to say that there shall be a list of umpires, but they do not require that the umpire be binding on the seller as well as the buyer.

Of course, you cannot have an umpire unless both people agree on him. To date the Atomic Energy Commission has added a few people to the list of assay umpires, but they are not binding on the buyer, which leaves us just where we were before. Of course, that is the only control you have on whether or not you are getting fair value for your

ore.

The CHAIRMAN. This legislation would not affect that?

Mr. McNICHOLS. No; this would not affect that any. But we bring this to the attention of the Small Business Committee of the House because it affects so many small businesses. It affects every small business on the plateau area that is depending on this backbone uranium industry, from Grand Junction to New Mexico, and into Arizona and South Dakota, and other places. It is a very important industry. Machinery, equipment, supplies, and various allied industries depend on this. It is very important, we feel, that the Small Business Committee be apprised of these situations.

There is also an explanation in the report of the method of allocating leases. These uranium lands on the public domain are available for leasing by various individuals who are desirous of leasing properties. Up to now there has been no policy by the Government on how these leases shall be allocated. They can grant them arbitrarily to anybody or restrict them to anybody.

This association has before the Atomic Energy Commission a proposal to make the allocation of these leases on a fair basis where anyone interested who can qualify will be entitled at least to apply for a lease.

The CHAIRMAN. Did you expect to have that placed in the form of a bill or legislation?

Mr. McNICHOLS. If necessary, we felt that we might have to do that. But we would rather negotiate the thing, if possible.

This directed ore clause that the Government has, wherever a person has a Government lease and is operating under a Government lease, the Government puts in a directed ore clause, whereby they can require the producer to send that to any particular mill. Now, in many instances, the Government requires these independent producers to send it to a mill that gives them less favorable conditions than any other mill on the plateau, but they have to send it over there. That is a particularly bad thing, we feel. It encourages monopoly in the uranium industry. That is something, I think, that should be of concern to every legislator because of its vital importance to the security of the country, that there should be nothing done which might encourage a monopoly in the uranium industry.

The prices that are set on the ore are not set, we feel, on a realistic basis. They are set arbitrarily without reference to the ability of the independent producer to come out. In many instances, if it were not for the vanadium in the ore, there would be a loss by the independent producers. Ores that are produced, for instance, in some part of the Colorado Plateau, in Utah, to a large extent in Arizona and New Mexico, have no vanadium in those ores. Oftentimes the small-business man, the independent producer has to follow up. He cannot make the grade.

We feel that the Small Business Committee should give some attention to urging that these prices be set on a realistic basis, on some kind of a cost-accounting form, as to what various types of producers can produce this product for and see that they can make a legitimate profit.

We thank you very much, Congressman.

The CHAIRMAN. Thank you very much for an interesting discussion. Now you have Mr. Ebbley who wants to say a word and file a statement.

STATEMENT OF NORMAN EBBLEY, GRAND JUNCTION, COLO., CONSULTING ENGINEER, URANIUM ORE PRODUCERS ASSOCIATION

Mr. EBBLEY. I am Norman Ebbley, Grand Junction, Colo., and I am a consulting engineer for the Uranium Producers Association which is an organization that is backing the independent miners in the uranium industry.

I have some information here on the uranium-mining industry which I would like to have filed with this committee, Mr. Chairman. It takes these points that were discussed by Mr. McNichols more in detail. There is one point here that I would like to bring out. It will take only a minute.

I am sure all these men in this room are particularly interested in the results of this sampling program which was sponsored 2 years ago by the Uranium Ore Producers Association. We found many inequities in the sampling plants and wrote a report in January of last year which was presented at the Colorado Mining Association convention as an exposé of one particular sampling plant.

At that time we showed that one mining company during the year of 1951 had an average loss of $17 a ton over and above what they were receiving from another sampling plant in a different town. After these sampling plants were corrected, this same company shipping the same ore to these same two different mills during 1952 showed only a difference of 31 cents a ton for a year's average as against $17 a ton for the previous year's difference.

Another mining company operating in the same area during 1951 showed a difference of $7.10 that they lost by shipping to this one mill. During the whole year of 1952 the same company had only a difference of 18 cents a ton for the yearly weighted average.

This is certainly irrefutable proof that these sampling plants were incorrect to begin with.

That is all I would like to say, Mr. Chairman.

The CHAIRMAN. Thank you very much. We will permit the statement to be filed as you requested.

(The material referred to follows:)

INFORMATION ON THE URANIUM-MINING INDUSTRY

Robert S. Palmer, special consultant for the House Small Business Committee, has kindly suggested that the uranium miners present their side of the story at these hearings. The Uranium Ore Producers Association, representing the largest group of independent uranium miners in the Colorado Plateau area, takes this opportunity to thank the House Small Business Committee, and should like to discuss briefly the association's program for aid to the independent miner.

We fully realize the present acute plight of the lead- and zinc-mining industry in Colorado and throughout the Nation as a whole; and, being miners by vocation rather than by avocation, we are naturally greatly perturbed at the turn of events now seriously affecting these sister mining industries. Although the uranium miner is perhaps better off from the standpoint of having a guaranteed price for his product, he still is seriously hampered by necessarily having to deal with and be controlled by Government agencies that unquestionably appear to be motivated by somewhat socialistic tendencies.

Some of the major problems which confronted the association and nonmember independent producers a year ago are briefly discussed, indicating the progress already made and what the association hopes to accomplish in the future.

Generally, the UOPA is encouraged by the attitude of the reorganized Raw Materials Operation Office of the Atomic Energy Commission in Grand Junction, and feels that decided progress is now being made to answer and correct the protests of the independent producer. A year ago, the UOPA, as as association of independent miners, was not recognized by the AEC; and the Commission was reluctant to discuss or arbitrate problems that were presented to them by the association. Outwardly, the AEC now welcomes the opinions and criticisms of the association, and is cooperating in an endeavor to give the producers a.fair shake.

Some of the problems affecting the uranium producers are briefly discussed as follows:

SAMPLING IMPROVEMENTS

During 1951, various members of the UOPA had, from time to time, protested to the AEC concerning sampling procedures in use by ore buyers in the area. In each instance, the AEC refused to investigate the situation, stating that it was a problem between the seller and the buyer; and, in one instance, indicating that the ore sellers must furnish with AEC with proof of inefficient sampling practices.

At the Colorado Mining Association convention in January 1952, the UOPA presented a technical paper outlining the improper sampling devices and methods then in use by some ore purchasers in the uranium-vanadium field.

Since that time, and directly through the efforts of the association, practically every sampling plant in the Colorado Plauteau area has undergone extensive corrective alterations. The association was also instigator for the preparation of a thorough, 127-page report by the Colorado School of Mines Research Foundation on sampling methods and procedures in the area. This report, covering a study of 11 principal purchasing stations, includes definite recommendations for the changes necessary for each particular plant, to place those purchasing depots within accepted standards.

The AEC has indicated its intention to follow up on this report and see that the recommendations, as outlined in the research foundation's survey, will be carried out by the ore purchasers.

Reports from independent mine operators indicate that considerable savings have been realized during the past year due to the UOPA campaign to establish proper sampling techniques throughout the area. Substantiating this statement, I have some figures here that should be of particular interest. The original protest made by the UOPA regarding inefficient sampling practices was, in part, based upon the great variance between the yearly weighted averages per ton of ore shipped to Uravan and to Durango by two mining companies. The Skidmore Mining Co. was paid, as an average for the entire year of 1951, $58.55 per ton for ore sold to Durango and an average of $41.31 per ton for ore sold to Uravan for the same period, or a difference of $17.24 per ton. The Ortmayer Mining Co., for the same year, on lower grade ore, received $43.30 per ton at Durango and $36.20 per ton at Uravan, or a difference of $7.10 per ton for the entire year. Now look at the averages for 1952, after the exposé on improper sampling practices forced the AEC to look into the matter and advise the errant company to straighten up its plant.

This appears to be irrefutable proof that the sampling units, as operated during 1951 were certainly inaccurate. Granting that the Durango plant slanted sampling results to the benefit of the ore seller, amounting to $1.96 per ton (as determined by the research foundation's report), there still existed an error in excess of $15 per ton for the Skidmore Mining Co.'s ore at Uravan.

That an error this large could possibly exist seems incredible, especially to you men connected with the base-metal industry, unless one bears in mind that an average of 6 percent of the sample by weight (as -200 mesh material) contains an average of 60 percent of the U-308 values. Thus, every small loss of -200 mesh material from the final sample, through wind action, leaks in the circuit, or from improperly designed or operated cutting devices, can have a disastrous effect on the accuracy of the final sample.

The AEC recently issued a press release bringing sampling progress up to date, indicating the changes already made and changes yet to be made at each sampling plant. We realize that some plants are still far from perfect, and this program will not be dropped until all plants meet standards acceptable throughout the mining industry.

UMPIRE ASSAYING

Everyone in the mining industry who has sold ore or concentrates appreciates the importance of umpiring. Although AEC regulations (title 10: Atomic Energy Report, ch. 1, subsec. 6) specifically provides for umpiring procedures, the AEC did not in the past recognize any but the Bureau of Standards and LeDoux & Co. of New York. This was virtually the same as not having a list, as the small uranium producer could not afford the cost or the delay in getting his settlement if he used either one of these umpires.

The Commission has been endeavoring to increase this list; and recently has added two local assayers, Brown of Grand Junction and Smith of Moab. However, here is the joker: the Commission states that "Although a specific assay company may be acceptable to the seller and the Commission as an umpire assayer, this same company may or may not be acceptable to the ore purchaser. ***" Naturally, the UOPA contends this does not make sense. This matter has been discussed with the AEC, and they have agreed to endeavor to determine a list of umpires acceptable to the ore buyers. Nothing further has been heard from the AEC relative to this problem.

OIL AND GAS-LEASE CONFLICTS WITH MINING CLAIMS

About a year ago, the AEC, through its Legal Department, requested the Bureau of Land Management to investigate the validity of certain mining claims that were staked on preexisting oil and gas leases. The fact that the claims were disclosed by the investigation to be invalid imposed a duty on the Bureau of Land Management to issue "decisions" to the claim owner declaring the locations to be null and void. This initial action started a trend that eventually snowballed into a situation that, if continued, would have resulted in a virtual monopoly by the AEC of all the independent producers' ground.

Naturally, all claimholders throughout the area were greatly disturbed, and the UOPA immediately took up the fight to see what could be done to protect the miners. The Bureau of Land Management disclaimed responsibility, stating they had no other recourse than to issue the invalidating "decisions" after being

requested by the AEC to investigate the status of the claims in question. The AEC, on the other hand, admitted requesting the examination but denied requesting the issuance of the invalidation notices. At the present time, neither agency desires to take credit for the wholesale land-grab attempt, although the damage has been done.

As a temporary measure to permit continued uranium production from the plateau area, the AEC, through combined efforts of the Commission and the UOPA, agreed on a policy governing conflicts arising wherein a miner had staked ground on a preexisting oil and gas lease.

An AEC lease arrangement has been worked out whereby the original claimant can work his ground and also receive the bonus on a new production, and do so for as long as he continues to work actively and produce. Through the UOPA's attorney, State Senator Steve McNichols, who made a special trip back to Washington for this purpose, the Bureau of Land Management and the AEC have agreed to insert clauses in the AEC leases which will protect the claimholders' interests in the ground, pending congressional legislation involving claims staked on preexisting oil and gas leases.

This legislation has now been introduced in the United States Senate by Senators Johnson and Millikin (S. 1397), and introduced in the United States House of Representatives by Representative Aspinall (H. R. 4144), to clarify the status of mining claims in areas held under an oil- and gas-prospecting permit or lease and to encourage the exploration and development of fissionable source minerals.

The passage of this bill will validate all mining claims which have been or may hereafter be located in accordance with the general mining laws upon such lands that are covered by preexisting oil- and gas-prospecting permits or leases. This bill has now been referred to the Committee on Interior and Insular Affairs, and a hearing will be held May 1, 1953.

It is extremely important that this committee be furnished with accurate information concerning the absolute necessity for the enactment of this legislation.

Attorneys and representatives of the Uranium Ore Producers Association will appear before this committee and present the facts. It is of paramount importance to all claimholders and to the economic development of the uranium industry in the Colorado plateau area, that the conflicts between mining claims and oil and gas leases be resolved in a manner that will validate the mining claims. If this legislation fails to be enacted, perhaps 75 percent of the uraniumbearing ground in the plateau area not held by the two large vanadium companies will revert to AEC administration-to be controlled by a Government leasing program, probably under such deleterious conditions as the directed ore clause, royalty payments, and actual mining directives.

Accordingly, the UOPA has mailed out over 400 "information circular" blanks requesting certain information on the number of claims individuals and companies hold that are affected by preexisting oil and gas leases and subsequent AEC land withdrawals.

It is of particular significance to note that the Independent Petroleum Association of America has gone on record as subscribing to and urging the passage of this legislation to clarify the status of the mining claims in areas held under oil- and gas-prospecting permits and leases.

ALLOCATION OF GOVERNMENT LEASES

The methods used and the reasons why the AEC selects a certain applicant for a lease on a Government-drilled ore body on Government ground have always been carefully guarded secrets. No one but the AEC ever knew the story. In the first place, the applicant was forced to obtain the restricted information regarding ore holes, values, size of the ore body, and even the primary knowledge that a specific lease was pending, through nefarious means not consistent with AEC regulations. It was necessary to pump the drill contractors, drillers, Government personnel, or listen to the usual conversation around bars. In other words, if an applicant applied for a specific lease, it was inferred he had illegal drilling data. If he did not apply for a specific lease, he never at any time knew if his blanket application was on active file or was ever considered for leases that were being let. He was completely in the dark.

Naturally, criticism was rampant-charges of favoritism and arbitrariness were common, and outright accusations of dishonesty were heard throughout the industry. It is not hard to understand this attitude when it is considered