Munitions Board notice that they are so held. The Munitions Board may, as long as any such metals or minerals are held by the Administrator, (1) direct the Administrator to transfer any of them to the national security stock pile in accordance with the provisions of the Strategic and Critical Materials Stock Piling Act, as amended (53 Stat. 811, 60 Stat. 596), or (2) within sixty days after such notice from the Administrator direct him to hold any such metals or minerals listed in the notice until sixty days after the next succeeding appropriation for purchases for the stock pile has become available. Unless notified by the Munitions Board to either transfer any of such metals or minerals or to continue to hold them as provided in this subsection, the Administrator shall sell them in the open market if and when open-market prices will return to the Government at least the approximate average price paid by the Government for the metals or minerals, and only in such quantities as will not materially depress the market. No metal or mineral shall be transferred into the national security stock pile under the provisions of this Act unless the material has been found to be strategic and critical as provided in the Strategic and Critical Materials Stock Piling Act, and meets established specifications as to quality and degree of refinement or processing, and unless such transfer is consistent with the current stock-piling procurement program of the Munitions Board. All moneys received by the Administrator of General Services from such sales in the open market shall be for deposit in miscellaneous receipts of the Treasury, and any transfer of metals or minerals to the national security stock pile shall be covered by a transfer of funds from appropriations available for purchases for the stock pile to miscellaneous receipts of the Treasury in amounts approximating what the cost of the metals or minerals would have been if purchased in the open market at the time of transfer.

(e) All contracts entered into under the provisions of this section-(1) shall contain an express provision that they are subject to the availability of appropriated money; and (2) may be entered into without regard to sections 3648 and 3709 of the Revised Statutes, as amended, or other provisions of law prescribing the manner of making contracts on behalf of the United States.

(f) No contracts shall be entered into under the provisions of this section for a period exceeding two years or after the expiration of three years from the effective date of this Act.

SEC. 7. As used in this Act

(a) "Secretary", standing by itself, means the Secretary of the Interior. (b) "Administrator" means the Administrator of General Services. (c) "Board" means the Minerals Conservation Board.

(d) "Exploration" means exploration in the United States for unknown or undeveloped sources of metals or minerals, including undeveloped extension of known deposits, conducted from the surface or underground, by surface trenching, core or churn drilling, tunnels, raises, winzes, or shafts, including recognized and sound procedures for obtaining pertinent geological information, and including metallurgical research on processes for the production of such metals or minerals.

(e) "Production" means the production of ores or minerals from mines in the United States, or from tailings, dumps, slags, or residues of such mines, which the Secretary determines would, in the absence of financial aid by the United States, be discontinued or remain discontinued under such circumstances with respect to each particular mine as to make it probable that for economic or technical reasons such production would not or could not be resumed promptly when needed for the national economy or security.

(f) "Small base metal mines" means mines or deposits of ores primarily producing or which in the course of conducting an exploration project primarily produce (a) lead, zinc, or copper ores, or ores containing a combination of such metals, the average aggregate monthly production of which does not exceed 100 tons of lead, zinc, and copper metal combined and (b) manganese, mica, chromite, mercury, and tungsten ores and ores of other minerals and metals the average monthly production of which, by quantity, approximates the market value of one hundred tons of lead computed and fixed as of the effective date of this Act, the quantity limitation for each mineral and metal thereafter to remain unchanged.

(g) "Producer" means any person or persons or legal entity by whom or for whose account and interest exploration, maintenance, or production is to be or is being performed.

(h) "United States", when used in a geographical sense, means the United States and its Territories and possessions.

SEC. 8. This Act shall not be construed as superseding or amending the Atomic Energy Act of 1946 (60 Stat. 755), as amended.

SEC. 9. There is hereby authorized to be appropriated not to exceed $80,000,000 annually for carrying out the provisions of this Act, including payments to producers for exploration, maintenance, and production, and the costs of administration, such funds to remain available until expended.

Sec. 10. (a) Each producer shall at all times have access to a complete file of all copies of all calculations and analyses and determinations used as a basis for aid under this Act, or modification or denial of his application, and shall be furnished a copy of each such analysis.

(b) The Secretary shall make annual reports to Congress on the operations under this Act on April 15, 1950, and February 15 of each succeeding year. Such reports shall include current and summary information detailing the activities and results obtained and anticipated pursuant to this Act, and such other pertinent information concerning the administration of this Act as will enable the Congress to evaluate its administration and the need for amendments and related legislation.

(c) Advance payments may be made for exploration projects, in such amounts and on such terms as the Secretary deems appropriate, where the producer certifies the need for such advance payments as working capital. Advance payments received by operators shall not be commingled with other funds and shall be subject to post-audit.

Passed the Senate October 6 (legislative day, September 3), 1949.
Attest:

LESLIE L. BIFFLE,

STIMULATING EXPLORATION FOR AND CONSERVATION OF STRATEGIC AND CRITICAL ORES, METALS, AND MINERALS

OCTOBER 11, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. ENGLE of California, from the Committee on Public Lands, submitted the following REPORT

[To accompany S. 2105]

The Committee on Public Lands, to whom was referred the bill (S. 2105) to stimulate exploration for and conservation of strategic and critical ores, metals, and minerals, and for other purposes, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass. The amendments are as follows:

AMENDMENTS TO S. 2105

Page 5, line 15, after the word "small" strike out the words "base metal." Page 5, lines 21, 22, 23, and 24; page 6, lines 1 and 2, after the period strike out the entire sentence on lines 21, 22, 23, and 24 and lines 1 and 2 on page 6.

Page 8, line 1, after the period insert the following new sentence: "The Secretary shall transfer to the Administrator for the performance of his functions hereunder such funds as the Administrator, with the approval of the Director of the Bureau of the Budget, shall determine to be necessary, in addition to any funds appropriated to the General Services Administration, for the proper performance of said functions."

Page 11, line 5, after the word

" strike out the words "base metal."

Page 11, line 7, after the word "produce" add the following: "(a)." Page 11, line 11, strike out the period and insert the following: "and (b) manganese, mica, chromite, mercury, and tungsten ores and ores of other minerals and metals the average monthly production of which, by quantity, approximates the market value of 100 tons of lead computed and fixed as of the effective date of this Act, the quantity limitation for each mineral and metal thereafter to remain unchanged."

Page 12, line 4, add the following new section:

"SEC. 10. (a) Each producer shall at all times have access to a complete file of all copies of all calculations and analyses and determinations used as a basis for aid under this Act, or modification or denial of his application, and shall be furnished a copy of each such analysis.

"(b) The Secretary shall make annual reports to Congress on the operations under this Act on April 15, 1950, and February 15 of each succeeding year. Such reports shall include current and summary information detailing the activities and results obtained and anticipated pursuant to this Act, and such other pertinent information concerning the administration of this Act as will enable the Congress to evaluate its administration and the need for amendments and related legislation.

"(c) Advance payments may be made for exploration projects, in such amounts and on such terms as the Secretary deems appropriate, where the producer certifies the need for such advance payments as working capital. Advance payments received by operators shall not be commingled with other funds and shall be subject to post-audit."

EXPLANATION OF THE BILL

The bill provides a limited means of assistance by the United States Government for encouraging the exploration and conservation of strategic, critical, and essential minerals and metals in the United States and its Territories and possessions by private enterprise.

ADMINISTRATION OF THE ACT

The bill creates a Minerals Conservation Board (sec. 3) consisting of the Secretaries of Interior, Defense, Commerce, and Treasury to carry out the policy of the act. The Secretaries may delegate their powers, functions, and duties to suitable officers of their respective agencies (sec. 3). The Board shall promulgate such rules and regulations as may be necessary to carry out its duties and functions under the act (sec. 5 (a)).

The Secretary of the Interior, who shall be the Executive Chairman of the of the Board (sec. 3), may prescribe rules and regulations for carrying out the provisions of the act, subject to the rules and regulations of the Board (sec. 5 (b)). The Secretary also may delegate any of his functions under the act (sec. 5 (c)).

POWERS OF THE MINERALS CONSERVATION BOARD

The Board and the Secretary of the Interior are given broad powers within the limitations of the act, inasmuch as the Department of the Interior has vigorously objected to the standards and directives set forth in other mineincentive bills considered and recommended by this committee. The committee reluctantly accedes to the provisions of section 4 of the bill which provides that the Board alone shall determine :

1. The minerals and metals and specifications thereof that shall be eligible for aid for exploration and conservation.

2. The maximum and minimum prices which may be paid for the purchase of any mineral or metal for conservation.

3. The amount of appropriated money to be allocated to the aid of exploration and to the aid of conservation.

4. The amount of appropriated money to be allocated to the aid of exploration of conservation for any particular mineral or metal or group of minerals or metals.

5. The maximum and minimum amounts of Government participation in costs of mine maintenance with respect to any mineral or metal.

6. The maximum and minimum amounts which may be paid to any producer or class of producers for the exploration for any mineral or metal or group of minerals or metals.

7. The ratio which the Government's contribution for exploration shall bear to the contribution of any producer or class of producers.

8. The time limits or dates within which conservation contracts shall terminate.

PROFIT ALLOWANCES

The committee notes that the bill makes no mention, one way or the other, of profit allowances in prices paid to producers for minerals and metals purchased for conservation purposes. Inasmuch as any major amendments to the bill favorable to the mining industry, including a mandatory provision for the inclusion of reasonable profits in prices paid for production purchased for conservation, would render the bill unacceptable to the executive branch of the Government, the committee has refrained from incorporating an amendment regarding profit allowances. However, the committee takes exception to the position taken on the subject of profits by the Bureau of the Budget. In its letter of August 15, 1949, to the Secretary of the Interior endorsing S. 2105, which letter is set forth in this report, the Bureau of the Budget states, in part: * * we should like to draw your attention to the provisions of section 4 (d) requiring the Minerals Conservation Board to determine the maximum and minimum prices which may be paid for purchases of metals or minerals. In assuring that such purchases are made solely for purposes of conservation, we believe it might be most advantageous to require that these price determinations allow only for coverage of the costs of operation and maintenance, without provision for net profit to the producer. We have held preliminary discussions with your representatives on this proposal to bar profit allowances and while no conclusion has been reached and no such amendment is included in your redraft, we feel strongly that the committee should give this matter serious consideration."

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The committee points out that mining, unlike manufacturing and other business enterprises, results in the depletion of the source of production and profit— the deposits mined. A conservation program to be attained through the purchase of production without the allowance of reasonable profits in the prices paid producers may be expected to offer little or no inducement to most producers except for short and temporary periods in the life of the known or probable ore reserves remaining in a mine or deposit and would, in the opinion of the committee, be relatively ineffectual. The committee also notes that the end result of the financial assistance provided by the bill to carry out the policy provisions set forth in section 2 is in the national interest.

ELIGIBLE APPLICANTS

Any producer may file with the Secretary of the Interior an application for financial aid in carrying out a specified project for exploration or financial aid to conserve ores in a mine or deposit, including tailings, dumps, slags, or residues of mines, through Government participation in the costs of maintaining the property in stand-by condition or through Government purchasing all or any part of the ores, minerals, or metals resulting from production from such mine or deposit (sec. 6 (a)).

A producer is defined (sec. 7 (g)) as “any person or persons or legal entity by whom or for whose account and interest exploration, maintenance, or pro duction is to be or is being performed." Thus it is clear that an applicant need not be one currently engaged in mining activities.

ANALYSIS AND CERTIFICATION OF APPLICATIONS

The Secretary shall cause mining engineers, geologists, and any other necessary technician to examine and report on each application and to certify it to the Secretary either for acceptance, as presented or subject to specified modification, or rejection (sec. 6 (b)).

With respect to an application for exploration assistance, the examining experts shall certify whether the project offers reasonable promise of discovering unknown or undeveloped sources of minerals or metals, including undeveloped extensions of known deposits, recognized and sound procedures for obtaining pertinent geological information, and metallurgical research on processes for the production of minerals and metals (sec. 6 (b) and 7 (d)).

With respect to an application for aid to conserve the ores, minerals, or metals in a mine or deposit, the examining experts "shall certify whether the project offers reasonable promise of maintaining in stand-by condition or in production, as the case may be, a property the production from which would, in the absence of financial aid by the United States, be discontinued or remain discontinued under such circumstances as to make it probable that for economic or technical

reasons such production would not or could not be resumed promptly when needed for the national economy or security" (sec. 6 (b)).

The committee notes that for all practical purposes few mines can be opened and effectively resume production if attempted after a war emergency has commenced; economic factors such as shortages of manpower and equipment alone preclude such action and result. In substantiation of this statement the committee believes it sufficient to call attention to one War Production Board select list of 36 domestic copper mines, dated May 15, 1943. The projects proposed for these mines, which would have provided for the production of substantial amounts of copper by reopening old mines or portions of mines or, in some cases, by increasing production capacity at operating mines, were all denied by the War Production Board Facility Review Committee or Facility Clearance Board primarily on the grounds of shortages of manpower and equipment. It is noted that all of the projects, many of which were proposed and recommended as early as October 1942, were rejected even though the War Production Board Copper Division estimates, based on the assumption that necessary material, equipment, labor, and water could be made available when required, indicated that only 4 to 16 months would be required for the commenceemnt of production from the particular projects and approximately 8 months to 2 years to obtain estimated maximum production.

As used in the bill, the word "production" includes the production of ores, minerals, and metals from mines or deposits in the United States, or from tailings, dumps, slags, or residues of such mines (sec. 7 (d)).

The reasons for including tailings, dumps, slags, or residues in such a conservation measure as S. 2105 is that often the prompt recovery of values from these sources is important in a conservation program. In the case of tailings, especially, erosion by wind and water may reduce the bulk and oxidation, leaching, and other chemical changes may seriously decrease the percentage of recovery of valuable minerals or metals contained therein in proportion to the passage of time.

ACCEPTANCE AND REJECTION OF APPLICATIONS

The Secretary of the Interior either accepts and approves the application analyzed and certified by the examining experts, subject to any modification therein which he may require, or he shall reject it.

If the Secretary's action on the application conflicts with the recommendation and certification of the examining experts, the case is referred to the Board. The Board shall either approve or reverse the action of the Secretary or direct the Secretary to reconsider the application. The Board's decision shall be final. Any applicant who is dissatisfied with the Secretary's action upon his applica tion may appeal to the Board. The action taken by the Board on applicant's

appeal shall be final.

If the Secretary accepts an application either in its original or modified form, the terms of the application and acceptance are merged in a formal, written contract (sec. 6 (c)).

The committee notes that the Secretary of the Interior is executive chairman of the Board which reviews the action taken by the Secretary on applications and which considers the appeal of cases submitted it by dissatisfied applicants. Although the bill does not provide ideal review and appeals boards it is hoped that every effort will be made to review all cases on a wholly impartial and objective basis.

SIMPLE EXPLORATION CONTRACTS FOR SMALL MINES

The bill provides that simple contracts covering exploration projects shall be awarded upon application to small mines if the application or examination discloses a reasonable promise of developing unknown or undeveloped sources of minerals or metals. Such contracts to small mines shall provide for financial assistance by the United States of not less than one-half of the total reasonable costs of exploration projects (sec. 6 (a)).

Small mines are defined (sec. 7 (f)) as mines or deposits of ores primarily producing, or which in the course of conducting an exploration project primarily produce (a) copper, lead, or zinc ores, or a combination thereof, the average monthly production of which does not exceed 100 tons of combined metals, and (b) ores of all other minerals and metals, including manganese, mica, chromite, mercury, and tungsten ores, the average monthly production of which, by quantity, approximates the market value of 100 tons of lead computed and fixed as of the effective date of the act, such quantity of each mineral and metal thereafter to