Senator BINGAMAN. Our first witness is James Hughes. Jim is the Deputy Assistant Secretary for Land and Minerals Management at the Department of the Interior. We appreciate your being here. I know you have worked on this issue and related issues for a long time.

STATEMENT OF JAMES M. HUGHES, DEPUTY ASSISTANT SECRETARY, LAND AND MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR

Mr. HUGHES. Thank you, Senator. I appreciate the opportunity to appear here today to discuss S. 30 and H.R. 2392. I will try to summarize my statement and place the entire statement in the record.

We are opposed to enactment of both S. 30 and H.R. 2392 as they are presently drafted. However, let me assure the subcommittee that the administration and Secretary Lujan want to resolve the issue of oil shale, and we look forward to working with the subcommittee in trying to come to some resolution of this issue.

Before I explain our opposition to the legislation, I would just like to highlight some of the factors the Department and the administration feel are very important and should be addressed in any legislative solution to this issue.

We want to resolve the oil shale issue. It remains an enigma some 70 years after many had thought Congress had resolved it in 1920.

Among the several issues Secretary Lujan has indicated that we are concerned about first is the $2.50 an acre patenting fee. The Secretary believes strongly this is not a relevant figure in 1989. We are addressing this issue in a legislative proposal we currently have going through administration review. We are looking at some options. Although we have not signed off on any options on that fee figure, the Secretary remains very forceful in his attitude that $2.50 an acre is just not the fee we should be charging in 1989.

Probably one of the most important factors in driving us to currently oppose S. 30 and H.R. 2392, is our concern about the impact of the legislation on existing property interests and related potential for takings exposures resulting from either the implementation of S. 30 or the implementation of H.R. 2392. At least three elements of the bills raise taking questions and therefore the risk of potential taking adjudication later on which might result in some Federal liability.

First, the bills would require paying increased fees for assessment work in patenting and an excessive holding fee.

Second, the bills limit and in some instances preclude patent issuance irrespective of the status of the existing claim.

Third, and irrespective of existing mining claims, the bills offer an illusory choice either to lease or to retain the claim. Indeed, the requirements for retention of the claim in S. 30 are so stringent that the only real choice for a claimant is to convert his claim to a lease. In H.R. 2392, the 100-year claim cancellation provision turns the claim election into a lease in fact.

Fourth, we feel strongly that all oil shale is a separate issue in terms of the 1872 mining law as evidenced by its amendments to the 1920 Mineral Leasing Act.

Fifth, in our view many of the remaining claimants would be willing to ultimately accept a solution in which the Federal Government retains rights to the surface and non-oil-shale mineral deposits while the claimants receive title to the oil-shale deposits together with the right to mine and remove them.

Sixth, we believe strongly that those who have patent applications pending should be grandfathered to reduce the takings risk. Seventh, we believe that legislative recognition of the Department's discovery standard based on Freeman v. Summers is essential to prevent challenges to the Department's use of these standards in making validity determinations.

Eighth, we believe that it is essential that the Congress establish by law the Department's standard of what is sufficient time for the Federal Government to establish a lapse of assessment work so that a claim can be canceled.

Ninth, both bills have unrealistic timeframes for actions by both the Secretary and the claimants.

Again, we think that all of the parties who are really involved with this issue are not as far apart as some people might think. I know earlier this year and late last year there were attempts to reach some degree of a potential solution out in Colorado. It is my understanding, although I did not take part and I do not think people in the Department directly took part in those negotiations, they came very close to coming up with the compromise. And I know Congressman Campbell from the Grand Junction area mentioned that to Secretary Lujan earlier this year.

Again, perhaps following this hearing, if people are of a mind to, perhaps we can sit down and again try and see if we might reopen those negotiations to see if we can come up with a solution.

That will conclude my testimony, Senator.

[The prepared statement of Mr. Hughes follows:]

JUL 31 1989

STATEMENT OF JAMES M. HUGHES, DEPUTY ASSISTANT SECRETARY, LAND AND MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR, BEFORE THE SUBCOMMITTEE ON MINERAL RESOURCES DEVELOPMENT AND PRODUCTION, SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES, ON S. 30, A BILL "TO PROVIDE FOR CERTAIN REQUIREMENTS RELATING TO THE CONVERSION OF OIL SHALE MINING CLAIMS LOCATED UNDER THE GENERAL MINING LAW OF 1872 TO LEASES, AND FOR OTHER PURPOSES", AND H.R. 2392, AN ACT "TO AMEND SECTION 37 OF THE MINERAL LEASING ACT RELATING TO OIL SHALE CLAIMS, AND FOR OTHER PURPOSES".

I appreciate the opportunity to appear here today to discuss S. 30 and H.R. 2392. We are opposed to enactment of both S. 30 and H.R. 2392. However, let me assure the Subcommittee that the Administration wants to resolve the issue of oil shale and would gladly work with the Subcommittee to do so. Before I explain the basis of our opposition to this legislation, I will briefly highlight the history of oil shale mining claims over the past 69 years, and what has brought us to the situation that exists today.

The Administration wants to resolve the oil shale issue. It remains an enigma some 70 years after many had thought Congress resolved it in 1920.

We have several items we think must be considered in any solution.

First, Secretary Lujan thinks the $2.50 an acre patenting fee is not a relevant figure in 1990. We are addressing that issue in a legislative proposal currently undergoing administration review.

Second, we are very concerned about the impact of the legislation on existing property interests and the related potential for "takings" exposure resulting from either S. 30 or H.R. 2392. At least 3 elements of the bills raise takings questions. First, the bills would require the payment of increased fees for assessment work and patenting and an excessive holding fee.

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Second, the bills limit and in some instances preclude patent issuance

irrespective of the status of existing claims. Third, and irrespective of existing mining claims, the bills offer an illusory choice either to lease or to retain the claim. Indeed, the requirements for retention of the claim in

S. 30 are so stringent that the only real choice for the claimant is to

convert his claim to a lease. In H.R. 2392, the 100-year claim cancellation provision turns the claim election into a lease.

Third, we feel strongly that oil shale is a separate issue in terms of the 1872 Mining Law as evidenced by its 1920 amendments to the Mineral Leasing Act.

Fourth, in our view many of the remaining claimants would be willing to ultimately accept a solution in which the Government retains rights to the surface and non-oil shale mineral deposits while the claimants receive title to the oil shale deposits together with the right to mine and remove them.

Fifth, we believe strongly that those who have patent applications pending should be grandfathered to reduce the "takings" risk.

Sixth, we believe that legislative recognition of the Department's discovery standard based on Freeman v. Summers is essential to prevent challenges to the Department's use of these standards in making validity determinations.

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Seventh, we believe that it is essential that the Congress establish by law the Departmental standard of what is a sufficient time for the Federal

Government to establish a lapse of assessment work so that a claim can be cancelled.

Eighth, both bills have unrealistic time frames for actions by both the
Secretary and the claimants.

Frankly, we think all the parties involved in this issue are not as far apart as some might think. Perhaps following this hearing we might all get together and negotiate in good faith. We could resolve this.

Oil shale mining claims have presented the Department of the Interior with some very difficult issues that have eluded definitive solution for 69 years. Although the mining claims have been in existence for at least 70 years, policy debates and litigation often delayed the Department from taking final action on a significant number of claims. Basically, the history of oil shale mining claims has been the history of the executive, legislative and judicial branches of government wrestling with the question of what actions are required of an oil shale mining claimant in order to maintain the claim and go to patent. There is no clear, unequivocal interpretation of law to serve as a guide to the claimant and the Federal administrator so that all remaining claims can be handled consistently and equitably, with due recognition of any legal rights which may have enured to the claimants.