(c) the amount of appropriated money to be allocated to the aid of conservation of any metal or mineral or group of metals or minerals, as specified by the Board;

(d) the maximum price or the minimum price, or both, which may be paid for the purchase of any metal or mineral for conservation: Provided, That adequate allowance shall be made for depletion and depreciation in computing costs of operation or maintenance;

(e) the maximum amount or the minimum amount, or both, which may be paid on account of participation in the costs of maintenance for conservation with respect to any metal or mineral;

(f) the maximum amount or the minimum amount, or both, which may be paid to any producer or class of producers on account of exploration for any metal or mineral or group of metals or minerals, and the ratio which the Government's contribution for exploration shall bear to the contribution of any producer or class of producers for exploration;

(g) the particular metals or minerals or ores thereof and specifications therefor that shall be eligible for aid for conservation;

(h) the particular metals or minerals that shall be eligible for aid for exploration; and

(i) the time limits or dates within which contracts for aid for conservation shall terminate.

Sec. 5. (a) The Board shall promulgate such rules and regulations as may be necessary to carry out its functions and duties under this Act, and to provide fair and equitable treatment for all applicants for aid.

(b) The Secretary, subject to the rules and regulations of the Board, may prescribe rules and regulations for carrying out the provisions of this Act and which must be complied with by applicants for contracts under the provisions of this Act.

(c) The Secretary may delegate any of his functions under this Act.

(d) All rules and regulations issued under the authority contained in this section shall be published in the Federal Register.

Sec. 6. (a) Any producer may file with the Secretary an application for financial aid in carrying out a specified project for exploration or financial aid to conserve a deposit of ores or minerals. An application to conserve may be either for aid by participating in the costs of maintaining the property in stand-by condition or by purchasing all or any part of the metals or minerals resulting from production from such deposit. The application and the project for aid disclosed by the application must conform to the express policy and provisions of this Act and with the rules and regulations of the Board and of the Secretary: Provided, however, That simple contracts covering exploration projects shall be awarded upon application to small base metal mines and such contracts shall provide for the payment by the United States of one-half of the total reasonable costs of all tunnels, shafts, winzes, and raises in such a mine if the application discloses that there is a reasonable promise of developing unknown or undeveloped sources of metals or minerals.

(b) The Secretary shall cause qualified mining engineers, geologists, and any other necessary teamicians to make examination of and to report on each application, and to certify it to the Secretary either for acceptance, as presented or subject to specified modifications, or for rejection. In the case of a project for exploration, the examining experts shall certify whether the project offers reasonable promise of discovering unknown or undeveloped sources of metals or minerals. In the case of a project for aid to conserve a deposit of ores or minerals, either by participating in the costs of maintaining the property in stand-by condition or by purchasing all or any part of the metals or minerals resulting from production from each deposit, the examining experts, considering economic and practical factors, shall certify whether the project offers reasonable promise of maintaining in stand-by condition or in production, as the case may be, a property the production from which would, in the absence of financial aid by the United States, be discontinued or remain discontinued under such circumstances as to make it probable that for economic or technical reasons such production would not or could not be resumed when needed for the national economy or security.

(c) The Secretary shall either accept and approve the application, subject to any modification therein which he may require, or he shall reject it: Provided, That if the Secretary's action on the application conflicts with the recommendation and certification of the examining experts, he shall refer the application to

the Board; and the Board shall either confirm and approve the action of the Secretary, or shall reverse it, or shall direct the Secretary to reconsider it. Confirmation or reversal of the Secretary's action by the Board shall be final, and direction to reconsider shall place the application in the same status it was in before action upon it by the Secretary. If the Secretary accepts the application. either in its original or modified form, the terms of the application and acceptance shall be merged in a formal, written contract. Any applicant who is dissatisfied with the decision of the Secretary upon his application, may at any time within thirty days after receipt of notice of the decision, unless further time is granted by the Board, appeal to the Board, and the Board, as expeditiously as possible, shall review the entire matter, make its findings thereon, and notify the applicant of its decision, which shall be final.

(d) All metals or minerals purchased under the provisions of this section, or such equivalent quantities thereof as may be permitted by the contract with the producer, shall be delivered by the producer to and shall be received by the Administrator of General Services at such places and times as may be provided in the contract. The Administrator shall from time to time, and in any event before selling them in the open market, notify the Munitions Board of the inventory of metals or minerals held by him under the provisions of this Act and shal! continue to hold all metals or minerals received by him under this Act until at least sixty days after he has given the Munitions Board notice that they are so held. The Munitions Board may, as long as any such metals or minerals are held by the Administrator, (1) direct the Administrator to transfer any of them to the national security stock pile in accordance with the provisions of the Strategic and Critical Materials Stock Piling Act, as amended (53 Stat. 811, 60 Stat. 596), or (2) within sixty days after such notice from the Administrator direct him to hold any such metals or minerals listed in the notice until sixty days after the next succeeding appropriation for purchases for the stock pile has become available. Unless notified by the Munitions Board to either transfer any of such metals or minerals or to continue to hold them as provided in this subsection, the Administrator shall sell them in the open market if and when open-market prices will return to the Government at least the price paid by the Government for the metals or minerals, and only in such quantities as will not depress the market. No metal or mineral shall be transferred into the national security stock pile under the provisions of this Act unless the material has been found to be strategic and critical as provided in the Strategic and Critical Materials Stock Piling Act, and meets established specifications as to quality and degree of refinement or processing, and unless such transfer is consistent with the current stock-piling procurement program of the Munitions Board. All moneys received by the Administrator of General Services from such sales in the open market shall be for deposit in miscellaneous receipts of the Treasury, and any transfer of metals or minerals to the national security stock pile shall be covered by a transfer of funds from appropriations available for purchases for the stock pile to miscellaneous receipts of the Treasury in amounts approximating what the cost of the metals or minerals would have been if purchased in the open market at the time of transfer.

(e) All contracts entered into under the provisions of this section—(1) shall contain an express provision that they are subject to the availability of appropriated money; and (2) may be entered into without regard to sections 3648 and 3709 of the Revised Statutes, as amended, or other provisions of law prescribing the manner of making contracts on behalf of the United States.

(f) No contracts shall be entered into under the provisions of this section for a period exceeding two years or after the expiration of three years from the effective date of this Act.

Sec. 7. As used in this Act

(a) "Security", standing by itself, means the Secretary of the Interior.

(b) "Administrator" means the Administrator of General Services.

(c) "Board" means the Minerals Conservation Board.

(d) "Exploration" means exploration in the United States for unknown or undeveloped sources of metals or minerals, including extensions of known de posits, conducted from the surface or underground, by surface trenching, core or churn drilling, tunnels, raises, wrinzes, 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.

(e) "Production" means the production of ores or minerals from mines in the United States, or from tailings, dumps, slags, or residues of such mines, which the Secretary determines would, in the absence of financial aid by the United

States, be discontinued or remain discontinued under such circumstances with respect to each particular mine as to make it probable that for economic or technical reasons such production would or could not be resumed promptly when needed for the national economy or security.

(f) "Small base metal mines" means mines or deposits of ores producing or which in the course of conducting an exploration project produce lead, zinc, or copper ores, or ores containing a combination of such metals, the average aggregate monthly production of which does not exceed 100 tons of lead, zinc, and copper metal combined.

(g) "Producer" means any person or persons or legal entity by whom or for whose account and interest exploration, maintenance. or production is to be or is being performed.

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

Sec. 8. This Act shall not be construed as superseding or amending the Atomic Energy Act of 1946 (70 Stat. 755), as amended.

Sec. 9. There are hereby authorized to be appropriated such sums as may be necessary for carrying out the provisions of this Act, including payments to producers for exploration, maintenance, and production, and the costs of administration, such funds to remain available until expended.

EXHIBIT 46

Calendar No. 967

81ST CONGRESS

SENATE

REPORT
No. 957

TO STIMULATE EXPLORATION FOR AND CONSERVATION OF STRATEGIC AND CRITICAL ORES, METALS, AND MINERALS, AND FOR OTHER PURPOSES

AUGUST 25 (legislative day, JUNE 2), 1949.-Ordered to be printed

Mr. O'MAHONEY, from the Committee on Interior and Insular Affairs, submitted the following

REPORT

[To accompany S. 2105]

The Committee on Interior and Insular Affairs, to whom was referred the bill, S. 2105, to stimulate exploration for and conservation of strategic and critical ores, metals, and minerals, and for other purposes, having considered the same, report favorably thereon with an amendment in the nature of a substitute, and recommend unanimously that the bill as amended do pass.

PURPOSE OF THE BILL

The general objective of the proposed legislation is to develop and maintain, through private enterprise, mineral reserves in the United States vital to the Nation's security and industrial needs. Overwhelming evidence was presented to the committee that known reserves of ores, minerals, and metals within the country have been critically depleted, that wholly inadequate exploration and development of new sources have been undertaken during the past 17 years, and that a large part of our domestic mining industry is in grave danger of disintegration.

This situation engenders a perilous and costly dependence by the United States upon ocean-borne supplies from foreign nations, constituting a most serious threat to our national security and to our long-range industrial peacetime needs as well.

Specifically, S. 2105 as amended has two immediate major purposes: First, to stimulate exploration for new or undeveloped sources of minerals and metals within the United States; second, to promote the conservation of known mineral resources which, because of declining prices and high costs as well as difficulties

of operation, are in danger of being permanently lost. Such conservation would be accomplished by maintaining either in stand-by condition, or in partial or total operation, properties containing important minerals or ores, the production of which in the absence of aid such as that authorized by this bill would be discontinued or remain discontinued under such circumstances as to make it probable that for economic or technical reasons such production would not be resumed promptly when needed for the national economy or security.

It must be borne in mind that successful mining results in the depletion of the deposits which are mined and that because of the peculiar physical conditions under which mining operations take place, many mines once shut down can never be reopened. In many cases, a mine not in production fills with water, metal equipment corrodes and rusts away, supports disintegrate, and large-scale caveins occur. It is always difficult and, in many cases impossible, either technically or economically, to reactivate a mine that has once closed. Meanwhile the experienced and skilled labor force necessary to operate such a mine has become dispersed. Thus, the mine and its ore body (as well as the essential operating personnel) is, for practical purposes, lost.

So, too, with exploration. Technical experts have informed the committee that it usually takes at least a year or more after discovery to bring an ore body into production. The committee has been reliably informed that since 1932, adequate exploration and development of new sources of raw materials and minerals within the United States have not kept pace with the demands of our expanding economy.

THE PRESIDENT'S MESSAGE

The exploration and conservation objectives of S. 2105 are very clearly in line with the recommendations of the President of the United States. The Task Force on Natural Resources of the Commission on Organization of the Executive Branch of the Government in its report also recognizes the factual situation which has prompted the committee to report this bill.

In his budget message of January 10, 1949, President Truman said: "Two world wars as well as subsequent needs for world recovery have drawn heavily upon our mineral resources. The Federal Government has a responsibility for assuring the adequacy of these resources through intensive surveys, investigations and exploration; fundamental research, and sound conservation practices. Funds recommended for the Bureau of Mines and some activities of the Geological Survey are directed to these purposes. In addition, I recommend legislation which will authorize incentive payments for the exploration and development of strategic and critical minerals."

The report of the Hoover Commission task force states (p. 50):

"A pressing need of the Nation is a more adequate supply of a long list of minerals to support and strengthen our industrial economy and to insure our national security. Hence, encouragement of exploration should be the principal objective of policies dealing with minerals and fuels on the public domain. Maintenance of the Nation's mineral reserves requires not only the discovery of concealed ore bodies in old districts, but the finding of ore bodies in entirely new regions where signs of ore or evidence of conditions favorable for mineralization are not sufficient to have induced adequate exploration."

EXPLANATION OF THE BILL

Under S. 2105 exploration would be stimulated and promoted by the Government's sharing with private mining enterprises the cost of a project which offers, in the opinion of competent engineers and geologists, reasonable promise of the discovery of an unknown or undeveloped source of metals or minerals and which, on the record as established in accordance with rules and regulations under the law, could not be carried out without Government cooperation. The privateoperator would have to invest his own money in order to receive exploration aid from the Government.

Conservation would be accomplished either by the Government's contributing 'to the cost of maintaining particular mining properties in a stand-by condition, or by purchasing the products of such properties at prices which would enable them to continue in production. Conservation aid would be accorded only to those properties which, in the absence of such aid, would be discontinued or remain discontinued under such circumstances as to make it probable that the property could not be brought back into production promptly when needed.

In all cases, the exploration or conservation aid would be obtained by individual contract, with American producers contracting with their Government to expand or preserve the mineral resources of the Nation in conformity with the efficiency of private enterprise. The committee feels that there is a definite public interest in the preservation of existing mineral resources and the discovery of new deposits.

Exploration or conservation contracts under the bill can extend for a period not in excess of 2 years, and no contracts may be made after 3 years from the effective date of the act. While they are exempted from the provisions for routine Government contracts requiring advertisement, competitive bids, and the like, all agreements entered into under the bill must contain an express provision that they are subject to the availability of appropriated money.

Existing governmental agencies will be utilized in the administration of the functions for which provision is made in the legislation. The policy determinatons which must necessarily be made within the legislative mandates are placed in the hands of the agencies best qualified to pass judgment: The Department of Interior, Defense, Commerce, and Treasury, with the heads of each of these agencies constituting a Minerals Conservation Board, and with the Secretary of the Interior constituted as Executive Chairman. Administration of the Board's policy determinations is placed in the Department of the Interior where the Bureau of Mines already has the organization and much of the personnel necessary for its administration. Included in the functions of the Department of the Interior is the approval or disapproval of application for aid certified by technical experts with a dissatisfied applicant having an automatic right of appeal to the full Board.

In general, the amount to be paid for exploration aid or for maintenance is determined by the Board as are the prices paid for metals and minerals purchased as conservation aid.

DISPOSAL OF PURCHASES

Materials so purchased are delivered to the Administrator of General Services. The Administrator must first offer them to the Munitions Board for transfer to the strategic stock pile. If the Munitions Board does not deem it advisable to acquire such minerals or metals, then the Administrator may sell them in the open market but only if and when the open market prices will return to the Government at least the price paid for them and in such quantities that sales will not depress the market.

It is the considered opinion of the committee that the above provisions adequately protect the open metal market, and will not in any way interfere with the working of the law of supply and demand. Any materials purchased under the bill for conservation aid necessarily will be bought at prices higher than those current on the open market at the time of purchase. These materials may not be sold at prices less than the above-mentioned cost price and then only in such quantities as will not depress the market. Thus the committee believes that the prices for materials produced and sold under usual practices and procedures will be in no way adversely affected.

This measure is not an amendment to the Strategic and Critical Materials Stockpiling Act of 1946 (60 Stat. 596). The minerals which are to be purchased will be made available first to the Munitions Board although the Board is not required to accept them. This provision is in accord with the recommendation of Munitions Board officials. It should be noted, however, that the objectives of the straetgic stock-pile law are themselves predicated upon a healthy, going mining industry within the United States.

SMALL MINING ENTERPRISES

History shows that most of the principal mines now producing were developed from small mines. In fact, small mines are often producers of big mines. Evidence presented to the committee shows that current economic trends have driven many small mines out of existence and are threatening to drive out many more, with the consequent dangers of monopoly control to our historic concepts of competition and free enterprise.

Therefore, the committee has written into the bill a small mining enterprise section and has set certain standards for aid to small base-metal mines. A small base-metal mine is defined in the bill as a mine with an average monthly production of less than 100 tons in the aggregate of copper, lead, and zinc combined.