The Congress has yet to decide if it will continue to allow the Department of Interior to grant fee-simple title to public oil shale lands in the West for $2.50 an acre as contemplated in the Mining Law of 1872. The previous Administration pursued a "use-it-up" policy, ignoring public protests and the obvious intention of many members of Congress to ensure that public lands are managed rationally and reasonably. Most Coloradoans want to included in decisions about the disposal of resources their tax dollars have gone to manage for many uses. The Interior Department under James Watt and Donald Hodel chose not to question a judge's interpretation of a century-old law -- an interpretation the Justice Department believes could be overturned if Interior would appeal and a law that many in Congress believe will have to be reviewed and revised. A dollar went a long way back in 1872, the year legislation was passed regulating mining claims on U.S. public lands. An ounce of gold brought less than $3, and under the new law, anyone who held a claim to certain mining lands could patent it, that is purchase a clear title to the land, by paying a filing fee of $2.50 an acre. A lot has changed since 1872; not many would argue that point. In 1988, however, the Department of Interior continued to argue that the federal government must patent the public's oilshale lands in Western Colorado, Utah and Wyoming under the standards set in 1872, and for the 1872 price: $2.50 an acre. Our country's early mining law had a clear and important purpose. With the opening of the West, the idea was to encourage the extraction and utilization of minerals in building our young economy. Minimal regulation was necessary to prevent a free-forall in claiming, extracting and selling the minerals. The 1872 law required claim-holders to show they had actually discovered a valuable mineral deposit on the claim before it could be patented or purchased. Also, the claim holder was to put $500 into property improvements and $100 a year in assessment work. Although it sounds straightforward, mining interests in 1872 knew that kerogen deposits, or oil shale, was more likely found in sedimentary layers like those in the Piceance Basin in Western Colorado. While the law said claims weren't valid if they were based soley on geological suppostition, the reality is that many claims were staked by someone who was looking at a map, not at clear evidence of oil shale. Even if a claim-holder had actually discovered oil shale and done the required improvements, his claim still wasn't worth much. No one had figured out a cost-effective way to get the oil out of the shale. So it would be tough to prove that very many oil-shale claims were legally found and maintained during the decades in which the underlying resources were not marketable. In fact, the same situation exists today. Without government subsidies, no one has figured out how to profitably mine oil shale lands. (That, however, does not preclude its value in the future when our country may be forced to produce a much greater share of our country's energy supply.) Just as the coming of the 20th century brought down the curtain on huge monopolies ruling the business world, so did it bring major changes in mining policy. The Mineral Lands Leasing Act of 1920 recognized the importance of retaining national resources for the good of the nation. It replaced the claim-patent system with the notion that the government could lease the lands in question to mining interests. The leasing system was designed to accomplish many purposes: protect both the public's mineral resources and surface rights, for activities such as grazing and recreation; continue to encourage the mining of resources; and allow the public to get a return on its resource by requiring the lease-holder, who would profit by extracting the resource, to pay royalty or bonus payments to state and and federal governments. Unfortunately, Congress exempted pre-1920 oil-shale claims from the 1920 law, intending to revisit the issue. It didn't until 1987. In 1986, when the Interior Department proceeded to transfer 82,000 acres of the public's oil shale land into private ownership, speculators turned around and sold the land for millions of dollars to oil companies. A House appropriations study publicized last year said this speculation may cost the American taxpayers a whopping $210 BILLION in royalties if and when oil-shale industry turns profitable. The public was quick to express its outrage over the 1986 Tosco settlement. In response, my friend Chairman Rahall sponsored a bill to halt the sale of these lands while at the same time encourage legitimate claim-holders who are serious about mining the oil from these shale-laden acres. The bill also directed Interior to investigate patent applications to determine if the claims were validly discovered and maintained. The bill passed the House by a three-to-one margin, but stalled in the Senate. Critics have argued that my bill represents a taking of property rights and that it is "not fair to change the rules in the middle of the game." The bill would not, however, take away a claim holder's ability to profit from his investment. He still would be able to mine oil from shale under a lease arrangement as Occidental Oil has done. As to the second charge, I wonder how we could have protected and fostered the public's health, safety and welfare over the past 200 years if Congress wasn't allowed to change the rules. The American public is conservative in this sense: it likes to hold onto what it's got, not only mineral resources but those public lands values that contribute to recreation and tourism. The public well understands that the sale of federal lands under the guise of oil shale development is a travesty. I believe the parties involved, the new Administration, the oil industry, oil shale claim holders, county officials, the states, and distinguished members of Senate realize that this issue must be resolved, legislatively, once and for all. Mr. RAHALL. Thank you, Mr. Campbell. We will now proceed with our witnesses. The first witness is Mr. James E. Cason, the acting assistant secretary, land and minerals management, of the U.S. Department of the Interior. While Mr. Cason is coming to the witness table, at this point I would like, with the consent of the subcommittee, to submit for the record the following material: The first is correspondence between the Interior Department and myself primarily relating to the assessment work and discovery standards that may be applied to oil shale claims. The letters are dated June 3, July 13, August 6, and October 2, 1987; December 7 and 20, 1988; and February 2, 1989. The second is the first three pages of Director Burford's written responses, dated January 30, 1989, to questions submitted to BLM pursuant to the subcommittee's fiscal year 1990 budget oversight hearing. This matter identifies the universe of unpatented claims currently in existence. The third item I would like to submit for the record is a letter dated February 23, 1989, from Arizona State University Professor John Leshy in response to my request that he review and comment on the Department's proposed position on the resumption doctrine. The final item is letters dated January 13, 1989, from Patton, Boggs & Blow on behalf of Marathon Oil and my response dated January 30, 1989, along with a response to my letter from Marathon dated February 24, 1989. The record will also show my response to that letter. This matter involves a discussion on whether the pending legislation has applicability to Marathon's patent application. Without objection, I would like to submit all of these items for the record. [The above-mentioned correspondence, written responses, and letters follow:] COMMITTEE ON INTERIOR AND INSULAR AFFAIRS U.S. HOUSE OF REPRESENTATIVES WASHINGTON, DC 20515 June 3, 1987 Mr. J. Steven Griles, Assistant Secretary Land and Minerals Management U.S. Department of the Interior Dear Steve: Yesterday the U.S. House of Representatives passed H.R. 1039, the oil shale bill, by a vote of 295 to 93. As I have stated in the past, the Interior Department's program announced last February relating to processing the remaining unpatented oil shale claims and the legislation are not in conflict. Validity determinations made by the Department would serve as the basis of whether a claim could be converted to a lease, retained in compliance with the new expenditure requirement, or be cancelled. It is my understanding that your staff briefed certain Committee staffers last Friday on the Department's progress relating to establishing a common framework of knowledge regarding oil shale claims. I would appreciate it if you would provide this information in writing to the Subcommittee. Specifically, please provide us with the following: (1) (2) (3) Have any claims been found to have been improperly What standard of discovery will the Department apply How does the Department intend to address the annual |