URANIUM LODE MINING CLAIMS ON FEDERAL

LANDS

THURSDAY, OCTOBER 13, 1977

U.S. HOUSE OF REPRESENTATIVES,

SUBCOMMITTE ON OVERSIGHT AND INVESTIGATIONS,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10 a.m., in room 2123, Rayburn House Office Building, Hon. John E. Moss (chairman) presiding.

Mr. Moss. The subcommittee will be in order.

During the past year, this subcommittee has conducted inquiries into the price and supply of uranium, one of the barometer fuels of the latter 20th and 21st centuries. This summer we held hearings detailing secret agreements among nations and companies and the methods by which an international uranium cartel manipulated the price and supply of uranium in the world market.

When the cartel was organized in 1972, the price of uranium was $5 per pound and threatening to drop to $4. Today in the space of a few short years the price has escalated to over $40 per pound, a 700-percent increase.

Facing what became clearly a sellers' market in raw uranium, once the cartel and other factors had done their work, several large utilities in this country sought to get into the uranium exploration and development business themselves. In August, we heard from TVA that just such an effort was underway. Others, too, are looking at the vast public lands in the Federal domain which might yield uranium directly to the consuming utilities. One such is the Washington Public Power Supply System, which recently consummated an agreement with the Colorado-based Fremont Energy Corp. for possible exploitation of over 350,000 acres of Federal land in the Red Desert area of Wyoming. We will hear from representatives of both those companies in the days to come.

Obviously, if utilities are seeking to explore for uranium in a praiseworthy effort to stabilize their own supplies and to better keep down prices for the American power consumer, the rules by which uranium-rich public lands are acquired-both in theory and in practice become critical.

This morning we examine the methods and procedures by which uranium lode mining claims are located and developed on Federal

"International Uranium Cartel-Volume 1," hearings held before the Subcommittee on Oversight and Investigations, Committee on Interstate and Foreign Commerce, 95th Congress, 1st session, May 2; June 10, 16, and 17; and August 15, 1977, Serial No. 95-39.

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lands. The guiding statute, by the way, is one of our oldest lawsthe Federal Mining Act of 1872.

We will examine whether uranium claims, tying up literally millions of acres of public lands, are being located, maintained, and developed in accordance with Federal and State mining laws. We will inquire whether these enormous tracts of uranium-potential Federal lands, once acquired by independent claim-stakers and energy companies, are being assessed and developed in timely fashion.

The subcommittee's jurisdiction and responsibility in this area is clear. Rule X of the Rules of the House of Representatives specifically provides that the Committee on Interstate and Foreign Com

merce:

Shall have the same jurisdiction with respect to regulation of nuclear facilities and of use of nuclear energy as it has with respect to regulation of nonnuclear facilities and of use of nonnuclear energy.

Rule X further provides for a special oversight function in that the committee "shall have the function of reviewing and studying on a continuing basis, all laws, programs and government activities relating to nuclear energy.'

The discovery and development of new uranium reserves in this country is a key factor in the solution of our energy problems. Today there are 65 licensed nuclear reactors in operation in the United States. By the mid-1980's, it is anticipated that we will have an additional 164 reactors in operaton-92 currently being built, 52 on order, and an additional 20 which have been announced but not yet ordered. Last year, we produced nearly 13,000 tons of uranium concentrate, or "yellowcake." We will need to do much better by the middle of the next decade. It is estimated that by then we will have to produce over 45,000 tons annually to meet our reactor requirements.

If there are problems in the timely development of uraniumpotential lands, now is the time to identify and correct them. That is the purpose of these hearings.

We begin our inquiries in the State of Wyoming, which holds the largest number of uranium claims staked on public lands. Our witnesses this morning include two independent claim-stakers from that State and a Wyoming county attorney who has been investigating the propriety of claim-staking practices in that State.

Our first witness this morning will be Mr. John MacGuire, Natrona Service, Inc., from Casper, Wyo.

Mr. MacGuire, would you stand and be sworn?

Do you solemnly swear that the testimony you are about to give this subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. MACGUIRE. Yes, sir.

Mr. Moss. Will you identify yourself to the hearing clerk for the hearing record?

Mr. MACGUIRE. John W. MacGuire, Casper, Wyo.

TESTIMONY OF JOHN W. MacGUIRE, NATRONA SERVICE, INC., CASPER, WYO., ACCOMPANIED BY LARRY JOHNSON, FOREMAN

Mr. MACGUIRE. Mr. Chairman and members of the committee, I am John W. MacGuire of Casper, Wyo. I have been engaged in

locating and validating uranium lode mining claims on public lands for the past 12 years. My company, Natrona Service, Inc., has staked mining claims in most of the Western United States and Alaska, and became the largest claim-staking service in the United States. We have staked over 80,000 mining claims covering 1.6 million acres of potential mineral lands. With me is my foreman, Larry Johnson, who handles our field operations.

* *

In 1872, Congress enacted the Federal Mining Act to promote development of the mineral resources of the United States. The act provides that all valuable mineral deposits in Federal lands "* are hereby declared to be free and open to exploration and purchase by citizens of the United States *** under regulations prescribed by law."

* * *

In order to encourage development of our mineral resources, Congress made it possible for any citizen to prospect for minerals and to locate mining claims on public lands. Congress intended that each person should have a possessory right to his claims, and ultimately the right to patent and purchase those claims, provided that he complied with the laws of the United States and the State regulations governing these claims.

Since uranium had not been discovered in 1872, its value as an energy source could not have been envisioned by the Members of the 42d Congress. Yet, the Federal Mining Act, which became law 105 years ago, is the governing authority by which uranium lode mining claims are located and developed today.

The Federal law and State regulations governing the valid location and possession of mining claims are not complex. They require that certain prescribed work be performed to locate and maintain these claims to demonstrate a diligent and good-faith effort on the part of the locator to develop his claims.

I regret to report that there are widespread abuses of both the Federal and State mining laws. In my opinion, these abuses have contributed to the serious problems of rapidly escalating uranium prices and a short supply market that electric utilities and their customers now face. These abuses include the improper location and validation of mining claims, the failure to perform the required annual assessment work of $100 per claim, the filing of false affidavits with county clerks attesting that these requirements have been fulfilled, and, as a result of these fraudulent practices, the tying up of millions of acres of public lands which are not being developed in accordance with the intent of Congress and the Federal Mining Act of 1872.

Perhaps it would be helpful to briefly review the Federal and Wyoming law relating to mining claims in order to clarify the terms and regulations we will discuss today. The Federal Mining Act describes a mining claim as a trapezoid which may not exceed 1,500 feet in length and 600 feet in width. These dimensions constitute a claim of approximately 20 acres in size.

The act delegated authority to States and local jurisdictions to make rules and regulations governing the location, manner of recording, and amount of work necessary to hold possession of a mining claim, subject to the following requirements: (1) The location must be distinctly marked on the ground so that its boundaries can be readily traced; (2) all records of mining claims must

contain the name of the locator, date of location, and a sufficient description to identify the claim; and, (3) on each claim located, and until a patent shall have been issued therefor, not less than $100 worth of labor must be performed or improvements made during each year. Compliance with Federal and State law assures the locator of a possessory right or title to his mining claim. State regulations governing the location of lode mining claims on Federal lands vary among the Western States. While the posting of a discovery monument on each claim is required in all States, about half the States require only four boundary markers, while the others require six. Only three States-Arizona, New Mexico, and Wyoming-require some form of discovery or validation drilling when a mining claim is located. Essentially, Wyoming law requires the following:

Öne: The surface boundaries of a mining claim must be marked by "six substantial monuments of stone or posts," one at each corner and one at the center of each side line. The purpose of this is so that a person out in the field would be made aware of the location of the claim or claims.

Two: The posting of a notice on the discovery monument containing the name of the claim and locator, and date of discovery. Three: The drilling of a hole or holes, not less than 11⁄2 inches in diameter, aggregating at least 50 feet in depth, with no single hole less than 10 feet in depth. In Wyoming, this constitutes the discovery or validation work and is generally done by drilling five 10-foot holes within a 60-day time frame.

Four: Within 60 days of discovery, a location certificate for each claim must be recorded in the county clerk's office containing certain descriptive data.

Five: An affidavit or sworn statement by the locator or his agent must be recorded with the county clerk for each claim specifying the nature, date, and location of the discovery drilling or validation work, by whom performed, and the type of mineral discovered. This data is incorporated in the location certificate and filed as one affidavit.

The required annual assessment work of not less than $100 worth of labor or improvements per claim must be performed during each year beginning on September 1 following the date the claim was located. Within 60 days of completion of the annual assessment work, an affidavit must be filed with the county clerk attesting that the required amount of work was done. These documents are known as assessment affidavits or proof of labor. When two or more mining claims are contiguous and under the same ownership, the annual assessment work required on each claim may be made upon any one of the contiguous claims, if desired. While the Federal Mining Act provides no civil penalties or criminal sanctions for failure to comply with the law, it is a felony under Wyoming law to file false affidavits and location certificates. If a claim is not validly located in accordance with the law, it is subject to relocation or overstaking by another party. Similarly, noncompliance with the requirement to perform annual assessment work opens the claim to relocation in the same manner as if the claim had never been located, provided that the original locator has not resumed work upon the claim before relocation.