If that is what you are getting at, I think the administration proposal under the mining act would provide us with the tool that we need.

Senator JORDAN. I think you have to get some better control over the energy sources, uranium especially, mined under the mining act of 1972. I am not at all sure that the recommended administration bill does all of that, but we will take a good look at it.

For the past 10 years that I have been on this committee we have talked repeatedly at every session of the Congress about the two great sources of energy that are yet undeveloped.

I am speaking now of geothermal resources and oil shale. I was pleased to see in your statement that you expect to let the first geothermal lease this year and that you are also encouraging the leasing of oil shale lands for production.

How close are we to actual oil shale leasing and the production that we would expect to follow?

Mr. LOESCH. We can't say, of course, how close we are to commercial production of fuel from oil shale, but if our plan continues to keep on track from a time standpoint, as it now is, we would hope the first sale of oil shale leases would be late this year, December of 1972.

I think you are probably aware, Senator Jordan, of the sort of failsafe plan that we concocted in the Department for oil shale leases.

Essentially this consists of a prototype operation which would put up for sale two sites, two tracts in each of the three principal oil shale States, Colorado, Wyoming, and Utah. We hope this will determinethat is that the program will determine the practicability at this point in time of the major oil shale development. Whether we succeed or not is going to depend. I believe, in large part on the attitude of industry toward this. But based on the nominations that were made for the tracts eventually selected and other tracts, we have good reason to believe that the industry is greatly interested.

I think there are going to be several points during the development of this program at which we will have major questions to face. Environmental considerations are serious in the oil shale business because of the necessity of disposition or handling of very large waste material volumes.

It is my personal belief that in the type of country in which the oil shale is situated, this problem can be managed not to the detriment, but to the eventual benefit of the local environment.

But we will have the same objections as are raised, for instance, in the forestry field, to clear cutting. Because for a time things are likely to look kind of bad in a particular place. I think the question will arise when we hold the sale as to whether or not the bidding is adequate, the bonus bidding is within the values that the public should expect. I personally feel quite clear in my mind that we ought not to worry about that at all in this prototype operation because it is my view that if the prototype program gets off the ground and results in substantial exploration, technologically, of production, that it will beneficiate all the rest of the Federal lands, not to speak of private lands with oil shale resources and that the eventual return to the Government by the public and the eventual development of the resources will be most well worth it, even if we didn't get any money for these tracts.

But I must tell you I think I am perhaps in a minority in feeling that way.

Senator JORDAN. Turning now to coal, did I hear you correctly that you knew of a 500-foot coal seam some place?

Mr. LOESCH. I am advised, Senator Jordan, that in Wyoming there is an area which has 500-foot coal seams in it.

Senator JORDAN. Well, I have heard some tall stories from my friends in Wyoming, but I never heard of a 500-foot coal seam.

Mr. LOESCH. This came to my attention a few months ago when we had an application for a lease of some coal which lies-the top of it lies approximately 3,000 feet underground.

The question was whether we could figure out a way to develop that coal in place. Because if it were mined the way underground mining is conducted, because of the thickness of the seam, we could only recover 15 percent of the available coal. They couldn't leave enough pillars, under the room and pillar method, they couldn't leave enough pillars and enough supporting structure to get out a significant portion of the coal. So I don't know. I never measured it, Senator, but I am advised there are such seams.

Senator JORDAN. Well, I am advised there are some marvelous coal seams in Wyoming and I saw there what I didn't know was possible. I saw a self-contained cooling system for a mammoth coal generated powerplant, where the water was recycled.

Now, I always assumed you had to have a Columbia River or a mammoth lake or something as a cooling apparatus for that kind of a plant. But here is a self-contained plant. Granted it takes some of the efficiency of that plant in order to recycle and cool the water, I suppose very much like it takes to cut down on your power to have an air-conditioning unit in your automobile that is self-contained.

Has the Department done any experimentation in self-contained cooling units for coal plants, and, if so, it seems to me it would open up great new areas of coal mining that are not close to water.

Mr. LOESCH. I am not aware, Senator. I do know technologically they are developing and in fact have developed systems which I didn't know there was one that was a completely closed system.

I am aware of recycling systems which use a small percent of the water, but retain and use over and over again a very large percentage of it. What the Department may be doing in the Bureau of Mines or somewhere else, I don't know. We can furnish that for the record, if you would like.

The Bureau of Mines is not conducting any basic research on "self-contained" cooling units for power plants. Although such technology is available, the specific choice for a cooling system depends on many technical and economic factors (the following 2 articles were submitted for the record and are retained in the Committee files: R.M. Jimeson and G. G. Adkins, "Waste Heat Disposal in Power Plants," Chemical Engineering Progress, Vol. 67, No. 7 (July 1971), p. 64-69 and K. A. Oleson and R. R. Boyle, "How to Cool Steam-Electric Power Plants," Chemical Engineering Progress, Vol. 67, No. 7 (July 1961), pp. 70–76. Senator JORDAN. I am tremendously impressed with those great low sulfur content coal deposits in the Rocky Mountain States. It seems to me that is a source of energy that we should be turning to more and

more.

I am a little concerned that the leasing is not going forward as rapidly as the chairman indicated. Because I think when it comes to a choice of mining in those flat and low sulfur content oil beds with a low overburden as against pursuing a 1- or 2- or 3- or 4-foot seam of coal in Appalachia or some of these other areas, we better mine where the coal is and move this energy to the load centers on direct current if necessary.

Mr. LOESCH. Senator Jordan, I fully concur in your views.

Senator JORDAN. Rather than disturb the tremendous acreage of surface as we are doing now in some areas?

Mr. LOESCH. Yes; and of course, you know where you have thick, easily accessible coal seams in relatively level country, so that you don't face yourself with a terrible reclamation problem or erosion problem and so on such as are found in other areas. It does seem foolish to me that we don't concentrate on those areas for the major energy production of the next, say, 30 years, until a brandnew technology comes before us.

Senator JORDAN. I am glad to hear you say that because I think that is definitely where we should be concentrating our efforts, to meet the energy needs.

Mr. LOESCH. Of course I feel as if we might be very temporarily on dead center in this regard right now. But I am personally extremely optimistic about the future out there in development of this hugewell, just almost unimaginable coal reserve. I think it is to the national interest that we do that. I think that the energy shortage that we are going to be faced with can be fully cured without any long term-well. sure, you are going to have some environmental degradation, but I think that under modern technology can be handled, particularly in the kind of country area we are talking about.

Up in Montana and Wyoming, while it is dry country, it is nothing like as dry as down in the Southwest. Of course the more precipitation you have the easier it is to reclaim and put back into both visually esthetic and actually productive form the land you have disturbed. I think we can do it there. I also believe that the technology for air and water-prevention of air and water pollution will make-it has made great strides in the last few years and I think it will continue to do so to the point where the full development of those coal reserves will be acceptable to the American people.

Senator JORDAN. Thank you.

I won't take any more time.
Senator Moss. Thank you.

The Senator from Wyoming has a problem of subsidence of surface down in the Rock Springs area. I want him to ask about those 500-foot seams. What are you going to do then when it subsides?

Senator HANSEN. I hope it isn't necessary for me to remind this audience. I never indulge in any hyperbole. I told Senator Jordan at least 10 million times I don't exaggerate. [Laughter.]

Mr. Chairman, let me as you, what are your desires. I do have certain questions that I would like to ask. It is 12 noon now.

Senator Moss. Well, I can go on for a period of time, unless it is lengthy. If it is really lengthy, we will recess and come back.

Senator HANSEN. What would suit your pleasure in that?
Senator Moss. Well, we will find out from the Secretary.

Mr. LOESCH. Mr. Chairman and Senator Hansen, I am at your disposal today. This is the most important thing I have to do today by far so I am happy to accommodate you.

Senator Moss. Would you prefer to come back at 2 o'clock? Senator HANSEN. Yes, if that would be all right with you. Senator Moss. All right. We will then stand in recess until 2 o'clock and Senator Hansen will begin his questioning at that point. (Whereupon, at 12 noon, the committee was recessed to reconvene at 2 p.m.)

AFTERNOON SESSION

Senator Moss. We will resume our hearing.

I regret being a little late but there was a vote on the floor at 2 o'clock, so we had to go there.

At the time we recessed Senator Hansen was about to begin questioning of Secretary Loesch, and you may proceed now, Senator. Senator HANSEN. Thank you, Mr. Chairman.

Mr. Secretary, this morning you discussed a number of questions and I would like to refer to those and to your responses, if I may.

With respect to receipt of fair market value, you stated that title 31, section 483 of the United States Code obligates the Federal Government to obtain a fair return for public lands leased or sold. That section specifically provides that any franchise, permit, or similar thing of value granted or issued by any Federal agency to or for any person shall be self-sustaining to the full extent possible, and the head of each Federal agency is authorized by regulation to prescribe therefore such fee, charge or price, if any, as he shall determine to be fair and equitable, taking into consideration direct and indirect costs to the Government, value to the recipient, public policy and other pertinent facts, and any amount so determined shall be collected and paid into the Treasury as miscellaneous receipts.

In your statement you indicated that the law just cited requires return to the Federal Government of a fair market value for the energy resource in question.

Those statements raise a few questions in my mind.

Fair market value in the context of competitive bidding usually results in the highest priced bid in the context of the limited supply offer. Now, under my reading of the act you have cited, and which I have just read, requires only that the transaction be self-sustaining and that the price be fair and equitable, not necessarily the highest price a buyer will bid. That is to say, fair market value.

In light of the language of the act and of the past domestic exploration and development of energy resources, how, then, do you interpret the act to require the Secretary of the Interior to obtain fair market value for energy resources leased on the public land?

Mr. LOESCH. Senator Hansen, of course, I think we will get into the realm of semantics a bit here.

The act says that the price shall be determined by the Secretary to be fair and equitable, taking into consideration these various items, including public policy and so on.

Now, in the modern context, that seems to equate with the term fair market value.

I agree, that is to say, my own feeling is that fair market value is not necessarily the last possible dollar that you can squeeze out of the prospective lessee. I believe that the rather lengthy delay which occurred during the end of the last administration and the beginning of this administration in putting up tracts on the Outer Continental Shelf caused, of course, higher bidding-this is a function of the lesser supply, the limited supply that you referred to.

It was our hope that we could get on stream with our 5-year schedule, which is for at least two sales each year, as you are aware, that the supply limitations would be eased, that competition in consequence would be somewhat broadened and that the new development of the resource would follow.

I have to agree that where you run into a delay, as we have in our last proposed sale, that this can by the necessity of the companies who would be interested in bidding to push up the price and in consequence the market value may be skewed by the timing. This is one factor that must be taken into consideration.

I might remark that one of the great hang ups of this administration, and I must say, I think it would be true of any administration in the modern context, is the fear of being accused of "a give-away" and that in administering these lease sales of all kinds, not only energy resources, but others, I find my Bureau, and the Department as a whole, to be greatly concerned with that idea.

We get terribly criticized, as you are aware, if there is even a suspicion that we are getting less than we ought to for any public

resource.

Senator HANSEN. In actuality, Mr. Secretary, isn't the Department's policy of requiring fair market value really not a requirement of law but rather in the mandate of the Office of Management and Budget designed to maximize Federal revenues? Might that not be one of the factors?

Mr. LOESCH. In all candor, Senator Hansen, I think that is a correct statement. I think it is true.

Senator HANSEN. You spoke about safeguarding future OCS sales against NEPA suits. In your statement you listed several departmental actions designed to reduce the OCS lease sales due to NEPA suits. One, are you certain these actions will be sufficient to prevent suits? Mr. LOESCH. No; I don't think anybody can be certain. At the time our last sale in December was shot down by litigation, so to speak, we in the Department came to the conclusion that as interpreted by the courts, at least, we had not done as good a job under NEPA as we were capable of doing.

In consequence the Secretary made no further attempt on that sale, and canceled the sale. We did not recommend that Justice appeal the case to the Supreme Court and we went back to the drawing board.

Now, as you are aware, we presently have scheduled an OCS sale for September 12. I think that is on stream. Our final NEPA study is due momentarily. As a matter of fact, I think we have a target date of June 15, and it will be out any minute now.

We have tried, in doing our homework for this coming sale, we have tried to meet the concerns of the court, as stated in the January opin