NEGOTIATING TEAMS

Mr. McKAY. This document says: "Within 90 days after enactment, the Secretary shall direct the appointment of a negotiating team representing each tribe. Hopi negotiating team appointed January 27, 1975, Navajo team appointed January 29, 1975," and so on.

That has already been done?

Mr. THOMPSON. Those are the negotiaters to enter into the 6-month negotiation.

Mr. McKAY. "Within 15 days after formal certification of both negotiating teams to the mediator, the mediator shall schedule the first negotiating session," and that first meeting has been held?

Mr. THOMPSON. Yes. I might add many meetings have been held both with Bureau officials, tribal officials, and the Federal mediators.

BUDGETED ITEMS

Mr. LEWIS. The Commission's original funds with regard to that, all line items in this budget are prorated for the remainder of 1976. If any of the items were cut to any extent, then we would just only have to revert to the money we set up for the contracting, which will cut that down some.

Mr. YATES. Are you saying that the work has to be done, and if we cut back on your administrative expense request, the only way you would be able to get it done is by outside contracting?

Mr. LEWIS. Your question was, why were we asking for the full amount. In answer to your question, we have our budget set up, line items prorated to fit the remainder of the 1976 fiscal year. This is what your question referred to.

We have this much time left in 1976, but the budget is set up to meet this time period.

Mr. MCKAY. Is your budget prorated over the 5 years for the total amount authorized? It isn't, is it? It can be extended at any rate you choose to administer it?

Mr. LEWIS. That is right.

Mr. REGULA. I notice an item of $216,000 for "Other services." What do you mean by that?

Mr. LEWIS. This is with regard to contracts.

Mr. REGULA. For what?

Mr. LEWIS. Socioeconomic studies for appraisals on the dwellings we will buy from these people who have to move out. The counselor service I have mentioned, in regard to those who want to move into urban areas, and other things.

TIME TO EFFECT RELOCATION

Mr. REGULA. How long do you contemplate it will take to effect a relocation of those who must move?

Mr. LEWIS. According to the guidelines set up in the law, we have a 2-year period from the time the court sets the line to formulate a plan on how we are going to do this.

Waiting for the boundary will be a problem, but we have a feeling that perhaps before January a boundary will be set up and we will start right in then to do this.

Mr. REGULA. You will have 2 years to develop a plan and then the actual moving might take how much time?

Mr. LEWIS. Another 3 to 5 years.

Mr. YATES. Mr. Murtha.

Mr. MURTHA. What type of systems will be used to reduce the number of livestock?

Commissioner THOMPSON. The system of incentive purchase for one and a half times market value and transportation. If this is not successful we plan to proceed with due process to impound under (25 CFR 152) the grazing regulations.

Mr. MURTHA. Has any thought been given to establishing an extensive animal husbandry program?

Commissioner THOMPSON. Our planning is based on the University of Arizona providing animal husbandry programs through existing extension contracts.

Mr. MURTHA. Once the land is restored, will the Indians be able to move in and pursue the raising of livestock once again? Remember this is a cultural and not an economic question.

Commissioner THOMPSON. Yes, unless there are people to be relocated as a result of the partition.

Mr. MURTHA. Will the Indian be permitted to buy his livestock back? If not, is this constitutional?

Commissioner THOMPSON. Yes, he may buy his livestock back if he has some place outside the area to graze them.

Mr. MURTHA. What is the growth of the herd each year?

Commissioner THOMPSON. Herds do not generally expand; the size of herds are maintained by replacement.

Mr. MURTHA. What is the accepted ratio of livestock per unit of land?

Commissioner THOMPSON. The joint use area contains many different kinds of land some being non-usable for grazing and some productive. The harvest acreage required for a sheep unit year long is 27 acres. The highest acre requirement is 612 acres.

Mr. MURTHA. Isn't it very likely if 120,000 livestock are in an area suited for 8,000 to 16,000 that the livestock would be undernourished and very possibly diseased?

Commissioner THOMPSON. Livestock generally adapt to the environment, they are not very productive but are not unhealthy or diseased. Mr. MURTHA. By what count did we come up with 120.000 animal units?

Commissioner THOMPSON. The Navajo Tribe's 1972 livestock census was used to determine the 120,000 units. This was supported by information obtained by our 1974 inventory of improvements and enumeration.

Mr. MURTHA. Who is going to appraise the Indian homes when they are to be relocated?

Commissioner THOMPSON. This will be the responsibility of the Relocation Commission established under the act. The actual appraisals will be done by contract.

Mr. YATES. Thank you very much, gentlemen, for your testimony. The committee will give the Commission every consideration. We hope you have a pleasant and safe trip back.

Mr. LEWIS. Thank you.

Mr. YATES. Yours is a very, very difficult job.

TUESDAY, NOVEMBER 11, 1975.

GEOLOGICAL SURVEY-ONSHORE LEASE

MANAGEMENT

WITNESSES

VINCENT E. MCKELVEY, DIRECTOR

WILLIAM A. RADLINSKI, ASSOCIATE DIRECTOR

RUSSELL G. WAYLAND, CHIEF, CONSERVATION DIVISION

JOHN DULETSKY, ASSISTANT CHIEF FOR OPERATIONS CONSERVATION DIVISION

FRANK WILES, BUDGET OFFICER, DEPARTMENT OF THE INTERIOR WILLIAM L. FISHER, DEPUTY ASSISTANT SECRETARY, ENERGY AND MINERALS

WILLIAM AVERY, STAFF ASSISTANT, ENERGY AND MINERALS

INTRODUCTION OF WITNESSES

Mr. YATES. The committee will be in order.

The principal purpose of this hearing is to discuss the two recent reports concerning the onshore lease management program of the Geological Survey, one by the National Aeronautics and Space Administration and one by the Office of Audit and Investigation, Department of the Interior.

We are pleased to have with us this morning the Director of the Geological Survey, Dr. Vincent McKelvey and Associate Director, Mr. Radlinski, accompanied by other witnesses from the Geological Survey.

Mr. MCKELVEY. We also have with us Mr. Frank Wiles, the Department Budget Officer.

Mr. YATES. He is always here. He is the best troubleshooter we have around here and, believe me, he has a lot of troubles to shoot for, too.

OPENING STATEMENT

Mr. MCKELVEY. We have a general statement on onshore lease management studies.

Mr. YATES. We will insert your statement in the record at this point, along with the attachments which identify your response to the two recent studies mentioned above.

[The statement and attachments follow:]

STATEMENT OF VINCENT E. MCKELVEY

Mr. Chairman, we are glad to meet with you to discuss the Geological Survey's onshore lease management program, particularly the two studies recently completed on management and royalty accounting functions, the reasons these studies were undertaken, their major findings and recommendations, and the actions we are taking to improve our operations.

In 1965, the Geological Survey's Conservation Division employed 238 people to supervise and manage onshore mineral lease operations at the field level. Those personnel supervised industry operations on 1,174 producing and active mining properties and on 9,425 producing oil and gas leases involving 26,492 producing oil and gas wells. Royalty revenue collected from these operations in 1965 amounted to $108 million. By 1970, the number of employees so involved had decreased to 228 (-4 percent), whereas producing oil and gas leases and wells increased to 11,135 (+18 percent) and 29,983 (+13 percent), respectively. Likewise, producing and active mining properties increased to 1,494 (+27 percent). Royalty revenue for the year was $129 million, an increase of $21 million over 1965.

The expanding workload of the onshore lease management program resulted in a situation where assigned functions could no longer be properly performed. At mid-year 1975, there were 260 personnel engaged in this activity, for a total increase of 32 positions since 1970. As of July 1, 1975, producing oil and gas leases numbered 12,631 and producing wells 32,008, and producing and active mining properties totaled 700. Royalty revenue for 1975 is expected to amount to $275 million.

The environmental legislation enacted in 1970 much increased the supervisory workload and further reduced the capability of available personnel to carry out their responsibilities effectively.

In fiscal year 1973, at the request of the Geological Survey the National Aeronautics and Space Administration agreed to do an in-depth study of its onshore lease management program. We requested this study because we recognized that we needed to modernize and strengthen our onshore supervisory capability as had already been done for the OCS program, and an action plan with specifics was needed to bring about the necessary improvement. For the same reasons, we also asked the Department of the Interior's Office of Audit and Investigation to undertake a study of our royalty accounting procedures.

The findings of these studies were for the most part anticipated, and the Survey concurred in the findings and accepted nearly all of the recommendations made by both the NASA and OA & I studies.

The NASA report was issued on December 20, 1974. In early January of 1975, a task force, composed of senior officials of the conservation division was assembled to review and update the conservation division's onshore lease management goals and objectives, and to review the recommendations of the NASA report. The task force completed its report in May 1975, and estimates of the cost and manpower needed to implement its recommendations were issued as a subtask force report in June 1975.

The more important recommendations of the NASA and OA & I reports, and our planned course of action with respect to them are submitted herewith as attachments to this statement.

Mr. Chairman, we welcome this opportunity to discuss these matters with you and will be pleased to respond to your questions.

Recommendation No. 4 addresses the manner in which the conservation division formulates objectives and determines and enunciates policy. Specifically, the study team recommended that the conservation division "Develop and issue a formal series of policy documents from the Chief (on specific subjects of which some examples were given), giving his interpretation and decision on various matters where continuing guidance is needed."

Present procedures are relatively informal, dating back to a time when the Division was small and informal methods were considered adequate to meet requirements of program direction. Implementation of this recommendation depends on organizing and staffing the proposed Office of Technical Services which includes a branch of manual development which will formalize, through manual releases, standard procedures for issuing policy documents.

Recommendation No. 9 identifies the need to develop technical standards which will be uniformly applied in regulatory operations on Federal mineral leases. Specifically, this recommendation advises the division to: "Develop a set of technical standards, including but not limited to, such technical decision processes as approval of drilling and mining plans, unitization, safety, and inspections. The Reston staff and the best technical people in the field, and resources within industry, universities, and State agencies should be utilized toward meeting this need."

Staff organizations have been established to coordinate the development of standard procedures, but the proper vehicle for insuring uniform application of the standards is the division manual, development of which is contingent upon organizing and staffing the branch of manual development within the Office of Technical Services. The organizational format for these functions has been developed, as noted earlier.

Recommendation No. 11 is directed toward reorientation of the Chief's office activities as much as possible from individual transactions and toward affairs of management. In response to this recommendation, the system of managing by objectives has been expanded to include regional programs. Bilateral meetings are held on a scheduled basis to monitor the progress in accomplishing the necessary work to attain those objectives and goals which have been established by the Chief and the regional managers as major program activities. Steps have also been initiated to provide guidance in policy matters and procedures through formalized interim instruction memoranda which eventually will be manualized. A current contract study will provide a manualized reporting system for onshore oil and gas and mining activities. Data provide through this system will be analyzed and will provide a means to monitor program activities.

Recommendation No. 39 is directed toward instituting a system for measuremated reporting system. A contract was commenced during July by Martin-Marietta Corp. to provide the Division with such a system for reporting its oil and gas and mining operations activities. The system is functional but is now going through the debugging phase. The final report will be completed by the end of December. The improved system is designed not only to provide statistical data but also to enable management to monitor program activities and accomplishments. The system will be expanded in the future to include accounting activities.

Recommendation No. 39 is directed toward instituting a system for measurement of industry compliance.

In implementing this recommendation, we intend to :

1. Establish technical standards for the various operational phases and for inspection thereof.

2. Develop a detailed inspection checklist and instructions which provide well-defined go/no-go criteria and obligatory enforcement actions.

3. Require inspectors to use the checklist and inspect leasehold operations against the physical, technical, and administrative standards so established. By accomplishing these tasks, the Division will be in a position to monitor industry compliance with the regulations and insure that good petroleum and mining engineering practices are being followed. Moreover, in the new manual reporting system which the Conservation Division has developed since the NASA study, district engineers and district and area mining supervisors are required to report all incidents of operator nonconformance with respect to applications and operator noncompliance in regard to their operations.

Recommendation No. 51 is concerned with requiring district engineers and district and area mining supervisors to fully report individual enforcement actions or decisions not to enforce.

The Conservation Division will issue instructional memoranda to be manualized later which:

1. Clarify enforcement policies and procedures.

2. Prescribe obligatory enforcement actions in the event of noncompliance. 3. Instill an objective and aggressive attitude toward enforcement. As these tasks are accomplished we will see an increase in the number of enforcement actions taken and in their documentation. District engineers and district and area mining supervisors are now required, as a result of the new manual reporting system, to report the incidents of nonconformance and noncompliance and the enforcement actions taken to bring about conformity or compliance.