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G.P.R.R. COLI

4 - AUG 1 6 Copy 1992

[No. 68]

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FULL COMMITTEE CONSIDERATION OF H.R. 5423, S. 2020, H.R. 11887,

H.R. 12081, HOUSE CONCURRENT RESOLUTION 509, H.R. 12416, AND APPOINTMENT OF NATIONAL MILITARY AIRLIFT SUBCOM. MITTEE

HOUSE OF REPRESENTATIVES,

COMMITTEE ON ARMED SERVICES,

Washington, D.C., Tuesday, August 7, 1962. The committee met at 10 a.m., Hon. Carl Vinson, chairman of the committee, presiding.

The CHAIRMAN. Now let the committee come to order.

Now the first bill we will call up this morning is H.R. 5423, to amend title 10 of the United States Code, and authorize the Secretary of the Navy to take possession of naval oil and shale reserves, and for other purposes.

Now, Mr. Price, Subcommittee No. 2 had that bill assigned to it, and I understand the subcommittee is ready to make a recommendation. The committee will be delighted to hear what Mr. Price has

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Mr. PRICE. Mr. Chairman, Subcommittee No. 2 met on July 19 and 20 for the consideration of two bills, H.R. 5423 and S. 2020. The first of these, H.R. 5423, is a bill relating to the naval oil shale reserves and to the experimental plant located on one of them.

H.R. 5423 as it was introduced would amend title 10 of the code so as to authorize the Navy to take possession of and administer the naval oil shale reserves in the same manner as the naval petroleum reserves. Also it would authorize the Navy to take possession of and administer an experimental plant on oil shale reserve No. 3.

In addition to the original bill, there is before each member a committee print of the bill as the subcommittee recommended for amendment. I had this print prepared because the amendment is long and I felt that a printed version of it was desirable. The amendment, although long, is actually only a restatement of existing law as it related to the petroleum reserves, with only an insertion here and there of references to "oil shale reserves.” Î'he only other new material is a reference to the experimental plant on reserve No. 3 which I will discuss in a moment.

Perhaps I should say at this time that there are three naval oil shale reserves—two of them in Colorado and one in Utah; altogether they total about 150,000 acres and have an estimated potential of some 26 billion barrels of oil.

Although this bill would make the petroleum reserve laws applicable to all of the oil shale reserves, I think we have a particular

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interest in oil shale No. 3, which is located near Rifle, Colo. The reason for this is that it is on this reserve that the experimental plant to which I referred is located. This plant was constructed in 1944 by the Department of the Interior and was operated by that Department until 1956 at which time the plant, which cost about $4.5 million was placed in a standby cartaker status.

The essential and most basic function of this bill is to remove a jurisdictional void which exists because of an opinion of the Attorney General in 1958 which raised serious questions as to general jurisdiction and control over the oil shale reserves and over the experimental plant.

In effect, the Attorney General's opinion held that neither the Navy nor Interior could do anything with the reserves or the plant other than hold them as they were.

Indeed, it even precluded the Navy Department from engaging in soil conservation, the thinning of deer herds and things of that kind. This bill will remove these jurisdictional questions and place the reserves under naval control and also clarify the status of the experimental plant.

Actually, at the time of the subcommittee hearing, the subcommittee was, in effect, hearing two bills since the Department of the Interior had its version of the measure which varied from the Navy version in one essential respect: under the Interior version of the bill, the Navy would take possession and control of the oil shale reserves but the plant, built by Interior, would be taken over by the Department of the Interior. Since historically the Bureau of Mines of the Department of the Interior has been the agency of the executive branch which has dealt with mineral resources development and since authority for this activity has been vested in it by the Congress and by direct instruction from the President, the subcommittee felt that H.R. 5423 should be amended so as to result in a combination of the two versions of the bill. And it is the recommendation of the subcommittee that all language following the enacting clause be stricken and new language inserted.

The new language will give possession and control of the oil shale reserves to the Navy and will give the experimental plant to the Department of the Interior. I might say that this solution is entirely agreeable to the executive branch and to the Department of the Navy itself.

Much of the discussion in the subcommittee revolved around the question as to how the experimental plant would be operated by the Navy if it had it and by the Department of the Interior if it had it. In the final analysis it has been determined that each department would approach this problem in very much the same fashion. And I think that because of the strong interest which was shown in this aspect of the bill, I should delineate in some detail the exact plans of the Department of Interior with respect to the operation of the experimental plant.

To use Interior's own words, let me state what that plan is: And this is all in quotations as the Interior's explanation.

Something useful should be done with the oil shale demonstration plant, which has been idle, with a minimum of custodial care for 6 years.

If the bill becomes law, the Department of the Interior may operate or alternately, contract and lease all or part of the Rifle facility in the manner best suited to the public interest, consistent with available funds. Contractors and lessees can be either public or private organizations. In this way the Rifle facilities will be available for both Government and privately sponsored projects. The Department's research will be programed to operate harmoniously with existing contracts.

Each contract or lease will contain rigid specifications to protect both the Government's responsibilities as well as the public interest in its property. All contracts are subject to prior review for legal sufficiency by the Solicitor's Office of the Department.

Agreements or contracts will have suitable provisions incorporated so that the Government may terminate for just cause such as failure to maintain Government property or make sateisfactory progress on the work.

The objective will be to carry out actively research projects on oil shale and shale oil. Programs conducted by lease or contract arrangements will specifically state the conditions for using the facility or parts thereof, maintenance, and related items will be carefully specified in the contracts as well as the monetary considerations.

The Government, the contractor, lessee or the cooperator as the case may be will be protected by adequate patent provisions.

Reactivation of the Rifle facility will provide a source of oil shale and shale oil for research and development work for various public and private organizations.

That is the end of the Interior's direct quotation.

From the foregoing, it can be seen that the widest possible utilization of this facility by Federal and local goverments and all elements of private business will be made.

Although I have mentioned it before, I would like to stress the fact that all of the laws which this committee have been dealing with for so long with respect to the petroleum reserves would under this bill be equally applicable to the oil shale reserves.

In addition to the consultation which has been held with this committee with respect to the petroleum reserves—and now the oil shale reserves—it should be noted that actual production of products from any of the reserves can begin only if directed by the Secretary of the Navy, agreed to by the President, and authorized by a joint resolution of the Congress. All of the controls, limitations, and protections which this committee has been dealing with for so long in the area of petroleum reserves will apply with equal force and effect to the valuable oil shale reserves.

The amendment recommended by the subcommittee is a long one, but this is because it restates several sections of the petroleum reserve law, inserting wherever appropriate a new word to include the oil shale reserves.

Mr. Chairman, I move the adoption of H.R. 5423, with the amendment to which I have referred.

Mr. Bray. Mr. Chairman-
The CHAIRMAN. Thank you, Mr. Price.
Any questions from any members of the committee?
Mr. Gavin ?

Mr. Gavin. I say this is rather sudden. No one had an opportunity even to read this bill.

I just made an inquiry about it the other day. Just exactly what will it do?

The CHAIRMAN. Well, I will try

Mr. Gavin. Will it authorize the Secretary of the Navy to take possession of the naval oil shale reserves ?

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