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and recommendations on some or all of the questions and policy issues. Time will not permit appearances by all members of the public who might wish to testify, but the committee will accept statements in writing addressed to issues on the following lists, for inclusion in the hearing record.

(There being no objection, the material was ordered to be printed in the Record, as follows:)

ENERGY RESOURCES LEASING AND DISPOSAL QUESTIONS AND POLICY ISSUES

INTRODUCTION

Leasing and disposal policies for energy resources on the public lands will be the subject of two days of hearings by the Committee on Interior and Insular Affairs. These hearings are part of the National Fuels and Energy Study authorized by Senate Resolution 45 and conducted by the Interior Committee with exofficio participation from the Commerce, Public Works and Joint Atomic Energy Committees.

June 19 is tentatively scheduled as the first of the two hearing days. On that day, representatives of the Interior Department will be asked to address several broad issues of policy concern (Attachment "A"). In addition, the Department is being asked to submit for the hearing record comprehensive answers to the attached list of questions and policy issues (Attachment "B"). The responses to Attachment "B" will be used by the Committee as background for a second day of hearings yet to be scheduled.

The list of questions and policy issued in Attachment "B" is organized according to the two major purposes of the hearings: a general oversight of energy resource management, and an examination of three particularly important aspects of leasing policy.

Part I of the list is intended as background for a general oversight of the management of all energy resources on U.S. public lands, including administration of the Mineral Leasing Act, the Outer Continental Shelf Lands Act, and the general mining laws insofar as they relate to energy resources.

Parts II and III invite a more intensive examination of three specific areas of leasing policy that may have particularly significant impacts on the nation's energy supplies in the forseeable future:

Part II concerns the criteria and procedures for issuing, reviewing or renewing coal leases and prospecting permits; and

Part III concerns mineral leasing on the Outer Continental Shelf. III-A deals with the leasing system and bidding methods and procedures for OCS oil and gas, and III-B deals with possible participation by coastal state and local governments in federal mineral leasing revenues.

The formulation in both lists of questions and policy issues were chosen for submission to the Interior Department in connection with the hearing scheduled for June 19. The views and recommendations regarding all or some of the issues covered by these lists will be solicited from other agencies, state governments, industry, consumer and conservation groups, and the public generally, either in appearances or in statements for the record.

ATTACHMENT A: GENERAL ISSUES OF ENERGY RESOURCE MANAGEMENT ON U.S. PUBLIC LANDS

The energy resources considered in the following questions include:

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In answering the questions, resources may be considered jointly or individually, as appropriate. "Public lands" should be interpreted to include the public domain, acquired lands, Indian lands, and the Outer Continental Shelf.

(1) Which energy resources on the public lands (a) are now, or (b) could be, made available in the foreseeable future, as a major element in the nation's energy supply?

(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 differences 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 to determine if they are consistent with today's energy requirements and environmental goals?

(3) How do you relate the Mining and Minerals Policy Act to Department of Interior policy regarding federal leasing of energy minerals?

(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 take into account national and regional demand and alternative sources of supply (including outstanding inactive, nonproducing federal leases, private and state lands, etc.)? In particular, what are the Department of Interior's policies for leasing coal, Outer Continental Shelf oil and gas, oil shale, and geothermal resources?

(5) 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.

(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?

(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 responsibility for environmental protection or performance?

(c) What, if any, recourse of 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? Is so, what provisions should such new authority contain?

(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?

(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?

(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 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?

(9) In which cases, if any, do elements of the present system encourage speculative nonproductive holding of resources on the public lands? Consider particularly (a) Noncompetitive leasing of onshore oil and gas;

(b) The system of prospecting permit and preference right leases for coal;
(c) The indefinte term and twenty-year review of coal leases; and
(d) The location-patent system for uranium ore.

(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?

(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.

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