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SIERRA COUNTY, Downieville, Calif., April 17, 1967.


Member of Congress, Second District, California, House Office Building,
Washington, D.C.

DEAR CONGRESSMAN: The Board of Supervisors of Sierra County thanks you for your letter of April 13 concerning proposed public land withdrawals for geothermal purposes.

We congratulate you on your action, as referred to in your letter, and are happy it was successful.

Inasmuch as the revised notice published in the Federal Register for March 24 completely eliminates Sierra County from the proposal, we have no further comments other than the general request that you continue to use your best efforts to see that affected areas receive notice of future proposals and that indiscriminate withdrawals of public lands from mineral location be opposed.

Sincerely yours,


GORDON I. SMITH, District Attorney and County Counsel, Sierra County.

San Andreas, Calif., April 21, 1967.


Be it resolved, that the American Gold Association, in meeting assembled at Altaville, California vigorously protest the action of the Department of the Interior, Bureau of Land Management in publishing intent in the Federal Register to withdraw from entry certain lands in California, Nevada, Idaho, Montana and New Mexico, purportedly to reserve them as a geothermal resource of the United States. And,

Be it further resolved, that the Secretary of the Interior and the Director of the Bureau of Land Management be advised of this protest prior to April 30, 1967 so that the said American Gold Association might appear as an interested party in any hearings as to this proposed withdrawal. And,

Be it further resolved, that the American Gold Association respectfully request of the Secretary of the Interior and the Director of the Bureau of Land Management that hearings on such a withdrawal be held in the areas affected so that interested parties might be heard and the wisdom of the withdrawal discussed. And,

Be it further resolved, that those persons residing in the Second Congressional District of California be advised that of 838,400 acres proposed to be withdrawn in the State of California that nearly 600,000 of these acres lies within the geographical boundaries of the Second District.

Unanimously passed, upon proper motion, this 21st day of April, 1967 at Altaville, California.

JOHN R. Ross, Chairman, American Gold Association, Inc.

EARNEST A. LONG, Secretary Pro-Tem, American Gold Association, Inc. Mr. JOHNSON. With that, Mr. Chairman, I just want to say that I do hope that your subcommittee will pass on to the full committee a bill that we can pass in the House of Representatives and hopefully meet the approval of the other body and that it will go to the White House for signature.

Mr. EDMONDSON. Thank you.

The gentleman from Utah, Mr. Burton, has an introduction to the committee.

Mr. BURTON. Yes, Mr. Chairman. I would just like to express this comment that I think that the President in this matter took advice from the same people as he did in the matter of the Great Salt Lake. But, I would like to take an opportunity to introduce to my colleagues on the committee some people that I think a great deal of and with whom I used to work. They are Dr. and Mrs. James Fowlger and their sons Val and Guy. Would you folks please stand.

He is the vice president of Weber State College where I used to teach, Mr. Chairman. I am happy to have him here. I would like to say that when I left Ogden and came to Washington I raised the intelligence level of both areas.

Mr. EDMONDSON. Well, I would like to say that it is a pleasure to have the guests of our distinguished member from Utah with us. He is our ranking Republican on the subcommittee and does a fine job. Mr. BURTON. Thank you very much, sir.

Mr. EDMONDSON. We listed to testify this morning our colleague from Hawaii, Mr. Matsunaga, and it is my understanding that he is in Hawaii and unable to appear this morning. But, he will be scheduled to be heard at a future date.

Before presenting the first witness on behalf of the administration here this morning, I would like to state, although I may be a minority voice in more ways than one on this subject, that I do think the committee will have to take notice of the fact that pretty clear indications were given to the committee at the time that this bill was heard last year that the grandfather clause was something the administration felt strongly about, and that veto was a very strong possibility if a grandfather clause was part of this legislation.

I think also that, while there has been some criticism of the administration sending up a bill, as far as the subcommittee chairman is concerned, it was a legitimate exercise of responsibility by the administration. When the President vetoes a bill and goes into the detail that he did in this veto message to point out the sections that were not acceptable, it seems to me it was a responsible exercise of his authority and power as President to send up legislation that would be acceptable.

Now, there are some points in the memorandum of disapproval on which I do not agree personally.

The implications that this committee has dealt lightly with its responsibilities to safeguard the public interest are implications that I regard as unfortunate and that I do not believe are valid. But this bill was finalized in the closing days of a session and some of us who are very keenly interested in this when it was going to the House were not able to be here for reasons of pressing business back home in those closing weeks. I think the final product that came represented conclusions on several points on which the House yielded to the other body where there was a House judgment that coincided with the judgment of the administration. But, that is water under the bridge at this point. We are interested in constructively trying to get legislation that will pass the House, will pass the other body, and will be signed into law.

I think we have some spokesmen for the administration here this morning who can be helpful to us in this direction. Now that we have

stated pretty well to a man our views about the memorandum, I hope we can get on with the business of hearing from the Department witnesses and the public witnesses with their constructive suggestions for the future and see if we cannot get a bill out that will meet the general acceptance.

Our first witness today is one of the ablest men in the Government, in my personal judgment. He has done an outstanding job with the Bureau of the Budget, our able Deputy Director, Phillip S. Hughes. We are very pleased to have you with us this morning.


Mr. HUGHES, Thank you, Mr. Chairman.

Mr. ASPINALL. Mr. Chairman, I would like to join with you in welcoming Mr. Hughes before this committee. I know that the background that we have set up here for him to testify against is more than likely a little bit difficult, but I have all the confidence in the world that he will make his position perfectly well known,

Mr. HUGHES. Thank you, Mr. Chairman.

Mr. SAYLOR. I, too, want to join in welcoming the witness before the committee. We have not always seen eye to eye and probably will not in future, but I have always respected him as a man of integrity and one who has devoted years of faithful service to our country.

Mr. HUGHES. Thank you, Mr. Chairman. I appreciate your very fine comments and those of Chairman Aspinall and Mr. Saylor. You have been so kind you have stolen my opening line, almost. I was going to say that while it is customary for witnesses to say they are "happy to be here" to present a particular point of view, I am not quite sure that is my situation at this point. But, nonetheless, I do appreciate your very kind comments and I am here in the line of duty to put forth the administration's position and respond to your comments and questions as best I can. I expect those gentlemen who are here from the Departments of Justice and Interior to be of further help to you in more detailed and technical aspects of this matter, Mr. EDMONDSON. Aside from the letter that has been supplied to us, dated June 9, do you have a prepared statement?

Mr. HUGHES. I do not, Mr. Chairman. It was my understanding that you did not wish one, but rather wanted me to be available for questions.

Mr. EDMONDSON. Your letter has been made a part of the record. (The letter referred to follows:)

Washington, D.C., June 9, 1967.


Chairman, Committee on Interior and Insular Affairs, House of Representatives, Longworth House Office Building, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request of June 5, 1967, for a report from the Bureau of the Budget on several bills regarding the disposition by the Secretary of the Interior of geothermal steam and associated geothermal resources. Those bills are H.R. 715, H.R. 3577, H.R. 4740, H.R. 5283, H.R 5778, and H.R. 9583. You also requested that the Bureau make available a witness for possible questioning at Committee hearings on these bills.

I will be the Bureau of the Budget witness and will be glad to be of any help I can.

On February 2, 1967, Assistant Secretary of the Interior Harry Anderson transmitted for the Administration a bill designed to meet the shortcomings of S. 1674 which was passed by the 89th Congress and which was disapproved by the President. The draft Administration bill has been introduced as H.R. 9583, this session.

We endorse H.R. 9583, and concur in the Interior Department's explanation of differences from S. 1674 (H.R. 4740, this session, is identical to S. 1674) in the Department's report of May 25, 1967, to your Committee.

Enactment of H.R. 9583 would be in accord with the program of the President. Sincerely,

Deputy Director.

Mr. EDMONDSON. You are recognized to speak.

Mr. HUGHES. The bills that are under consideration have been summarized by you and by the other gentlemen present here who sponsored individual bills. I see no particular need at this point to review them. I think perhaps the most useful thing I can do would be to review very briefly the six principal points of difference between the introduced bill. H.R. 4740, whch is similar to the disapproved bill of the last session, S. 1674, and H.R. 9583, which is the administration's bill.

With regard to the transmission of a bill by the administration, Mr. Chairman, we share your views that in the light of the history here we would have felt it irresponsible not to have sent up a bill which represented the administration's proposal for this type of legislation. On the general question of the veto and the implications which some have derived from it, I hope it is clear that insofar as I am concerned and the Bureau of the Budget is concerned, we do not regard ourselves as in any sense the sole protector of the public lands and the public well-being. We have dealt with you gentlemen over a period of a good number of years and I fully recognize that you would rise to any challenge to your right and interest to protect the public interest as vigorously and as strictly as does the executive branch of the Government. I think it is hardly necessary to say that certainly the President himself had no intention to disparage either the committee as a whole or any of its members in the comments that he made on the last session's bill.

The problem here before us, as we see it, is a difficult one because it involves a rather new and pioneering venture. But the problem is simply how best to permit the competitive development of these leases which we recognize should proceed under private competitive auspices. What confronts us, as I see it, is some difference in judg ment as to the terms on which that development should proceed under private auspices. Surely, there is no argument between the administration and the Congress nor between the Bureau of the Budget and the Congress as to the desirability of private development as distinguished from public of these resources.

Now, with respect to the principal differences between H.R. 9583, the administration bill this session, and H.R. 4740, Mr. Johnson's bill which is similar to the disapproved bill. First, section 4 of H.R. 4740 permits the holders of mineral leases or permits or applicants for such permits on Federal lands to convert them into geothermal leases. This is the so-called grandfather clause provision and H.R. 9583 does not have such a provision. It would, therefore, require fully competitive action with respect to such development.

Second, section 7 of H.R. 4740 would permit a lessee to hold geothermal leases in any one State aggregating a little over 51,000 acres. The maximum acreage in H.R. 9583 is about 10,000 acres. The latter bill, H.R. 9583, also authorized the Secretary to raise the maximum holding in any State after 15 years and after hearings. I think the question here, Mr. Chairman, is simply how much land is necessary to adequately develop and exploit these resources. It is the feeling of the administration that a more restrictive figure initially is desirable; one that, in our best judgment, of the persons within the administration would permit an adequate land holding to permit development.

Third, H.R. 4740 requires that steam be sold or utilized as a basis of royalty, while H.R. 9583 broadens this requirement to provide that the lessee should pay royalty also on steam reasonably susceptible to sale or use by the lessee as determined by the Secretary.

Fourth, H.R. 4740 would authorize the Secretary to require periodic renegotiation of leases; but only within the framework of general regulatory authority. H.R. 9583 provides specific authority and requires that the Secretary so regulate. It was our concern that, in the light of legislative history somewhat adverse to renegotiations it would be very desirable to have specific provisions for renegotiation. in the statute.

Fifth, H.R. 4740 provides for continuation of leases after the primary term and, I am quoting, "For so long thereafter as geothermal steam is produced or utilized in commercial quantities."

H.R. 9583, in contrast, provides for a maximum term of 60 years, a 10-year initial or primary term and then 50 years extension.

And sixth, section 6 of H.R. 4740 provides a primary term of 15 years with a 5-year extension for beginning production. And H.R. 9583 limits the primary term to a period of 10 years.

There are other differences. They fall, I think, more into the technical category, Mr. Chairman, and these are, I think, the principal areas that have been under discussion both before the Congress action and the President's action of last year, and since then.

I have no further comments, but I would be glad to do what I can to help work this thing out in a fashion that is satisfactory to the committee, to the President, and to the industry which must ultimately be the developer of these resources.

Mr. EDMONDSON. Well, I think, for the benefit of the members of this committee who have not already noticed it, the most important things covered by Mr. Hughes appear in the memorandum which was attached to the submission of the Secretary of the Interior on May 25, and some additional points on differences between the bills, appeared in that memorandum also. It is a useful summary of the points that do represent the differences between the two bills.

Thank you for your statement, Mr. Hughes, and thank you for your statement with reference to the meaning of the language in the memorandum of disapproval with regard to the public interest involved here.

I would like to recognize the chairman of the full committee at this. time.

Mr. ASPINALL. Mr. Chairman, I do not have too many questions. Mr. Director, did the Bureau of the Budget or representatives of the Department of Interior prepare that statement that accompanied the letter of May 25, 1967? That is, the one you testified to?

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