face values, having been interested in this part of the West for at least twenty years, and having visited the Green River country upon many occasions. Last September (1966) I was privileged, as a member of the Advisory Council of the Public Land Law Review Commission to spend several days in an aerial survey of Colorado, and of the lands in question. The tour covered all of the country between Glenwood Springs, Rifle, and the Flaming Gorge Reservoir, with special attention to the Piceance Basin Oil Shale area. The Public Land Law Review Commission is, perhaps I should say, contracting for an in-dept study of "Energy Fuel Minerals," including oil shale, which soon should provide additional facts and information. The rich shale oil deposits underlie 16,000 square miles that include or adjoin some of the truly scenic areas in North America. Recreation is already important, although the aridity of the land has retarded much permanent recreational development. Elk, deer, and upland game birds of several species inhabit the area; 11 percent of all of the deer taken by Colorado hunters each year are from the Piceance Basin. That is the wintering ground of the largest migratory mule deer herd in the world. Although most of the streams are intermittent, some provide good trout fishing. Camping, trail riding, and other forms of outdoor recreation are expanding rapidly. As transportation systems improve, the recreational uses of the surface of these oil shale lands will increase sharply. Furthermore, the rivers and tributary streams of the Green River Formation are of vital importance to many western countries as sources of water for irrigation, hydroelectric power and domestic use. Unregulated oil shale mining could create serious water pollution. The in situ process developed at the Bureau of Mines facilities at Rifle offers the best promise of maximum oil yields with a minimum loss of surface values. Unfortunately, orderly development of these great oil resources is hampered by the existence of thousands of disputed claims filed under the Mining Law of 1872. The majority of these have been contested, and have not been proved out or adjudicated. Implementation of the Interior Department's five-point program is contingent upon the leasing to private industry of relatively large tracts of cil-bearing shale. Congressioinal assistance is needed to enable the Secretary to quiet all outdated and unproved mining claims in the Green River Formation as an essential first step in the activation of any equitable plan of development. Congress should not wait for the adjudication of these cases in the courts. That would be most unfortunate and would result in tremendous losses to the federal treasury. We also believe that Congress should take all necessary steps to authorize full cooperation among the Department of the Interior, the Atomic Energy Commission, and private industry for the future development of this exceedingly valuable natural resource. The Institute would like to have some of the income from this fabulous program go into the Land and Water Conservation Fund, and it certainly would be advisable to reduce the national debt. We believe that the Interior Department is wise in developing sound plans for the shale oil resources well in advance of the immediate needs. This is a refreshing departure from some past governmental practices and procedures. It also will provide a magnificant opportunity for formulating a model program that will benefit every American in the years to come. Senator HART. Mr. Stoddard is unable to be with us. We have concluded in view of the large number of individuals who have expressed a desire to testify, that several additional days of hearings will be scheduled in all likelihood next week, and as soon as the staff manages to develop a schedule, we will announce it. We are adjourned to the call of the chair. (Whereupon, at 11:30 a.m., the subcommittee was adjourned, to reconvene subject to the call of the chair.) COMPETITIVE ASPECTS OF OIL SHALE DEVELOPMENT TUESDAY, MAY 2, 1967 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY The subcommittee met, pursuant to recess, at 10 a.m., in room 2228, New Senate Office Building, Senator Philip A. Hart (chairman) presiding. Also present: S. Jerry Cohen, staff director and chief counsel; Charles E. Bangert, assistant counsel; Peter N. Chumbris, chief counsel for the minority; James C. Schultz, counsel for the minority; Gladys E. Montier, clerk; Patricia Bario, editorial director; and David Dominick, legal assistant to Senator Hansen. Senator HART. The committee will be in order. I apologize for being delayed. Our opening witness-and we welcome him-is Charles Stoddard, whom we know as the former Director of the Bureau of Land Management of the Interior Department. Mr. Stoddard was the resources program staff director of the Office of the Secretary. Mr. Stoddard, you were kind enough to give us a statement, and it will be made a part of the record in full as though given. It is a very brief one. As you go along, if you care to make additional comment or summarize it at any point feel free. STATEMENT OF CHARLES STODDARD, EXECUTIVE DIRECTOR, CITIZENS ADVISORY COMMITTEE ON RECREATION AND BEAUTY Mr. STODDARD. Thank you, Mr. Chairman. I would like to correct the record of the morning paper in which I was listed as a representative of the Interior Department. I am no longer in that connection. Just by way of background, my field has been in resource economics over the years, and my current employment has no relationship to the subject of this particular hearing. I will read my statement as I have sent it to you. Senator HART. Would you care to indicate for the record your present associations or activities? Mr. STODDARD. I am the executive director of the Citizens Advisory Committee on Recreation and National Beauty. In response to your request for my views on the leasing of the Federal oil shale resource, I have recalled and set down some of the issues which were of concern during my tenure as the Director of the Bureau of Land Management. Since I am no longer serving in that capacity, the suggestions which follow are given only as a private citizen. While I can offer this committee no easy solutions, perhaps it will be helpful to define and describe some of the tough policy questions which resource administrators will face if they are to manage this tremendous publicly owned resource in the national interest. There are technical questions, economic and policy questions-often intertwined in that policy solutions depend upon technical answers. The Congress is the policymaking authority where our citizens expect these decisions to be made in the national interest. It may, therefore, be beneficial to describe the questions which intensive study by this committee, the Interior Committees of both Houses of Congress, and the Public Land Law Review Commission will be expected to resolve prior to the issuance of historical decisions affecting oil shale development. By so doing, hasty or ill-considered proposals may be screened out and solid policies hammered out in full public view. The only technically perfected method of oil shale extraction at present is removal of the shale, and distilling in retorts. This is costly, will disturb huge areas of watershed and critical wildlife wintering areas. There is also a large problem of disposal of waste. Research and experimental development to perfect underground fracturing and vaporizing theoretically could lower costs, increase royalty revenues to the Federal Government and cause little surface damage beyond subsidence. With respect to the central concern of this committee, monopoly, there is good reason to believe that the development of a low-cost underground process will make it possible for independent producers to operate without the heavy capital investments needed for retort-distillation. Research needs therefore pose a number of questions: (1) Should the Federal Government undertake such research (on the underground in situ method) by contract on its own lands in order to acquire the necessary information needed for the terms of leasing permits? (2) If there is no Federally sponsored research, how will Federal resource agencies have access to information needed to manage this public asset? (3) Inasmuch as large acreages of shale are privately owned, what immediate need is there for leasing of limited Federal lands for private research prior to general leasing? (4) If so, should results from private research be made available for Federal shale administrators on such matters as costs, techniques, investment requirements, et cetera ? (5) If commercial leases are made allowing the removal-and-retort method on public lands what provisions should be made to prevent erosion watershed damage and unsightly dumping of wastes? (6) How much, if any, leasing should precede technical perfection of the in situ processes? (7) Should there be full governmental exploration of the sodiumaluminum mineral formations intermingled with oil shale prior to leasing? Policy questions are: (1) Should leasing of Federal oil shale lands be timed to coincide with decline in the Nation's known reserves of liquid petroleum? (2) If leasing is to precede this decline, should Federal restrictions on imports and interstate domestic production controls be removed as a condition prior to leasing? (3) Should any Federal oil shale leasing be undertaken before research information and experimental development is well underway on private lands? If so, what would be the terms set forth in the leases? (4) What should be the maximum size lease to any one company if monopoly is to be prevented? (5) Present allocation of revenue by the Mineral Leasing Act of 1920 is 371⁄2 percent to the States to defray costs of State government, 522 percent to the Reclamation Fund for irrigation projects, and 10 percent to the Federal Treasury-except Alaska where 90 percent goes to the State. In view of the estimated potential $300 billion in leasing revenue, should so large a Federal asset be confined to three States and an agricultural irrigation program without consideration to the many other pressing public needs? Or should the formula in the Mineral Leasing Act be amended to allocate full revenue to the Federal Treasury or portions to such needs as education, watershed conservation, urban development, or other priority requests? (6) Since oil shale is a known geological structure (KGS) and has no costly discovery costs should the depletion allowance (on private lands) of 15 percent be increased to 272 percent. Should it apply to oil shale development on public lands? I have concluded that if reasonably sound technical policy decisions can be worked out, the process for doing so would be in the development of a program-to lay the basis for a program for the development of the shale. I think there is general agreement on the desirability of the development of this very valuable nationally owned national resource. It seems to me that these points that I urged while I was the Director of the Bureau of Land Management are still valid. (1) Before any major part of the oil shale lands, and particularly the thick heart of the Piceance Creek Basin rich multiple minerals is committed through unplanned leasing, the Government needs to obtain information upon which a complete management plan for development can be based. This information includes: (a) Information on extent and quality of all the potentially valuable minerals which may exist in the area. (b) The best technology to mine, extract and process the raw mineral into usable products. (c) The best technology to obtain the valuable products and at the same time protect the nonmineral resources including the nature beauty and scenic values. (d) The probable economics of an industry involving the production of oil shale and possible other minerals. There is a joint cost and joint product aspect that I do not think has been given very detailed economic analysis as yet. (e) The relation of shale oil production to the total energy mix including phasing of shale oil production into that mix. (f) The social, political and economic alternatives in the development of these public resources unless the Government has the information before major decisions and commitments are made, it is the position of "offering a subsidy of unknown value for a development of unknown costs promising a return of unknown amounts." (2) Once the above information is obtained and evaluated, then the leasing policy can be developed and plans for overall development |