(The statement of Harold T. Johnson follows:)

STATEMENT OF HON. HAROLD T. (BIZZ) JOHNSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Chairman, at the outset I would like to express my appreciation for the consideration this committee gave during the 89th Congress and again is giving here today to the problem of proper development of the geothermal resources which now exist on the public lands.

The importance of this to the Second Congressional District, which I am proud to represent, and to the State of California can best be shown by the Department of Interior's statistics relating to the public lands which currently are known to be valuable for geothermal resources.

According to the Secretary's findings revealed March 29th of this year, there are slightly more than one million acres of public land in five western states which are known to have geothermal value.

Of these, some 838,000 acres, or more than 80 per cent of the total, are located within the State of California.

More than 615,000 of these are in the Second Congressional District.

So you can see, that when we talk about public lands with known geothermal value, approximately 60 per cent of those so identified in the entire nation are located in the Second Congressional District.

These geothermal resources are concentrated in three of the 19 counties which make up my District:

Mono County: 480,640 acres just east of the Sierra-Nevada Range.

Lassen County: 79,360 acres just south of Lassen Volcanic National Park and 19,200 acres near Honey Lake in the eastern section of the county.

Modoc County: 37,129 acres in the extreme northeastern corner of California, an area known as Surprise Valley.

Currently, all this acreage has been withdrawn by the Department of Interior for any type of sale or entry, a move which could have an extremely serious impact upon the utilization of these lands and upon the economy of the region. You will recall, Mr. Chairman, that originally the Secretary of the Interior had withdrawn all these areas plus those which were merely "prospectively valuable" for geothermal resources.

This involved more than 87 million acres of public lands, 7 million of which were in the State of California.

Just this withdrawal alone tied up 17 per cent of all land area of the statepublic and private.

A large percentage of the lands in the first proposed withdrawal were in my district.

For this reason, the leadership which you, Mr. Chairman, and the Chairman of the Full Committee took in protesting this massive withdrawal were deeply appreciated and I personally, was pleased to have joined with you in this effort. Now the Secretary has reduced this to the one million acre figure, but I believe that we need to enact legislation such as we have before us today in order to eliminate any requirement for a withdrawal of such proportions and I am firmly convinced that this legislation will accomplish this purpose.

Today, we again have the opportunity to approve legislation which will promote the development of a new and unique natural resource from our Federal public lands-geothermal steam.

Another year has passed and the geothermal steam resources lying beneath the Federal public lands are still untapped because of the lack of enabling Federal legislation.

In addition, development of geothermal steam from privately owned lands is severely retarded because of the checker-boarded character of Federal and private lands in some areas which have promising geothermal steam potential. It is imperative that appropriate legislation be passed this year, and I most earnestly urge that this Subcommittee act at the earliest possible date to approve a bill which will accomplish the purpose of bringing about the orderly and beneficial development of this great new national resource for our people.

Five bills pending before you are generally patterned after S. 1674 as passed by the Eighty-ninth Congress.

I wish to commend the authors of each bill for their efforts to resolve this important matter.

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My bill, H.R. 4740, is identical to the provisions of S. 1674 which we passed last year, and, in my opinion, this still is the bill most responsive to the public interest and to the development of our infant geothermal industry.

This Subcommittee, along with the full Committee on Interior and Insular Affairs, during the Second Session of the Eighty-ninth Congress held extensive hearings on geothermal leigslation, and after exhaustive study and airing of both industry and executive agency viewpoints, passed the House amendment to S. 1674.

This amended bill was further amended by the Senate, and passed by both Houses of Congress.

It was the culmination and distillation of five years of discussion, public hearings, field inquiries and consideration by Congressmen and Senators quite knowledgeable in mineral resources development.

As you know, S. 1674 was the subject of a "pocket veto" transmitted with a Memorandum of Disapproval, dated November 14, 1966.

It is my opinion that the veto was ill-advised, and that the Memorandum of Disapproval was based on:

(1) miscomprehensions of the history of legislation for the development of mineral resources of the Federal public lands, and

(2) factual errors as to the provisions of S. 1674.

Like last year's bill, H.R. 4740 is designed to be consistent with the traditional leasing policy of Federal lands as expressed in the Mineral Leasing Act. It cannot be overemphasized that the greatest advantages to the United States will result from providing adequate incentives for private investment in this new geothermal industry.

The greatest value to the Government and the people in the long run will come from the early and adequate development of this new power source.

These benefits will come from substantial long-range royalties and the supplying of inexpensive electric power to the people of many areas of our nation, who are now isolated from the benefits of our great hydroelectric power plants. This philosophy, as reflected by H.R. 4740, is opposed to the more shortsighted view expressed in H.R. 9583 sponsored by the Department of the Interior, which offers the temporary and limited advantage of modest bonus payments in a few prospective geothermal areas, but imposes restrictions which would limit interest in investment and development of the art.

It is just not practical to think that those who have up to now expressed keen interest in the development of geothermal resources on public lands under legislation like S. 1674, would continue this same degree of interest under the highly restrictive provisions of H.R. 9583 proposed by the Department of the Interior.

The Interior bill would also eliminate the so-called "grandfather clause" of S. 1674 which permits deserving pioneer geothermal developers to convert Federal mineral leases and mining claims to geothermal leases, under restrictive qualifying conditions administered by the Secretary of the Interior.

I wish to reemphasize my support for a proper grandfather clause. Pioneer exploration efforts which have been financed and undertaken heretofore by private citizens and firms, have developed valuable early geothermal and geophysical data which will shorten the leadtime period which will be required before actual geothermal energy production can commence after Congress passes a geothermal leasing act-and Congress should appropriately recognize these early pioneering efforts.

In addition, earlier and more efficient development of geothermal resources on private lands will result from the inclusion of a grandfather clause.

If we grant conversion rights to the pioneer operators, they will then be able to immediately begin to develop blocks of acreage theretofore acquired which included both Federal and privately owned land, interspersed.

I would also like to comment on the drastic step taken by the Secretary of the Interior in his application for withdrawal of February 7, 1967, of all public lands which are valuable or prospectively valuable for geothermal steam, from all appropriations under the public land laws, including without limitation, the mining laws and the mineral leasing laws.

After widespread criticism, the Secretary revised his application on March 24, 1967, by specifically describing the lands withdrawn and stating the criteria used in determining the lands withdrawn.

The revised withdrawal encompasses some 1,050,000 acres, of which 830,000 acres are in California.

I believe that this withdrawal is still far too widesweeping.

Under the guise of protecting Federal geothermal resources, the withdrawal application severely retards development of other minerals and of public lands under other Federal statutes in a vast area of the western United States-particularly in California.

The criteria for determining "lands potentially valuable for geothermal resource development" as set forth in the application are far too loose in view of the Secretary's objective of preventing the acquisition of geothermal resourcebearing land pending geothermal leasing legislation.

It certainly should be the intent of Congress that these same criteria not be used in the determination of known geothermal resources areas for the purpose of classifying lands for competitive bidding, under any geothermal leasing act we may enact.

In any event, the withdrawal application should contain a self-operating termination date which would be the effective date of the proposed geothermal legislation.

Mr. Chairman and Members of the Subcommittee, I urge that H.R. 4740, or some bill embodying its principal provisions, be favorably reported by this Subcommittee at the earliest possible date.

Mr. Chairman, in conclusion I want to say that the position which I have expressed herein relation to the proposed withdrawal of lands with geothermal potential, is supported fully by local government in the areas of the Second Congressional District which are involved.

For the record I would like to submit as an indication of the urgency of this matter the resolutions concerning it from the Boards of Supervisors of the following counties:

Calaveras, El Dorado, Inyo, Modoc, Mono, Nevada, Plumas, and Sierra. Additionally Mr. Chairman, I submit resolutions from the Plumas County Taxpayers' Association and the American Gold Association.

Thank you.

Mr. JOHNSON. I would like to summarize briefly.
Mr. EDMONDSON. Without objection.

Mr. JOHNSON. Mr. Chairman, the members of the committee, I too was very much shocked last year when I learned of the veto that had been placed on legislation of this committee. All of us here today worked on that legislation for a good many days and weeks. It was vetoed, and despite the contents of the veto message, I do not think there was anything in that bill that would be harmful to the people of the United States. That is why again I introduced H.R. 4740, which is identical to the bill that was vetoed. I see nothing wrong with the bill that is now pending before us and I have no pride of authorship, certainly, but I do hope that this committee will work out a satisfactory bill with the other body so that we can send it to the White House again for the President's consideration.

Now, I too, was very much disturbed by the notices of withdrawal which came out which amounted to approximately 86 million acres, of which 7 million were in California. Then when it was reduced to a little over a million acres it was slightly over 800,000 acres in California. Six hundred twenty-five thousand of those acres are in my own congressional district, so I was very much disturbed and so were all of our counties in the State of California. We were quite concerned about the withdrawal and the way it was handled.

That is why I hope that this committee will pass this piece of legislation so that we can open up those 1,500,000 acres or the 830,000 acres of land in California. People are very much disturbed at the present time as to the outcome of just what will happen to this land.

Certainly I am no expert in the field of geothermal steam. Representing an area that I do, we have a great potential in this particular resource and the development of it. We want to see legislation forthcoming in this session of Congress to allow us to get started.

The two main provisions of the bill I introduced that will be controversial to the administration, I presume, have to do with the size of the lease and it has to do with the grandfather clause. We discussed this for a long time. In California we have many private lands that are also commingled with this public lands, so it doesn't amount to a great deal more than the just figure, the figure that I have recited there, as it relates to the public domain. Now, this industry is a very new one, there has been exploration carried on for a number of years, and they are just barely getting started. We have a very fine working project out there in Sonoma County off of the old geysers and we have a number of areas that are known geothermal areas. That is what we are told by various Government officials.

I have been told that there are two very fine prospects in my own district that would be susceptible to a power development similar to what is now working and progressing in the county of Sonoma of our State.

Now, I think that the people who are in the business today took advantage of whatever act was available in acquiring a certain amount of land, but most all of this development at the present time that is working is on private. Now, some hold oil and gas leases. Some hold mining leases. Now, I think they should have a right and preference because they are the pioneers in the field, and I think they should be protected. Now, I notice that the bill that was offered by my colleague from California, he has a little different grandfather clause, and I am sure in the final end that would be acceptable. But, I see no real harm in the one that is provided for in H.R. 4740; because this amounts to a very small amount of land under consideration, and as the bill provides, it could be no more than 12,800 held by any one company in the conversion activity or processes that would take place under the legislation. I can see no real harm in it.

In my own State of California they are very actively considering legislation at the State level in support of geothermal steam operations and, Mr. Chairman, I would ask unanimous consent that I place in the record a letter from Ford B. Ford, the assistant to the administrator in charge of public lands in California.

Mr. EDMONDSON. Without objection it is so ordered. (The letter referred to follows:)

Hon. HAROLD T. JOHNSON,
Congressman, House Office Building,
Washington, D.C.

THE RESOURCES AGENCY OF CALIFORNIA,
Sacramento, Calif., May 26, 1967.

DEAR BIZ: Jim Stearns advised me today that you were interested in any comments we may have regarding the Geothermal Energy Bills now pending before Congress.

First, I would like to give you a resume of what is happening on the state level. Our SB 169, copy enclosed, reflects many sessions between governmental and industry interests. The government interests were federal, state and local, and it is truly a consensus bill. I think the major factors which may have some bearing upon the unresolved problems as between the respective bills of the Department of the Interior and Senator Bible on this subject have to do with the

royalties, the renegotiation clause and competitive bidding on public lands. As I understand, two of the major reasons why the President was influenced by the Department of the Interior to veto Senator Bible's bill previously were that there was no renegotiation clause and that there was not a termination date on a given lease. We have attacked these problems in the following manner:

For competitive bidding purposes there is a set royalty of 10 percent on steam, a range of 2 to 5 percent on minerals with a single biddable element which could be either cash bonus or net profits, or some other single biddable element which could be easily assessed as to the related value of the resources. Then we have inserted a provision for renegotiation after the initial 20-year period from the initial date of the lease, and every 10 years thereafter. We feel this adequately protects the public interest inasmuch as geologists have indicated that a commercially valuable field may have a life of many hundreds of years. We propose to amend SB 169 to include a 99-year termination of any lease. If the Department of the Interior and Senator Bible cannot get together on their current positions, it is suggested that the approach mentioned here be considered. Incidently, New Mexico has enacted legislation patterned after SB 169. The New Mexico bill does not use the prospecting permit approach contained in SB 169 nor is that approach contemplated in federal legislation. The approach which we are using is a historical approach used in this State on other minerals. However, I made reference to SB 169 and its provisions because the participants involved are the very same industry representatives which are involved in federal legislation. They completely concur in SB 169.

With regard to federal legislation, we have received verbal commitments that when federal legislation passes and the administrative procedures are established on the federal level that the February 7, 1967, withdrawal order will be lifted, which will permit other interests in other minerals to continue location of claims.

I am enclosing also a report of the Senate Fact Finding Committee on Natural Resources which I wrote before I took the position I now have. I think it details the advantages to the state and nation, if laws properly reflect the additional problems faced by the geothermal industry. I am convinced that if federal and state legislation become law which include provisions along the general format of SB 169 reflecting the unique problems facing the industry, that the economic impact upon our counties, especially those having large amounts of public land, will be tremendous.

There, of course, would be a possessory tax accuring to those counties on the substantial facilities involved. As you know, the heat cannot be transferred for any distance, therefore, these facilities which have been variously estimated to cost between $20 and $40 million each can generate considerable income to the counties. The advantages as you will note in the report besides the economic advantage includes such things as no air pollution, and continuous cheap power (cheaper than any other source). We have experienced some problems with our own bill because of the interjection of the Joint Tidelands Committee at a recent date. Therefore, we have an additional educational problem. But I'do anticipate our bill will pass and become law substantially as it is reflected in the copy enclosed.

Should you have any additional questions, please call me at 916-445-1568, I sincerely hope that federal legislation will pass in a manner which will receive the President's endorsement.

Kindest personal regards.
Sincerely,

FORD B. FORD, Assistant to the Administrator.

Mr. JOHNSON. I would also like to place in the file a copy of the pending bill, Senate bill 169, which is offered by one of my State Senators and coauthorized by one of my Assemblymen in the same district. I would like to make that a part of the file and I would also like to make a part of the file a report that was made by the legislature by Senate committee and have it made part of the committee file.

Mr. EDMUNDSON. It will be filed without objection. So ordered. Mr. JOHNSON. Mr. Chairman, I would also like to place in the record following my statement, resolutions from various county boards of