[House Report 106-1012]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-1012
======================================================================
MINERAL REVENUE PAYMENTS CLARIFICATION ACT OF 2000
_______
October 26, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
[To accompany H.R. 4340]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 4340) to simplify Federal oil and gas revenue
distributions, and for other purposes, having considered the
same, report favorably thereon without amendment and recommend
that the bill do pass.
Purpose of the Bill
The purpose of H.R. 4340 is to simplify federal oil and gas
revenue distributions, and for other purposes.
Background and Need For Legislation
H.R. 4340 would amend the Mineral Leasing Act to change the
method used to calculate amounts paid to States from federal
onshore mineral leasing receipts.
Under the Mineral Leasing Act (30 U.S.C. 181 et seq.) the
federal government has shared half of the rental payments,
royalties and bonus bids received from onshore public domain
mineral leases with the states hosting these leases for oil,
gas, coal, sodium minerals, potash, phosphate and oil shale.
Congress extended this same authority to the Secretary of the
Interior for acquired federal mineral rights by the Act of
August 7, 1947 (30 U.S.C. 351-359). This Act provided that the
receipts from such mineral leases be shared with State and
local governments in the same manner as is prescribed for other
receipts from the lands covered by the lease, which may be more
or less than 50 percent. For example, 75 percent of mineral
receipts on Army Corps of Engineers-acquired lands are returned
to State and local governments. On National Forest lands
acquired under the Weeks Act of 1911, only 25 percent of the
mineral receipts are shared. In addition, under the President's
Reorganization Plan No. 3 of 1946 (establishing the Bureau of
Land Management), the Secretary of the Interior is authorized
to lease minerals under acquired lands which would otherwise be
locatable under the general mining laws, and to distribute the
mineral receipts in the same manner as under the Act of August
7, 1947. Lead mines in the Mark Twain National Forest in
Missouri return significant revenues to the State and local
governments under this authority.
Importantly, under all these authorities, the States'
shares are returned without further action by Congress (i.e.,
the receipts are treated as a permanent appropriation of
funds). Many, if not most, of the States receiving mineral
revenue payments have laws or State constitutional requirements
to dedicate these receipts to educational purposes. States are
able to forecast the amount of receipts to expect by comparison
with other indicators of mineral prices and production levels,
such as severance tax revenues.
For some six decades, the sharing of receipts with the
States was done without respect to the costs of administering
the leasing programs. This was known as ``gross receipts
sharing.'' During the Reagan Administration, the executive
branch proposed a reduction in the permanent appropriation of
the States' share by withholding 75 percent of the federal
government's administrative costs before sharing the receipts.
Congress rejected this diminution and amended the Mineral
Leasing Act to expressly state that the revenue sharing
payments to the States ``shall not be reduced by administrative
or any other costs'' (Public Law 100-203).
Nevertheless, budgetary pressures remained and in the
Department of the Interior and Related Agencies appropriations
bill for fiscal year 1991, Congress ultimately agreed to a
formula where half of the federal government's administrative
costs to administer the Mineral Leasing Act would be deducted
from the revenue stream before apportionment to the States,
thus requiring public lands States to bear one-fourth of the
federal government's cost. This system is known as ``net
receipts sharing.''
For three fiscal years net receipts sharing was enacted as
an annual rider to appropriation laws. States bore the burden
of the federal government's costs based upon a pro rata or
``revenue state share''. This meant that if a State had
generated 35 percent of all onshore mineral revenues to the
U.S. Treasury in one year, then that State would have 35
percent of the federal government's cumulative costs allocated
to it in the sharing formula.
In the 1993 Omnibus Budget Reconciliation Act, net receipts
sharing was made permanent law, but with a somewhat different
methodology. The Minerals Management Service (MMS, the
Department of the Interior agency charged with determining each
State's burden) is now required to calculate federal
administrative actual costs incurred by the Bureau of Land
Management, the U.S. Forest Service and the Minerals Management
Service Royalty Management Program attributable to each State.
This is to determine whether, because of economies of scale, a
State's burden is less than it would be if calculated under the
simple pro rata formula. Each year since enactment of this dual
calculation requirement, the States of Wyoming and New Mexico
have had a lessened net receipts sharing burden than under the
appropriation law riders of Fiscal Years (FY) 1991-1993. For
example, in FY 2000 the burden to Wyoming is $7.4 million
rather than $13.7 million under the revenue state share.
Likewise, New Mexico's FY 2000 burden is $5.5 million, but
would have been $8.1 million under the pro rata formula
methodology utilized initially.
However, the requirement to more equitably allocate the net
receipts sharing burden for each State has proven difficult to
administer. MMS must query two other agencies about their costs
budgeted and spent within each State, and allocate nationwide
overhead costs to each State's Bureau of Land Management, U.S.
Forest Service and the MMS Royalty Management Program
expenditures. Thus while the 1993 methodology is an improvement
in fairness to States, it created an enormous uncertainty in
the federal government's calculations compared to the 1991-1993
period. The Inspector General of the Department of the Interior
audited the net receipts sharing program in 1997 and concluded
that the new system practically guaranteed to cause errors in
the proper allocation of costs to each State receiving
revenues. A return to the 1920-1991 practice of gross receipts
sharing obviates this calculation nightmare for allocating
federal administrative costs fairly.
H.R. 4340 would repeal the current net receipts sharing
formula of the Mineral Leasing Act and return the program to
the gross receipts sharing requirement of the law prior to
1991. The result of this repeal is that States will receive
approximately $20.5 million more annually, which monies most
public land States dedicate for educational purposes.
Committee Action
Congressman Tom Udall (D-NM) introduced H.R. 4340 on April
13, 2000. The bill was referred to the Committee on Resources
and within the Committee to the Subcommittee on Energy and
Mineral Resources. On June 15, 2000, the Subcommittee held a
hearing on the bill, hearing from witnesses from State
governments, as well as from the Deputy Assistant Secretary of
the Interior for Land and Minerals. On July 19, 2000, the
Resources Committee met to consider the bill. The Subcommittee
on Energy and Mineral Resources was discharged from further
consideration of the bill by unanimous consent. No amendments
were offered and the bill was ordered favorably reported to the
House of Representatives by unanimous consent.
Committee Oversight Findings and Recommendations
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Resources' oversight findings and recommendations
are reflected in the body of this report.
Constitutional Authority Statement
Article I, section 8 of the Constitution of the United
States grants Congress the authority to enact this bill.
Compliance With House Rule XIII
1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(3)(B)
of that rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974.
2. Congressional Budget Act. As required by clause 3(c)(2)
of rule XIII of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, this
bill does not contain any new budget authority, credit
authority, or an increase or decrease in tax expenditures.
According to the Congressional Budget Office, enactment of this
bill would increase direct spending over the 2001-2005 time
period.
3. Government Reform Oversight Findings. Under clause
3(c)(4) of rule XIII of the Rules of the House of
Representatives, the Committee has received no report of
oversight findings and recommendations from the Committee on
Government Reform on this bill.
4. Congressional Budget Office Cost Estimate. Under clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 403 of the Congressional Budget Act
of 1974, the Committee has received the following cost estimate
for this bill from the Director of the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 8, 2000.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: the Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4340, the Mineral
Revenue Payments Clarification Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Megan
Carroll.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 4340--Mineral Revenue Payments Clarification Act of 2000
Summary: H.R. 4340 would amend the Mineral Leasing Act to
change the method used to calculate amounts paid to states from
federal onshore mineral leasing receipts. CBO estimates that
enacting this bill would increase direct spending by about $111
million over the 2001-2005 period. Because the bill would
affect direct spending, pay-as-you-go procedures would apply.
Implementing H.R. 4340 also could affect discretionary
spending, but we estimate that any such impacts would be less
than $100,000 annually.
H.R. 4340 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Enactment of this legislation would benefit state and local
governments by increasing the share of federal mineral revenues
paid to the states.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 4340 is shown in the following table.
The costs of this legislation fall within budget function 800
(general government).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2001 2002 2003 2004 2005
------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING \1\
Payments to States, under
current law:
Estimated budget authority.. 617 624 620 612 629
Estimated outlays.......... 617 624 620 612 629
Proposed changes:
Estimated budget authority. 21 22 22 23 23
Estimated outlays.......... 21 22 22 23 23
Payments to States under H.R.
4340:
Estimated budget authority.. 638 646 642 635 652
Estimated outlays.......... 638 646 642 635 652
------------------------------------------------------------------------
\1\ H.R. 4340 also could affect discretionary spending, but by less than
$100,000 a year.
Basis of Estimate: For this estimate, CBO assumes that
H.R. 4340 will be enacted near the start of fiscal year 2001.
Changes in Direct Spending: Under current law, a portion
of the federal government's annual costs to administer onshore
mineral leasing programs is deducted from gross onshore mineral
receipts prior to making payments to states in the following
year. States receive 50 percent of those net receipts, except
Alaska, which receives 90 percent of net onshore mineral
receipts generated in that state. H.R. 4340 would amend current
law so that no federal administrative costs would be deducted
from gross onshore mineral receipts before making payments to
states.
According to the Minerals Management Service (MMS), the
agency responsible for calculating these payments to states,
about $21 million--18 percent of federal administrative costs
for the onshore minerals management program incurred during
1999--will be deducted from payments made to states for fiscal
year 2000. Under this bill, such deductions would no longer be
made. As a result, based on information from the MMS, CBO
estimates that enacting H.R. 4340 would increase direct
spending for payments to states by $21 million in 2001 and by
$111 million over the 2001-2005 period. That estimate assumes
that federal costs for administering onshore mineral leasing
will continue to be about $117 million a year (adjusted
annually for inflation) and that, under current law, payments
to states would be reduced by 18 percent of those
administrative costs.
Changes in Discretionary Spending: By changing the formula
for calculating payments to states, this legislation could
affect administrative costs for the MMS. Based on information
from the agency, however, we estimate that any changes in
discretionary spending to calculate payments to states would be
less than $100,000 a year.
Pay-As-You-Go Considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. Because
H.R. 4340 would increase direct spending for certain payments
to states, pay-as-you-go procedures would apply. The net change
in outlays that are subject to pay-as-you-go procedures is
shown in the following table. For the purposes of enforcing
pay-as-you-go procedures, only the effects in the current year,
the budget year, and the succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
---------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................ 21 22 22 23 23 24 24 25 26 26
Changes in receipts....................... Not applicable
----------------------------------------------------------------------------------------------------------------
Estimated Impact on State, Local, and Tribal Governments:
H.R. 4340 contains no intergovernmental mandates as defined in
UMRA. Enactment of this legislation would benefit state and
local governments by increasing the share of federal mineral
revenues paid to the states.
Estimated Impact on the Private Sector: This bill contains
no new private-sector mandates as defined in UMRA.
Estimate Prepared by: Federal Costs: Megan Carroll. Impact
on State, Local, and Tribal Governments: Marjorie Miller.
Impact on the Private Sector: Sarah Sitarek.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
Compliance With Public Law 104-4
This bill contains no unfunded mandates.
Preemption of State, Local or Tribal Law
This bill is not intended to preempt any State, local or
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 35 OF THE MINERAL LEASING ACT
Sec. 35. (a) * * *
[(b)(1) In calculating the amount to be paid to States during
any fiscal year under this section or under any other provision
of law requiring payment to a State of any revenues derived
from the leasing of any onshore lands or interest in land owned
by the United States for the production of the same types of
minerals leasable under this Act or of geothermal steam, 50
percent of the portion of the enacted appropriation of the
Department of the Interior and any other agency during the
preceding fiscal year allocable to the administration of all
laws providing for the leasing of any onshore lands or interest
in land owned by the United States for the production of the
same types of minerals leasable under this Act or of geothermal
steam, and to enforcement of such laws, shall be deducted from
the receipts derived under those laws in approximately equal
amounts each month (subject to paragraph (4)) prior to the
division and distribution of such receipts between the States
and the United States.
[(2) The proportion of the deduction provided in paragraph
(1) allocable to each State shall be determined by dividing the
monies disbursed to the State during the preceding fiscal year
derived from onshore mineral leasing referred to in paragraph
(1) in that State by the total money disbursed to States during
the preceding fiscal year from such onshore mineral leasing in
all States.
[(3) In the event the deduction apportioned to any State
under this subsection exceeds 50 percent of the Secretary of
the Interior's estimate of the amounts attributable to onshore
mineral leasing referred to in paragraph (1) within that State
during the preceding fiscal year, the deduction from receipts
received from leases in that State shall be limited to such
estimated amounts and the total amount to be deducted from such
onshore mineral leasing receipts shall be reduced accordingly.
[(4) If the amount otherwise deductible under this subsection
in any month from the portion of receipts to be distributed to
a State exceeds the amount payable to the State during that
month, any amount exceeding the amount payable shall be carried
forward and deducted from amounts payable to the State in
subsequent months. If any amount remains to be carried forward
at the end of the fiscal year, such amount shall not be
deducted from any disbursements in any subsequent fiscal year.
[(5) All deductions to be made pursuant to this subsection
shall be made in full during the fiscal year in which such
deductions were incurred.]
(b) In determining the amount of payments to the States under
this section, the amount of such payments shall not be reduced
by any administrative or other costs incurred by the United
States.