Answer. Not generally applicable. However, for programmatic reasons not directly related to the question, the Commission does propose to lease on a competitive basis the limited area of uranium-bearing lands which it controls.

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

Answer. Inasmuch as uranium is a locatable mineral, the mining laws in effect give a locator possessory rights to the claim. Requirements regarding land reclamation, protection of other resources, or environmental quality stem from relatively recent environmental legislation, such as the National Environmental Policy Act of 1969 (PL 91-190, 42 USC 4321 et seq.), the Clean Air Act (42 USC 1857) and the Water Pollution Control Act (33 USC 451).

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

Answer. The use of its licensing authority to impose environmental requirements on persons and enterprises engaged in uranium mining operations would be at the discretion of the Commission in non-agreement states.

(b) In what instances, if any, does the law permit or require bonding or other assurance of financial responsibility for environmental protection or performance? Answer. The Mining laws do not require bonding. The Commission might impose such a requirement as a condition of its issuance or continuance of a license to transfer source material from a mine (42 USC 2092).

(c) What, if any, recourse or 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? If so, what provisions would such new authority contain? Answer. In connection with its own limited uranium leasing program, the leases will include provisions for environmental protection and AEC will have full enforcement authority with respect to a lessee's failure to comply with lease provisions, including those relating to protection of other resources, environmental quality and land reclamation. It will also have the authority to cancel leases in such instances (10 CFR 60.8 (s)). No additional authority is required at this time.

(d) What has been the specific effect of environmental laws, regulations, and requirements on the level of exploration and production of energy minerals on the public lands?

Answer. Environmental laws, regulations, and requirements have probably had the effect recently of reducing the level of exploration and production of uranium, primarily as a result of delaying and increasing the cost of reactor and mill construction.

(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?

Answer. Not applicable.

(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 the 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?

Answer. The present system of disposal for uranium (location of mining claims) appears to provide sufficient incentive for early exploration and development, given the requisite levels of prospective markets and prices.

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

(a) Noncompetitive leasing of onshore oil and gas.

Answer. Not applicable.

(b) The system of prospecting permit and preference right leases for coal. Answer. Not applicable.

(c) The indefinite term and twenty-year review of coal leases.

Answer. Not applicable.

(d) The location patent system for uranium ore.

Answer. The present system requires that $100 worth of labor per year per unpatented uranium mining claim be performed. This is approximately a $5-peracre holding cost. Compared to the advance royalties and/or rentals typically paid for private lands, this figure is very low, and probably does encourage speculative non-productive holding of uranium resources.

(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?

Answer. Disposal of uranium is primarily by location under the mining laws and does not provide for receipt of fair market value (or any direct value) by the government for the resource. The public benefits received from such a disposal program are indirect. These include the employment of people in exploration, development, mining, transporting, and processing activities and the added federal, state, and local taxes engendered by such activities.

(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?

Answer. If land controllers are broadly classed as "large" or "small" in terms of their financial resources, AEC's experience indicates that more than 90% of uranium production has been by "large" companies, most of which are integrated in that they own not only mining properties but also ore processing plants. Of the presently known low-cost uranium reserves, about 98% are directly or indirectly (through subsidiaries and joint ventures) controlled by some 30 corporations or partnerships classed as large in varying degree.

The remaining 2% of uranium reserves are controlled by more than 1000 small companies, partnerships and by individuals.

Acquisition of uranium lands by various means, including staking the public domain and other methods, has evidently been widespread in all classes of enterprise. The effectiveness of exploration and of reaching the production stage has, however, as in any industry, been greatest for those having considerable financial

resources.

Uranium not being a so-called "leasable" mineral, the location-patent system applies to it on the public domain. A number of major uranium deposits have been developed, however, on leased Indian Lands (e.g., the Laguna, Navajo and Spokane reservations). Since such leases involve rather large cash bids for desirable tracts, as well as substantial performance requirements, they are usually out of the reach of financially weak parties.

Location on the public domain is the lowest cost method of obtaining mineral rights. It is therefore available to numerous small companies and individuals having limited resources. It is also available to larger companies, which are financially able to bear the expenses of locating and performing the labor requirements on numerous claims. The problems and expense of taking such claims to patent are significant. The larger companies are in a better position in this respect, and small locators have frequently chosen to sell their location rights, particularly if they have succeeded in finding showings of a promising ore deposit. However, it must be said that the location-patent system does not in itself favor any particular class of enterprise.

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

Answer. Not applicable.

(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 OC8 oil and gas leasing. Answer. Not applicable.

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

Answer. With respect to AEC's planned uranium leasing program, information available on reserves and potential resources is believed to be adequate to formulate appropriate lease terms and to administer the leasing program effectively. Although not applicable to AEC with respect to resource management, AEC considers there is inadequate information on location, quality and cost of exploitation of coal resources for overall energy resource planning.

(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.

Answer. AEC does not have complete information on the number, acreage, ownership and control of all individual claims, but does not consider such information to be necessary at this time for its program planning. The information on uranium being made available voluntarily by the uranium industry to the AEC is adequate to determine developed uranium reserves and to monitor progress of development and volume and value of production.

(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!

Answer. Not applicable.

(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 prepetuated in any subsequent legislation related to mineral leasing?

Answer. Not applicable.

ATTACHMENT B

ENERGY RESOURCES LEASING AND DISPOSAL QUESTIONS AND POLICY ISSUES

PART I. ISSUES CONCERNING ALL ENERGY RESOURCES

A. Legal and Management Regimes

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

Answer. Uranium on the public lands (except Indian and acquired lands) is developed under the mining laws dating back to the mining law of 1872. The proposed leasing of AEC-controlled lands for uranium mining will be carried out under the AEC's legal authority to lease acquired and withdrawn lands for uranium in the Atomic Energy Act of 1954, as amended (42 USC 2097).

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

Answer. The principal goals and objectives of the AEC concerning the management of uranium resources on AEC-controlled lands are the orderly progress of uranium mining in the area and exploitation of AEC-controlled resources in a manner which results in the maximum extraction within the limits imposed by economics and the corresponding income to the government.

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

Answer. At the discretion of the AEC (10 CFR Part 60).

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?)

Answer. Through proper timing relative to the development of the area in which the resources are located and by appropriate bidding procedures and royalty schedules.

c. What is the basis for any difference in goals or objectives with respect to different energy resources?

Answer. Not applicable.

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?

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Answer. Projected energy requirements are such as to justify the continual review of the development and management of the nation's energy resources and the legal authorities relating thereto.

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?

Answer. The following answers concern only the AEC limited uranium land leasing program:

a. Who makes the evaluation?

Answer. The evaluation is performed by a team of AEC personnel including geologists, mining engineers, metallurgical engineers and cost analysts.

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

Answer. A net public resource value for AEC-controlled lands containing uranium ores is not used by the Commission in its evaluation. Instead, the Commission examines the potential consequences of the mining activity as it may result in the production of useful materials as well as the possible adverse effects on the environment. These two aspects are not necessarily quantifiable in the same terms so as to permit a determination of net public resource value. c. What is fair market value, and how is it measured and how does it relate to the evaluation?

Answer. The fair market value is considered to be the value on the commercial market of the ore estimated to exist on the property and the potential for new discoveries, less the cost of extraction and a reasonable profit to provide the incentive to a prospective lessee to undertake the risk of exploration, development and mining. The estimate of the fair market value is considered directly as a measure of the adequacy of bids received.

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

Answer. It is difficult to distinguish between fair market value and maximization of government revenue. An attempt to increase government revenue above that indicated from a determination of fair market value as in question 3.c. above by means of increased royalty rates, for example, would tend to decrease the total quantity of ore mined and, therefore, decrease the ultimate income to the Government.

e. Is a discounted cash flow analysis used in leasing evaluations? If so, how? Answer. Yes. The analysis is used to determine the relative values of cash bids and royalties over an extended period of operation of the mining properties. f. How is fair market value determined in isolated, non-industrialized areas? Answer. All of the AEC-controlled lands proposed for leasing are located within a reasonable distance of milling facilities. Proximity to milling facilities is the only economic factor bearing on the location of uranium properties. The mill product is a highly concentrated one that can be shipped in world-wide commerce at low unit cost.

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.

Answer. Except for leases on Indian lands, acquired lands and the uraniumbearing lands controlled by AEC. the system used to make uranium available is through the location of mining claims.

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

Answer. The action required to obtain rights to uranium on the public lands is the location of mining claims. Rights to uranium on Indian lands are obtained through lease.

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?

Answer. Not applicable.

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?

Answer. The AEC has discretionary authority under the Atomic Energy Act (42 USC 2097) with regard to acquired lands, to open or close the lands to development, as described in the answer to Question 2 of Attachment A. Except for the limited area of AEC-controlled uranium lands, the AEC has not exercised this authority with respect to the development of uranium resources.

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?

Answer. No compensation is paid to the Government for uranium mined on public lands under the mining laws. With respect to AEC-controlled lands, the disposal procedures and royalty schedules for uranium are to be determined at the discretion of AEC, with the objective of maximizing economic extraction and associated income to the government.

9. What is the term of a lease, permit, sale, or other right to each resource? Answer. No leases on AEC-controlled uranium lands are presently in effect. The AEC expects that when it grants leases they will be for a term of 5-10 years, renewable for an additional 5-10 years.

a. Can the contract provision be reviewed and amended within this term, and if so, with respect to what conditions?

Answer. It is expected that the lease contracts in the AEC leasing program will contain provisions for review and adjustment with respect to the price per pound used to determine royalty payments. The leases will also provide for continuing AEC approval of exploration and mining plans and changes to permit assurance of adequate environmental control.

b. To what extent are the term and scope of review and amendment prescribed by law, or within the discretionary authority of the Interior Department? Answer. The term and other provisions of a lease for these lands is within the discretionary authority of the AEC (10 CFR Part 60).

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

Answer. It is expected that a lease will be renewed or continued on application of the lessee if he has adequately performed under the lease terms, and if renewal is in the best interest of the Government.

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?

Answer. The terms and conditions of the original leases, which would contain provisions regarding renewal, have not as yet been determined.

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

Answer. The conditions of renewal are not prescribed by law or regulation; they would be entirely within the discretionary authority of the AEC.

11. Where law or regulation establishes a performance standard (producible, commercial protection, 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?

Answer. Not applicable.

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?

Answer. With respect to uranium on the public domain there is not limit to the number or acreage of claims that any one person may hold. There are no statutory or regulatory restrictions on the number or acreage of leases applicable to AEC's leasing program. It is probable that AEC will impose some limits but these have not yet been determined. AEC's approval of assignments and transfers will be required.

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?