must eliminate prospects with the lowest geologic 

 potential or poorest indicated financial return and 

 concentrate on the most profitable. 



Our continental shelf will be explored by 

 private industry only if it appears that ore deposits 

 which might be present there can be discovered 

 and extracted more profitably there than else- 

 where. Favorable land and ocean mining laws of 

 other countries put them in direct competition 

 with U.S. offshore exploration dollars. If the 

 United States wishes to develop— or even test the 

 likely extent of its offshore hard mineral re- 

 sources—it will have to entice private industry 

 exploration dollars from other kinds of explora- 

 tion, in the United States and abroad on land and 

 on the shelves of other countries. 



It appears that the regulations governing off- 

 shore exploration and recovery of oil and gas are 

 not an incentive for hard minerals development. A 

 legal framework which encourages continental 

 shelf exploration and mining by establishing an 

 attractive investment opportunity for industry 

 would be in the public interest. 



At the present time it is extremely difficult to 

 anticipate how the offshore mining industry may 

 develop or what kind of properties and mining 

 procedures are likely to be attractive. The Com- 

 mission has a responsibility for assuring that 

 inappropriate laws do not smother a nascent 

 industry. A system for assigning mineral explora- 

 tion and development rights on the Continental 

 Shelf should: 



—Be sufficiently flexible to recognize the great 

 diversity in knowledge, resource potentials, tech- 

 nology and the physical characteristics of mining 

 operations. 



—Rely on competition to the extent feasible. 

 However, companies should not be exposed to any 

 international uncertainty as to the prospect of 

 being able to exploit mineral deposits which they 

 have discovered through privately-financed ex- 

 ploration. 



—Provide a reasonable economic rent to the pubUc 

 for the use of public lands and public data. 



—Recognize that the U.S. Government, as lessor of 

 outer continental shelf lands, faces competition 

 from other nations who may offer development 



rights to their offshore and onshore lands on terms 

 calculated to attract mining enterprises. 



Recommendation : 



The Outer Continental Shelf Lands Act should be 

 amended to allow the Department of the Interior 

 greater flexibility in the management of offshore 

 lands. The specific terms under which these lands 

 are yielded to private development could be 

 adjusted to reflect differences from case to case 

 and over time in our knowledge of and capability 

 to exploit mineral potentials. The amended legis- 

 lation should establish the following options for 

 exploring and for yielding exploration and min- 

 erals development rights on the Continental Shelf 

 as defined in the Geneva Convention on the 

 Continental Shelf, or, if recommendations of the 

 International Panel are adopted, only to the 200 

 meter isobath or a distance of 50 miles, whichever 

 is greater. 



Where a promising minerals development 

 opportunity has been identified by the Govern- 

 ment or by Government-supported scientific insti- 

 tutions, bidding procedures should be used. 



Where knowledge of mineral potential is too 

 limited to permit successful bidding, and a com- 

 pany has expressed interest in exploration and/or 

 exploitation, the Govermnent should either con- 

 tract to develop the data necessary to permit a 

 competition for development rights, or announce 

 in the Federal Register the applicant company's 

 intent— absent objections— to explore the described 

 area under a concession system which would also 

 yield to it rights to develop any minerals which 

 might be found. 



Should any other company, within a specified 

 time, indicate that it also has an interest in the 

 exploration and possible development of the tract, 

 the Department should conduct a competition 

 among the interested companies for exploration 

 and development rights. 



Regardless of whether awarded as a result of 

 bidding or negotiation, the rental and royalty 

 terms which would apply under the permit should 

 be specified before the permit would be granted or 

 exploration begun. 



A legal system somewhat analogous to the 

 concession system practiced successfully in some 

 foreign countries tentatively appears to be more 

 appropriate to minerals development. The main 

 provisions of such a system would include: 



VII-93 



