands; Pentagon whistle-blower Ernest Fitzgerald once remarked that DOE had become "the great Pentagon in the sky." The result has been a management structure which is strong on hierarchy and short on group feeling. One lower-level employe told the story of a man who claimed to have invented a miraculous machine that would solve the energy problem. The inventor had sent the plans to his congressman, who had forwarded it to the Energy Department. Rather than turn it over to a low-level employe, an assistant secretary answered it himself, for fear of offending the congressman. "Schlesinger has everybody so terrified that nobody wants to be caught off base," the employe explained. "So they're all form and no substance. And the sad thing is, it takes time to answer a letter like that."
But there are other, more substantive, casualties of Energy's chaotic first 18 months. None is more revealing than the paralysis of the Strategic Petroleum Reserve, which accounts for more than a quarter of the department's 1979 budget. By any objective measure, SPRO is a vital part of DOE's mission.
The objective is to store 750 million barrels of oil in underground salt caverns in Louisiana and Texas, to be drawn out and used in an emergency. In time of oil embargo, or war, the oil in the domes - roughly equal to one month's domestic production - might conceivably make the difference between paralysis and survival.Storing it is an immensely complicated technical task, abd represents a huge financial expenditure. A year ago the department projected the cost at $14.4 billion; that figure is certain to increase.
But SPRO, which was at one time scheduled to have more than 250 million barrels of oil stored by now, has only 82 million. Schlesinger admits that the program is "about a year" behind schedule, for which he blames the restraints put on him by local authorities and the Environmental Protection Agency. "Rarely in the past has a major national effort of this kind been undertaken without a decision to go to wartime methods," he said. "In World War II you might have run roughshod over (environmental constraints) and that might have been the preferable way in this instance."
But many of SPRO's problems actually arose because it was neglected while the tasks of reorganization drew Schlesinger's attention elsewhere. The departmental flow-chart originally placed SPRO two layers beneath the assistant secretary for resource applications. So the huge program remained under acting leadership for 10 months, until an assistant secretary was recruited and confirmed and then was able to recruit his own director.
In the meantime, problems built up in SPRO until a report by the office of the department's inspector general two months ago concluded that millions of dollars had been wasted because of poor inventory control, bad procurement and contract administration, misuse of equipment and poor planning. SPRO's management had not even bothered to get exemptions from local sales taxes - routine for federal projects - and, as a result, had paid $150,000 in sales tax for a single contract.
After an audit by the inspector general, SPRO applied for an exemption and a refund; but in other areas, the report said, "We are not satisfied that corrective action is taking place as rapidly as it should . . ."
In addition, of course, SPRO's management made the now-famous decision not to install pumps to bring the oil out until 1980 or so. During the Iranian oil crisis, this decision received massive criticism; interim pumps are scheduled to be in place this month.
Last September a fire broke out at one SPRO salt dome in which one worker died and and another was injured; 30,000 barrels of crude oil were lost. As a result of this debacle, the SPRO program was belatedly moved up to report directly to Myers. But by the time the program began to get its construction and safety programs under control, the collapse of the shah's government sent oil prices soaring, and the Energy Department decided to stop buying oil for storage for fear of sending spot prices even higher.
"We're now in the position where we have lots of capacity but no oil in the ground," Myers admits. Still, he says, SPRO was intended as a cushion against price instability; by not buying oil, it is reducing world demand. Thus, he argues gamely, "in one sense, we're kind of doing what SPRO's secondary mission was."
The SPRO disaster is enormous but not unique. Everywhere in the Energy Department are deadlines missed, slots unfilled, organizational charts incomplete, lines leading nowhere. For example, FERC's new management has tried to simplify its procedures and shorten its waiting periods; but the press of new applications - and the new 27-tier natural gas pricing system - has resulted in a larger backlog of cases than it inherited from FPC, while the difficult issues of procedural reform have not yet been tackled. On another level, many of DOE's civil-service employes say they feel they are trapped in an organization that does not work, and that nobody cares.
One man reported that in his division the confusion over financial procedure had resulted in unpaid travel vouchers of as high as $800 for a period of five months.Another pointed to the offices around his and said, "Ever since I've been here, I've never heard any admonition about conservation. The heat in the building is too hot. During the winter, people left their radiators on all night. Or in summer they left their fans on. It would never occur to Schlesinger that we ought to be first in conservation." "We found too many anecdotes of lost or delayed correspondence, delay in coordination, lack of early warning and poor dissemination of policies and decisions," said the management audit.
Schlesinger loyalists insist that confusion is inevitable in assembling a large, complex new agency and that it is unfair to judge the department a failure or a success after only 18 months. They furhter say that during much of the agency's life its top leadership has been embroiled in the bitter house-to-house legislative fighting that surrounded Carter's first energy plan, which took nearly two years to be enacted.
"It takes you at least three or four years to make a department operational," says Schlesinger soothingly. Adds Myers, "I think any new agency has some growing pains. I went through the merger of two major corporations and it took some time to get our act together." Says George McIsaac, assistant secretary for resource applications. "In some respect, even though we all knew what we were getting into, the American people perhaps expect too much. DOE, after 18 months, is expected to perform with the finesse of the Department of Defense . . . We're doing just fine."
There's something to that argument. The task of organizing the Energy Department is a huge one; many of those who have undertaken it are manifestly competent, energetic and sincere in their devotion to its mission. Despite its reputation, the department is far from a nest of bureaucratic duff-sitters or civil-service clock-watchers. But the DOE bill was sold to the people as a means of introducing "immediate order" and as a way of coping with a serious, immediate crisis, one Carter later termed "the moral equivalent of war."
Now the soothing bureaucratic nosies - the words saying: relax, give us a few years, let us get our act together - unavoidably raise the question of whether this trip was really necessary, whether creating a cabinet department is the proper response to the perception that we are in a "crisis" - about energy or anything else.
As a crisis-solving agency - a Pentagon to conduct the moral equivalent of war - DOE is a clear failure. One does not fight a war by reorganizing the government. Schlesinger, a master of blaming his troubles on outside conditions, once remarked "how grateful we should be that the Japanese chose to attack Pearl Harbor prior to passage of the National Environmental Policy Act." But one could argue as forcefully that, had the nation responded to Pearl Harbor by reorganizing the Department of War, we would have probably had to fight the enemy on the outskirts of Kansas City.
Viewing the situation in wartime terms, the proper response to an energy crisis would probably have been either to throw huge amounts of money into research to find new supplies of energy and to organize government-run facilities to produce synthetic gas and oil, gasohol or solar power, or to impose rationing and mandatory conservation measures, thus ending our dependence on foreign oil. Either plan would have huge drawbacks - research funding would lead to some waste and boondoggle; rationing would bring inequities and profiteering. But they might get results quickly, and, in wartime, one has not the luxury of constructing a clean flow-chart before giving battle.
By choosing to view the energy problem as one calling for reorganization, the administration, wittingly or not, seems to have decided that the energy problem would be a feature of our national life for quite a while to come-a nagging, intractable, but not threatening obstacle to sound planning ana smooth economic growth, one that could wait three or four or five years for a concerted attack.
One side effect of reorganization is that it gives huge masses of people a vital career stake in the problem at hand. For a brief time during its debates on the Energy Department bill, Congress considered writing in a "sunset" provision that would have abolished it after five years. It's a shame the provision was removed. However, there was an amendment to provide a congressional review in 1982. That seems like a good time to take another look at the idea of an Energy Department.
For right now, however, one thing seems clear: the current reorganization has shaken our federal energy machinery almost to the breaking point. The one thing that is not needed right now is another hefty dose of "immediate order." The machine we have-bad as it seems-should be cleaned up, given sound management, and allowed to run for a few years. Schlesinger says he has heeded the message of the critical management audit.
Late last month, he issued the first series of orders designed to correct the flaws it criticized. From now on, O'Leary is to be the department's "executive officer," and Myers has been effectively demoted to a role supervising conservation programs and SPRO.
Three years from now, Congress will have a chance to decide if he-or his successor-has succeeded, if the organization needs an Energy Department at all. If they don't do a thorough job, after that DOE will sail serenely into the stream of American bureaucracy, untouchable and unstoppable, whether it's needed or not.
"In five years, the world is going to change," says one department official. "A lot of the things we're doing in energy are going to be done-and we'll still be here. We're a latter-half-of-the-20th-century Agriculture Department." CAPTION: Illustration, no caption, The cover illustration is by William Coulter.; Picture 1, no caption, By James K. W. Atherton; Picture 2, By James K. W. Atherton