STATEMENT OF SENATOR MCCLURE

HEARING ON S. 30 AND H.R. 2392

MONDAY, JULY 31, 1989

SINCE ENACTMENT OF THE MINERAL LEASING ACT IN 1920, THERE HAVE BEEN A WEALTH OF CONFLICTING ADMINISTRATIVE, JUDICIAL AND CONGRESSIONAL DECISIONS AND INSTRUCTIONS WITH RESPECT TO OIL SHALE CLAIMS WHICH WERE GRANDFATHERED UNDER THAT ACT. MOST RECENTLY, SECRETARY LUJAN HAS ESTABLISHED AN ADMINISTRATIVE PROHIBITION ON THE ISSUANCE OF OIL SHALE PATENTS THROUGH CALENDAR YEAR 1989. FRANKLY, I AM CONCERNED THAT THE RIGHTS OF CLAIMHOLDERS, PARTICULARLY THOSE WHO HAVE FILED PATENT APPLICATIONS, ARE BEING VIOLATED BY THIS MORATORIUM AND THOSE WHICH THE CONGRESS HAS IMPOSED IN RECENT YEARS. THOUGH I AM QUITE AWARE OF THE CONTROVERSY ASSOCIATED WITH THESE CLAIMS, IT IS MY VIEW THAT THE DEPARTMENT OF THE INTERIOR HAS A RESPONSIBILITY TO CARRY OUT THE LAW AS

IT HAS BEEN INTERPRETED BY THE COURTS.

THIS MORNING'S HEARING FOCUSES ON TWO MEASURES, S. 30 AND H.R. 2392, WHICH ADDRESS THESE UNPATENTED OIL SHALE CLAIMS. IN THIS SENATOR'S VIEW, BOTH PIECES OF LEGISLATION FALL FAR SHORT OF RESOLVING THE ISSUES ASSOCIATED WITH THESE CLAIMS IN A FAIR AND EQUITABLE MANNER. HOWEVER, I BELIEVE IT MAY BE POSSIBLE TO FASHION A COMPROMISE LEGISLATIVE PROPOSAL WHICH WILL SERVE TO END THE CONTROVERSY OVER THESE

CLAIMS, AND NOT JUST INVITE FURTHER LITIGATION. I AM AWARE OF THE EFFORTS OF THE OIL SHALE LANDS CLAIMS COMMITTEE, A GROUP MADE UP OF VOLUNTEERS REPRESENTING DIVERGENT VIEWS ON THE OIL SHALE ISSUE, WHICH

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HAS MET SEVERAL TIMES IN COLORADO TO TRY TO CRAFT SUCH A COMPROMISE

PROPOSAL. I COMMEND THOSE WHO HAVE BEEN PARTICIPATING IN THAT GROUP

FOR ESTABLISHING A DIALOGUE WITH ONE ANOTHER AND FOR WORKING TO FIND A

REASONABLE RESOLUTION TO THE OIL SHALE ISSUE.

CONCERNS.

WITH RESPECT TO S. 30 AND H.R. 2392, I HAVE A NUMBER OF SPECIFIC FIRST, BOTH MEASURES FOREVER PROHIBIT CLAIMHOLDERS WHO HAD NOT MET ALL REQUIREMENTS FOR A PATENT PRIOR TO THE DATE OF INTRODUCTION OF THE LEGISLATION FROM PATENTING THEIR CLAIMS UNDER THE TERMS OF THE 1872 MINING LAW THE LAW UNDER WHICH THEY WERE LOCATED. I FEEL VERY

STRONGLY THAT A WINDOW SHOULD BE PROVIDED WHICH WOULD PRESERVE THE

RIGHT OF A CLAIMHOLDER TO COME FORWARD AND SEEK A PATENT FOR A LIMITED

TIME AFTER ENACTMENT OF THE LEGISLATION.

I AM ALSO EXTREMELY CONCERNED ABOUT THE INCREASED ANNUAL

ASSESSMENT REQUIREMENTS PRESCRIBED IN BOTH MEASURES FOR THOSE CLAIMANTS
WHO ELECT TO MAINTAIN THEIR CLAIMS. THEY ARE EXCESSIVE AND

UNREASONABLE. TO ADD INSULT TO INJURY, H.R. 2392 ALSO PROVIDES THAT
CLAIMS WHICH HAVE BEEN MAINTAINED THROUGH EXPENDITURE OF THE REQUIRED
$5000 PER YEAR ASSESSMENT WORK, WILL TERMINATE 100 YEARS AFTER THEIR
LOCATION UNLESS THEY ARE COMMERCIALLY PRODUCING OIL SHALE BY THAT DATE.
IF, FOR INSTANCE, A CLAIM WAS LOCATED IN 1917 AND THE CLAIM HOLDER
ELECTS TO MAINTAIN THE CLAIM UNDER THE PROVISIONS OF THE HOUSE MEASURE,
HE RISKS LOSING THE CLAIM IN 28 YEARS (2017) AFTER EXPENDING A MINIMUM
OF $140,000. PERHAPS WE SHOULD NOT BE SO ALARMED ABOUT THE TERMINATION
PROVISION, HOWEVER, SINCE THE $5000 REQUIREMENT IS SO PROHIBITIVE THAT

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MOST, IF NOT ALL, CLAIMANTS WOULD BE FORCED TO RELINQUISH THEIR CLAIMS

LONG BEFORE THE SECRETARY WOULD CANCEL THEM DUE TO LACK OF COMMERCIAL

PRODUCTION.

UNFORTUNATELY, I BELIEVE THAT THIS IS THE UNSTATED GOAL OF

THE HOUSE-PASSED LEGISLATION.

I AM ALSO CONCERNED ABOUT THE $2000 PER ACRE FEE CONTAINED IN H.R. 2392 WHICH WOULD BE REQUIRED OF CLAIMHOLDERS ELIGIBLE TO APPLY FOR A LIMITED PATENT ON THEIR CLAIMS (OIL SHALE AND ASSOCIATED MINERALS ONLY). THIS AMOUNT IS AN INSULT TO THOSE CLAIMANTS WHO HAVE IN GOOD

FAITH PARTICIPATED IN DISCUSSIONS ON COMPROMISE LEGISLATION AND HAVE

AGREED TO GIVE UP THEIR RIGHT TO PATENT THE SURFACE AND OTHER RESOURCES

ASSOCIATED WITH THEIR CLAIMS. THEIR CONCESSION OF SURFACE RESOURCES

SHOULD SEND A STRONG MESSAGE TO THOSE WHO CONTINUE TO ACCUSE OIL SHALE CLAIMANTS OF ASPIRING TO CREATE SKI RESORTS OUT OF LANDS THEY ACQUIRE FOR $2.50 PER ACRE.

FINALLY, S. 30 CONTAINS A PARTICULARLY DISTURBING PROVISION WHICH PROHIBITS HOLDERS OF OIL SHALE CLAIMS FROM OBTAINING ANY OTHER FEDERAL

MINERAL LEASES. THIS IS VERY OFFENSIVE IN LIGHT OF THE BILL'S $1000 ANNUAL ASSESSMENT REQUIREMENT WHICH THESE CLAIMANTS MUST COMPLY WITH IN ORDER TO CONTINUE TO HOLD THE CLAIMS.

IN CLOSING, I WELCOME THE GOOD FAITH EFFORTS OF THOSE INVOLVED IN THE OIL SHALE ISSUE TO COME UP WITH COMPROMISE LEGISLATION WHICH WILL IN MY VIEW, NEITHER S. 30 OR H.R. 2392

BE EQUITABLE TO ALL CONCERNED.

REPRESENTS SUCH A REASONABLE COMPROMISE.

Malcolm Walls

STATEMENT OF SENATOR WALLOP

GIVEN AT

THE HEARING ON S. 30 AND H.R. 2392

31 JULY 1989

MR. CHAIRMAN, FOR A VARIETY OF REASONS, I STRONGLY OPPOSE THE TWO
PIECES OF LEGISLATION BEFORE US TODAY.

THE BILLS CONSTITUTE A LEGISLATIVE TAKING

PRIMARY AMONG THOSE REASONS IS THAT THESE BILLS LEGISLATIVELY
TAKE VALUABLE PROPERTY RIGHTS FROM AMERICAN CITIZENS WITHOUT ANY
COMPENSATION.

I FIND IT IRONIC THAT THERE WAS A POINT IN TIME WHEN THE
GOVERNMENT WAS DOING ALL IT COULD TO GET AMERICA'S LAND INTO
PRIVATE HANDS. FEDERAL LAWS, SUCH AS THE HOMESTEAD ACT OF 1862
AND THE GENERAL MINING LAW OF 1872, ENCOURAGED SETTLEMENT AND
DEVELOPMENT OF THE WEST.

NOW, THE FEDERAL GOVERNMENT IS DOING ALL IT CAN TO TAKE BACK
THOSE LANDS. WITH PROPOSALS SUCH AS S. 30 AND H.R. 2392, THE
CONGRESS IS NOT ONLY TAKING PROPERTY RIGHTS, BUT IT IS RENEGING
ON PROMISES MADE OVER A CENTURY AGO.

UNFORTUNATELY, THE GOVERNMENT HAS AN ENORMOUS APPETITE FOR TAKING
PROPERTY RIGHTS, BUT LITTLE STOMACH FOR PAYING FOR THEM. FIFTY-
EIGHT MILLION DOLLARS WAS AWARDED BY FEDERAL COURTS OVER A TWO
YEAR PERIOD TO SATISFY JUST COMPENSATION CLAIMS UNDER THE FIFTH
AMENDMENT. PENDING COURT CLAIMS CURRENTLY TOTAL UPWARDS OF $1
BILLION.

IF EITHER OF THESE BILLS WAS ENACTED INTO LAW, THE PENDING CLAIMS
AGAINST THE GOVERNMENT WOULD SKYROCKET. BY FORCING SOME
CLAIMANTS TO GIVE UP THEIR POSSESSORY TITLE TO THE LANDS COVERED
BY THE CLAIMS, H.R. 2392 WOULD LEGISLATE AN UNCOMPENSATED TAKING
OF PRIVATE PROPERTY RIGHTS. IF H.R. 2392 BECAME THE LAW OF THE
LAND, THOSE OIL SHALE CLAIMANTS WHO HAVE NOT YET FILED PATENT
APPLICATIONS WOULD HAVE NO CHOICE BUT TO SEEK PAYMENT IN THE
FEDERAL CLAIMS COURT.

LIKEWISE, S. 30 WOULD LEGISLATE AN UNCOMPENSATED TAKING FOR THOSE
WHO HAVE NOT YET FILED PATENT APPLICATIONS. BEYOND THAT,
HOWEVER, S. 30 ALSO WOULD WORK AN UNCOMPENSATED TAKING FOR THOSE
CLAIMANTS WHO HAVE FILED BUT NOT COMPLETED ALL THE REQUIREMENTS
FOR ISSUANCE OF A PATENT. BUREAUCRATIC DELAY PREVENTED THOSE
CLAIMANTS FROM COMPLETING THEIR PATENT APPLICATIONS. AS A
RESULT, AND THROUGH NO FAULT OF THEIR OWN, S. 30 WILL EFFECTIVELY
LOCK THEM OUT OF LANDS TO WHICH THEY WERE ENTITLED BEFORE
IMPOSITION OF THE ARBITRARY CUT-OFF DATE OF 25 JANUARY 1989.

WYOMING CLAIMHOLDERS LOSE THEIR RIGHTS

IN WYOMING, WE HAVE 340 OIL SHALE CLAIMS COVERING 54,400 ACRES.
UNDER EITHER BILL, ALL WYOMING CLAIMANTS WOULD HAVE THEIR RIGHTS
TAKEN WITHOUT JUST COMPENSATION BECAUSE, AS YET, NO PATENT
APPLICATIONS HAVE BEEN FILED. BESIDES LOSING PROPERTY RIGHTS,
WYOMING CLAIMANTS WOULD BE FORCED TO MAKE AN ELECTION BETWEEN
EITHER TAKING A LEASE OR MAINTAINING THE CLAIM AT TEN OR FIFTY
TIMES THE COST.

THE BILLS FORCE CLAIMANTS TO ABANDON THEIR CLAIMS

THAT'S RIGHT, TEN OR FIFTY TIMES THE COST. UNDER THE SCHEME ESTABLISHED BY S. 30, THOSE WHO HAVE NOT COMPLETED, OR FILED, PATENT APPLICATIONS BY THE ARBITRARY DATE OF 25 JANUARY 1989 MUST ELECT TO TAKE A LEASE AND PAY A ROYALTY OF 12 1/2 PER CENT, OR MAINTAIN THE CLAIM PURSUANT TO A REQUIREMENT TO PERFORM $1000 WORTH OF LABOR EACH YEAR, VERSUS $100 A YEAR AT PRESENT.

UNDER H.R. 2392, THE CLAIMANT WHO HAS YET TO FILE FACES THE SAME
ELECTION. IF THE CLAIMANT ELECTS TO MAINTAIN THE CLAIM, HE MUST
PERFORM "DILIGENT DEVELOPMENT" EQUAL TO $5,000 PER YEAR PER
CLAIM. WHAT'S EVEN WORSE, THE CLAIM WILL REVERT TO THE FEDERAL
GOVERNMENT AFTER 100 YEARS FROM THE DATE OF LOCATION. FOR MOST
CLAIMANTS, THAT MEANS THEY WILL LOSE ALL RIGHTS TO THEIR CLAIM
AROUND THE YEAR 2015, EVEN THOUGH THEY HAVE INVESTED $150,000!
THE TRUE INTENT OF THESE PROVISIONS, AS WELL AS THE JACKED UP
PATENTING FEE CONTAINED IN H.R. 2392, IS TO COERCE THE CLAIMANTS
TO ABANDON THEIR CLAIMS. NONE OF THE INDIVIDUALS WHO HOLD CLAIMS
CAN AFFORD THESE EXORBITANT FEES.

THIS TRUE INTENT IS CONFIRMED BY ANOTHER PROVISION IN S. 30, WHICH PREVENTS ANY ENTITY HOLDING AN OIL SHALE CLAIM FROM OBTAINING ANY OTHER TYPE OF LEASE UNDER THE MINERAL LEASING ACT. OBVIOUSLY, CLAIMANTS ARE GOING TO ABANDON THEIR CURRENTLY UNDEVELOPABLE OIL SHALE CLAIMS IN FAVOR OF DEVELOPABLE LEASES ON COAL OR OIL AND GAS.

THE BILLS ARE NOT REVENUE RAISERS

THEY

PROPONENTS OF THE BILLS JUSTIFY THEM AS "REVENUE RAISERS." ESTIMATE THAT PURCHASES OF THE LIMITED PATENTS WILL GENERATE ABOUT $50 MILLION, AND THAT THE DILIGENT DEVELOPMENT FEE WILL GENERATE ABOUT $6 MILLION PER YEAR. AS I SAID BEFORE, NO REVENUES WILL BE RAISED BECAUSE CLAIMANTS WILL ABANDON THEIR CLAIMS. WHAT THE PROPONENTS ALSO FAIL TO CONSIDER IS THAT THE BILLS WILL CREATE A FLOOD OF LITIGATION REQUIRING HUGE EXPENDITURES BY THE JUSTICE DEPARTMENT TO DEFEND AGAINST THE JUST COMPENSATION CLAIMS.

THE BILLS REPRESENT A SUBTLE ATTACK ON THE 1872 MINING LAW FINALLY, BY INCREASING THE ANNUAL WORK REQUIREMENT AND THE PATENT FEE, THE BILLS INDIRECTLY AMEND THE 1872 MINING LAW. EVEN WORSE, ENACTMENT OF EITHER BILL WOULD CONSTITUTE A BAD PRECEDENT TO BE CITED WHEN DIRECTLY CONSIDERING REFORM OR REPEAL OF THE 1872 MINING LAW.

MR. CHAIRMAN, OURS HAS ALWAYS BEEN A GOVERNMENT OF THE PEOPLE,
NOT A GOVERNMENT ON THE PEOPLE, AND PRIVATE PROPERTY CANNOT BE
TAKEN FOR PUBLIC USE WITHOUT JUST COMPENSATION. THIS IS NOT JUST
ANOTHER OLD SAW, IT IS PART OF THE CONSTITUTION. THE AUTHORS OF
THE FIFTH AMENDMENT WOULD CERTAINLY BE DISMAYED AT WHAT S. 30 AND
H.R. 2392 WOULD DO TO PRIVATE PROPERTY RIGHTS.

THANK YOU.