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Submissions by-Continued

Page The Energy Policy Project---

336 Letter to Senator Jackson, dated July 14, 1972..

336 Robert B. Krueger, Los Angeles, Calif..

347 Responses to questions--

348 “An Evaluation of United States Ocean Policy", from McGill Law Journal, Montreal, vol. 17, 1971, No. 4.---

370 Thomas R. Stauffer, Harvard University-

466 Letter to Senator Jackson, dated September 22, 1972.

466 "Estimated Economic Cost of U.S. Crude Oii Production,” sum

mary of paper presented to the annual meeting of the Society of
Petroleum Engineers, San Antonio, Tex., October 14, 1972.-

469 American Gas Association.

492 Responses to questions

493 American Mining Congress

501 Letter to Senator Jackson, dated August 11, 1972.

502 American Petroleum Institute

512 Statement

513 National Coal Association..

551 Statement

552 National Ocean Industries Association..

568 Statement

569 Independent Petroleum Association of America..

583, 621 Statements of W. M. Elmer and Richard A. Rosan on behalf

of American Gas Association ?:7 Independent Natural Gas
Association of America.---

584, 606

APPENDIX III

UNSOLICITED STATEMENTS FOR THE HEARING RECORD

633 633 634 634 636

Submissions by-
Texaco Inc.

Statement
Rocky Mountain Center on Environment..

Responses to questions---
Senator Lawton Chiles of Florida.---
Letters to :

Senator Jackson, dated August 4, 1972..

Secretary Morton, dated July 17, 1972.State of Louisiana.

Letter to Senator Scott, dated August 9, 1972-

Resolution
Rocky Mountain Oil and Gas Association..

Statement
Sierra Club---

Letter to Senator Jackson, dated July 14, 1972.

Responses to questions.Varn Petroleum Co------

Letter to Senator Jackson, dated August 9, 1972_

636 637 638 638 638 640 641 647 647 647 649 649

FEDERAL LEASING AND DISPOSAL POLICIES

MONDAY, JUNE 19, 1972

U.S. SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

D.C.

The committee met at 10 a.m. in room 3110, New Senate Office Building, Senator Frank E. Moss, chairman) presiding.

Present: Senators Moss, Hansen, Anderson, Jordan of Idaho, and Allott.

Also present: William J. Van Ness, Richard D. Grundy, Arlon Tussing, Mary Jane Due, and David Stang.

Senator Moss. The subcommittee will come to order.

OPENING STATEMENT OF THE CHAIRMAN

Today's hearing concerns the Federal policies that govern development of energy resources on the public lands.

The purpose is general oversight of the various laws under which fuels and energy resources are leased.

As a part of the energy study, National Fuels and Energy Policy Study, this proceeding will examine how the resources of the public lands can best help to meet the Nation's growing need for clean and economical energy.

The public lands of the United States, including the Outer Continental Shelf, are certain to play a growing role in the energy budget of the United States.

At the turn of the next century, resources that have hardly begun to be developed-oil shale and geothermal energy-may be immensely important.

In the intervening period, however, the oil and gas from the Outer Continental Shelf and the immense coal resources of the West offer the largest domestic stocks of new energy available with curent technology. This hearing places special emphasis on policies that gorern the leasing of these two sources of fuel.

The committee's main concern today with coal is to ascertain the policies, criteria, and procedures governing the Interior Department's issuance of coal leases and prospecting permits. We have learned dramatically from developments in the Four Corners region of the Southwest that we cannot afford to view coal leasing in isolation from a host of other economic, social and environmental considerations.

The committee is interested in determining whether the Interior Department's current coal leasing policies, regulations and procedures do in fact take these considerations into account, and whether legislation is necessary to enable the Department to do this job effectively.

(1)

The committee has already held two days of oversight hearings in April 1972 on the administration of the Outer Continental Shelf Lands Act. These hearings reviewed the place that OCS oil and gas can have in meeting National energy requirements and the environmental issues of OCS development.

Today's consideration of Outer Continental Shelf policy attempts a new look at the issue that has provoked controversy for many years, the method of allocating oil and gas leases, and the methods of collecting fair market value for these resources.

The committee is interested in any evidence that alternative systems of lease bidding might encourage more rapid resource development, lead to greater competition, or produce more revenues in the long run than the system of cash bonus bidding.

Today's hearing also will begin an exploration of the question whether the coastal States ought to share in Federal revenues from Outer Continental Shelf mineral leasing.

Today, we are receiving testimony only from the Interior Department. In addition to the Department's presentation today, we have requested the Department and other agencies to furnish for the record comprehensive answers to a much more detailed list of questions and policy issues.

After the committee members and the staff have had an opportunity to evaluate the testimony and supporting materials from today's hearing, another day of hearings may be scheduled in which these issues may be examined further.

Although the witness list for this later hearing has not been determined, it is clear that the committee will not be able to hear everyone who wants to testify on the issues.

All interested parties, however, are invited to submit statements for the record, responsive to the committee's lists of questions and policy issues for this hearing.

Without objection I will insert in the record the questions and the policy issues to which I referred.

(The questions and policy issues referred to follow :)

(From the Congressional Record. May 22, 1972) NOTICE OF HEARINGS ON FEDERAL LEASING AND DISPOSAL POLICIES FOR ENERGY

RESOURCES ON THE PUBLIC LANDS

Mr. Jackson. Mr. President, leasing and disposal policies for energy resources on the public lands will be the subject of hearings conducted by the Committee on Interior and Insular Affairs in the present session of Congress, June 19, 1972, is scheduled as the first of 2 hearing days. These hearings are part of the National Fuels and Energy Policy Study authorized by Senate Resolution 45, and conducted by the Interior Committee with exofficio participation from the Commerce, Public Works and Joint Atomic Energy Committees.

Secretary of the Interior Rogers C. B. Morton has been asked to appear and testify on the Interior Department's planning and management policies for leasing and development of energy resources on the public lands, including the Outer Continental Shelf. Comprehensive lists of questions and policy issues bave been sent to the Secretary and a basis for his testimony and for materials and exhibits to be submitted for the hearing record. Mr. President, I ask unanimous consent that these questions and policy issues be printed in the Record following my remarks.

Representatives of other executive branch agencies will be requested to testify or to submit statements for the record, giving additional information, views, and recommendations on some or all of the questions and policy issues. Time will not permit appearances by all members of the public who might wish to testify, but the committee will accept statements in writing addressed to issues on the following lists, for inclusion in the hearing record.

(There being no objection, the material was ordered to be printed in the Record, as follows:)

ENERGY RESOURCES LEASING AND DISPOSAL QUESTIONS AND POLICY ISSUES

INTRODUCTION

Leasing and disposal policies for energy resources on the public lands will be the subject of two days of hearings by the Committee on Interior and Insular Affairs. These hearings are part of the National Fuels and Energy Study authorized by Senate Resolution 45 and conducted by the Interior Committee with exofficio participation from the Commerce, Public Works and Joint Atomic Energy Committees.

June 19 is tentatively scheduled as the first of the two hearing days. On that day, representatives of the Interior Department will be asked to address several broad issues of policy concern (Attachment “A”). In addition, the Department is being asked to submit for the hearing record comprehensive answers to the attached list of questions and policy issues (Attachment “B”). The responses to Attachment "B" will be used by the Committee as background for a second day of hearings yet to be scheduled.

The list of questions and policy issued in Attachment "B" is organized according to the two major purposes of the hearings: a general oversight of energy resource management, and an examination of three particularly important aspects of leasing policy.

Part I of the list is intended as background for a general oversight of the management of all energy resources on U.S. public lands, including administration of the Mineral Leasing Act, the Outer Continental Shelf Lands Act, and the general mining laws insofar as they relate to energy resources.

Parts II and III invite a more intensive examination of three specific areas of leasing policy that may have particularly significant impacts on the nation's energy supplies in the forseeable future:

Part II concerns the criteria and procedures for issuing, reviewing or renewing coal leases and prospecting permits; and

Part III concerns mineral leasing on the Outer Continental Shelf. III-A deals with the leasing system and bidding methods and procedures for OCS oil and gas, and III-B deals with possible participation by coastal state and local governments in federal mineral leasing revenues.

The formulation in both lists of questions and policy issues were chosen for submission to the Interior Department in connection with the hearing scheduled for June 19. The views and recommendations regarding all or some of the issues covered by these lists will be solicited from other agencies, state governments, industry, consumer and conservation groups, and the public generally, either in appearances or in statements for the record.

ATTACHMENT A: GENERAL ISSUES OF ENERGY RESOURCE MANAGEMENT ON U.S.

PUBLIC LANDS
The energy resources considered in the following questions include:

Oil and gas.
Oil shale and other hydrocarbons (tar sands, etc.).
Coal and lignite.
Uranium.

Geothermal energy. In answering the questions, resources may be considered jointly or individually, as appropriate. "Public lands" should be interpreted to include the public domain, acquired lands, Indian lands, and the Outer Continental Shelf.

(1) Which energy resources on the public lands (a) are now, or (b) could be, made available in the foreseeable future, as a major element in the nation's energy supply?

(2) What are the principal goals and objectives of the government with respect to management of each resource?

(a) To what extent is each goal or objective specifically set out in law, or adopted at the discretion of the Department?

(b) To what extent is each goal or objective compatible with other objectives for the management of individual resources? (For example, how are encouragement of current development, conservation of supplies for future use, and maximization of government revenues reconciled ?)

(c) What is the basis for any differences in goals or objectives with respect to different energy resources ?

(d) To what extent do the goals and objectives of the principal legal authorities under which individual energy resources are managed require review to determine if they are consistent with today's energy requirements and environmental goals?

(3) How do you relate the Mining and Minerals Policy Act to Department of Interior policy regarding federal leasing of energy minerals?

(4) For which energy resources does your Department (or agency) have a long-term schedule, plan, or strategy for leasing or disposal? To what extent, and how, does each take into account national and regional demand and alternative sources of supply (including outstanding inactive, nonproducing federal leases, private and state lands, etc.) ? In particular, what are the Department of Interior's policies for leasing coal, Outer Continental Shelf oil and gas, oil shale, and geothermal resources ?

(5) In view of the large acreage and probable quantities of some energy resources in private ownership, or under current federal lease, what is your position on the need to issue additional leases or prospecting permits? Consider espe. cially coal and oil shale.

(6) For each resource, what conditions regarding land reclamation, protection of other resources, or environmental quality, are currently required for exploration or energy resource production on the public lands?

(a) To what extent are such conditions prescribed or proscribed by law, or within the discretionary authority of the Interior Department?

(b) In what instances, if any, does the law permit or require bonding or other assurance of financial responsibility for environmental protection or performance?

(c) What, if any, recourse of enforcement authority has the Interior Department (or your agency) with respect to violations or default of contract provisions regarding protection of other resources or environmental quality. or land reclamation? Does the Federal government have authority to cancel a lease, permit, or other resource right in such an instance? Is additional authority needed at this time? Is so, what provisions should such new authority contain ?

(d) What has been the specific effect of environmental laws, regulations. and requirements on the level of exploration and production of energy mine

rals on the public lands? (7) What safeguards in the preparation of a new five-year leasing schedule will protect against, and provide relief from, anticipated recurring delays due to litigation and other foreseeable resistance to continuing regularly held OCS lease sales?

(8) Does the present system of leasing or disposal for each energy resource provide sufficient incentive for early exploration and development? Do the current size of lease tracts for the various energy minerals, acreage limitations on lease holdings, and length of lease terms deter exploration and/or development of any energy resource on public lands?

(9) In which cases, if any, do elements of the present system encourage speculative nonproductive holding of resources on the public lands? Consider particularly

(a) Noncompetitive leasing of onshore oil and gas ;
(b) The system of prospecting permit and preference right leases for coal;
(c) The indefinte term and twenty-year review of coal leases; and

(d) The location-patent system for uranium ore. (10) Does the present system of leasing or disposal of each energy resource provide for receipt of fair market value by the government for the resource ? Consider particularly the four instances named in question 9. In each instance where the government generally receives less than fair market value, what benefit does the public receive from leasing or disposal programs in which receipt of fair market value is not a principal objective?

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