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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 SECRE

TARY, 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 de posits while the claimants receive title to the oil-shale deposits to gether 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 Í 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 3 1 1900

STATEMENT OF JAMES M. HUGHES, DEPUTY ASSISTANT SECRETARY, LAND AND MINDALS MANAGELLAT, DEPARTMENT OF THE INTRIOR, BEFORE THE SUBCOMITTER OU MITRAL RESOURCES DEVELOPMEDIT AND PRODUCTION, SKATE COWLITTEZ ON KERGY AND NATURAL RESOURCES, ou s. 30, A BILL "TO PROVIDE FOR CERTAIN REQUIRRATS RKLATING TO TH. CONVRSION OF OIL SHALE MIILIG CLANS LOCATED UNDR TED GENERAL MINDIG LAW OF 1872 TO LEASES, AND FOR OTHER PURPOSES", AND H.R. 2392, AN ACT TO ALLROUND SECTION 37 OF THE MORAL LEASING ACT RKLATING TO OIL SHALS CLANS, AND FOR OTEN 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 aad H.R. 2392.

However,

let ne assure the Subcommittee tbat tbe Adalaistration wants to resolve the

18sue of oil sbale and would gladly work with tbe Subcommittee to do so.

Before I explain the basis of our oppositioa to this legislation, I will

briefly highlight the history of oil sbale aiaiag claims over the past 69

years, aad what has brought us to the situation that exists today.

The Administration wants to resolve the oil sbale issue.

It remains an enigma

some 70 years after nany bad thought Congress resolved it in 1920.

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

First, Secretary Lujaa thiaks the $2.50 ao acre patenting fee is aot a

relevant figure ia 1990. We are addressing that issue 1o a legislative

proposal currently undergoing adalaistration review.

Second, we are very concerned about the impact of the legislation on existing

property interests and the related potential for "takings" exposure resulting

fron either s. 30 or H.R. 2392. At least 3 elements of the bills raise

takings questions. First, the bills would require the payneat of lacreased

fees for assessmeat work and pateating and an excessive bolding fee.

2

Second, the bill. list and in some lastances preclude pateat issuance

irrespective of the status of existing clains. Third, and irrespective of

existing adoing clains, the bills offer an illusory choice either to lease or

to retain the clain. Indeed, the requirenents for reteation of the claio lo

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

coavert his claim to a lease.

IQ H.R. 2392, the 100-year claio cancellation

provision turas the claio election into a lease.

Third, we feel strongly that oil sbale is a separate issue in terms of the

1872 Mining Lan as evidenced by its 1920 amendments to the Mineral Leasing Act.

Fourth, 10 our view many of the remaining claimants would be willing to

ultimately accept a solution to which the Government retains rights to the

surface and aon-oil shale mineral deposits while the claimants receive title

to the oil sbale deposits together with the right to aine and remove ther.

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

Sixth, we believe that legislative recognition of tbe Department's discovery

standard based on Preensa v. Sumners is essential to prevent challenges to the

Department's use of these standards to making validity determinations.

3

Seventh, we believe tbat it is essential that the Congress establish by law

the Departnental standard of what is a sufficient time for the Federal Government to establish a lapse of assessneat work so that a clatı can be

cancelled.

Bighth, both bills bave unrealistic time frames for actions by both the

Secretary and the claimants.

Prankly, we thiak all tbe parties lovolved in this issue are oot as far apart

as sone night think. Perhaps followdag this hearing we aight all get together

and negotiate in good faith. We could resolve this.

011 sbale doing claims have presented the Department of the Interior with

sone very difficult 18sues that have eluded definitive solution for 69 years.

Although the doing claims have been lo existence for at least 70 years,

policy debates and litigation often delayed the Department from taking final

action on a sigaificant quaber of claims. Basically, the history of oil sbale

vioing clalas bas been the history of the executive, legislative and judicial

brancbes of government wrestling with the question of what actions are

required of an oil sbale biaing claimant in order to maintaio the clair and go

to patent. There is no clear, unequivocal interpretation of law to serve as a

guide to tbe clainant and tbe Pederal adai aistrator so that all remaining

clains can be handled consistently aad equitably, with due recogoition of any

legal rights which usy bave eaured to the clainants.

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