retary of the Interior and he is directed to do so "when exercising his authority under such programs as may be authorized by law other than the act."

Question 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 taken into account national and regional demand and alternative sources of supply, including outstanding inactive, nonproducing Federal leases, private and State lands, et cetera?

In particular, what are the Department of Interior's policies for leasing coal, Outer Continental Shelf oil and gas, oil shale, and geothermal resources?

And I may say here, Mr. Chairman, that the answer to this question is quite lengthy, but yet, in itself, does not cover or fully answer the question which is covered throughout this paper and particularly in answer to, I believe it is question 9, which we will get to in a few minutes.

But suffice to say here that as our planning system develops, it will provide the framework for a long-term strategy for the leasing and disposal of Federal energy resources.

The system will take into account national and regional demand and alternative sources of supply. The Department's policy is to lease or dispose of these resources only when we meet the three major mineral management goals and objectives of orderly and timely resource development, protection of the environment, and the receipt of fair market value for leased resources.

I think perhaps the most controversial, well, I don't know, they are all perhaps controversial, but the receipt of fair market value is a question we will devote ourselves more specifically to later in the

answer.

You are aware that we have our proposed 5-year schedule of offshore leasing which is directed at orderly resource development. The answer details how we manage that, goes into the fact that we are presently engaged in an experimental plan for the development of oil shale by a trial on six selected tracts, two in each of three States, Wyoming, Colorado and Utah for consideration in the prototype shale leasing program.

We plan to hold the first competitive lease sale on geothermal steam this year.

Next question. 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 especially coal and oil shale.

Answer 5. The Department's present position is to proceed cautiously on the issuance of further coal leases and permits pending an analysis of the quantity and quality of coal already under lease, and the demand and need for additional coal.

In addition, the Department plans to incorporate terms and conditions in the outstanding leases upon their renewal in order to foster their development.

In regard to oil shale, the quality and quantity of oil shale deposits on private lands generally does not match the best of the Federal de

posits. Therefore, Federal leasing of oil shale should be encouraged. And that is what we are attempting to do in our current program.

In regard to uranium, known reserves of relatively low cost uranium fall far short of the Nation's requirements. Where possible, Federal lands should be open to mining claim location and the Department should continue to consider prospecting permits.

In his clean energy message of June 1971, the President underscored the critical national need for clean energy and directed the Department to accelerate offshore oil and gas leasing and to prepare a 5-year leasing schedule for oil and gas on the Outer Continental Shelf.

The Department is operating under this tentative 5-year lease schedule. The President also emphasized the importance of a geothermal leasing program and an oil shale leasing program which have been developed.

Additional onshore oil and gas leases are needed, but it is even more important that the leases be issued under conditions which will promote orderly development. It is believed that a system of all competitive leasing with appropriate requirements for exploration and development, instead of the present noncompetitive leasing system, would be more responsive to supply and demand and would lead to less holding of leases primarily for speculation.

The administration's proposed bill to reform the mineral leasing laws would provide that, with minor exceptions, all leases would be issued competitively.

Question 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?

As to oil and gas on the OCS, all major oil sales are considered major actions which can significantly affect the quality of the human environment and consequently require the preparation of environmental impact statements.

Compliance with detailed lease stipulations, operating regulations and orders designed to protect the environment is required of all lessees and operators on the OCS.

(a) Section 102 (c) of NEPA prescribes the specific minimal content of environmental impact statements required of all major actions affecting the environment.

Section (5) of the OCS Lands Act provides the Secretary broad discretionary authority to prescribe such rules and regulations as may be necessary to administer leasing on the OCS.

(b) The OCS leasing regulations provides for bonding all lessees, these bonds are being conditioned on compliance with all terms of the lease.

(c) The OCS operating regulations provide for the suspension of operations, including production, which in the Department's judgment threatens immediate, serious, or irreparable harm to the environment.

Any nonproducing lease may be canceled administratively whenever the lessee fails to comply with any provision of the OCS Act or lease or applicable regulations in force and effect on the date of issuance of

the lease. Producing leases may be canceled for such failure only by judicial proceedings.

We believe the Department presently has ample authority to suspend operations and/or cancel a lease.

(d) The net effects of strengthened environmental laws has been an increase in the time required to implement operational steps which necessarily precede and lead up to an OCS sale and some reduction in the acreage offered for lease.

In order for the Department to fully comply with the requirements of NEPA as it has been interpreted in recent court decisions, a further increase of this time frame has been necessary.

Onshore minerals. Under 43 CFR 23.5 (a) (1) departmental regulations and BLM manual procedures, before a permit for exploratory activity is issued, a technical examination is made to determine the probable effect of prospecting activity on the environment.

The examination takes into consideration the need for the:

preservation and protection of other resources including recreational, scenic, historic, and ecological values; the control of erosion, flooding and pollution of water; the isolation of toxic materials; the prevention of air pollution: the reclamation by revegetation, replacement of soil, or by other means, or lands affected by the exploration or mining operations; the prevention of slides; the protection of fish and wildlife and their habitat; and the prevention of hazards to public health and safety.

Stipulations to protect the environment are incorporated in the permit. If the technical examination reveals that operations cannot feasibly be conducted to avoid certain specified damages to the environment, operations may be prohibited or restricted in the area under application.

For onshore oil and gas, a BLM manual 3109/3509 prescribes that the same type procedures followed under 43 CFR 23 for other minerals will also be followed before the issuance of oil and gas leases.

With respect to those nuclear, uranium and thorium, deposits which are subject to the location-patent system, the Mining Law of 1872 does not provide for the Government's control of environmental impacts. The authority of the Secretary to impose environmental controls on activities under the mining law is now under study by the Department. Mining operations would be subject to applicable State water and air quality and surface restoration controls and to various surface management authorities of the Federal resources management agencies.

AEC, in its procedures to license uranium ore processing plants, requires as part of the NEPA section 102 environmental impact statement a description of the environmental impact of associated mining operations.

(a) The above described procedures for controlling environmental impacts for leasable minerals are within the discretionary authority of the Secretary.

However, the Mineral Leasing Act states in 30 U.S.C. 187 as a general principle, that leases shall contain provisions for exercising care in the operation of properties and for safeguarding the public.

Moreover, the National Environmental Policy Act specifically requires that all other statutes and regulations be administered and interpreted "to the fullest extent possible" in accordance with its policies.

(b) The leasing acts provide that the Secretary shall prescribe such rules and regulations as he may deem appropriate to carry out the provisions of the acts, including bonding requirements for environmental protection or performance. For nuclear minerals, the mining law does not make provisions for bonding requirements.

(c) The Department does not have the authority to cancel leases, except geothermal steam and nonproducing oil and gas leases, for violations or default of contract provisions regarding protection of other resources, environmental quality, or land reclamation. Nonproducing oil and gas and geothermal steam leases can be cancelled administratively for violations by the Department.

Other leases can be cancelled only by Federal courts. The Department does have the authority to cancel all permits for noncompliance with the terms and conditions.

Additional authority is not not needed with respect to the cancellation of any permit. However, the Department does need the authority to cancel all leases administratively for noncompliance with the terms and conditions.

(d) For nuclear minerals which are subject to location under the mining laws, there have been no requirements for environmental protection except for requirements under applicable State laws or various surface management authorities of the Federal resource management agencies.

The effect is not known at this time of the AEC's requirement for a description of the associated mining operations prior to the licensing of uranium ore processing plants.

For the minerals subject to lease, the environmental laws, regulations, and requirements have caused some delay in the levels of exploration and will probably continue to delay issuance of new leases and permits.

Question 7. What safeguards in the preparation of a new 5-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?

Answer 7. In the preparation of a new 5-year OCS leasing schedule, adequate time, based on our most recent experiences, is being allowed for preparation of environmental impact statements and public hearings in compliance with NEPA.

Contracts have been made with agencies whose expertise in environmental analyses and alternative energy sources enables them to make substantial contributions to our planning and analytical efforts.

BLM has strengthened its staff working on the environmental analysis of OCS development. Environmental impact statements prepared for each proposed OCS lease sale are increasingly comprehensive, and every effort is being made in the preparation of these statements to comply with the requirements of NEPA as interpreted by the courts. I might say here, Mr. Chairman, once having prepared a full environmental statement, which satisfies the requirements of the court, if we are able to do that, we shouldn't have to repeat that work, the major part of that work, for each site.

The alternative sections and a large amount of the material that is included in a full scale environmental statement will be useful

with compartively minor revisions for successive sales. It is largely, I think, the question of getting the proper format to begin with.

Turning now to question 8, does the present system of leasing or disposal for each energy resource provide sufficient incentive for early 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?

There are strong indications that the present OCS leasing system of cash bonus bidding and fixed royalty have provided sufficient incentive for early exploration and development of leases.

The large cash bonuses that companies pay represent immediate, sunk, costs that stimulate early exploration. However, the Department is presently studying alternative bidding systems, and one of the purposes of these studies is to determine the relative effects of various bidding systems on providing incentives for early exploration.

Some of the pros and cons of the various systems as applied to exploration and development are discussed in the answer to ques

tion 12.

We believe that the current size of lease tracts, usually 5,760 acres, and length of OCS leases, 5 years and so long thereafter as production occurs, do not normally have deterrent effects on exploration and/or development.

There may be some merit in providing for longer primary terms in new areas, that, because of adverse weather conditions, such as in the Gulf of Alaska, result in short field seasons.

Although the current sizes of lease tracts for the various leasable. onshore energy minerals do not generally deter exploration and/or development of any energy resource on public lands, consideration should be given to revising the reserve limitation system to a system of quantity and/or quality of recoverable resource instead of the present acreage system.

Obviously, for example, the 46,080 acres of coal limitation per State does not provide a meaningful starting point to limit the coal holdings. That is, there is a tremendous reserve difference between 46,080 acres of a 4-foot coal bed and 46,080 acres for a 100-foot coal bed. Any limitation of coal reserve holdings should therefore be based on the estimated quantity and/or quality of the recoverable reserve and related to the appropriate quantity and/or quality needed by industry for development. A quantity-quality reserve limitation system would equally be applicable to oil shale.

The mining law imposes, by its very nature, an economic limitation on the locatable nuclear mineral reserve holding and an economic incentive for exploration and development. Mining claims for such minerals, for example, would be valid only where the claimant has made a discovery of valuable mineral within the meaning of the mining law.

Generally, the past lease terms for the onshore leasable energy minerals do not deter exploration and/or development of any energy resource. On the other hand, the terms have not generally provided for early exploration and development for coal.