Lahn, Richard, Washington representative, Sierra Club. Moss, Hon. Frank E., a U.S. Senator from the State of Utah.. Overton, J. Allen, Jr., president, American Mining Congress- Schmechel, W. P., vice president and general manager, Western Energy Attachment A-State of Montana total coal leases (table). Attachment A-1-State of Montana private fee coal leases-totals by individual lessee (table).. Attachment A-2-Revised coal lease figures by county (table). Clark, Robert M., vice president, the Atchison, Topeka, and Santa Fe Railway System, to Hon. Patsy T. Mink, dated Aug. 22, 1974 (plus Statement of the need to repeal section 2 (c) of the Mineral Leasing Hughes, Royston C., Assistant Secretary of the Interior, to Hon. 36 Miller, Arnold, office of the president, United Mine Workers, to Hon. 174 Additional information: Coal Mining operating regulations-Department of the Interior, 133 Cost composite, wholesale price index of coal 1967 to 1973 (submitted Part 211-Coal-mining operating regulation (from 38 FR 10001, Receipts from mineral leases-fiscal years 1972 and 1973 (table). FEDERAL COAL LEASING THURSDAY, JULY 25, 1974 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MINES AND MINING OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D.C. The subcommittee met, pursuant to notice, at 10:05 a.m., in room 1324, Longworth House Office Building, Hon. Patsy T. Mink (chairman of the subcommittee) presiding. Present: Representatives Mink, Camp, Roncalio, and Runnels. Mrs. MINK. The Subcommittee on Mines and Mining will come to order. We are pleased to open our hearings on Federal coal leasing system, and, without objection, I would like to insert my comments at the beginning of these hearings. The purpose of these hearings today will be to explore the current and projected activities and plans of the Department of the Interior with respect to Federal Coal Leasing Policy No. 1. There are a number of issues that this subcommittee wants to raise regarding the system; among these issues are: (1) The Northern Great Plains resources program is engaged in describing and evaluating the social, economic, and environmental impacts on the Northern Great Plains associated with alternate levels of intensity and mix of coal use; e.g., the relative advantages of various mining techniques for Northern Great Plains coal, the financial and environmental costs of water for coal conversion and electricity generation, and the capabilities of potentially impacted localities to accommodate increased demands for public services. Aside from representatives of the Department, this program includes participants from State Government, industry, environmental groups, and citizens. (2) A second program now underway in the Department is the energy minerals allocation recommendation system (EMARS). According to the Department of the Interior, This system will make available certain Federal lands which have been, in effect, environmentally sanatized and the resource tradeoff's made at a district level in the Bureau's general planning system. The system involves three phases. The fifist produces minimum acceptable leasing goals for Federal energy resources by analyzing current coal ownership, resource value, national and regional energy and coal demands, and existing Federal leases. The second phase involves tract selection. The minimum leasing goals are sent to the district levels, within each State, where resource trade-off's through use of the Bureau's planning system are made and public hearings are held. The selected tracts are then referred back to Washington. Once the Secretary has approved the leasing schedule the third phase, leasing, begins. This phase involves the (1) State Offices, pre-sale evaluations, post sale evaluations and the issuance of the lease. The distict offices must assure there is compliance with lease stipulations and monitor rehabilitation. (3) Finally, the Department has issued a draft environmental impact statement, proposed Federal coal leasing program. This statement is now under public review. The statement covers: proposed resumption of nationwide coal leasing by the Bureau of Land Management, upon acceptance of final environmental impact statement, utilizing the energy mineral allocation recommendation system. This program primarily involves 85 million acres of identified coal reserves located in the Northern Great Plains and northward along the continental divide from New Mexico and Arizona through Montana. There are several major issues which have been raised regarding the current Federal coal leasing system. Among these are: (1) The need to integrate any coal leasing system with land use planning considerations for the region affected. (2) The need to assure that the public is receiving an adequate return for the development of the resource. This issue includes the questions of rental and royalty rates, as well as the manner in which leases are issued. It has been recommended that no further coal leases should be issued, except under a competitive bidding system. Such a system could be either through the submission of sealed bids only or by a system of sealed bidding, followed by oral bidding. The latter has been criticized because it reduces the amount of money received by the Department for a lease. (3) Questions have been raised as to the practice of allowing competitive bidding only on the basis of a bonus, paid at the time of the bid. Alternatives to this system include a royalty bidding system, or system of bonus bidding with a deferred payment provision. This would enable the smaller coal operators to successfully compete with the large energy corporations. (4) Currently, only about 10 percent of the leases which have been issued by the Department are actively being mined. The vast majority of the leases are held for speculative purposes. A solution to this problem which has been recommended is to insert strict diligent performance requirements into a lease contract. (5) Presently, coal leases are offered on a permanent basis. It has been suggested that instead of this system, a definite term be placed on the lease, with the provision that it continue as long as production is actually taking place. Related to this issue is the often stated need for a provision for the timely revision of lease terms. One suggested time period has been 10 years. (6) Finally, there has been considerable interest in amending the Mineral Leasing Act of 1920 to allow the States to spend the 37.5 percent of the revenues which come to them under the existing law for purposes other than schools and roads. Interest in this type of change has also been expressed with respect to revenues from oil shale development. The feeling is that the States will require these funds for a number of social intrastructures projects. For our opening witness this morning, we are delighted to welcome Mr. Jack Horton, Assistant Secretary for Land and Water Re sources, Department of Interior, who will speak on behalf of the Secretary, as I understand it. And you are accompanied by Mr. Frank A. Edwards, Assistant Director, Minerals Management, Bureau of Land Management. You are also accompanied by Mr. Frederick N. Ferguson, Assistant Solicitor, Minerals Office of the Solicitor; and Mr. Russell G. Wayland, Chief, Conservation Division, Geological Survey. We welcome all four of you. We have your testimony, and you may proceed in any way you wish. If you would like me to have this inserted at this time or if you would like to present it, fine. The Chair would prefer to have you present it, because the Chair has not had a chance to go through it before the meeting this morning. STATEMENT OF JACK HORTON, ASSISTANT SECRETARY FOR LAND AND WATER RESOURCES, DEPARTMENT OF INTERIOR, ACCOMPANIED BY FRANK A. EDWARDS, ASSISTANT DIRECTOR, MINERALS MANAGEMENT, BUREAU OF LAND MANAGEMENT; FREDERICK N. FERGUSON, ASSISTANT SOLICITOR, MINERALS OFFICE OF THE SOLICITOR; RUSSELL G. WAYLAND, CHIEF, CONSERVATION DIVISION, GEOLOGICAL SURVEY Mr. HORTON. Madam Chairman, we would like to present it in that there are a number of changes. Mrs. MINK. You may proceed. Mr. HORTON. Thank you, Madam Chairman. It is a pleasure for us from the Department of Interior to appear before the Subcommittee on Mines and Mining today, to discuss the public land coal program. We believe that this program is vital to the Nation because of the importance of coal as a major domestic energy source available to the United States in quantities necessary to meet near term national goals. Any coal development has to be done while respecting the integrity of the environment. Coal occupies this important position because it exists in large quantities and because extraction and use technologies are available. Other energy sources will become available in significant quantities in the 1980's, although coal will still probably be of vital national importance through the year 2000. A large amount of the Nation's low-sulfur coal is in the West and it is reasonable to assume that some of the increase in national coal production will come from these lands, many of which are leased and administered by the Department of the Interior. In this testimony, we will discuss: first, our current public land leasing program, our coal resource planning system which we have termed EMARS (energy minerals allocation recommendation system), the coal programmatic environmental impact statement presently under public review, and the objectives and status of the Northern Great Plains resource program. Finally, we will discuss our plans for a future coal leasing program. The Secretary on February 17, 1973, announced a new Federal coal leasing policy with no new leasing (except under certain short |