costs of eligible production payable on the part of the United States, by agreement with the producer.

SEC. 5. (a) To carry out the purposes of this Act, production contracts shall be made as prescribed by the Secretary, on behalf of the United States, with any bona fide producer of strategic or critical metals or minerals who applies for such a contract, subject to the limitations of this Act. Such contracts shall provide for the purchase by the United States of eligible production at such price as the Secretary determines to be necessary and appropriate in order to enable the particular producer to develop and maintain the particular eligible production which is the subject of the production contract, and the price so determined may include the payment of a premium above the current market price for the metals or minerals to be covered by the contract. No such premium shall be fixed at a rate which exceeds the market price current at the time the premium is fixed by more than 25 per centum, except that the Secretary may fix a higher rate for any particular metal or mineral the total output of which from any one mine covered by the production contract does not exceed in any one month a value of $3,000 at the market price current when the premium is fixed, if he deems such higher rate to be necessary or appropriate to carry out the purposes of this Act.

(b) Production contracts made pursuant to this section shall provide for the purchase of eligible production during such period of time as may be fixed by the terms of the contract, but such period shall not be shorter than one year nor longer than three years from the date of the making of the contract. Any contract for a period longer than one year shall provide for renegotiation of the purchase price stipulated therein as of each anniversary of the date of the making of the contract, to the end that the standards prescribed by this section may be applied to eligible production subsequently obtained by the producer on a basis conforming to the economic conditions existing at the time of each such renegotiation. If the producer and the Secretary fail to agree upon the price to be paid under the contract for the year following any anniversary date, the term of the contract shall expire as of such date. Any production contract may permit eligible production obtained during the term of the contract to be delivered after the expiration of such term.

(c) All production contracts shall limit purchases thereunder to eligible production which meets minimum specifications determined by the Munitions Board for the national security stock piles, and which is to be delivered to the Bureau of Federal Supply of the Treasury Department for the national security stock piles. All eligible production purchased under this section shall be delivered by the producer to the Bureau of Federal Supply at such places and times and on such terms as may be provided for in the production contract and approved by such Bureau. The Secretary, however, may permit the delivery under a production contract of an equivalent quantity of the same metal or mineral in a form and of a grade which meets the minimum specifications of the Munitions Board and which is satisfactory to the Bureau of Federal Supply,' in lieu of requiring the delivery of the particular eligible production resulting from the production contract. In no event shall payment of the purchase price be made until delivery has been had. The Bureau of Federal Supply shall transfer all metals and minerals obtained by the United States through production contracts under this section to the national security stock piles esablished pursuant to the Strategic and Critical Materials Stock Piling Act (60 Stat. 596), as amended.

(d) All production contracts shall contain an express condition that no royalties shall be paid on any portion of the purchase price which is in excess of the market price current at the time of the making or renegotiation of the contract, as the case may be, except that the Secretary may permit royalties to be computed, in whole or in part, on any premium payable under the contract in cases where the holder of the royalty shares in the expenses of transportation, milling, or smelting of ores to an extent that justifies, in the judgment of the Secretary, the inclusion of the premium, or some part thereof, in the computation of the royalty.

(e) Subject to the limitations of this Act, the Secretary shall include in production contracts such terms and conditions as he may deem necessary or appropriate for carrying out the purposes of this Act, and may at any time modify the terms and conditions of any such contract, including the purchase price for eligible production payable on the part of the United States, by agreement with ' the producer.

SEC. 6. As used in this Act

(a) "Strategic or critical metals or minerals" means any metal or mineral designated as strategic or critical pursuant to section 2 (a) of the Strategic and Critical Materials Stock Piling Act (60 Stat. 596), as amended, for which the Munitions Board deems further stock piling to be the only means of insuring an adequate supply for an emergency, but shall not include any such metal or mineral with respect to which the Munitions Board finds that further purchases for the national security stock pile are unnecessary, or will probably cease to be necessary within one year from the date of the finding.

(b) "Essential metals or minerals" means any metal or mineral designated by the President as an essential metal or mineral with respect to which such a critical shortage exists as to affect, or threaten to affect, adversely the domestic economy (including the maintenance of maximum production and employment), free competitive enterprise and particularly small business, the general welfare, the national security, or the carrying out of the foreign policy of the United States.

(c) "Eligible exploration" means exploration in the United States at any location and in any manner approved by the Secretary, for unknown or undeveloped sources of either strategic or critical metals or minerals or essential metals or minerals, whether 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.

(d) "Costs of eligible exploration" means the costs directly attributable to eligible exploration including rental or depreciation of equipment used in exploration, direct labor and the supervision thereof, and materials and supplies actually used in exploration less the salvage value thereof, but excluding capital outlays, royalties, and all general overhead and administrative expenses.

(e) "Eligible production" means strategic or critical metals or minerals, or ores containing such metals or minerals, produced from mines in the United States, or produced from the tailings, dumps, slags, or residues of such mines, which the Secretary determines would not be produced, or the production of which he determines would be discontinued, in the absence of a production contract entered into under the provisions of section 5 of this Act, and includes all operations requisite for and resulting in the production of such metals or minerals, or ores thereof, except exploration.

(f) "Producer" means any person or persons or any legal entity or entities by whom or for whose account and interest eligible exploration or eligible production is to be, or is being, undertaken.

(g) “United States", when used in a geographical sense, means the United States together with its Territories and possessions.

SEC. 7. No exploration contract or production contract under this Act shall be entered into after June 30, 1952, nor shall any such contract be made for a term extending beyond June 30, 1953.

SEC. 8. (a) The aggregate amount of the obligations incurred under all exploration contracts outstanding under this Act shall not exceed for any one fiscal year the sum of $20,000,000.

(b) The aggregate amount of the obligations, incurred under all production contracts outstanding under the Act shall not exceed for any one fiscal year the sum of $40,000,000.

(c) The Secretary is hereby authorized and directed to distribute exploration and production contracts among producers, and to control the amounts payable thereunder, in accordance with such criteria as he may deem necessary or appropriate to use for the application and enforcement of the limitations of this section in a manner that will promote accomplishment of the purposes of this Act. SEC. 9. All exploration contracts and production contracts made in conformity with the provisions of this Act shall constitute contractual obligations of the United States, notwithstanding any other provisions of law limiting the incurrence of such obligations or governing the terms thereof.

SEC. 10. (a) Each producer shall have access at all reasonable times to copies of all pertinent calculations, analyses, and determinations used as a basis for the allowance or denial of any exploration contract or production contract applied for by him under this Act, or for the revision of the terms of any such contract entered into with him under this Act, except to the extent that the Secretary determines that disclosure of such information would be contrary to the interest of the national security.

(b) Copies of all rules and regulations prescribed under this Act, and of all changes made therein, shall be furnished to each producer who files an application under this Act or who submits a request in writing to the Secretary for such copies.

SEC. 11. The Secretary shall make an annual report to the Congress, within three months after the beginning of each calendar year, on the operations under this Act. Such reports shall include information on all transactions or commitments entered into during the previous calendar year, stating the person, amount, and purpose involved in each such transaction or commitment, except to the extent that the Secretary determines in specific instances that disclosure of such information would be contrary to the interest of the national security.

SEC. 12. There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act, including the payment of obligations incurred under exploration contracts and production contracts and the payment of expenses of administration.

(b) Funds hereafter appropriated for the procurement of materials for the national security stock piles shall be available for the payment of obligations incurred under production contracts made pursuant to this Act, except to the extent that such obligations are for premiums above the market price of the metals or minerals purchased current at the time of the making or renegotiation of such contracts, as the case may be.

(c) The Secretary of the Treasury is hereby authorized to establish such working funds as may be necessary or appropriate for the administration of this Act. Mr. ENGLE. Inasmuch as there has been a quorum call in the House we are going to have to adjourn. However, we would like to have the bill before us and we will go over it and contact you and Mr. Slaughter at a later date.

Secretary KRUG. Off the record.

(Discussion off the record.)

Mr. ENGLE. The record will clearly show that the draft which is submitted is proposed not by the Department, but is submitted by the Department at our request for the purpose of securing some common ground of understanding. It has not been cleared with the Bureau of the Budget, and is submitted to the committee for study.

Mr. Secretary, we want to thank you very much for coming before the committee. I am sure your testimony has done much to clarify the situation. We appreciate your taking the time to do so.

Secretary KRUG. I appreciate your very courteous attention. Thank

you.

Mr. ENGLE. The committee will stand adjourned to meet at the call of the chairman.

(Thereupon, at 11: 55 a. m. Thursday, April 7, 1949, an adjournment was taken to meet at the call of the chairman.)

92987-49-ser. 14-18

Mr. ENGLE of California introduced the following bill; which was referred to the Committee on Public Lands

A BILL

To stimulate the exploration, production, and conservation of strategic and critical ores, metals, and minerals and for the establishment within the Department of the Interior of a Mine Incentive Payments Division, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "National Minerals Act of 1949."

STATEMENT OF POLICY

SEC. 2. It is the policy of the Congress that every effort be made to stimulate the exploration, development, mining, and maximum production of strategic and critical metals and minerals by private enterprise to supply the industrial, military, and naval needs of the United States by providing for the conservation and development of these materials in order to decrease and prevent, wherever possible, a dangerous and costly dependence of the United States upon foreign nations for supplies of such materials. To this end it is the further policy of the Congress that every effort be made to stimulate, stabilize, and maintain a sound and active mining industry within the United States; to coordinate the programs now provided or to be provided by law for making scientific, technologic, and economic investigations concerning the extent and mode of occurrence and the development, mining preparation, treatment, and utilization of ores and other mineral substances found in the United States or its Territories or insular possessions which are essential to the common defense or the industrial needs of the United States; and to stimulate the commercial extraction and production of the

same.

SEC. 3. (a) There is hereby created within the Department of the Interior a Mine Incentive Payments Division, hereinafter called the "Division."

(b) The administrative officers of the Division shall be the Director, suitably qualified in actual administrative and mining experience, and the Assistant Director. The salary of the Director shall be $15,000 per annum. In the absence of the Director his duties shall be performed by the Assistant Director.

(c) It shall be the duty of the Director, and he is hereby authorized and directed, (1) to perform the functions hereinafter specifically authorized, and (2) to prescribe rules and regulations for carrying out the provisions of this Act in the simplest manner.

(d) The Director may select, employ, and fix the compensation of such engineers and other experts as may be necessary to carry out the purposes of this Act without regard to the civil-service laws and the Classification Act of 1923 as amended and shall employ such other staff as he may deem necessary.

[NOTE.-H. R. 976 as amended and reported out of the Committee on Public Lands is included in the appendix as exhibit 29, p. 386. The committee report on H. R. 976 is included as exhibit 30, p. 391.]

264

(e) All records of the Office of Premium Price Plan for Copper, Lead, and Zinc shall upon request by the Director be transferred and delivered to the Division.

SEC. 4. (a) To carry out the purposes of this Act, production payments as prescribed by the Director shall be made to those producers whose operations require such payments on all ores, metals, and minerals determined to be strategic or critical, pursuant to section 2 (a), Public Law 520 (Seventy-ninth Congress, ch. 590, second session), and included in group 1-a o: the Munitions Board list of strategic and critical materials, dated September 30, 1948, together with any minerals or metals that subsequently may be added thereto, and produced from ores, dumps, tailings, slag piles, or residues (excluding scrap materials), except that in the event that the Munitions Board shall find that further purchases of particular ores, metals, or minerals for national security stock-pile purposes are no longer necessary or will within one year of the date of finding cease to be necessary, then (1) if such finding is made within thirty days after the effective date of this Act, no payments shall be made under the authority of this Act with respect to such ores, metals, or minerals, and (2) if such finding is made more than thirty days after the effective date of this Act no payments under the authority of this Act shall be made with respect to such ores, metals, or minerals, produced after one year from the date of such finding: Provided, That in the event any such findings are amended by the Munitions Board to the effect that purchases of such ores, metals, or minerals have again become necessary for national security stock-pile purposes the payment provisions of this Act shall again become applicable subject to the limitations of this paragraph.

All ores, concentrates, metals, and minerals on which payments are made shall meet minimum specifications determined by the Munitions Board for the national security stock pile.

(b) Production payments for any particular metals or minerals shall be in addition to the amount received per unit from other sources by the producer of the metal or mineral. Such payments shall not exceed the difference between the current market price and (1) in the case of those metals that were produced under the Premium Price Plan, an amount equal to the highest market price plus the highest production premiums received by any domestic producer during the calendar years 1942 to 1946, inclusive, and (2) in the case of other ores, metals, and minerals an amount equal to the highest amount paid any domestic producer for such ores, metals, and minerals during the calendar years 1942 to 1946, inclusive, by the Reconstruction Finance Corporation or its subsidiaries or by other Government departments or agencies, such amounts specified in clauses (1) and (2) hereof to be adjusted by the Director in proportion to the changes in the Bureau of Labor Statistics wholesale price index of all commodities (1926 equals 100) since such highest sums or amounts were first offered or paid. Hereafter all maximum production payment limitations provided in this section shall be adjusted by the Director in proportion to each five-point change in the Bureau of Labor Statistics wholesale commodity price index of all commodities (1926 equals 100). These maximum limitations shall apply unless in the opinion of the Director with the approval of the Munitions Board special consideration is necessary for the exploration or production of a particular metal or mineral.

Production payments shall be made within the limitations defined in this Act so as to encourage development, production, and conservation and provide adequate allowances for depreciation, amortization, and depletion and shall include a reasonable profit to the producer based upon efficiency and upon the values of all recoverable metals and minerals contained in the ores, excluding values of crushed rock or waste materials.

SEC. 5. (a) Exploration payments shall be made to producers of those ores, metals, or minerals on which production payments are payable on the following bases:

(1) Upon application to the Division by any bona fide producer in an amount not to exceed $1,500 per month for each mine in actual operation.

(2) Upon application to the Division by any producer for particular projects in amounts approved by the Director.

(b) Exploration payments received by producers shall not be commingled with other funds and shall be subject to post audit.

(c) In computing the amounts of production payments no allowance shall be made for royalties in excess of 10 per centum of the market price. It shall be a condition of the making of all production and exploration payments that the recipients thereof shall pay no royalties on exploration payments whatso