Long-range Program for Minerals Industry

SUBCOMMITTEE ON MINERALS, MATERIALS, AND FUELS, OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D. C. The subcommittee met, pursuant to notice, at 10:30 a. m., in room 224, Senate Office Building, Hon. James E. Murray (chairman) presiding.

Present: Senators Murray, Bible, Carroll, Malone, Dworshak, and Barrett.

Present also: Senators Anderson and Church.

Staff members present: Robert W. Redwine, assistant counsel to the committee, and George B. Holderer, staff engineer.

The CHAIRMAN. The subcommittee will come to order.

I know there are many here who are curious as to why the door of the hearing room was not open at the time set for starting this inquiry. The answer is simple. The committee had asked the Office of Defense Mobilization for the development of certain testimony it was felt necessary the committee have for guidance in its considerations. The Office of Defense Mobilization felt it could give that testimony only in executive session as it is of a classified nature.

That portion of the hearing started at 9:30 and has now been completed.

This hearing has been called for a single purpose; namely, to determine how best the Congress of the United States can act to reestablish the mining and minerals industry of the Nation upon a sound economic foundation.

Unemployment is more rampant in mining than any other general field. Hundreds upon hundreds of small mines have closed down completely in recent months. Our larger mines-those which employ hundreds and thousands of workers each-have been forced to curtail production.

Dividends from mining operations are rapidly becoming only conversation topics that are recalled when there is discussion of the good old days.

Something has to be done, and done quickly, if our minerals extractive industries are to be kept a meaningful part of the mobilization base necessary for the security of the Nation.

The so-called long-range minerals program submitted last June by the administration unfortunately proved to be fictional rather than real.

Industry representatives who testified before this committee following its submission by Secretary of the Interior Fred A. Seaton labeled

the program as being inadequate and charged that its adoption would result in hurting rather than helping domestic mining.

For many months I, as chairman of the full Interior and Insular Affairs Committee, and other members of the committee of both political parties, have been urging the administration to recommend to the Congress a realistic minerals program, acceptable to industry, and which would not be vetoed.

On February 18, I notified Secretary Seaton that I had called hearings to start today, March 24, and asked that he be the leadoff witness. On March 12, 22 days later, the Secretary replied to my letter of February 18, stating that he would not be prepared on this day to make recommendations in this all-important matter of a basic industry whose very lifeblood is being drained away by conditions not under its control.

After consultation with Secretary Seaton's personal representative, the decision was made to go ahead with the hearing today, as time has become the essence of the matter.

Other governmental departmental officials and industry witnesses will be heard, as will be several western governors who have expressed grave concern over the deterioration of domestic mining.

Secretary Seaton has indicated that he will be in a position to submit the administration's recommendations around the 15th of April. Perhaps a careful study of the transcript of these hearings will help the Secretary in formulating his program. I have requested him to set a definite date when it will suit his convenience to appear.

I hope that that date will not be so long in the future that his appearance will be in the nature of a post mortem on domestic mining rather than a consultation to determine remedies for a sick industry.

I am determined and I know that many of my colleagues are also not to let our great copper, lead, and zinc industries and the other important segments of our overall minerals extractive industries go by the board without making a fight to save them from economic disaster.

Before calling our first witness this morning, I wish to place in the record my letter of March 11 to Mr. Gabriel Hauge, administrative assistant to the President, requesting that he appear before this subcommittee, and his reply dated March 13, stating that he must decline. (The letters referred to follow :)

UNITED STATES SENATE, COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, March 11, 1958.

Mr. GABRIEL HAUGE,

Administrative Assistant to the President,

Executive Office Building, Washington, D. C.

DEAR MR. HAUGE: I attach herewith copy of a letter dated February 18, addressed to Secretary of the Interior Fred A. Seaton, announcing the opening of hearings before this committee on March 24 in respect to the domestic minerals industries.

I call your particular attention to the first paragraph of that letter which reads, "History has taught us that falling mineral and metal prices, followed by decreasing domestic production with miners forced into the bread lines, is the bellwether of depressions. It is needless for me to point out that this Nation's minerals extractive industry is in a serious economic squeeze."

I also direct your attention to the statement in that letter quoting Secretary Seaton as having informed the committee on June 4:

"If we include the manufacturing industries turning out machinery and other products derived from metals and minerals we find fully one-fourth of our total national income generated by this sector of our economy."

In view of the above-mentioned facts and the widespread unemployment in the "sector of our economy" which accounts for the generation of "fully onefourth of our national income," and your intimate knowledge of and official responsibilities in the field of the national economy, it is highly desirable that you appear to present your views before the committee, and it will be appreciated if you will advise me as to what day and hour during the week of March 24 it will be convenient for you to appear. Thank you for your cooperation in this matter.

Sincerely yours,

Hon. JAMES E. MURRAY,

JAMES E. MURRAY, Chairman.

THE WHITE HOUSE, Washington, March 13, 1958.

Chairman, Committee on Interior and Insular Affairs,

United States Senate, Washington, D. C.

DEAR SENATOR MURRAY: I have your letter of March 11 in which you invite me to appear before the Committee on Interior and Insular Affairs in its hearings with respect to the domestic minerals industries.

As a member of the President's staff, my only official responsibilities are to advise the President on economic and other matters. This confidential relationship to the President precludes me from accepting your invitation to appear before the committee, and I must decline. I do appreciate, however, your feeling that my testimony would be helpful.

GABRIEL HAUGE,

Special Assistant to the President.

The CHAIRMAN. I then order to be printed the various bills pertaining to these hearings.

(S. 2375, S. 3537, and S. J. Res. 16 follow :)

[S. 2375, 85th Cong., 1st sess.]

A BILL To provide a program for the development of the minerals resources of the United States, its Territories and possessions by encouraging exploration for minerals and providing for payments as incentives for the production of certain minerals, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is declared to be the policy of the Congress to stimulate exploration for minerals and to provide Federal financial assistance to assure the continuation of production of certain essential minerals within the United States, its Territories and possessions.

TITLE I

SEC. 101. The Secretary of the Interior is hereby authorized and directed, in order to provide for additional development of domestic mineral resources, to establish and maintain a program for exploration by private industry within the United States, its Territories and possessions for such minerals, excluding organic fuels, as he shall from time to time designate, and to provide Federal financial assistance on a participating basis for that purpose.

SEC. 102. (a) In order to carry out the purposes of this title, and subject to the provisions of this section, the Secretary is authorized to enter into exploration contracts with individuals, partnerships, or corporations which shall provide for such Federal financial participation as he deems in the national interest. Such contracts shall contain terms and conditions as the Secretary shall deem necessary and appropriate, including terms and conditions for the repayment of the Federal funds made available under any contract, together with interest thereon, to be calculated from the date of first production or certification, whichever shall first occur. Such interest shall be at rates which (1) are not less than the rates of interest which the Secretary of the Treasury shall determine the Department of the Interior would have to pay if it borrowed such funds from the Treasury of the United States, taking into consideration current average yields on outstanding marketable obligations of the United States with maturities comparable to the terms of the particular contracts involved and (2) shall be adequate to cover, in addition, the costs of administering the particular contracts.

(b) Whenever minerals are produced and sold by the contractor or his successor in interest from the area described in a contract authorized by this title, there shall be paid to the United States a royalty on the value of said production which shall be applied toward the repayment of the Federal funds expended under the contract, including interest on such funds. Such payments shall be covered into the miscellaneous receipts of the Treasury.

(c) As soon as practicable, upon completion or termination of the exploration project undertaken pursuant to a contract, the Secretary shall certify to the contractor that an obligation to pay royalty on future production, as specified in the contract, has accrued, or the Secretary shall inform the contractor that no further obligation exists under the contract. Certification shall be made when an analysis and evaluation of the results of the exploration project discloses that mineral production from the area covered by the contract is possible. Upon certification, payment of royalties shall be a charge against production for the period specified in the contract or until the obligation has been discharged, but in no event shall such royalty payments continue for a period of more than twenty-five years from the date of contract.

(d) No provision of this title, nor any rule or regulation which may be issued by the Secretary shall be construed to require any production from the area described in the contract.

(e) No funds shall be made available under this title unless the applicant shall certify that he is unable to finance the proposed exploration activities and that funds from commercial sources are unavailable on reasonable terms.

(f) The Secretary shall establish and promulgate such rules and regulations as may be necessary to carry out the purposes of this title: Provided, however, That he may modify and adjust the terms and conditions of any contract to reduce the amount and term of any royalty payment when he shall determine that such action is necessary and in the public interest.

SEC. 103. As used in this title, the term "exploration" means the search for new or unexplored deposits of minerals, including related development work, within the United States, its Territories and possessions, whether conducted from the surface or underground, using recognized and sound procedures including standard geophysical and geochemical methods for obtaining mineralogical and geological information.

SEC. 104. Departments and agencies of the Government are hereby authorized to advise and assist the Secretary of the Interior, upon his request, in carrying out the provisions of this title and may expend their funds for such purposes, with or without reimbursement, in accordance with such agreements as may be necessary.

TITLE II

SEC. 201. The Secretary of the Interior is hereby authorized and directed, in order to assure the continuation of production of certain essential minerals within the United States, its Territories and possessions, to establish and maintain a program of payments to domestic producers of those minerals listed in section 202 of this title, within the limits therein contained, as an incentive for the production of such minerals.

SEC. 202. (a) The production incentive payments authorized by this title shall be made for the following minerals mined from deposits located within the United States, its Territories and possessions, in the amounts and subject to limitations herein specified :

(1) For beryl concentrates (10 percent BeO basis), $70 per short ton, with premiums and penalties as set forth in the regulations issued pursuant to section 204 of this title, for not to exceed an aggregate of seven hundred and fifty short tons annually. No incentive payment shall be made in a calendar year on a quantity in excess of one hundred short tons produced by any one producer and originating in any one mining district from properties controlled by such producer.

(2) For commercial grade, metallurgical chromite (46 percent basis), $21 per long dry ton, with premiums and penalties as set forth in the regulations issued pursuant to section 204 of this title, for not to exceed an aggregate of fifty thousand long dry tons annually. No incentive payment shall be made in a calendar year on a quantity in excess of ten thousand long dry tons produced by any one producer and originating in any one mining district from properties controlled by such producer.

(3) For commercially acceptable columbium-tantalum concentrates (basis 50 percent contained combined pentoxides), $2.35 per pound, with ratios of

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Long-range Program for Minerals Industry: Hearings Before the Subcommittee ...