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Hon. WAYNE N. ASPINALL,

DEPARTMENT OF THE INTERIO

OFFICE OF THE SECRETARY Washington D.C., July 20,

Chairman, Committee on Interior and Insular Affairs,
House of Representatives, Washington, D.C.

DEAR MR. ASPINALL: This is in response to your request for the views Department of the Interior on H.R. 84, a bill to stabilize the mining of le zinc by small domestic producers on public, Indian, and other lands, other purposes. These comments also apply to identical bills, H.R. 250 2874, H.R. 4003, H.R. 4448, H.R. 5271, and H.R. 7534 and a similar bill, H The Department is opposed to the enactment of H.R. 84 in its present The bill would authorize and direct the Secretary of the Interior to for stabilization payments to small domestic producers of lead and zinc upon a price of 17 cents per pound for lead and 141⁄2 cents per pound f Such payments would be limited to producers whose output of lead zinc in any 12-month period does not exceed 2,000 tons of each commodit each single operating unit for which he seeks payment. A small d producer may be eligible for such payments with respect to only one op unit in any one State or mining district.

The Department believes that subsidies of the magnitude envisioned b bills would be seriously detrimental not only to national interests but welfare of the lead-zinc industry itself. If enacted, the subsidies aut would stimulate a large amount of production from marginal mines would be unable to survive the expiration of the subsidy program. They bring on the market substantial additional tonnages of metal at a tim stocks are unusually large and are depressing prices. These additions to from subsidized production would undoubtedly result in lower prices an the nonsubsidized portion of the domestic lead and zinc industry to output and reduce employment.

The $4,840,000 yearly appropriation authorized will, in our opinion, adequate to cover the total tonnage eligible for subsidy. The Secretary Interior will then have to allocate proportionately to each eligible pr Many producers may incur serious losses by putting properties in op expecting to receive the full subsidy and then receiving only a portion o The Department believes that the Government's objective with refere lead and zinc should be to bring about better conditions in the industry, permit it to operate normally within our traditional concepts of private prise. We do not believe that such conditions can be achieved by a cont program of subsidies.

We recognize that the Government is responsible in part for stimulating production by its defense programs. For this reason, we have endors temporary use of import quotas and have used international consultati push for reductions in output by producers outside of the United States approval of H.R. 84, in its present form, would operate to disrupt the now being made to restore a reasonable balance in world production an sumption of these commodities.

The administration is supplementing these efforts to reduce production and reduce the available supply of metal in the world by offering to surplus lead stocks held outside of the United States. This barter pr has been conditioned on the willingness of major producers to cut back and smelter output substantially below the levels of previous years and willingness of producers throughout the world to bring total production anticipated levels of consumption. We believe this program will lift o market a large part of stocks held abroad and help bring about a balan tween new supply and demand.

There remain, however, the problems of economic and human distress a from the inability of depleted or uneconomic mines to continue to suppl ployment in a communtiy. Measures to cope with such problems in all are now rapidly taking shape. The Congress has enacted the Area Rede ment Act (Public Law 87-27) and the administration has moved promp implement it. In this connection, the administration expects to create cial task force to gather data and analyze the situations of depressed munities historically related to mining. The Nation cannot afford erosi human resources by the depletion of the particular natural resources upon y the economy of a community has been based.

This Department is engaged in an analysis of the whole range of problems affecting the production and utilization of metals and minerals. These problems are complex and do not lend themselves to ready and easy solution. We regard this review as a continuing function of the Department, and as we find deterrents to fuller realization of the Nation's mineral potential, we shall seek their removal.

Meanwhile, the Department would not object to the enactment of a limited temporary measure which would assist a number of small producers without disrupting the entire industry. Such assistance should be limited to a 3-year period during which every effort should be made to utilize other more fundamental courses of action. To appropriately limit the program and to provide for orderly termination, we recommend that individual payments be limited to 750 tons of each metal the first year, 500 tons the second year, and 250 tons the third and last year, based on a combined price of 271⁄2 cents for the lead and zinc.

We propose that a small producer be defined as one who actually mined lead or zinc ores at some time during the period 1956-60, but who did not in any year prdouce more than 2,000 tons of the two metals combined. This definition would cover approximately 90 percent of all domestic producers of lead and zine. Producers of other metal who recover lead and zinc as byproducts should not be eligible. Production from properties not previously operated, or from properties leased since January 1, 1961, should not be eligible.

The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely yours,

JOHN M. KELLY,

Assistant Secretary of the Interior.

THE SECRETARY OF COMMERCE,
Washington, D.C., July 25, 1961.

Hon. WAYNE N. ASPINALL,

Chairman, Committee on Interior and Insular Affairs,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This letter is in reply to your request for the views of the Department of Commerce with respect to H.R. 84, H.R. 2505, H.R. 2874, H.R. 4003, and H.R. 163, bills to stabilize the mining of lead and zinc by small producers.

These bills provide for stabilization payments to be made to small domestic producers of newly mined lead and zinc ores whenver the average price of common lead in New York is below 17 cents a pound and whenever the average price of prime western zinc in East St. Louis is below 141⁄2 cents a pound. Such payments would be equivalent to the differences between the amounts received from the sales of ores by the small domestic miners--after deducting smelting and related costs-and the amounts they would have received had the price of common lead metal been 17 cents a pound in New York and the price of prime western zinc been 141⁄2 cents a pound in East St. Louis. Stabilization payments would be limited to domestic miners whose output in any 12-month period did not exceed 2,000 tons of recoverable lead metal and 2,000 tons of recoverable zinc metal from each single operating unit producing ores on which stabilization payments are claimed. Small domestic producers may be eligible for such payments with respect to only one operating unit in any one State or mining district.

All of the above bills are identical except II.R. 163. One of the differences between it and the others is that H.R. 163 provides for stabilization payments on 5.000 tons of recoverable lead and zinc metal combined.

The Department of Commerce is opposed to the enactment of these bills as presently drafted.

This Department is of the view that the magnitude of the subsidy payments proposed in these bills would so increase domestic supplies of lead and zin as to depress prices further and result in major offsetting adjustments by the unsubsidized segment of the domestic industry. This could mean a decrease in the output of the unsubsidized mines and of employment therein.

The establishment of a lead and zinc subsidy program of the magnitude envisaged in these bills would have an adverse effect upon efforts of this Govern

ment and the governments of other important consuming and producing countr to deal with the problems relating to these two metals. Since May 1959 c tain producers in some foreign countries have independently and voluntar reduced mine and smelter output and exports of these two metals, especia lead.

Recent actions taken at the international level should have a substantial ber ficial effect upon the domestic mining industry. At the Mexico City meeting the International Lead and Zinc Study Group during March 1961 a number foreign producers, through their respective government representatives, a nounced substantial reductions in lead mine and smelter output and in expor As a result, for the first time since 1957 planned free world production of le for 1961 is below estimated consumption for the year.

In addition to these actions, this Government has entered into barter arran ments whereby surplus domestic agricultural products would be exchanged surplus foreign lead accumulated prior to December 31, 1960. It is believ that the removal of these surplus lead stocks and the reduction in supplies newly mined lead (including some zinc) would have a salutary effect upon t market.

In light of these international actions, to increase domestic lead and zinc p duction at this time through the payment of subsidies in the amount propos in these bills may be considered an inimical act by those countries whose p ducers have reduced output in order to bring about a better balance through supply and demand for these two metals. Such action may result in the termi tion of international consultations.

Nevertheless, the depressed conditions among the small mines, their employ and related communities continue. Accordingly, two alternative plans, in 1 of the subsidy programs envisaged in these bills, are proposed.

First, the administration would not object to the enactment of a limited a temporary measure which would assist a large number of small domestic le and zinc mines without adversely affecting the overall industry and the corr tive actions already taken. Listed below are the basic features of this propos The subsidy assistance would be limited to small lead and zinc mines and t period of 3 years. During this time, effort would be made to resolve the proble of the small domestic mines on a more lasting basis. The assistance payme would be limited to 750 tons of each metal (recoverable basis) for the first yea 500 tons for the second year; and 250 tons for the last year. The subsidy p ments would be made on basis of a combined price of 271⁄2 cents for the t metals. The program would be limited to small producers. A small produ would be defined as one who actually mined lead and zinc ores at some time d ing the 1956-60 period, but whose output during any one year did not exce more than 2,000 tons of recoverable lead and zinc metal. Producers of ot metals who recover lead and/or zinc as byproducts would not be eligible subsidy payments. Output from mines not previously operated or leased si January 1, 1961, would not be eligible to receive subsidies.

Second, the administration is developing plans to implement the recently acted Area Redevelopment Act (Public Law 27). Under this legislation qualif firms in depressed mining areas may receive assistance to effect economies a changes which would make them more competitive. The legislation also p vides for vocational retraining for unemployed miners and subsistence payme to persons undergoing training.

We have been advised by the Bureau of the Budget that there would be objection to the submission of this report to your committee.

Sincerely yours,

Hon. WAYNE N. ASPIN ALL,

EDWARD GUDEMAN, Acting Secretary of Commerce

EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF CIVIL AND DEFENSE MOBILIZATION,
Washington, D.C., July 25, 1961

Chairman, Committee on Interior and Insular Affairs, 'House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in reply to your request for a report on H.R. H.R. 163, H.R. 2505, H.R. 2874, and H.R. 4003, 87th Congress, bills to stabil the mining of lead and zinc by small domestic producers on public, Indian, a other lands, and for other purposes.

The proposed legislation would direct the Secretary of the Interior to maintain a program of stabiliaztion payments to small domestic producers of lead and zinc ores and concentrates. The bills would authorize payment of the difference between the selling prices and 17 cents per pound for lead and 141⁄2 cents per pound for zinc.

Since the mobiliaztion position in lead and zinc is excellent, no defense justification can be established for the proposed legislation.

From the standpoint of the administration's program, the Bureau of the Budget advises that it has no objection to the submission of this report.

Sincerely,

Director.

Mr. EDMONDSON. We have several Members of the House who are authors of legislation along this line who are there this morning. I think two members of the committee are included in their number, and I would like to recognize at this time the gentleman from Nevada, Mr. Baring.

STATEMENT OF WALTER S. BARING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEVADA

Mr. BARING. Thank you, Mr. Chairman. I think I would like to paint the picture in my own State of Nevada first.

The foreign aid program and the reciprocal trade program, tied in together, have completely closed the mining in Nevada.

We had quite a battle several years ago on tungsten. As you know, Nevada is quite a large tungsten-producing State. When the lid popped off on lead and zinc, although some lead is found all over the State, for three lead-producing areas Eureka County, Nev.; Ely, White Pine County, Nev.; Caliente, Pioche, and neighboring communities near them in Lincoln County-the picture became black. You go through those counties and those people say: "What are we going to do? What are you going to do?"

I might call your attention to the fact they do not have the necessary population to come under the distressed areas bill which we passed last year, which was also vetoed, and there is another bill like it being contemplated right now in the Congress.

We cannot get any support from the distressed areas funds. So that the only thing they have there is what they have lived on all their life-mining.

I introduced a bill along with yourself, Mr. Chairman, because I believe in it. If the Government is going under a policy that is putting our people out of work, we must resort to this type of legislation to help the small people live. The big producers do not need help.

But in regard to my State-and that is for whom I am speakingI do not get letters telling me support this President's or that President's program on foreign aid. All of my letters are "Let's stop somewhere. It has been a bad mistake. Let's take it off the books and start over. But don't keep up this foreign aid spending and putting our own people out of work.

When unemployment hits this country I think free trade has got to stop, and until such time as I think we can strengthen our tariff situation by removing reciprocal trade, I think this legislation is necessary.

The situation is extremely critical. I would say some 4,00 are affected in the State of Nevada. While I want to hear wit from the various companies and producers, I want to say that t uation in Nevada is critical, and I am for this bill.

(Mr. Baring's prepared statement follows:)

STATEMENT BY WALTER S. BARING OF NEVADA IN BEHALF OF H.R. 2874 (H

I have watched thriving mining communities fade into ghost towns i part of my State where mining once was the principal industry. Thes are not even eligible to receive aid under the depressed areas legislation of the relatively small population. I have approached the problem from angles through the introduction of legislation and I finally support a res memorializing the administration to come up with a sound domestic program which they have failed to do. True, the Tariff Commission ha sidered from time to time the advisability of raising tariffs in order to domestic production, but I have little or no faith in what may develop pu to their present investigations. I do feel that they are realistic or symp in their approach, and while they have deliberated, domestic mining h tually become extinct.

H.R. 2874 simply provides an incentive payment which would stabiliz sliding scale, zinc at 141⁄2 cents and lead at 17 cents per pound for small pro as defined. We cannot depend on the Tariff Commission and I have yet t a favorable departmental report on any bill that would help domestic under the present administration. It is therefore, of utmost importanc the Congress enact the legislation now before us. This legislation, couple adequate import controls would establish a program invaluable in the de ment of not only small lead and zinc mining operations, but would stre our present ore reserves which are necessary to supply the tremendous requirements of the Nation's economy.

Mr. EDMONDSON. I thank the gentleman, and I certainly wa compliment him upon the consistent fight which he has waged fo entire minerals industry. I know every time we have had a pro before this committee affecting any segment of the mining ind the gentleman from Nevada has been one of the stoutest cham of that legislation to help improve our domestic mining industry Mr. BARING. Thank you, Mr. Chairman.

Mr. EDMONDSON. Does any member of the committee have any tions of the gentleman from Nevada?

Then I would like to recognize the gentleman from New Me Mr. Morris, who is also an author of legislation now pending b the committee.

Mr. MORRIS. Mr. Chairman and members of the committee colleague, the senior Congressman from New Mexico, Congress Montoya and I have a joint statement prepared for the comm I would like to ask the committee to hear Congressman Montoy deliver our joint statement at this time.

I think Congressman Montoya has with him Mr. McConnell, is an expert on the lead and zinc industry and will accompany Montoya to the stand.

It is with a great deal of pleasure I present my Colleague, ( gressman Montoya, and Mr. McConnell to this committee once ag Mr. EDMONDSON. We are very pleased to have our colleague, Montoya, with us and his assistant, Mr. McConnell.

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