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. Respectfully submitted. EVANS, KITCHEL & JENCKES, By ALFRED B. CARR. Hon. WAYNE N. ASPIN ALL, 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 endorse 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, FELIX CHAPPELLET, Vice President and General Manager. Hon. ED EDMONDSON, FOOTE MINERAL COMPANY, Chairman, Subcommittee on Mines and Mining, Exton, Pa., June 6, 1967. 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. Sincerely yours, 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, Executive Vice President. EARTH ENERGY, INC., Los Angeles, Calif., June 15, 1967. Hon. ED EDMONDSON, Washington, D.C. 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 Washington, D.C. CAREL OTTE, 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. STATUS 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 incen tives 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. RECOMMENDATION 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, CAREL OTTE, 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. We respectfully ask that this letter of support for Congressman Johnson's bill, H.R. 4740, be placed in the record of the recent hearing before your Subcommittee. Very truly yours, WILLIAM L. D'OLIER, Assistant to the Vice President. HOUSE OF REPRESENTATIVES, Mr. ED EDMONDSON, Chairman, Mines and Mining Subcommittee, DEAR MR. CHAIRMAN: A few days ago, the California State Legislature completed action on Senate Joint Resolution No. 27 expressing its opposition to the proposed withdrawal for mineral entry of the vast area of public land with geothermal steam potential. In view of our earlier hearings on H.R. 4740 and other bills, I thought it appropriate that this be included in the hearing record, and accordingly I make this request. Sincerely yours, HAROLD T. (Bizz) JOHNSON, SENATE JOINT RESOLUTION NO. 27 Adopted in Senate May 15, 1967. Secretary of the Senate. Adopted in Assembly June 29, 1967. This resolution was received by the Secretary of State this Chief Clerk of the Assembly. Senate Joint Resolution No. 27-Relative to withdrawal of lands in public domain from lease or mineral location for development of geothermal steam. Whereas, The outstanding strength and world position of this nation and the advanced state of the arts and sciences attained by its citizens has been due in large part to its wealth of natural resources, and in turn to the capacity it has developed over the years for production of raw natural resources and for their conversion to manufactured goods essential to our society; and Whereas, The products of mines form a very large part of these natural resources; and Whereas, A close relationship may be inferred between the capacity of this nation for production from mines, and the system put into being by congressional acts, particularly by means of the General Mining Law of 1872, whereby the discoverer of valuable minerals on the public domain has been able to take such discovery into possession without let or disturbance on the part of his fellow citizen or even of his government; and Whereas, From time to time certain areas of the public domain have been withdrawn from mineral location by the federal government (when the lands were properly shown to be needed for such purposes as national parks, reservoirs, military bases, and the like) under prescribed procedures and with due consideration, with at least one form of such withdrawal requiring express congressional approval; and Whereas, All such withdrawals have been within distinctly described boundaries, and all have been more or less localized and limited in extent; and Whereas, Though conflicts have developed from time to time between claimants and even owners of surface resources, on the one hand, and of mineral resources below ground, on the other, as for example conflicts developing in the 1950's between uranium mining claimants on the Colorado plateau and holders |
