and commercial property at Harbor Bay Isle in Alameda, 205 acres of residential property at Pauma Valley, 688 acres of commercial and residential property at Vandenberg Village, and a 2,000-acre tract of land in Douglas County, Colorado. At July 31, 1976, Utah's investment in improved real estate projects amounted to approximately $4.1 million net of depreciation, and its investment in unimproved properties held for investment or development was approximately $10.2 million. The Harbor Bay Isle property, improvements and related facilities costs are excluded from the above investments. These costs were transferred in 1972 to an investment in a general partnership in which Utah has a 50% interest. In addition to its investment in the partnership, Utah acquired substantially all (approximately $23.5 million principal amount) of the bonds issued by a reclamation district to raise funds for the development of this project. Due to difficulties experienced in obtaining approval to proceed with a feasible program of development, a significant reserve on this bond investment has been provided by Utah. See "Utah Management's Discussion and Analysis of the Statement of Consolidated IncomeOther Comments." Competitive Conditions The competitive aspects of Utah's operations vary considerably with the type of activity and contractual arrangements. With respect to mining activities, the marketing of minerals is influenced by the location, product mix, price, accessibility of competitors' mines, and general economic conditions. Indirectly, operations can be affected by the eventual market for the finished products produced from the raw materials furnished by Utah. Uranium concentrate is sold to public utilities and to companies fabricating nuclear fuel elements; domestic iron ore sales are made principally to one company, and domestic coal sales are tied to long-term contracts with electric utilities. Coking coal sales from Queensland, Australia, are made under long-term contracts to Japanese and European steel mills and other industrial consumers and on a spot sale basis. The shipments of iron ore from Australia are governed by purchase contracts of varying periods. The sale of copper concentrates does not normally fall into a fixed price long-term pattern; the price usually fluctuates depending upon London Metal Exchange quotations prevailing at the time of delivery or upon prices being paid by domestic smelters. A substantial portion of Utah's gross revenues from operations results from sales to Japanese and European companies under long-term sales agreements. Domestic oil must compete with imported oil, and oil and gas must compete with coal, atomic energy, hydroelectric power and other forms of energy. These factors have at times tended to depress prices in the oil and gas industry. Employee Relations As of April 1, 1976, Utah had approximately 5,500 employees. Approximately 56% and 43% were employed in North America and Australia, respectively. In North America, 66% of the employees are represented for collective bargaining by unions. The International Union of Operating Engineers represents nearly all of the employees at the Island Copper, Navajo and Craig mines, and the United Steelworkers of America represents employees at the Lucky Mc and Shirley Basin mines. Labor agreements were negotiated at each of such mines during 1976; the Island Copper agreements expire in April 1978 and the remainder expire in 1979. Cedar City employees are represented by the International Union of Operating Engineers, the Laborers International Union of North America, and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America under one combined agreement which will terminate in August 1977. In Australia, 75% of the employees at the mines are represented by the Combined Mining Unions. Over the years, Utah has experienced brief, intermittent work stoppages by its union employees in Australia. In June 1975, the unions imposed bans on overtime (work beyond a 35-hour week) and on the employment of new labor and on August 26, 1975, Utah, in keeping with similar action by other coal mining companies, elected to suspend the union employees at the Goonyella, Peak Downs and Saraji mines until such time as the unions lifted the bans. Operations were continued on a restricted basis at the Blackwater mine. After a work stoppage of approximately three weeks, employees at Utah's mines agreed to return to work under the provisions of a decision handed down by the Australian government's Coal Industry Tribunal effecting an industry-wide settlement. The settlement included the lifting of all bans on overtime and new labor and at the same time provided for wage increases. Environmental Matters 63 Laws and regulations currently in force which do or may concern Utah's domestic operations include the Federal Water Pollution Control Act Amendments of 1972 and regulations thereunder, the Clean Air Act of 1970 and regulations thereunder, the Federal Coal Mine Health and Safety Act of 1969 and regulations thereunder, the Federal Metal and Nonmetallic Mine Safety Act and regulations thereunder, the Atomic Energy Act of 1954, as amended, and regulations thereunder (as they relate to protection against radiation), the environmental protection regulations of various governmental agencies (e.g., U. S. Forest Service regulations governing mineral activities in national forests, the U. S. Geological Survey regulations promoting operating practices which will avoid, minimize or correct damage to the environment and Bureau of Land Management Surface Protection Regulations), and various state laws and regulations concerned with mining techniques, reclamation of mined lands, air and water pollution, and solid waste disposal. Certain legislation may indirectly affect Utah's operations. For example, implementation of the Clean Air Act could affect Utah's operations and earnings by causing Utah's coal customers to curtail their operations. Moreover, in implementing the National Environmental Policy Act of 1969, certain Federal agencies have required the preparation of environmental studies. Federal agencies could, pursuant to such Act and consistent with their legislative authority, require Utah to undertake certain environmental protection measures prior to commencing or continuing certain of its operations. Proposed regulations, and legislation that has been or may be reintroduced in Congress, could also directly affect Utah's operations or its ability to develop certain of its reserves. These include proposed surface coal mine legislation and the Bureau of Land Management Organic Act. Costs of mining may increase in response to environmental concerns, but since much existing law is still in the process of being implemented, it is impossible to predict its ultimate impact on Utah's operations. Costs for domestic environmental controls (including costs of compliance with the legislation and related regulations mentioned above) for the year ended October 31, 1975 and the nine months ended July 31, 1976 were as follows: Year Ended October 31, 1975 Nine Months Ended July 31, 1976 Charged to Charged to Capital Costs and Capital Costs and Additions Expenses Additions Expenses Occupational health and safety........................... $ 316,000 $ 857,000 $622,000 $ 585,000 Land reclamation................................................. 937,000 1,231,000 151,000 1,153,000 Environmental control and monitoring.............. 902,000 526,000 4,000 672,000 Total...................................................... $2,155,000 $2,614,000 $777,000 $2,410,000 Utah expects to be able to comply with all existing environmental laws and regulations and expects to recover a substantial portion of the cost of compliance from its customers; however, no assurance can be given that such recovery will be possible. Utah's environmental policy and standards are consistently applied to its domestic and foreign operations to the extent permitted by local government regulations. Pending Legal Proceedings Uranium BusinessUnited States On October 15, 1976, a complaint was filed in the United States District Court for the Northern District of Illinois by Westinghouse Electric Corporation against Utah and numerous other producers of uranium, both foreign and domestic. The complaint alleges that, in violation of the Sherman Antitrust and Wilson Tariff Acts, the defendants commencing in 1972 conspired to fix and increase the prices of uranium in foreign and domestic commerce, allocated the markets for and curtailed the supply of uranium and refused to sell uranium to certain purchasers, including Westinghouse. The complaint seeks injunctive relief against further violations of the antitrust laws, an injunction requiring producers to sell uranium to Westinghouse at prices previously in effect and treble an unspecified amount of alleged damages. Utah intends vigorously to defend this suit. 62