This paper presents preliminary results of research founded on the hypothesis that in real environments there exist regularities that can be idealized as mathematical structures that are simple enough to be analyzed. The author considered three steps in analyzing the encoding of modularity of the environment. First, a general information processing task for a cognitive system, "completion," is described. Second, the entities of schemas for encoding the environmental modules and how they are used by the cognitive system to perform its task are discussed. Finally, a criterion for how the encoding of the environment into schemas should be done is presented. The paper is divided into sections on Completions and Schemas, Harmony and Computational Temperature, Cooling the System, Cognitive Crystallization, Schema Selection, Perceptual Grouping, Rules versus Instances, and Higher Level Analyses. An appendix presents the Formal Framework of Harmony Theory. A list of other reports and personnel is also included. (MNS)