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(11) What is the experience to date with respect to classes of enterprise engaging in exploration and production operations involving energy minerals on public lands? Does the present system of leasing or disposal for any of the major onshore and offshore energy resources unduly favor some classes of enterprise (for example, large integrated firms)? What is the relationship between classes of enterprises presently engaged in development of energy resources on public lands and the rate of exploration and production with respect to the development of coal, oil shale, and geothermal energy?

(12) What are the advantages and disadvantages, in terms of the criteria set forth below, as applied to OCS oil and gas leasing of a (1) cash bonus bidfixed royalty system; (2) deferred bonus bid-fixed royalty system (payments of one-third of the bonus bid successively upon award of lease, discovery, and production); and (3) fixed bonus-royalty bid system?

(a) Competition;

(b) Incentive to rapid exploration and development;

(c) Conservation of energy resources for future use;

(d) Total amount of resources ultimately recovered under the lease;
(e) Efficiency of allocation;

(f) Possible bias toward any one class of lessees (Ease of entry, etc.)
(g) Timing and amount of revenue to Government;

(h) Problems of administration and levels of Government personnel required to administer the leasing system;

(i) Ability to implement within the authority of the Act (i.e., would it require amendment of the OCS Lands Act?)

(13) How adequate for purposes of planning and management is the information available to your Department or agency on energy resources of the public lands? Consider particularly:

(a) Geological and geophysical information relevant to OCS oil and gas leasing;

(b) The reserves, and probable and potential resources, on lands under coal permit or lease, or under application for permit or lease;

(c) The number, acreage, and reserves or resources of uranium claims; (d) The persons owning or effectively controlling leases or claims; (e) The progress of development, or volume and value of production from leases or claims.

If it is the position of your Department (or agency) that inadequate information is available, what changes in law, organization, or regulations would be necessary to make the desired information available?

(14) Does oil and gas exploration development and production on the Outer Continental Shelf impose a net economic or fiscal burden on the adjacent coastal state? Should this burden, if any, be compensated by granting the coastal states a share of OCS mineral leasing revenues?

(15) What funds have been paid to states under the revenue sharing provisions of the Mineral Leasing Act of 1920? What is the basis in policy for such sharing of revenues? With respect to public lands states other than Alaska is there any reason why such a revenue sharing policy should not be perpetuated in any subsequent legislation related to mineral leasing?

ATTACHMENT B: ENERGY RESOURCES LEASING AND DISPOSAL QUESTIONS AND POLICY ISSUES

PART I. ISSUES CONCERNING ALL ENERGY RESOURCES

The questions in Part I should be answered for each of the following energy resources on U.S. public lands (including acquired lands and Indian lands): Onshore oil and gas;

Outer Continental Shelf oil and gas;

Oil shale and other hydrocarbons (tar sands, etc.);

Coal and lignite;

Uranium; and

Geothermal energy (distinguish, where geothermal steam and hot rock resources).

Some of the following questions have been asked in a similar form with respect to Outer Continental Shelf oil and gas in the list of questions and policy issues

prepared for the Committee's oversight hearings on administration of the Outer Continental Shelf Lands Act held on March 23 and 24, 1972. Where detailed answers were submitted for the record of the earlier hearing, those answers may be briefly summarized and referenced in response to the questions here. Also, questions similar to some of the following are asked in Part II and Part III of this list of questions and policy issues with specific reference to coal or to Outer Continental Shelf oil and gas. Detailed responses should be made to such questions under Part II or Part III, and those responses may be summarized and referenced where appropriate in Part I.

A. LEGAL AND MANAGEMENT REGIMES

Describe briefly the legal and management regime governing the development of energy resources on U.S. public lands (including acquired lands and Indian lands). The responses should include, but not necessarily be limited to, answers to questions:

1. What constitutes the principal legal authority under which each resource is developed?

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 difference 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 and amendment to make them consistent with today's energy requirements?

3. To the extent that receipt of "fair market value" is an objective of management policy for any resource, how is each such resource evaluated before lease or sale, when reviewing bids, when reviewing a lease for renewal or other purposes, and when determining royalty obligations? For each resource, and in each instance:

a. Who makes the evaluation?

b. What is net public resource value, and how is it measured and how it is used in evaluation?

c. What is fair market value, and how is it measured and how does it relate to the evaluation?

d. Distinguish, if possible, between fair market value and maximization of government revenue.

e. Is a discounted cash flow analysis used in leasing evaluations? If so, how? f. How is fair market value determined in isolated, non-industrialized areas? 4. Describe briefly the system (location, competitive lease, lease to first applicant, prospecting permit with preference right, negotiated sale, etc.) used to make each resource available for private development.

5. What initiative or action is required by a private party to obtain rights to each resource?

6. What discretionary authority, if any, has the Interior Department to lease or not to lease, or otherwise to open or close lands to development of each resource?

a. Specify the source of the authority (statute or regulations) and identify the criteria which determine the conditions and purposes for which the authority may be exercised.

b. Is the existing authority for each energy resource adequate to protect other resources and values found on and associated with the public lands?

7. What discretionary authority, if any, has the agency with jurisdiction over the surface (if other than Interior) to open or close lands to development of each resource?

8. How is the price determined that is paid to the government for each resource or the right to develop it? To what extent is the system of pricing and/ or the specific price prescribed by law, and what, if any, discretionary authority has the Interior Department over them?

9. What is the term of a lease, permit, sale, or other right to each resource? a. Can the contract provisions be reviewed and amended within this term, and if so, with respect to what conditions

b. To what extent are the term and the scope of review and amendment prescribed by law, or within the discretionary authority of the Interior Department?

10. What are the conditions for renewal or continuation of a lease, permit, sale, or other right to each energy resource?

a. To what extent may the conditions for renewal or continuation differ or be made different from the original conditions for issuance of the lease, permit, or right?

b. To what extent are the conditions of renewal prescribed by law, or within the discretionary authority of the Interior Department?

11. Where law or regulation establishes a performance standard (producible, commercial production, diligent development, valid discovery, etc.) for issuance, continuance or renewal of a lease, permit, or other right:

a. How is this standard defined in law, in regulation, and in administrative practice?

b. What, if any, test is conducted or required by the Interior Department to determine whether this standard has been fulfilled? Who makes and/or reviews these tests?

12. For each energy resource, what, if any, limits are there on the number or acreage of leases, sales, permits or claims that one person may hold? To what extent do these limitations apply to options, partial and total assignments, partnerships, associations, stockholder interests, or other kinds of interest? 13. For each resource, what conditions regarding protection of other resources, land reclamation, or environmental quality, are currently required for permissive exploration or in a lease or sale contract, permit, claim or patent?

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 reponsibility?

c. What, if any, recourse or enforcement authority has the Interior Department with respect to violations or default of contract provisions regarding protection of other resources or environmental quality, or land reclamation? Does the Department have authority to cancel a lease, permit, sale, or other resources right in such an instance?

14. Describe the existing procedure for complying with section 102 of the National Environmental Policy Act with respect to leasing or disposition of each energy resource?

a. At what points in the existing process are the overall alternatives to general leasing or disposal strategies, and to specific lease, permit or sale offerings, land closures or land openings, considered?

15. What, if any, procedures are prescribed by law, or instituted by regulation or administrative practice, for considering state and local views and interests, and the relation to privately, state, or municipally owned resources of the same type, in Interior Department decisions regarding leases, sales, permits, or the opening or closing of lands to development of each energy resource?

16. For each energy resource, describe briefly the organization of the Department for administration of leases, permits, sales or claims.

a. In what instances and to what extent is the ability of the Department to implement the goals and objectives prescribed by law for each energy resource dependent upon levels of funding and personnel?

B. SYSTEMS OF DISPOSITION AND MANAGEMENT: ALTERNATIVES AND MODIFICATIONS 17. What major in-house or contractor studies and analyses have been undertaken by the Interior Department since 1969 with respect to alternative systems of resource leasing or disposal, or with respect to management procedures?

18. In the case of each energy resource, summarize briefly the major modifications in law or management actively considered either by the Public Land Law Review Commission or by this Administration. Reference these alternatives to the PLLRC report and/or consultant reports, or to Interior Department or contractor publications.

19. What, if any, major modifications of systems or management policy have been put into effect either by legislation, regulation or operating decision since 1969?

20. What major modifications of the manner of developing these resources are incorporated into legislation currently proposed by the Administration?

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21. For which energy resources are the Department's decisions regarding execution of particular leases, permits, or sales, or regarding the opening or closing of lands to exploration or location part of an overall schedule of development related to national energy needs (like the OCS five-year leasing schedule)? Please summarize the principles, schedule and strategy of development in each instance. (Special attention is requested to the oil shale and geothermal energy resources.)

C. QUANTITATIVE AND HISTORICAL INFORMATION

22. Please provide the best available estimates of proved reserves, and probable and potential resources (or some other appropriate classification according to certainty and/or recoverability) on the U.S. public lands, of each of the energy resources listed at the beginning of Part I. In each of these instances, the reserves or resources on U.S. public lands should be compared with total U.S. reserves or resources. Estimates of coal and oil reserves and resources should, to the extent available, be subdivided by state, according to a measure of sulphur and ash content (i.e., distinguish between "clean and dirty” resources), and as mined or mineable by (a) underground methods, and by (b) surface mining methods. 23. In the case of each energy resource indicate:

a. the acreage of lands classified as containing, or suitable for production of that resource;

b. the number of acreage of leases, permits, claims or patents newly filed or issued, and averages outstanding in the years 1953-1972 [In the case of oil and gas, and coal, new leases and acreage should be subdivided into competi. tive and noncompetitive (or preference) leases];

c. the names of the ten persons or companies (including affiliated or subsidiary companies) holding the greatest (chargeable or other) acreage of leases, permits, or claims in each of these energy resources and the percentage of total lands under lease, permits, sales or claims by these persons or companies;

d. the estimated proved reserves, and probable and potential resources on lands now under lease, permit, or claim (Indicate these as proportions of total reserves or resources on U.S. public lands and in the U.S.);

e. what proportion of the total number and acreage of leases, permits, or claims, is actually under commercial production; and,

f. the number and acreage, by kind, of permits or leases expiring or subject to review in each of the next ten years.

Where data requested in the foregoing are not available, present the the best substitute information and indicate what action would be necessary to make the requested data available.

24. For each energy resource, for the years 1953-1971 and by region (for coal, subdivide by state), summarize the production and value of production from U.S. public lands. Compare these amounts of total production and value of production in the U.S.

25. For each resource for the years 1953-1971 and by region (for coal, subdivide by state), summarize the receipts of the Federal Government from royalties, bonuses, minimum royalties, rentals, filing fees and other landowner remittances.

PART II. COAL LEASING ISSUES

The questions in Part I should be answered fully here with respect to coal resources, and these answers should be summarized in the general answers to Part I of this list. Responses are requested to the following additional questions and issues.

26. What are the criteria and procedures for determining royalties and other charges on a preference right lease obtained through a prospecting permit? How do these charges compare with "fair market value"?

27. If the terms and conditions of an existing lease are not modified except at 20-year periods, and part 23 of 43 CFR does not apply to existing leases.

a. What environmental control does the Department (or the agency with jurisdiction over the surface, if other than Interior) presently have over the leased land?

b. Under what circumstances must the United States as lessor initiate court action to cancel a lease?

28. What other minerals can be mined under a coal lease? And how does the Department obtain fair market value for any such minerals, comingled or otherwise?

29. What limitations of right of surface utilization and exclusive possession for the surface of the leased land and the adjoining Federal lands are imposed upon lessees?

30. What criteria, methods and procedures are used to determine the timing of sales, issuance of pemits and issuance of coal leases? Are these the same as for OCS oil and gas leases? If not, why not?

31. What, if any analysis or assumption regarding the demand from public lands influences the Department's decisions regarding issuances of leases or permits?

a. To what extent does the Department's coal leasing strategy depend upon, and relate to, the Department's assessment of the national energy situation?

b. To what extent do the Department's decisions on specific applications for coal permits or leases reflect an assessment of regional coal demand, and the possibility of meeting that demand from existing federal coal leases or from state or privately owned resources in the same region?

32. What was the average time elapsed after application in obtaining a prospecting permit, and in obtaining a preference right lease in 1971? in 1961?

33. Does the Department have, or is it preparing or considering, a coal leasing schedule or strategy comparable to the five-year leasing schedule for Outer Continental Shelf oil and gas?

34. How many applications for prospecting permits and coal leases are currently pending and what acreage is involved, by state?

a. What are the proved coal reserves, and probable and potential coal resources, on the lands under application for lease?

b. In each state where permit or lease applications are pending, what are the proved coal reserves, and probable and potential coal resources currently on private lands, and under federal lease, and under state, local or private lease? What was coal production in the most recent year of record? Subdivide these items, to the extent possible, into coal mined or mineable by underground, and by surface methods.

c. Which, if any, of these applications are under active consideration by the Department for issuance of permits or leases?

d. Upon what specific analyses regarding the supply and demand for coal in each region would any permits or leases be granted?

Where data requested in the foregoing are not available, present the best available information and indicate what action would be necessary to make the requested data available?

35. Under what circumstances can the Secretary waive the general production requirements of continuous operation and diligent development set forth in the Mineral Leasing Act (30 USC sec. 207) ?

a. Under what circumstances has the Secretary waived or suspended or reduced minimum royalties and rentals?

b. Since only minimum rental requirements are set by Statute, what procedure, short of effecting a change in the regulation can be used to change the rental requirements?

c. Are leases now being renewed that have gone 20 years or more without production? If so, why?

36. What methods are used to determine actual tons of coal produced on a given lease?

37. What are the ratios of inspectors to leases and lease acreage by States?

PART III. OUTER CONTINENTAL SHELF OIL AND GAS LEASING ISSUES

The questions in Part I should be answered fully here with respect to Outer Continental Shelf Oil and Gas resources, except where they have been answered

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