[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[Extensions of Remarks]
[Pages E2043-E2044]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  H.R. 2517--BUDGET RECONCILIATION ACT

                                 ______


                            HON. KEN CALVERT

                             of california

                    in the house of representatives

                       Thursday, October 26, 1995

  Mr. CALVERT. Mr. Speaker, I rise in strong support of the 
reconciliation bill Chairman Kasich has brought to the floor today. I 
wish to take my limited time to speak in rebuttal to my Democratic 
colleagues' criticism of the Resources Committee's title which occurred 
around dinner time last night. Listening to it made my stomach churn. 
It is the big lie, Mr. Chairman, which the five minority Members of the 
Resources Committee who spoke all reiterated about title IX. I have to 
hand it to them though, they have been saying it so often they must be 
starting to believe it themselves.
  But, the American public is not fooled. The giveaway mantra echoing 
down in the well last night rings hollow from these Members. For 
example, they complain bitterly about our proposed reform of the law 
governing mining rights on public lands, but where have they been for 
the last 40 years? My friend from Hawaii, Mr. Abercrombie likened us to 
bank robbers, but failed to mention that the Democratic alternative we 
get to vote upon has no mining provisions as far as I can see. And if 
they think the alternative provision offered in our committee was so 
worthy, where is it now?
  Mr. Chairman, it is missing because it was the same ludicrous job-
killing, investment-robbing bill they have pushed for three or more 
Congresses. It had an 8 percent gross royalty provision that even the 
Clinton administration's own Interior Department said in 1993 would 
quickly cost us 1,100 American jobs and lose the U.S. Treasury $11 
million in just 3 years. And, other more reputable studies show a far 
greater negative impact than this.
  But, we have opted to levy a net proceeds of mines royalty in our 
bill. It has a proven formula for generating revenue for the Treasury 
while at the same time preserves domestic mining jobs. The terms are 
modeled directly upon the State of Nevada's well-studied net proceeds 
of mines tax. Mr. Abercrombie maintains that we have expanded the 
allowable deductions from gross proceeds beyond those of the Nevada 
tax, but this is simply not the case. We have clarified what is actual 
practice, which practice resulted in the collection of $48.2 million in 
1994.
  Mr. Chairman, gross royalties distort the marketplace, encourage 
high-grading, and cause layoffs and closing of higher cost mines. Net 
royalties do not. Perhaps this is why gross royalties are fast becoming 
very rare in the world. The Federal Governments of Canada, Mexico, 
Chile, Peru, Bolivia, Spain, Sweden, and Zimbabwe do not levy gross 
royalties on metal mining at all! Instead, they tax mining profits, 
just as our Government does as well.
  Now, Mr. Abercrombie notes that mining royalties paid to private 
mineral owners in Nevada average 3 percent of gross revenues, but he 
failed to note that such landowners are unable to levy income taxes--
only governments can do that--so the only way an economic rent can be 
had in such cases is to seek as large a royalty as can possibly be 
sustained. But for the Federal Government to do the same would be to 
cut off its nose (corporate and individual income tax revenues) to 
spite its face (royalty receipts shared with States). Obviously, it is 
quite possible for Congress to levy a mining royalty which loses money 
when tax consequences for considered--which budget enforcement rules do 
not allow to be factored into a CBO score. And that is exactly what 
would happen if the 8 percent net smelter return royalty touted by the 
Democrats were enacted.
  If my Democratic friends would acknowledge simple economic principles 
now and then they would not be ranting and raving about Jesse James. 
Even Fidel Castro is lately talking more sense than our friends across 
the aisle. But then, he is looking for investment to flow into Cuba not 
away. Why does not the minority come out and say what we all know--they 
simply do not want hardrock mining on public lands in the United 
States. Adios, mineros. Vamos a Mexico!
  But, Mr. Chairman, that was not enough. They knocked our efforts to 
simplify and make fairer the byzantine Federal oil and gas royalty 
collection system, too. There we go, robbing the Treasury again to give 
breaks to oil companies. If this were the case, why is it that the CBO 
says the royalty fairness part makes $57 million for the Feds and $33 
million more for the States? It is the very same CBO whose numbers my 
friends across the aisle will quote until the cows come home when it 
fits their purpose.
  Mr. Abercrombie says we drastically modify the existing statute of 
limitations on the collection of royalties due taxpayers. But, in 
truth, our bill does not modify an existing statute of limitations, 
because there is not one! The Democrats would rather promote the status 
quo, which is to allow bureaucrats an indefinite period of time to 
collect royalties. As a result of this inertia, over $450 million worth 
of royalty collections is outstanding--tied up in red tape and 
litigation. Our bill requires the Secretary collect all royalties 
within 6 years accelerating revenues and eliminating expensive 
bureaucratic delays.
  Another falsehood about the royalty fairness provisions is the 
allegation that lessees of marginal wells could operate without paying 
any royalty. Absolutely nowhere does this proposal allow this 
consequence. And the prepayment of future royalty obligations for 
marginal leases which we encourage in this part requires the agreement 
of the Secretary of the Interior as well as the Governor of the 
affected State as to the present value of the future royalty stream. It 
is bullet proof for the Treasury, and the Democrats should know that.
  Furthermore, our friends across the aisle charge that our provisions 
for equitable treatment of royalty payments on oil and gas leases would 
cost $60 million over 7 years. But that is not what CBO said. In fact, 
the policy to treat royalty overpayments in the same manner the IRS 
treats overpayments--reciprocity of interest obligations--greatly 
simplifies accounting requirements and directly contributes to the 
collection of an additional $117 million of royalties offset by the 
anticipated $60 million cost. That is a net of $57 million to the 
taxpayer which the Democrats suggest we should walk away from. We 
believe this sum is worth saving however, and so does the Clinton 
administration.
  The truth is, our royalty simplification bill makes money because it 
makes everybody--lessee and lessor alike--work to get it right the 
first time. And, we empower the States to do the job on leases within 
their boundaries. After all, half the onshore royalty stream goes back 
to the States, why would they not be just as diligent as the Feds to 
ensure that the bills are fully paid on time, and for lower collection 
costs? Of course, the States will be vigilant in 

[[Page E2044]]
protecting their interests. The Governors of the two States with by far 
the most a stake--Wyoming and New Mexico--support this legislation 
because it allows them to do the same jobs better, fairer, and less 
expensively than the Feds could ever dream of doing. No, it is not a 
loophole bill, it is a reduce the Federal bureaucracy bill, and that 
bothers supporters of the status quo.
  Mr. Chairman, I urge my colleagues to support the Kasich budget 
reconciliation bill. The Resources title is sound. It stands the test 
of increasing direct receipts without bankrupting the Treasury because 
of lost job opportunities. Vote ``aye'' on H.R. 2517.

                          ____________________