change the disposition of revenue to: 37-1/2 percent to the State and 62-1/2 percent to the U.S. Treasury to be credited to miscellaneous

receipts, except that Alaska would receive 90 percent of the revenues from that State.

The accompanying table lists the distribution of revenues to the States from February 25, 1920, to June 30, 1971.

BUREAU OF LAND MANAGEMENT

TABLE 123.-Allocations to States from mineral leasing acts receipts,
February 25, 1920–June 30, 1971

* Includes under Executive Order of November 6, 1958: Montana $96,540, New Mexico $4,964. Includes $391 for South balf of Red River.

Includes $1,644 under Executive Order of October 27, 1960.

NOTE.-The acts of Feb. 25, 1920 (41 Stat. 437, 30 U.S.C. 181 et seq.), Oct. 2, 1917 (40 Stat. 297), and Feb. 7, 1927 (44 Stat. 1057, 30 U.S.C. 281 et seq.).

*Table #123 from 1971 Edition of Public Land Statistics,

Mr. LOESCH. Mr. Chairman, I talked longer than I intended to in trying to brief the lengthy statement I have. I am sorry about that, but that completes my presentation.

Senator Moss. Thank you very much, Secretary Loesch. That was helpful to have you summarize as much as possible.

You do have a very extensive and detailed statement here answering the questions and we appreciate that. We haven't had the opportunity of analyzing it in detail before this morning, and it may be that with more time to read it in detail we may have questions that we would like to submit to amplify or explain any part of it and that is extended to any member of the committee because there is a great deal in there that we must digest and understand.

I do have a few questions that occur to me now and I am sure my colleagues may have some questions.

So, we will proceed with that and see if we can wrap it up as soon as possible.

First of all, in dealing with your later question on the revenue sharing, as an alternative to OCS revenue sharing with the coastal States, what are the advantages or disadvantages of letting the coastal States collect the severance tax on OCS mineral production?

Mr. LOESCH. Well, of course, Mr. Chairman, let me say first of all that I feel some shyness in answering questions of deep economic significance because I am not an economist. But I would say that allowing States to levy a severence tax on the Federal Government's shore production would likely, in my mind, lead to more of an imbalance than a revenue sharing program as such.

It seems to me that there is a certain question, and here I am not speaking for the administration, but just my view.

It seems to me that there is a certain amount of justice in not allowing a State which happens, by a fortuitous circumstance, to have what in some areas is called a windfall, to take that windfall to the detriment of the other States.

I think this committee has recognized this, for instance, in the way it handled the Alaskan Native Claims Act, distributing the regional revenues among all the regions instead of just the region benefitting where the resource happened to be found.

Senator Moss. Regarding coal leases, what proportion of the coal leases on public land are now under production or in active development?

In your answer to question 5 you state the Department plans to incorporate terms and conditions on the outstanding leases upon their renewal in order to foster their development.

Doesn't the present law require development as a condition of the continuation of leases?

Mr. LOESCH. Yes.

To answer the first part of your question first, we think that-well, we know that 15 percent of present outstanding coal leases are under active production. Thirty-four percent are now producing or have at one time or another in the past produced. There is another percentage which is planned for production in an orderly mining plan development.

In other words, being held in orderly reserve at the present time. There is a substantial percentage of leases, however, which so far as

any activity is concerned, appear to be held purely for speculative purposes.

Now, the plans that we have and that we have been developing over the last 2 years or more for changes in the coal leasing system are designed to prevent this type of holding.

That is the complicated problem in this respect. For example, we have been considering a coal sale, a coal lease sale, one in Wyoming and one in Colorado. The one we have been contemplating in Colorado, the operator, which has a growing operation, is presently operating on private land. It also has a lease on State lands and immediately adjacent to it is Federal land which we have been thinking of putting up for sale.

Now, it is not environmentally proper, it seems to us, for us to require that that operator open up a new coal mine or strip operation on the Federal land simply to, if he becomes the successful bidder, simply to meet a production requirement when he would come to that = with less environmental degradation in due course over a period of

years.

Now, it is this kind of problem that you get into when you try to structure a minimum production requirement. But we think we can do that and certainly we think we can prevent or at least greatly minimize the type of long-term speculative, nondeveloped holding that we agree has occurred in the past.

Senator Moss. Are there coal leases being renewed that have gone many years without any production or development?

Mr. LOESCH. No, sir; not right now.

While I can't tell you the results, the Department is presently investigating the idea of no longer automatically renewing leases at the end of 20 years which has been the case in the past.

Secretary Dole and I have discussed at some length how we will give the necessary warnings and restructurings to the present holders so that within the limits of legality we can either get production from those coal leases or get rid of them.

Senator Moss. Would it be to an advantage economically if the leases were canceled and then were offered to someone who would proceed with development; is that right?

Mr. LOESCH. Yes, I think the current departmental philosophy is this. We don't think we ought to lease any coal unless there is a substantive plan for development at the time of the sale.

The coal will be just as well in the ground 20 years from now in the hands of the Government if there is not planned development for that particular coal.

Now, as Senator Hansen mentioned in his opening statement, there are more complications involved in this, too. Coal leasing and coal production cannot be considered all by itself under current conditions. We have got to look at the overall environmental question involved in various regions.

It is a matter of argument today in the Department, for instance, as to whether or not the making of or the holding of a coal sale in the immediate area of present operations is a major Federal action requiring an environmental statement under NEPA.

It seems clear to me, at least, that holding a sale in a pristine area which has not had coal operations in it before it necessarily under the

definitions that have come to us from the courts and substantive Federal action.

But at any rate, it seems clear to us also that for proper development of the resources, for meeting energy needs, we have to consider coal development on at least a basin-wide basis, along with all the other factors which are going to affect the environment in that area.

Such as, just for one important example, the installation of large power stations and the installation of substantial high voltage transmission lines.

Senator Moss. As I understand it, the term "coal leases" are now designated as indeterminate and I wonder how you would cancel a lease, short of court action, after 20 years?

Mr. LOESCH. Well, I don't believe coal leases are indeterminate. However, they are for a 20-year term with successive 20-year renewals. In the past the renewal has been absolutely automatic if the lessee desired renewal. He got it. And, of course, at a very low annual rental rate.

Throughout the forties, fifties, and early sixties, these leases went for a maximum of $1 an acre, after the initial 5 years or more of the lease the rental escalated to $1. To a company or an individual, for that matter, desiring to hold such a lease for speculation, the cost is minimal. It is written off taxwise as the cost of doing business and from a corporate standpoint, of course, that cuts it in half forthwith. Our polícies, of late, have been an escalated rental based on appraisals jointly arrived at by the Bureau of Land Management and U.S. Geological Survey providing for rather substantial escalation at the end of the fifth year of the lease.

Now, if such escalated rentals rise high enough, they certainly would discourage long-term speculative holdings. We have a question in our mind as to whether they would discourage it enough and whether there should not also be built in a minimum production requirement as well as the escalated rental.

Senator Moss. Is the Department now developing a general policy and plan on these coal leases?

Mr. LOESCH. Yes, sir; it is. We have tried it experimentally, as a matter of fact, in nearly-2 years ago, 18 months ago.

We held a coal sale in Wyoming which represented our initial cut at an escalated rental. I can't remember the name of the lessee, but it was a company which had a plan to use the low-sulfur coal in utilities plants in Iowa. I believe it was the Iowa Power Co. who purchased at this sale.

I believe-John, can you recall what the escalated rental on that was in the 5 years?

Mr. SPRAGUE. No.

Mr. LOESCH. I think we went to $9, if memory serves me on that one. Senator Moss. Well, when can we count on this policy being settled upon and followed?

Mr. LOESCH. In all honesty, Mr. Chairman, I couldn't guarantee you a date.

You understand in addition to thrashing out the policies within the Department, it will necessarily have to be cleared around the executive branch. I hestitate to speculate on when that might be.