At the present time it is extremely difficult to 

 anticipate how the offshore mining business may 

 develop or what kind of properties and mining 

 procedures are likely to be attractive. The Com- 

 mission has a responsibility for recommending 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 explo- 

 ration. 



—Provide a reasonable economic rent to the public 

 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 Government 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: 



—A mineral explorer could obtain a permit for 

 exclusive rights to explore a large area— say 100 

 square nules-on application. A large area under 

 permit is essential in the beginning because any 

 type of an anomaly would likely encompass a large 

 search area. All minerals except oil, gas, and 

 sulphur would be included. 



-The permittee would be required to pay at least 

 a nominal rental of $50 to $100 per square mile 

 per year for the area held. Main purpose of the 

 rental fee would be to discourage speculative 

 holdings. 



-Permittee would be required to do a minimum 

 amount of work each year and would be required 

 to turn back half the original area at the end of the 

 first year, half the remaining area at the end of the 

 second year, and so on. The minimum work 

 obhgation would increase on a sUding scale each 

 year. The permittee would have the option of 

 turning back the entire remaining parcel at any 

 time. 



VII-117 



