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Congressional Testimony
June 15, 2000, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1720 words
HEADLINE:
TESTIMONY June 15, 2000 BARBARA CUBIN REPRESENTATIVE HOUSE
resources FISHERIES, WILDLIFE AND OCEANS WILDLIFE REFUGEE SYSTEM AWARENESS
BODY:
Opening Statement of The Honorable Barbara
Cubin Chairman, Subcommittee on Energy & Mineral Resources Legislative
Hearing on H.R. 4340 (Udall of NM) - Mineral Revenue Payments Clarification Act
of 2000 S. 1030 (Enzi) - 60 Bar Ranch Land Exchange June 15, 2000 The
Subcommittee on Energy and Minerals meets today to take testimony on two brief
bills: H.R. 4340, the Mineral Revenue Payments Clarification Act of 2000
introduced by our full committee colleague from New Mexico, Mr. Tom Udall,
joined in by his delegation-mate, Mr. Joe Skeen and by myself. Secondly we will
have an Administration statement introduced concerning S. 1030, a land exchange
bill introduced by Senator Enzi of Wyoming. This bill would facilitate an
exchange of private surface with federal surface in Campbell and Johnson
Counties, Wyoming, with a reservation of mineral interests on both acquired and
conveyed lands. Mr. Udall's bill, H.R. 4340, seeks to restore the manner in
which the states and the federal government shared receipts from mineral leases
- royalties, rents and bonus bids - from the inception of the initial leasing
law in 1920 until 1991. That system simply divided the revenues based upon the
"gross receipts" received. That is, there was no deduction of federal costs to
administer mineral leasing. Thus, for public domain leases, the state hosting
the lease would receive half of whatever monies were generated from the lease.
(On certain acquired federal mineral estates the sharing was by different ratio,
less to the State on Weeks Act-acquired National Forest lands, but more on U.S.
Army Corps of Engineers-acquired projects.) . Rising budgetary pressures during
the 1980's prompted President Reagan to advance the idea of deducting a portion
of the federal government's administrative costs to run the leasing program
before sharing the remainder in the same manner as before. This became known as
"net receipts sharing." In 1987 the 100th Congress firmly rebuked this notion
and expressly amended the Mineral Leasing Act to prevent net receipts sharing. I
was not a Member of Congress then, nor was the lead sponsor, Mr. Udall, but his
uncle, Rep. Mo Udall, chaired the full committee at that time and I have to
believe he fully supported that bar to net receipts sharing in law. In 1991,
however, the tide turned, and the 102nd Congress added a "rider" to the Interior
appropriations bill directing that one- half of the federal administrative costs
be deducted from the receipts before they are divided with the states. As such,
public land states began to bear one- fourth of the fed's budget for these
activities. (In Alaska, the burden was higher, 45%, because that state is to
receive 90% of federal mineral lease revenues.) Now, the question is, did this
new burden upon state government come with an increased role in public lands
minerals management as a quidpro quo for the reduction of funds which most
states dedicate to education purposes? Well, none that I can find. In fact, an
objective observer of the current federal management style may well conclude
state and local governments have far less of a say in the way in which the feds
decide to lease or not to lease their mineral rights. Perhaps the best example
of this was President Clinton's set aside of the Escalante-Grand Staircase
National Monument in southern Utah in 1996. Neither the governor, nor the
Congressional delegation - and certainly not the local counties - were consulted
one bit before that decision to use his Antiquities Act authority. The public
lands were set aside in large measure because of the perceived threat of a
proposed coal mine and oil and gas drilling. Had these projects gone ahead, the
State of Utah would have received half the net receipts." Additionally, many
school sections were included within the boundary, although they have since been
exchanged out in a deal with the Governor. I raise this example to highlight an
additional inequity of the net receipts sharing law. When the BLM set about to
create a general management plan for the new monument, it needed to use funds
from all the various budget categories, including coal and oil & gas
leasing. My understanding is that each year the plan was in development the BLM
minerals program kicked in some $150,000 as its "share." Thus, Utah school
children (and there are a lot of them I'm told) were denied some $37,500 per
year as their "share" of the feds costs to begin to manage an area which
everyone in the country understood would not generate one dime in mineral
revenue ever again! How fair is that? A few years ago, the Inspector General of
the Interior Department set about auditing the costs which the Bureau of Land
Management, the U.S. Forest Service, and the Minerals Management Service say
they bear in the administration of mineral leasing programs. And the IG said,
basically, this system is a mess. The net receipts sharing law requires these
agencies to sum up - state by state since 1993 - the expenditures made in a
fiscal year so that in the following year the states' half share of revenues is
reduced to reflect these costs. But, the appropriations and budgeting process is
not conducive to this calculation. Bottom line? The IG said the audit process is
nearly impossible., and that several states likely had their half share of
receipts reduced by more than the net receipts law allows. Senator Bingaman of
New Mexico introduced S. 1997 last year and Messrs. Udall, Skeen and myself a
House version this year. We think its time to turn back the clock to the 1987
era when Congress affirmed that mineral revenues were to be shared without cost
deduction. Since, 1991, the states cumulatively have paid a quarter billion
dollars (yes, billion with a "B") of the fed's costs without any say in how
those costs are incurred. And the primary target of this change in law is our
school kids. If the net receipts law were a direct reduction of this magnitude
on education spending many Members would be outraged. But because of the stealth
nature of the reduction, and the fact that western states bear lion's share of
the burden, it has been difficult to win sympathy to repeal net receipts
sharing. Perhaps we can do so this year, as the House of Representatives has
shown a willingness to pass other bills, such as the Conservation and
Reinvestment Act, to restore the "promise" made to the states to share
outer continental shelf oil and gas revenues for Land & Water Conservation
Fund purposes. I believe the 66' Congress promised to share mineral leasing
revenue with the states which host these mineral deposits, and for seven decades
the federal government did so in a fair manner. After a decade of net receipts
sharing and the burden it has placed on our states, its time to return to the
simple to calculate, simple to audit, gross receipts sharing which served us
well.
LOAD-DATE: June 26, 2000, Monday
