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STATE OF NEVADA, COUNTY OF WASHOE
Before me, a notary public, on this 3rd day of August, 1962, personally appeared Lawrence B. Williams and Flora Smith of Nixon, Nevada, to me known to be the identical person who executed the within and foregoing document, and acknowledged to me that he executed the same in his official capacity as Chairman of the Pyramid Lake Paiute Tribe as its free and voluntary act and deed for the uses and purposes therein set forth.
My commission expires: March 11, 1966.
STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO
On this 25th day of July, 1962, before me personally came Ralph K. Davies known to me, who being duly sworn, did depose and say that he is President of WESTERN GEOTHERMAL, INC., the corporation described in and who executed the above instrument; that he knows the seal of said corporation; that it was so affixed by authority conferred by said corporation and that he signed his name thereto by like authority.
JOSEPHINE L. BUCKLEY.
Notary Public in and for said County and State. The Bureau of Indian Affairs of the Department of the Interior has reviewed the foregoing amendment to prospecting permit and has no objection to it.
EVANS, KITCHEL & JENCKES,
MR. BOYD L. RASMUSSEN, Director,
DEAR SIR: On behalf of Phelps Dodge Corporation we hereby object to and protest the temporary segregation and subsequent withdrawal of public and acquired lands from entry, exploration, discovery, location, occupation, and purchase under the mining laws of the United States applicable to metalliferous minerals, which are valuable or potentially valuable for geothermal resources, under the revised notice of proposed withdrawal and reservations of lands dated March 21, 1967, and published in the Federal Register, Vol. 32, No. 57, pages 4506 and 4507, on Friday, March 24, 1967.
With respect to the lands described therein, the revised notice does not conform to several of the requirements of the regulations set forth in 43 C.F.R. 2311.1-1 relating to the filing of applications, and their contents. Subsection (b) (4) requires a statement of the gross acreage within the exterior boundaries of the requested withdrawal or reservation, and net public land, water, or public land and water acreage covered by the application. Subsection (b) (7) requires a statement of the estimated period during which the proposed withdrawal or reservation will remain in effect. Subsection (b) (11) requires the citation of the statutory or other authority for the type of withdrawal or reservation requested. These requirements were formally adopted and promulgated by the Bureau of Land Management, and should control its actions. They properly and reasonably provide for the protection of the public and the metalliferous minerals industry, which is so vital to the economy of the United States. The provisions of the revised notice result in a failure to give proper notice to the public and the metalliferous minerals industry of the duration of the proposed withdrawals, the specific descriptions of the lands affected, and the authority under which the proposed withdrawal would be made. This last point is of particular importance because of the many statutes, executive orders, secretary's orders, and regulations applicable to public lands, some of which are inconsistent or in conflict with others.
With respect to the public and acquired lands not described in the notice, the revised notice is objectionable because of the following provisions:
"Lands which in the future are determined to be potentially valuable for geothermal resource development will be deemed to be temporarily segregated as of the time a notation is made on the tract books that the lands have been classified as potentially valuable for geothermal resource development by the
Geological Survey and will be deemed to be withdrawan when a notice of such notation is filed with the Federal Register."
These provisions, delegating authority to the Geological Survey to temporarily segregate and withdraw lands, are unauthorized. Under Executive Order 10355, May 25, 1952, 17 F.R. 4831, a Secretary's order is required, and the Secretary may delegate his authority only to the Undersecretary or the Assistant Secretaries of the Interior. Under 43 C.F.R., Part 2310, the temporary segregation of lands can be made only by the notation of receipt of an application for withdrawal or reservation, made under the provisions of these regulations. Under 43 C.F.R. 2311.1-4 (b) and (d), the withdrawal may be effected only by the approval of the Secretary, or his authorized agent, and the publication in the Federal Register of an appropriate order of withdrawal or reservation.
These provisions give the Geological Survey an unrestricted future power to temporarily segregate and withdraw or reserve public and acquire lands without (a) making application, (b) publishing notice of proposed application, stating the estimated period during which the proposed withdrawal or reservation will remain in effect and citing the statutory or other authority for the type of withdrawal or reservation, (c) holding a public hearing on protests, or (d) obtaining an appropriate order from the Secretary of the Interior or his authorized agent. The regulations provide an opportunity for the public to object to or comment on the proposed withdrawal and, in some cases, to attend a public meeting for that purpose. The quoted provisions of the revised notice are contrary to both the letter and the spirit of the regulations and principles of the Administrative Procedure Act, 5 U.S.C.A. 1005 et seq., as they permit of no rights to be heard nor do they allow an agency decision to be reviewed.
The foregoing objections are raised solely with respect to the legal deficiencies of the revised notice published March 24, 1967. Phelps Dodge Corporation feels strongly that the proposed withdrawals are improper as a matter of policy and law and, in this regard, supports in their entirety the conclusions of the April 20, 1967, leter of Mr. W. Howard Gray, Chairman of the Public Lands Committee, American Mining Congress, to you.
These circumstances warrant a public hearing held with proper notice at a convenient time and place.
EVANS, KITCHEL & JENCKES, By ALFRED B. CARR.
Hon. WAYNE N. ASPINALL,
WESTERN OIL & GAS ASSOCIATION,
Los Angeles, Calif., June 5, 1967.
Chairman, House Committee on Interior and Insular Affairs,
DEAR CHAIRMAN ASPINALL: The Western Oil and Gas Association supports the provisions of H.R. 4740 and urges its enactment.
As an oil industry trade association operating in the six western states of California, Oregon, Washington, Alaska, Arizona and Nevada, our member companies believe that the geothermal potential of the western states should be developed. Inasmuch as the federal government is the predominant landowner in these western states, we believe that substantial development cannot take place until there is enabling federal legislation to premit the leasing of public lands for geothermal steam. We support H.R. 4740 because it provides the necessary economic incentives to insure the establishment of a substantial geothermal industry while at the same time fully protecting the public interest.
After nearly five years of study and discussion in the Congress, you have in H.R. 4740 (and its companion bill in the Senate, S. 23), a bill which we can en dorse without reservation. Many of the bill's provisions are patterned after those found in the Mineral Leasing Act-an act which has worked effectively in developing other mineral resources on the public lands over the past 47 years. During the course of past hearings on geothermal steam legislation and those to be held by your Subcommittee on Mines and Mining commencing June 12, you have obained and will receive much detailed and expert testimony including that to be offered by at least one of our member companies. Therefore, we shall comment only briefly about some of the provisions of H.R. 4740.
(1) Provision is made in Section 4 to lease lands in "known geothermal resource areas" competitively and to lease lands outside such areas on a noncom
petitive basis. We believe that in areas where there is a high geothermal steam potential, competitive bidding will insure a substantial dollar return to the government from cash bonuses, while at the same time wildcatting will not be discouraged on lands outside the "known geothermal resource area,' " where leases may be issued noncompetitively to the first qualified bidder.
(2) The importance of the "grandfather clause" also contained in Section 4 of H.R. 4740 cannot be overemphasized. This provision will make it possible for companies to put together economically drillable blocks of leases where public and private land holdings are interspersed in the same locale. While this provision has been criticized by the Administration, we believe that there are adequate provisions to safeguard the public interest, particularly when you note that the conversion right would be limited to no more than 12,800 acres of leases in any one state and the applicant would have to demonstrate that he is capable of making and has already made substantial expenditures in geothermal development. Further, all conversions would be subject to the scrutiny of the Secretary of Interior who would promulgate the regulations under which the right could be exercised.
(3) Section 5, dealing with royalty rates, properly establishes them slightly lower than those for oil and gas. This is an intelligent recognition of the fact that the risks are high and the payout period longer in the development of a geothermal steam operation.
Other provisions in H.R. 4740 dealing with the size of lease and acreage limitations are completely acceptable. We do not share the Interior Department's concern that the 51,200 acre limitation would permit any one operator to monopolize the geothermal resources of an entire state. We believe that competition would prevent this from occurring.
We would appreciate your making our brief remarks a part of the Subcommittee on Mines and Mining hearing record. Very truly yours,
Vice President and General Manager.
Hon. ED EDMONDSON,
FOOTE MINERAL COMPANY,
Chairman, Subcommittee on Mines and Mining,
DEAR SIR: Since 1963, the Foote Mineral Company has been engaged in the development and production of lithium and potassium chemicals from a subterranean deposit of salines and evaporites at Silver Peak, Esmeralda County, Nevada.
At this time, we have invested several million dollars in roads, exploration wells, production wells, large solar evaporation ponds, and a chemical processing complex.
We lease these properties from the Bureau of Land Management of the Interior and pay lease rentals and production royalties to the Interior Department. Under the terms of the Mineral Leasing Act of 1920, we have the exclusive right to minerals so leased. We, therefore, feel it necessary to respectfully request the Committee to insure that the proposed geothermal leasing act contains appropriate clauses that will encourage and protect the continued development of leasable and locatable minerals.
As presently written in the several bills under consideration, there is a tendency to create a "super-priority" for geothermal energy as against all other mineral resources. For example, it is proposed that a geothermal lease that is worthless for geothermal purposes may be automatically converted to a mineral lease for "by-products." However, the Interior Department strenuously objects to the so-called "grandfather" clauses, which give a corresponding right to existing lease holders to convert to geothermal leases.
A geothermal lease should not be a superior form of lease, and where preexisting leases or claims are producing the same or similar minerals that might be a by-product of a geothermal lease, the preexisting lessee should maintain his exclusive legal rights. We urge you to retain the language of the original Senate version of S. 1674 the bill that was passed by the 89th Congress, together
with the amendments suggested by Mr. Harry R. Anderson, Assistant Secretary of the Interior-in his report to the Honorable Wayne N. Aspinall of May 23, 1966 from which a quote the following Section with Mr. Anderson's proposal italicized:
"Sec. 7. Where the production, use, or conversion of geothermal energy through the medium of geothermal steam is also susceptible of producing other valuable products and minerals incidental thereto, substantial beneficial use of production of such byproducts shall be required, except that the Secretary in individual circumstances may modify or waive this requirement in the interests of conservation of natural resources or for other reasons satisfactory to him, and except that in no case shall the use or production of such byproducts be permitted other than by the holder of preexisting leases, claims, and permits whenever the same or similar byproducts are being produced on the same land under other leases, claims or permits granted previously: Provided, That the geothermal lessee shall be reasonably compensated by such lessee or permitted for the cost of bringing, incidental or geothermal operations, such byproducts to the surface." In addition we believe firmly that where an existing lessee is in active operation and paying royalties, that he should have a reasonable period of time in which he would enjoy a preferential right to apply for an additional geothermal lease. I seriously doubt that the Department of the Interior has issued mineral leases in the past without proper investigation of mineral discovery and the proof of adequate exploration expenditures to protect the public interest. We wish to thank you for this opportunity to present our views in this important matter.
F. B. SHAY, Executive Vice President.
Hon. HAROLD T. JOHNSON,
ROCKY MOUNTAIN OIL & GAS ASSOCIATION,
House of Representatives, Washington, D.C. Reference H.R. 4740 to authorize the Secretary of the Interior to make disposition of geothermal steam and associated geothermal resources. Please be advised that Rocky Mountain Oil & Gas Association has reviewed this bill and supports and endorses its passage.
ROBERT B. LAUGHLIN,
EARTH ENERGY, INC.,
Los Angeles, Calif., June 15, 1967.
Hon. ED EDMONDSON,
Earth Energy, Inc., has followed closely the drafting of legislation to open public lands for geothermal energy development. It feels that H.R. 4740 or H.R. 715 constitutes a workable compromise either bill would safeguard the public interest. They provide needed incentive for an infant industry and benefit the economy by stimulating development.
Hon. ED EDMONDSON,
Chairman, Subcommittee on Mines and Mining
EARTH ENERGY, INC.,
DEAR MR. EDMONDSON: Earth Energy, Inc., a wholly-owned subsidiary of Union Oil Company of California, has been engaged for four years in the exploration of geothermal resources in the western United States. During this period, it has drilled many wells, conducted pilot chemical processing operations, and has spent in excess of 4 million dollars in developing this new resource.
Geologically favorable conditions for the occurrence of geothermal resources exist mainly in the western States such as Nevada, California, Oregon, Idaho and Alaska, where the United States is by far the largest landowner. Yet, to date, all exploration and development activities of geothermal energy have been carried out on private lands because of the absence of a law permitting geothermal exploration and development of the Public Domain.
PROPER SAFEGUARDS AND ECONOMIC INCENTIVES
This new industry is in its infancy, and knowledge and experience came costly as reflected in the statistics. After about 10 years of activity and the drilling of about 30 prospects, only one of the three or four discoveries is producing revenue at this time. The others are in various stages of research and development. Because of the high risk and long delay-time between discovery and revenue, any proposed legislation should provide proper incentives and safeguards to attract the necessary venture capital. The contracts existing with the private landowners have proved with time that they provide these incentives and we strongly recommend that legislation contain similar terms and conditions.
Only through the landowner and the exploring company, each venturing his assets, has the economic potential of geothermal power been demonstrated. We now believe that it is timely and in the public interest to open the Public Domain and further explore and develop this resource.
This Committee and the Committee on Interior and Insular Affairs of the Senate have spent many hours during the last two sessions of Congress hearing testimony of industry and government in drafting an appropriate geothermal steam leasing bill. Having followed the course of previous legislative drafts, we feel that H.R. 4740 or H.R. 715 offer workable solutions. They safeguard the public interest, they provide needed incentives for an infant industry, and passage of either would benefit the economy by stimulating development. We urge early passage of appropriate and enabling legislation.
Very truly yours,
OCCIDENTAL PETROLEUM CORPORATION,
Congressman ED EDMONDSON,
Chairman, Subcommittee on Mines and Mining,
DEAR CONGRESSMAN EDMONDSON: During the week of June 19, 1967, the Subcommittee on Mines and Mining again heard argument concerning proposed leasing laws for geothermal resources on Federal land. Occidental Petroleum Corporation appreciates the patience and effort which you and your colleagues continue to apply to the problem of geothermal leasing.
Occidental stands in support of H.R. 4740 as the bill which would best serve the public interest if private enterprise is to put any substantial economic meaning into the phrase "geothermal resources". The use of competitive bidding in leasing must be reasonably regulated, as it is in H.R. 4740, when applied to this newly predicted subsurface resource. We think it significant that the early stages of our domestic petroleum and mining industries were characterized by minimal restrictions on private initiative to explore. And logically, the most successful use of competitive bidding has appeared in a mature stage of activity; that is in the development of offshore oil and gas reserves by a highly skilled industry that has made an important contribution to the American economy for over 100 years. In comparison, the present technical understanding and economic use of geothermal fluids are very small. Occidental concurs in the testimony of the Western Oil and Gas Association and other industry representatives that the development of geothermal resources on Federal lands will require encouraging, rather than restrictive, legislation.