    [Senate Hearing 114-368]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-368

               S. 2031, THE AMERICAN SODA ASH COMPETITIVENESS ACT

    =======================================================================

                                     HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

                                     OF THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 1, 2015

                                   __________

                           Printed for the use of the
                   Committee on Energy and Natural Resources

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             Available via the World Wide Web: http://www.fdsys.gov

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                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       BERNARD SANDERS, Vermont
    JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
    STEVE DAINES, Montana                AL FRANKEN, Minnesota
    BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
    JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
    SHELLY MOORE CAPITO, West Virginia

               Subcommittee on Public Lands, Forests, and Mining

                            JOHN BARRASSO, Chairman
    SHELLEY MOORE CAPITO                 RON WYDEN
    JAMES E. RISCH                       DEBBIE STABENOW
    MIKE LEE                             AL FRANKEN
    STEVE DAINES                         JOE MANCHIN III
    BILL CASSIDY                         MARTIN HEINRICH
    CORY GARDNER                         MAZIE K. HIRONO
    JOHN HOEVEN                          ELIZABETH WARREN
    JEFF FLAKE
    LAMAR ALEXANDER

                        Karen K. Billups, Staff Director
                    Patrick J. McCormick III, Chief Counsel
                             Heidi Hansen, Counsel
               Angela Becker-Dippmann, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
               Spencer Gray, Democratic Professional Staff Member

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Barrasso, Hon. John, Chairman, and a U.S. Senator from Wyoming...     1

                                    WITNESS

    Leiter, Amanda, Deputy Assistant Secretary, Land & Minerals
      Management, U.S. Department of the Interior....................     7
    Douville, Christopher, President, American Natural Soda Ash
      Corporation (ANSAC)............................................    11
    Finn, Rick, Federal Affairs Manager, Port of Portland (Oregon)...    22
    von Ahrens, Fred, Vice President, Manufacturing, Tronox Alkali...    26

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    American Natural Soda Ash Corporation (ANSAC):
        China: Importance of VAT Rebate Elimination for U.S. Soda Ash
          Exports dated April 7, 2009................................   104
        About ANSAC and the U.S. Soda Ash Industry...................   108
        Letter to Hon. Ron Kirk, U.S. Trade Representative, dated
          April 15, 2009.............................................   109
        Letter to Hon. Hillary Clinton, Secretary of State, and Hon.
          Timothy Geitner, Secretary of the Treasury, dated July 17,
          2009.......................................................   111
        Letter to Hon. Timothy Geithner, Secretary of the Treasury,
          dated October 1, 2010......................................   112
        Letter to Hon. Ron Kirk, U.S. Trade Representative, date
          April 2, 2012..............................................   115
        Letter to Ms. Claire Reade, Assistant U.S. Trade
          Representative for China Affairs, Office of the U.S. Trade
          Representative, and Mr. Craig Allen, Deputy Assistant
          Secretary for Asia, U.S. Department of Commerce dated
          August 21, 2013............................................   117
    Barrasso, Hon. John:
        Opening Statement............................................     1
        CNBC article dated September 16, 2105 entitled ``Why China's
          yuan may be set for 15% devaluation'' by Dhara Ranasinghe..     3
        Wall Street Journal article dated September 30, 2015 entitled
          ``Export Weakness Hampers Growth''.........................     6
    Beer Institute:
        Letter for the Record........................................   139
    Congress of the United States Letters to:
        Hon. Ron Kirk, U.S. Trade Representative, dated May 5, 2009..   119
        Hon. Hillary Clinton, Secretary of State, dated July 16, 2009   121
        Hon. Ron Kirk, U.S. Trade Representative, dated January 28,
          2010.......................................................   123
        Letter to Hon. Gary Locke, Secretary of Commerce, and Hon.
          Ron Kirk, U.S. Trade Representative dated May 31, 2011.....   125
        Hon. Jacob Lew, Secretary, Department of the Treasury, dated
          February 25, 2015..........................................   127
    Douville, Christopher:
        Opening Statement............................................    11
        Industrial Minerals article dated September 2015 entitled
          ``Chinese Soda Ash: Mission Creep''........................    13
        Written Testimony............................................    17
        Responses to Questions for the Record........................   147
    Finn, Rick:
        Opening Statement............................................    22
        Written Testimony............................................    24
        Responses to Questions for the Record........................   162
    Freudenthal, Hon. David:
        Letter for the Record........................................   133
    Glass Packaging Institute:
        Letter for the Record........................................   137
    International Longshore & Warehouse Union:
        Letter for the Record........................................   163
    Leiter, Amanda:
        Opening Statement............................................     7
        Written Testimony............................................     9
        Responses to Questions for the Record........................   145
    Mead, Hon. Matthew:
        Letter for the Record........................................   132
    Natural Soda LLC:
        Statement for the Record.....................................   135
    S. 2031, the American Soda Ash Competitiveness Act:..............   143
    Union Pacific Railroad:
        Letter for the Record........................................   140
    United Steelworkers:
        Letter for the Record........................................   164
    von Ahrens, Fred:
        Opening Statement............................................    26
        IMA-NA Soda Ash Life Cycle Assessment........................    27
        Written Testimony............................................    95
    Wyden, Hon. Ron:
        Statement for the Record.....................................   165

     S. 2031, THE AMERICAN SODA ASH COMPETITIVENESS ACT, A BILL TO REDUCE
      TEMPORARILY THE ROYALTY REQUIRED TO BE PAID FOR SODIUM PRODUCED ON
                     FEDERAL LANDS, AND FOR OTHER PURPOSES

                                  ----------

                           Thursday, October 1, 2015

    U.S. Senate Subcommittee on Public Lands, Forests,
                                             and Mining
              Committee on Energy and Natural Resources
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:40 p.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. John
    Barrasso, Chairman of the Subcommittee, presiding.

      OPENING STATEMENT OF HON. JOHN BARRASSO, U.S. SENATOR FROM
                                WYOMING

        Senator Barrasso. The Committee will come to order. Senator
    Wyden is unavoidably detained.
        This afternoon the Subcommittee on Public Lands, Forests,
    and Mining will hold a hearing on S. 2031, the American Soda
    Ash Competitiveness Act.
        Last month the Subcommittee's Ranking Member, Senator
    Wyden, and I introduced this bipartisan legislation along with
    Senators Enzi and Merkley. The purpose of our bill is to help
    America's natural soda ash producers compete in the global
    market. Natural soda ash is also known as sodium carbonate. It
    is the raw material used to manufacture glass, chemicals and
    other industrial goods.
        Natural soda ash is produced from Trona, a mineral found in
    high concentrations primarily in California and Wyoming. The
    production of soda ash supports thousands of jobs across the
    country in a variety of industries including mining, shipping
    and manufacturing. In my home State of Wyoming, soda ash
    production directly employs over 2,300 people.
        In 2014, the United States exported nearly 58 percent of
    all soda ash produced for a total of $1.3 billion. Last year
    soda ash was our nation's second largest inorganic chemical
    export. Soda ash exports help reduce America's trade deficit
    and grow our nation's economy, but we must not assume that soda
    ash exports will increase. America's soda ash producers
    continue to battle unfair trade practices imposed by other
    nations.
        For example, China has aggressively moved to help its
    synthetic soda ash producers capture market share from
    America's soda ash producers. Since 2009, China has given its
    synthetic soda ash producers a nine-percent rebate on China's
    value-added tax, its V-A-T, it is VAT. More recently China
    devalued its currency, the Yuan, by 4.4 percent to boost
    exports.
        It is estimated that China's value added tax rebate and
    currency devaluations give soda ash and China producers roughly
    a $27 per metric ton benefit. This unfair benefit is only
    expected to grow over the next year.
        CNBC reported recently that China may devalue its currency
    by a total of 15 to 20 percent by the end of 2016.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        CNBC cited a source that said, ``Engineering a devaluation
    of this magnitude would not be easy.'' However, they talk about
    the People's Bank of China, ``has the mechanism to achieve a
    creeping devaluation and maintain the appearance of it being
    market led.''
        This report and China's track record on currency
    devaluation make me very skeptical and suspicious of any
    communications or any commitments that China's president
    allegedly made last week. China's unfair trade practices
    threaten America's soda ash producers, and it is important that
    Congress respond.
        That is why we have introduced the American Soda Ash
    Competitiveness Act. Our bipartisan bill will help level the
    playing field for America's soda ash producers. Specifically,
    our bill maintains a competitive royalty rate for soda ash
    produced from Federal land.
        Tomorrow the Bureau of Land Management, the BLM, is
    expected to increase the royalty rate on soda ash. I strongly
    disagree with this decision. The Administration should not
    raise costs on America's soda ash producers without first
    ensuring that China and other countries scrap their unfair
    trade practices.
        So I want to thank Senator Wyden for his support of this
    bipartisan legislation. Senator Wyden knows the importance of
    the soda ash industry to Oregon, Wyoming and communities
    throughout the country. He also knows that America's natural
    soda ash has a significantly lower environmental impact when
    compared to China's synthetic soda ash.
        I also want to thank Senators Enzi and Merkley for their
    support of this bill.
        On July 29th, the House Natural Resources Committee
    approved identical legislation on a bipartisan vote. I will
    encourage members of this Committee to advance our legislation
    as quickly as possible.
        I would also like to point out a front page story in
    yesterday's Wall Street Journal entitled, ``Export Weakness
    Hampers Growth.'' According to the study, hopes for an American
    export boom are wilting. U.S. exports are on track to decline
    this year for the first time since the financial crisis,
    undermining a national push to boost shipments abroad. The
    article goes on to say that the weak trade performance is
    restraining overall economic growth. The article also discusses
    the challenges that Portland, Oregon has faced in trying to
    increase its exports.
        I will enter this article in today's hearing record.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. As we await other members of the
    Committee, we will hear at this time from our witnesses.
        Joining us this afternoon is Ms. Amanda Leiter, Deputy
    Assistant Secretary for Land and Minerals Management at the
    Department of Interior. Thank you for being with us. Mr. Chris
    Douville, who is the President of ANSAC, the American Natural
    Soda Ash Corporation. Mr. Rick Finn, Federal Affairs Manager
    for the Port of Portland. And Fred von Ahrens, who is Vice
    President of Manufacturing for Tronox, who came here from Green
    River, Wyoming today.
        Welcome to all of you. I look forward to your testimony.
        Ms. Leiter, let's start with you.

    STATEMENT OF AMANDA LEITER, DEPUTY ASSISTANT SECRETARY, LAND &
          MINERALS MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR

        Ms. Leiter. Chairman Barrasso, absent members of the
    Committee, thank you for the opportunity to testify on S. 2031,
    the American Soda Ash Competitiveness Act.
        As you just stated this bill would reinstate for five years
    the soda ash royalty rate reduction enacted in 2006 that
    expired in October 2011.
        The Department of the Interior cannot support S. 2031
    because the act would not provide a fair return to the American
    public, and the economic evidence from 2006 to 2011 does not
    indicate that this sort of royalty reductions substantially
    increases soda ash production, jobs or exports.
        As you noted, soda ash is a key ingredient in many products
    including glass, detergents and baking soda. It is refined from
    the mineral Trona or it can be manufactured synthetically. The
    United States is a leading producer of soda ash with the
    world's largest natural deposit of Trona in Southwestern
    Wyoming.
        As of Fiscal Year 2014, there were 78 Federal sodium leases
    spanning nearly 99,000 acres across five states, Wyoming,
    California, Colorado, Arizona and New Mexico. Fifty-five of the
    leases were in Wyoming.
        The soda ash industry contributes substantially to U.S.
    gross domestic product. In 2014, the total value of the
    domestic soda ash produced was about $1.7 billion and the
    industry directly supplied 2,500 jobs.
        S. 2031 would reinstate the two-percent royalty rate
    established by the Soda Ash Royalty Reduction Act of 2006,
    which expired in October 2011. From October 2011 to October
    2013, royalty rates returned to the rates set in each
    individual lease. In 2013, the Helium Stewardship Act included
    a provision that, again, waived lease terms and set a four-
    percent royalty rate for two years, and that provision expires
    today.
        As mandated by the 2006 act, the BLM reported to Congress
    on the impact of the royalty reduction between 2006 and 2011.
    That 2011 report found that the 2006 act resulted in a
    substantial loss of royalty revenues to the Federal Government,
    $150 million, far exceeding congressional estimates from 2006.
        The BLM also found that the rate reduction did not appear
    to have significantly contributed to the creation of new jobs
    in the industry nor to have created, excuse me, nor to have
    increased exports nor to have notably increased the industry's
    capital expenditures to enhance production.
        The report did find that a significant amount of production
    had shifted from state and private leases on to Federal leases.
        As a steward of America's public lands, the Department of
    the Interior takes seriously our responsibility to receive a
    fair return for the mineral resources we manage on behalf of
    the American people. S. 2031 would waive the requirements of
    the Federal Land Policy and Management Act of 1976 which states
    that it is United States' policy to receive fair market value
    for the use of public lands and resources.
        In a 1996 study, the BLM found that in Wyoming's Green
    River Basin the soda ash royalty rate was eight percent on most
    private lands and five percent on state lands. As a result of
    the study the BLM determined that the fair market value royalty
    rate for all then existing Federal leases in Wyoming would be
    increased from five to six percent, and the royalty rate on all
    new leases in Wyoming would be eight percent. We have no reason
    to believe that state and private royalty rates have changed
    from five and eight percent, respectively.
        In Fiscal Year 2014 under the Helium Stewardship Act four
    percent rate, the soda ash industry paid almost $42 million in
    royalty for production from Federal lands. If the royalty rate
    had been just two percent during Fiscal Year 2014, the royalty
    revenue for that year would have been 50 percent lower
    representing a loss of $21 million to Federal and State
    taxpayers.
        Current United States Geological Survey data indicate that
    the soda ash industry has increased production, exports and job
    numbers over the last four years regardless of the changing
    royalty rate. These data provide no economic justification for
    a rate reduction.
        For these reasons, and especially because S. 2031 would not
    provide a fair return for the use of public resources, the
    Department of the Interior cannot support this bill.
        Mr. Chairman, thank you for the opportunity to testify
    today. I'd be happy to answer any questions.
        [The prepared statement of Ms. Leiter follows:]

        Senator Barrasso. Thank you very much, Ms. Leiter, I
    appreciate your testimony.
        As I mentioned earlier, Senator Wyden is unavoidably
    detained. Breaking news out of Oregon is there has been a
    shooting, with ten people killed, and as many as 20 others
    injured at a community college. I know that Senator Wyden has
    other pressing issues affecting him.
        Mr. Douville, if you could please give your testimony.

    STATEMENT OF CHRISTOPHER DOUVILLE, PRESIDENT, AMERICAN NATURAL
                      SODA ASH CORPORATION (ANSAC)

        Mr. Douville. Chairman Barrasso, thank you for the
    opportunity to testify on S. 2031, the American Soda Ash
    Competitiveness Act. I am Chris Douville, President of ANSAC,
    which is the world's largest soda ash exporter.
        ANSAC was established in 1984 as the export arm of the U.S.
    national soda ash industry. We handle the sales, marketing and
    logistics operation in global export territories for three
    leading producers of soda ash in the United States, Tronox,
    Tata Chemicals and OCI.
        I join my industry colleagues today in voicing support for
    this legislation. With U.S. soda ash exports facing the
    combined headwinds of a shaky global economy and increasingly
    aggressive foreign competition, a reduction of the royalty rate
    is needed now more than ever.
        I would like to highlight several issues as you consider
    this legislation. First, the U.S. soda ash industry, thanks in
    part to previous royalty reductions, has increasingly expanded
    exports. Second, U.S. natural soda ash is facing growing
    competition in developing countries from China's synthetic soda
    ash. Third, the outlook for exports is expected to worsen in
    the year ahead as global soda ash demand growth in emerging
    markets is in decline.
        From the perspective of ANSAC enactment of this legislation
    is absolutely critical to maintain U.S. jobs and export
    competitiveness. At the quantities of 6.7 million metric tons,
    valued at $1.3 billion in 2014, U.S. natural soda ash exports
    have directly contributed to thousands of high paying, U.S.
    jobs and served to put a dent in the U.S. trade deficit. In
    2014, 58 percent of U.S. natural soda ash production was
    exported compared to 42 percent in 2005, the year before the
    royalty rate was first reduced. Thus, the royalty rate
    reduction has greatly helped to support additional export
    growth.
        The U.S. is not only the leading soda ash export in the
    world, it is also the most efficient and environmentally
    friendly. U.S. natural soda ash consumes far less energy and
    produces fewer global greenhouse gas emissions on a delivered
    basis than synthetic soda ash. Despite the efficiency and
    environmental advantages of U.S. natural soda ash production,
    China has overtaken the United States as the world's largest
    soda ash producer, now making 115 percent more soda ash than
    the U.S.
        The percentage of Chinese soda ash exports is on the rise
    as evidenced by the September 2015 Industrial Minerals article
    titled, ``Chinese Soda Ash Mission Creep,'' which I would like
    to submit for the record.
        Senator Barrasso. Without objection.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Douville. China's domestic demand growth has fallen to
    its lowest level since 2009. As Chinese producers seek an
    outlet for their excessive annual production capacity, we
    forecast the Chinese exports could increase 22 percent in 2015.
        Since 2009, China has promoted the export of soda ash by
    offering its producers a nine-percent rebate of the country's
    17 percent VAT on their exports. More recently, the
    government's 4.4 percent devaluation of China's currency in
    August 2015 has provided Chinese soda ash producers with an
    additional price advantage. Together the VAT rebate and
    currency devaluation give Chinese soda ash exporters a $27 per
    metric ton benefit based on an average export price of $200 per
    metric ton. This equates to approximately $60 million in
    benefit for Chinese exporters.
        Recent media reports, as you've cited, indicate that China
    is considering a further 15 to 20 percent devaluation of its
    currency by the end of 2016. China has reduced export prices by
    $30 to $40 per metric ton in the past six months. Chinese soda
    ash exporters are now prime to take market share from the U.S.
    throughout Asia and beyond.
        China competes directly with U.S. natural soda ash in Asian
    markets where U.S. exports have grown in recent years.
    Unfortunately, China enjoys preferential access to markets such
    as Vietnam, Taiwan, Pakistan and the Philippines. U.S. natural
    soda ash faces tariffs in all these countries, but China has
    none due to regional free trade agreements. Adding to industry
    concerns is the fact that demand for soda ash has weakened in
    key markets in Asia and Latin America.
        If China continues to benefit from unfair trade practices,
    economic growth is stalled in many emerging economies. Glass
    production, especially for the use in construction in
    automotive markets, is expected to decline. The consequences
    are likely to be felt by U.S. soda ash exporters.
        The last time there was a decline of U.S. soda ash exports
    was in 2009, a result of the global recession. At that time,
    the two-percent royalty rate on soda ash was the key to our
    competitiveness and helped to ensure that U.S. exports could
    rebound quickly.
        Mr. Chairman, now more than ever a royalty policy that
    factors in the competitiveness of U.S. soda ash exports is
    needed. The current convergence of an increasingly aggressive
    government supported competition from China combined with a
    weak outlook for foreign demand poses a high risk for U.S. soda
    ash exports. If we are not careful, a bright spot on the U.S.
    economy, the $1.3 billion soda ash trade surplus, is in
    jeopardy.
        Thank you very much for the opportunity to provide our
    views and we urge your support of S. 2031.
        [The prepared statement of Mr. Douville follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you very much, Mr. Douville.
        Mr. Finn?

       STATEMENT OF RICK FINN, FEDERAL AFFAIRS MANAGER, PORT OF
                           PORTLAND (OREGON)

        Mr. Finn. Thank you, Mr. Chairman. The Port of Portland
    appreciates this opportunity to express our support for S.
    2031, the American Soda Ash Competitiveness Act.
        The Port of Portland is a consolidated public port
    authority in Portland, Oregon that owns and operates marine,
    aviation and industrial park facilities. Our marine assets
    consist of four marine terminals on the Willamette and Columbia
    Rivers and a large pipeline dredge. In addition, the Port owns
    and operates Portland International Airport, two general
    aviation airports and several industrial parks.
        Together with several other ports on the Columbia Snake
    River navigation system, the Port of Portland is an export
    gateway for products from the Pacific Northwest and the
    interior of Canada and the United States. Agricultural products
    and mineral products dominate our export trade. And one of the
    most important mineral products that we export is soda ash.
        The Port of Portland has been exporting soda ash since 1987
    when we built a marine terminal dedicated exclusively to the
    handling of this cargo.
        In 2014, 75 ships or about one ship every five days docked
    at the Port of Portland to load soda ash. We exported about 2.8
    million short tons of the product, primarily to Pacific Rim
    countries. In fact, about 40 percent of all soda ash exports
    from the United States whether exported by marine or by land go
    through the Port of Portland, so it obviously comprises a very
    important cargo for us.
        All of the activities associated with receiving soda ash at
    the Port of Portland by rail and then loading on board ships
    generates significant local economic benefits. We estimate that
    about 200 direct, indirect and induced jobs are associated with
    the handling of this cargo. And each of those direct jobs pays
    an average of $50,400.
        I might just add that these are very important blue collar
    jobs with benefits that are available to a variety of people,
    some of whom cannot go to college or for whatever reason,
    choose not to go to college. So it's the very kind of blue
    collar job that the Portland region has historically tried to
    support and cultivate.
        Another important but unquantifiable benefit from the
    handling of soda ash in Portland is that it helps to maintain
    and improve our local, regional, rail network. The Union
    Pacific railroad transports soda ash from Wyoming to Portland.
    And the long haul, steady, reliable nature of this business
    encourages the Union Pacific to invest and improve the regional
    rail network in Portland. As a result other domestic and
    international exporters and importers than have nothing at all
    to do with soda ash benefit from the rail improvements that the
    Union Pacific makes to facilitate its soda ash business.
        So for a variety of reasons, especially the local economic
    benefits that this cargo provides to Portland, the Port of
    Portland is happy to join with our colleagues in the U.S. soda
    ash industry to urge you to support S. 2031.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Finn follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you very much, Mr. Finn.
        Mr. von Ahrens?

     STATEMENT OF FRED VON AHRENS, VICE PRESIDENT, MANUFACTURING,
                             TRONOX ALKALI

        Mr. von Ahrens. Thank you.
        Good afternoon, Chairman Barrasso. My name is Fred von
    Ahrens. I'm the Vice President of Manufacturing for Tronox
    Alkali in Green River, Wyoming. I'm here representing Tronox
    Alkali and the four other U.S. producers of natural soda ash,
    Tata Chemicals, OCI, Solvay, Searles Valley Minerals, in
    support of S. 2031.
        I'm pleased to report that the soda ash industry is the
    country's largest inorganic chemical export by volume
    contributing more than one billion dollars annually to our
    trade balance. Combined, the five U.S. natural soda ash
    producers employ more than 3,000 full time, skilled workers
    with an average salary of more than $122,000. Approximately
    1,000 of these workers are represented by the United Steel
    Workers.
        More than 18,000 indirect jobs are also dependent on the
    U.S. industry including the railroads, glass packaging, window
    manufacturing, the auto industry and port workers in Washington
    State and Oregon, California and Texas. The five companies also
    have corporate offices in Connecticut, New Jersey, Oklahoma,
    Pennsylvania and Texas with a staff totaling more than 500
    employees.
        Recent history has demonstrated that a two-percent Federal
    royalty rate can have positive impacts. First, it fosters
    robust export growth consistent with the President's National
    Export Initiative. Second, it leads to expanded domestic
    manufacturing capacity and job growth. Third, it results in an
    increase rather than a decrease in Federal royalty revenues by
    spurring development of the resource.
        Mr. Chairman, today, approximately 58 percent of our
    production is exported primarily to the Pacific Rim and Latin
    America. The 2006 and 2013 royalty rates enacted by Congress
    came out of recognition that global economic conditions,
    specifically the emergence of subsidized Chinese competition,
    were eroding America's natural soda ash advantage.
        There are two methods of producing soda ash, the natural
    method, utilizing Trona ore employed by the five U.S.
    companies, and a synthetic process. China is the largest
    producer and exporter of the synthetic process. The natural
    process is the more efficient way of making soda ash and has
    significant environmental advantages over the synthetic
    process, which generates a larger carbon footprint and has
    other negative environmental impacts.
        Mr. Chairman, I would like to submit for the record a life
    cycle assessment commissioned by the IMANA that demonstrates
    that U.S. soda ash is better for the world than Chinese
    synthetic soda ash.
        Senator Barrasso. Without objection.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. von Ahrens. Thank you.
        The new synthetic soda ash facilities in countries such as
    India and Vietnam, lack the environmental regulation and the
    associated cost of manufacturing that we have in the United
    States. Emissions from a recently commissioned plant in Vietnam
    have poisoned local waters, resulting in mass fish kills, and
    have lowered air quality to unhealthy levels in surrounding
    communities.
        Mr. Chairman, from 1996 to 2006 and 2011 to 2013 when the
    royalty rate was six percent approximately, 1,000 jobs were
    lost, the global market share declined, and China went from
    importing more than one billion tons of soda ash to being a
    major exporter, and is now the United States' largest
    competitor.
        When the royalty was lowered to two percent from 2006 to
    2011, in the midst of a global recession, a number of positive
    things happened. Royalties to the government rose to more than
    $80 million. The industry not only retained jobs, it created
    100 new jobs. The industry nearly doubled its rate of
    investment in spending to nearly $150 million annually to
    expand capacity and much needed improvements. The program
    continued to support education systems as confirmed by the
    current and past Governors of Wyoming.
        Congress has the opportunity to increase global
    competitiveness, increase jobs and reduce global greenhouse
    gases by passing this bill.
        Thank you for your consideration of our views. I'd be
    pleased to take any questions.
        [The prepared statement of Mr. von Ahrens follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you very much to each of you.
        Mr. Finn, I would like to start, if I could, with you
    because I mentioned yesterday's Wall Street Journal article.
    Would you discuss some of the challenges that the Port of
    Portland is facing in trying to boost exports?
        Mr. Finn. Yes, Mr. Chairman.
        Historically the Port of Portland and other ports on the
    Columbia Snake River system have been an export gateway for
    products from the Pacific Northwest and the interior of the
    United States and Canada. And we continue, actually, to grow in
    that capacity. Bulk products, in particular, continue to be
    very strong from the Port of Portland and other Columbia River
    ports.
        The challenge we face at the Port of Portland is with one
    particular kind of cargo and that is containerized cargo. We
    have always operated a medium-sized niche container terminal,
    primarily for containerized products from Oregon, Washington
    and Idaho. Due to some differences between labor and management
    over the operation of that container terminal, we have lost
    almost all of our container service for the time being.
        Efforts are underway to try to restore that container
    service, but for the time being we only have one, very limited,
    container carrier calling at the Port of Portland.
        Senator Barrasso. So then what role does soda ash play in
    Portland's strategy going forward?
        Mr. Finn. Going forward, Mr. Chairman, soda ash is one of
    the many bulk products that form the foundation, really, for
    our marine business. Since 1987, soda ash has been a steady
    cargo at the Port of Portland, and it's very important,
    actually, to our financial foundation that we maintain and try
    to grow these kinds of foundational cargos while at the same
    time trying to address this other issue.
        Senator Barrasso. Ms. Leiter, in your testimony you state,
    ``The royalty rate reductions from 2006 to 2011 did not appear
    to have contributed in a significant way to the creation of new
    jobs.''
        I would note that the royalty rate reduction was in effect
    during one of the worst recessions in decades. I am just
    wondering if you think how did the royalty rate reduction,
    maybe, help save or preserve existing jobs within the soda ash
    industry?
        Ms. Leiter. Thanks for the question.
        As we say in the written testimony we don't, actually, have
    the data to assess. The job rate stayed approximately constant
    through those six years, five years, and we don't have the data
    to assess what would have happened in the industry during the
    recession in the absence of that.
        Senator Barrasso. Mr. Douville and Mr. von Ahrens, I wonder
    if you have some thoughts and would like to respond to that
    same idea of preserving jobs since things have stayed stable in
    a time, economically, when our own economy was having
    significant challenges?
        Mr. von Ahrens. Mr. Chairman, we were not only allowed or
    not only able to protect jobs, but we added over 100 jobs
    during that time period. Exports were up, production is up, and
    Federal revenues are up. Our capital access, as I said in my
    testimony, was also up.
        Senator Barrasso. Yes.
        Is there anything you would like to add, Mr. Douville?
        Mr. Douville. Yeah, during the window, exports were up
    about 640,000 tons from 2007 through 2011. In the year 2009,
    exports were actually down almost 900,000 tons year over year.
    So we were able to come back from the dip in 2009, in large
    part, because of the royalty rate reduction that we had
    received, and the fact that we were able to readjust our
    position in a number of these marketplaces.
        Senator Barrasso. Okay.
        Mr. von Ahrens, in your testimony you stated that during
    the royalty rate reduction from 2006-2011, the U.S. soda ash
    industry nearly doubled its rate of investment spending more
    than $158 million to expand capacity and make needed
    improvements, and that approximately 58 percent of your
    production is exported. Ten years ago this export to domestic
    ratio was the reverse with more than 60 percent of it being
    used here at home domestically.
        You then explained this change is directly correlated to
    the historic fluctuation in the royalty fees that the U.S.
    companies pay for mining in Federally-owned lands as an impact.
        Mr. Douville, you also say that the royalty rate reduction
    has greatly helped to support additional export growth.
        This afternoon, Ms. Leiter testified that the royalty rate
    reduction from 2006-2011 did not appear to have contributed in
    a significant way to increased exports or a notable increase in
    capital expenditures.
        Would any of you like to respond to that testimony?
        Mr. von Ahrens. Mr. Chairman, we believe that the BLM takes
    a narrow view to this. When we look at our investments from a
    trade perspective, over $300 million of additional trade
    balance for the increase from 2007 and 2011, and the numbers do
    not include tax revenues resulting in increased production.
        Senator Barrasso. Mr. Douville, is there anything else you
    would like to add? Then I will give Ms. Leiter an opportunity
    to respond.
        Mr. Douville. At the same time as I talked about before, we
    were up 640,000 tons during the window, and that equated to
    about $300 million in trade balance improvement during that
    time. So as Mr. von Ahrens said, we were able to find some real
    positives in other areas during that time.
        Senator Barrasso. Ms. Leiter, anything on that? I do have
    another question for you.
        Ms. Leiter. I would like to add two things.
        The first is that our understanding is that we have seen a
    growth in exports and that has largely been due to the close of
    Trona or, excuse me, soda ash manufacturing facilities in
    various other countries and the U.S. has absorbed that
    manufacture.
        I'd also like to note that the quantity of U.S. exports
    appears to have trended upward from 2011 to the present even as
    the royalty rates initially from 2011 to 2013 were restored to
    the lease rates and then from 2013 to the present as those
    rates were set at four percent. So we've seen a fairly steady
    trend upward in exports even as the royalty rate fluctuates in
    the background.
        And that, I think, is also what I would like to point out
    about the job growth as well. It is true that jobs held steady
    from 2006 to 2011 but jobs have continued to hold steady and
    fluctuate only around 100 jobs even from 2011 to the present as
    the royalty rates returned to the lease rates.
        Senator Barrasso. Yes, you mentioned the fluctuation in
    rates because it was two percent from 2006 to 2012; Congress
    enacted legislation and it was four percent from 2013 to 2015.
    Your testimony discusses the Department's views on these
    effects of the royalty rate reductions.
        I am wondering what your thoughts are on the rate reduction
    from 2013 to 2015. We heard about the previous years but what
    about these last couple of years?
        Ms. Leiter. So the figures that I have are for 2000. I
    don't have any figures for 2015. The figures that I have for
    2013 and 2014 suggest that production has continued to trend
    slightly upward. Exports have continued to trend slightly
    upward, and jobs have stayed approximately constant. And that
    was true in 2010 and 2011 at the background lease rates of
    about 5.6 percent, on average, and also in 2013 and 2014 under
    the four-percent rate.
        Senator Barrasso. Does the Department believe it actually
    helped save or create jobs, increase investment, boost
    production, and promote exports of soda ash? And you do not
    have the numbers for 2015.
        Ms. Leiter. Does the Department believe that reducing
    royalty rate does those things?
        Senator Barrasso. Yes. Help?
        Ms. Leiter. No. I think I'd have to say not. [Laughter.]
        Senator Barrasso. Would either of you like to respond on
    that?
        Mr. Douville. If you look at the period of time, and I'll
    let Mr. von Ahrens talk about the--any capital that may have
    been invested in 2011 going into 2012.
        If you look at what's happening today, today is very
    similar to what we saw back in 2009. The Chinese are trying to
    export their way to achieve some of their GDP objectives, and
    we've seen a significant reduction in pricing and a significant
    market share grab.
        As I mentioned in my testimony, we anticipate this year
    that the Chinese will be exporting about 22 percent more than
    they did a year ago. So as you look at where we are today, our
    position is that, again, we need this support more than ever so
    that, again, the benefits that we saw back in '09 we can see
    those benefits as we continue to carry forward because the
    industry certainly does need to continue to grow.
        Senator Barrasso. Yes. Anything you would like to add?
        Mr. von Ahrens. Thank you, Chairman.
        In the front part of the question is that exports are up.
    Jobs are up. Production is up. Federal revenues are up, and our
    capital investment is up.
        But, as Mr. Douville mentioned in his testimony, with the
    headwinds, there's a lag in the impact to our business and
    we're starting to see that impact now as the yuan is revalued
    and the consistent support that the Chinese get on export. We
    are seeing those exports go up, and that will impact us as we
    go forward.
        Senator Barrasso. Well since you mentioned devaluation and
    the currency, if we could just spend a couple minutes on this:
    China's unfair trade practices.
        Since 2009, China has given its synthetic soda ash
    producers a nine percent rebate on China's value added tax.
    More recently, China devalued its currency by 4.4 percent. It
    seems that these actions give Chinese soda ash producers what
    has been described as a $27 per metric ton benefit.
        Could you explain what that actually means so people
    understand how that fits into all of this, this $27 per metric
    ton benefit?
        Mr. Douville. Yeah.
        Senator Barrasso. Whoever is the best on the panel?
        Mr. Douville. Thank you, I can take that.
        If you look at the current market pricing, it's around $200
    per metric ton, FOB China. So the nine-percent rebate that they
    get would be about $18 of the $27. The 4.4 percent devaluation
    of the currency would be another $8.80, so that's how we get to
    the approximately $27 benefit.
        This year, they're going to export around 2.2 million tons,
    so together when you multiply that out it's around a $60
    million benefit for the Chinese industry. And we saw directly,
    after the August 11th devaluation, an immediate response from
    the Chinese producers into the marketplace looking to increase
    exports. And our market share is definitely at risk.
        Senator Barrasso. To what extent would our bill, if
    enacted, reduce this unfair benefit?
        Mr. Douville. From what I understand, the CBO has scored
    this at about $16 million per year and certainly not the full
    $60 million that the Chinese exporters are seeing today. And if
    there's a devaluation, again at that $200 number, for every one
    percent that's devalued it's another $2 per ton. So the 15 to
    20 percent could be another $30 to $40 per ton.
        Senator Barrasso. That is the question then if in recent
    media reports that we have seen, China is considering a further
    15 to 20 percent devaluation in the currency.
        Mr. Douville. Yeah.
        Senator Barrasso. So additive, you would have another 30 to
    40 based on the $2 per ton.
        Mr. Douville. Right.
        Senator Barrasso. Okay.
        I want to ask you about ANSAC for a second.
        You have written at least five letters to the
    Administration asking them to encourage China to eliminate the
    value added tax rebate to its soda ash producers. Since 2009,
    members of the House and Senate have also sent letters to the
    Administration urging the elimination of China's value added
    tax rebate for soda ash producers.
        I am going to enter these letters into the records after
    today's hearings.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Would you elaborate on the efforts that
    ANSAC and others in the soda ash industry have taken to
    eliminate China's rebate, China's value added tax rebate?
        Mr. Douville. Yeah. It's in support of the, with the
    Industrial Minerals Association which represents all of the
    soda ash companies here in the U.S., as you said, have sent
    letters to the U.S. Trade Representative's Office, to the
    Secretary of State and to the Secretary of Commerce, I believe,
    I'm sorry, Secretary of the Treasury, the three of those, over
    the last five, six years. To date, we have received from the
    USTR a commitment that it will be included in JCCT discussions,
    and to date we are still pushing hard for that to happen.
        Senator Barrasso. Could I ask you about any other unfair
    trade barriers that are out that countries, other than China,
    have imposed on American soda ash exports?
        Mr. Douville. Yeah, that's a great question. There's three
    in particular I'd like to talk about.
        India has a market of around three million tons of demand.
    If you look at the future growth opportunities for U.S. soda
    ash, the Indian per capita consumptions are on five pounds per
    person. In the U.S., it's around 35. As India matures and that
    number grows from five to 35, you're talking about a 14 million
    ton opportunity. The Indian market has both import tariffs on
    U.S. soda ash as well as significant dumping duties for very
    diminimus quantities that have been shipped there.
        In Vietnam, Mr. von Ahrens talked about the issue there
    with the soda ash plant that started up in June of this year
    with no environmental controls for a synthetic plant with a
    mass kill of fish for local fisherman. The government's
    response was we will look at relocating individuals and not so
    much as we will look at, you know, including environmental
    controls. But the two-percent that was added into the import
    duty for Vietnam started only about 12 months ago. So that was
    totally to support this new plant that came on.
        In Taiwan, there's a 3.5 percent import duty with no soda
    ash operation there. And because of the Chinese trade
    agreements with Vietnam and Taiwan, they don't have import
    duties on either Vietnam or Taiwan.
        Senator Barrasso. Yes, and what steps have you taken to
    reduce these unfair trade practices?
        Mr. Douville. We've sent letters to the Office. I don't
    have the name here, unfortunately, but to one of the offices
    within Taiwan, within Taipei. The responses we have gotten back
    are that they'd be interested in a larger free trade agreement
    but they're not interested in talking about individual
    products.
        On a larger level, the Trans Pacific Partnership, we've
    been very supportive of that as well as the Trade Promotion
    Authority. If that were to happen, we would see benefits in
    both Vietnam and Japan, which could amount to a significant
    benefit for us.
        Senator Barrasso. Thank you.
        Mr. von Ahrens, U.S. natural soda ash producers, according
    to your testimony, employ more than 3,000 full-time, skilled
    workers. About 1,000 of these are represented by the United
    Steel Workers. You go on to explain the production of soda ash
    from U.S. natural resources in Wyoming and California is done
    by skilled workers with an average salary, I just want to make
    sure I got it right, an average salary of more than $85,000 per
    year and in very small rural communities.
        Mr. von Ahrens. Yes, and that number has actually gone up
    to almost $122,000 now.
        Senator Barrasso. Could you explain the importance of the
    soda ash industry, the jobs the industry provides to rural
    communities in Wyoming and in California?
        Mr. von Ahrens. During the last recession we actually did
    not even lose jobs in Sweetwater County. They look at us as a
    very stable employer. The industry, by far, is valued by the
    region as well as the state. They are some of the best jobs in
    the world.
        Senator Barrasso. Mr. Finn, would you explain the
    importance of the jobs that soda ash, the soda ash industry,
    supports at the Port of Portland?
        Mr. Finn. Yes, Mr. Chairman.
        As I mentioned in my remarks, we estimate that the average
    salary of those jobs to be about $50,400, which constitutes a
    good, healthy family wage job with benefits. The people
    employed by the soda ash, handling it at the Port of Portland
    include longshore labor, railway men, tugboat operators, river
    and bar pilots and several other occupations that depend on the
    export of soda ash.
        Senator Barrasso. Mr. von Ahrens, we talked a little bit
    about the two methods of producing soda ash, the natural
    method, utilizing Trona, and the synthetic process. The natural
    process, with significant environmental advantages over the
    synthetic process, it has always appeared that way to me. The
    synthetic process, I know, generates a large carbon footprint
    and has negative environmental impacts. I understand that all
    soda ash producers in the United States produce natural soda
    ash while China is the largest producer of synthetic soda ash.
        Would you elaborate on some of the environmental advantages
    that natural soda ash has over synthetic soda ash?
        Mr. von Ahrens. Yes.
        The primary is energy. To make the conversion from Trona to
    soda ash it takes about 30, just under 40 percent less energy
    to make that conversion as opposed to all synthetic
    manufacturing. In addition, there's other chemicals used in the
    process which leads to liquid and air emissions.
        Senator Barrasso. Also is it fair to say that for people
    who want to reduce the carbon emissions, they really ought to
    support taking steps to ensure the U.S. soda ash producers grow
    our market over, say, China synthetic soda ash producers?
        Mr. von Ahrens. Absolutely, including our customers who are
    looking at buying natural soda ash because of the natural lower
    greenhouse gas footprint as submitted in life cycle analysis.
    They see it as a benefit as well.
        Senator Barrasso. I want to go ahead and start now with Ms.
    Leiter and then ask any of the other witnesses if there is
    anything else you would like to add.
        Ms. Leiter. I think I'd just like to emphasize that our
    mandate is to provide a fair return to the American taxpayer,
    and the best evidence we have in front of us of that fair
    market rate is the average of the private and state lease rates
    which is about 5.6. This would reduce the royalty rate for soda
    ash produced on Federal lands significantly below that fair
    market rate. It would reduce royalties to the Federal and State
    treasury.
        And all of the data we have suggests that its only impact
    is that manufacturers of soda ash, quite sensibly, shift their
    production from private and state over to Federal leases but
    that it does not have the beneficial impacts on soda ash
    production, jobs and exports that the Committee is looking for.
        Senator Barrasso. Mr. Douville, is there anything you would
    like to add?
        Mr. Douville. During the window from '06 through 2014--I
    talked before about just the window from '07 to '11. But during
    the window from '06 to '14 is about 1.4 million tons of
    increased exports during that window, the majority of which
    came during the times when the soda ash royalty was reduced. So
    the benefit on the export side has certainly been there.
        Senator Barrasso. Okay.
        Mr. Finn, anything you would like to add?
        Mr. Finn. No, sir. All I want to do is thank you for
    introducing us to S. 2031, and we urge the Committee to approve
    it.
        Senator Barrasso. Thanks.
        Mr. von Ahrens?
        Mr. von Ahrens. My one request is that when we look at the
    data, we don't look at any single year. Our mine plans are 20
    years long. Our business plans are five years long.
        As we see the royalty rate potentially going up tomorrow,
    it will have an impact that will show up a year or two from
    now. And as Mr. Douville talked about, the headwinds are
    already upon us.
        That's all I have to say, sir.
        Senator Barrasso. Well, thank you.
        I want to thank all of you for being here. Before
    concluding the hearing I would like to enter into the record
    letters and testimony in support of the bill from the Governor
    of Wyoming, Matt Mead, his predecessor, Governor Dave
    Friedenthal, Natural Soda LLC, the Glass Packaging Institute,
    the Beer Institute and Union Pacific Railroad.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. I want to thank each of you for being
    here today. Thank you for your time.
        Some of the other members may submit written questions. I
    ask that you please promptly respond. The hearing record will
    be open for two weeks.
        With that, the hearing is adjourned.
        [Whereupon, at 3:25 p.m. the hearing was adjourned.]

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