[Congressional Record Volume 143, Number 149 (Thursday, October 30, 1997)]
[Senate]
[Pages S11496-S11498]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         CBO ESTIMATE ON S. 967

 Mr. MURKOWSKI. Mr. President, on October 29, 1997, I filed 
Report 105-119 to accompany S. 967, a bill to amend the Alaska Native 
Claims Settlement Act and the Alaska National Interest Lands 
Conservation Act to benefit Alaska Natives and rural residents, and for 
other purposes. At the time the report was filed, the estimates by 
Congressional Budget Office were not available. The estimate is now 
available and concludes that enactment of S. 967 would ``increase 
direct spending by about $10 million over the 1998-2002 period.'' I ask 
that a complete copy of the CBO estimate be printed in the Record.
  The estimate follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                 Washington, DC, October 29, 1997.
     Hon. Frank H. Murkowski,
     Chairman, Committee on Energy and Natural Resources, U.S. 
         Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 967, a bill to 
     amend the Alaska Native Claims Settlement Act and the Alaska 
     National Interest Lands Conservation Act to benefit Alaska 
     Natives and rural residents, and for other purposes.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Victoria 
     V. Heid (for federal costs) and Marjorie Miller (for the 
     impact on state, local and tribal governments).
           Sincerely,
                                                     James L. Blum
                                  (For June E. O'Neill, Director).
       Enclosure.
     S. 967--A bill to amend the Alaska Native Claims Settlement 
         Act and the Alaska National Interest Lands Conservation 
         Act to benefit Alaska Natives and rural residents, and 
         for other purposes
       Summary: CBO estimates that enacting S. 967 would increase 
     direct spending by about $10 million over the 1998-2002 
     period. Because the bill would affect direct spending, pay-
     as-you-go procedures would apply. Assuming appropriation of 
     the authorized amount, implementing S. 967 also would result 
     in discretionary spending of about $1 million over the next 
     five years.
       S. 967 contains at least one intergovernmental mandate as 
     defined in the Unfunded Mandates Reform Act of 1995 (UMRA), 
     but CBO estimates that any costs imposed on state, local, and 
     tribal governments would be minimal and would not exceed the 
     threshold established in that act ($50 million in 1996, 
     adjusted annually for inflation). The bill contains no 
     private-sector mandates as defined in UMRA.
       Description of the bill's major provisions: S. 967 would 
     affect the terms and conditions of various property 
     transactions involving Alaska native corporations. Several 
     provisions would affect the property rights of specific 
     native corporations.
       S. 967 would amend existing law by assigning a value of $39 
     million to properties to be conveyed by the Calista 
     Corporation in exchange for monetary credits to certain 
     federal properties if the Department of the Interior (DOI) 
     and the corporation have not agreed on the value of the 
     exchange by January 1, 1998. The bill would allow the Doyon, 
     Limited, native corporation to obtain the subsurface rights 
     retained by the federal government in up to 12,000 acres of 
     public lands surrounded by or contiguous to corporation-owned 
     properties. Another provision would expand the entitlement of 
     the Cook Inlet Region Incorporated (CIRI) to include 
     subsurface rights to an additional 3,520 acres.
       S. 967 would amend the Alaska Native Claims Settlement Act 
     to allow the native

[[Page S11497]]

     residents of five native villages in southeast Alaska to 
     organize as native corporations. The bill would authorize the 
     appropriation of $1 million for planning grants to the five 
     villages.
       The bill would permit individual natives to exclude bonds 
     issued by a native corporation from the assets used for 
     determining financial eligibility for federal need-based 
     assistance or benefits.
       The bill would extend certain protections to lands 
     exchanged among corporations, clarify the status of 
     applications involving land allotments, and exempt a 
     corporation's revenues from sand, gravel, and certain other 
     resources from the income distribution requirements that 
     apply to regional corporations' development of subsurface 
     property. The bill would specify the method of distributing 
     mining claim revenues related to the Haida Corporation or 
     Haida Traditional Use sites.
       Finally, the bill includes administrative provisions 
     affecting training of federal land managers, subsistence uses 
     in Glacier Bay National Park, certain access rights to 
     federal land, contracting preferences for visitor services, 
     and a status report by the Secretary of the Interior on 
     implementing current laws on local hiring and contracting 
     with regard to public lands.
       Estimated cost to the Federal Government: CBO estimates 
     that enacting this bill would increase direct spending by 
     about $10 million over the 1998-2002 period and about $17 
     million over the 1998-2007 period. This bill also would 
     authorize to be appropriated about $1 million for planning 
     grants to certain native villages. The estimated budgetary 
     impact of enacting S. 967 is shown in the following table. 
     The costs of this legislation fall within budget function 300 
     (natural resources and environment).

------------------------------------------------------------------------
                                         By fiscal years in millions of
                                                   dollars--
                                      ----------------------------------
                                        1998   1999   2000   2001   2002
------------------------------------------------------------------------
Spending Under Current Law:
  Estimated Budget Authority.........      5      0     -1     -1     -1
  Estimated Outlays..................      5      0     -1     -1     -1
Proposed Changes:
  Estimated Budget Authority.........     21      0     -4     -4     -4
  Estimated Outlays..................     21      0     -4     -4     -4
Spending Under S. 967:
  Estimated Budget Authority.........     26      0     -5     -5     -5
  Estimated Outlays..................     26      0     -5     -5     -5
 
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Level..................      0      1      0      0      0
Estimated Outlays....................      0      1      0      0      0
------------------------------------------------------------------------

     Basis of estimate
       Direct spending
       CBO estimates that enacting S. 967 would increase direct 
     spending because of provisions that would result in a loss of 
     federal receipts from property sales.
       Calista Corporation property account. The costs of this 
     bill would result primarily from section 5, which prescribes 
     the value of the Calista Corporation's properties to be 
     exchanged for monetary credits with the Department of the 
     Interior to complete a land exchange between the two parties. 
     Under current law, the Calista Corporation is to receive 
     monetary credits equal to the value of the lands to be 
     conveyed, and the corporation is authorized to use these 
     monetary credits to purchase other federal properties. The 
     value of monetary credits counts as direct spending in the 
     year they are issued and as receipts in the years in which 
     they are redeemed. If the credits are used to acquire 
     property that otherwise would have been sold by the 
     government, the use of the credits results in a corresponding 
     loss of receipts from such sales. So far no monetary credits 
     have been awarded because DOI and Calista disagree on the 
     valuation of the properties.
       The gap between the valuations is substantial: the 
     department's appraisal assigned a value of about $5 million 
     to the properties, while the corporation asserts that the 
     property is worth significantly more. Given the differences 
     in methodologies and values, this impasse could last for 
     some time. Because the department will not award monetary 
     credits until there is an agreement, it is possible that, 
     under current law, Calista would not receive any monetary 
     credits for several years. For the purpose of this 
     estimate, however, we assume an agreement will be reached 
     in fiscal year 1998, because of Calista's interest in 
     acquiring property with the credits. Although a negotiated 
     valuation could exceed DOI's $5 million appraisal, CBO has 
     no basis for estimating whether and to what extent the 
     Secretary would agree to a higher value. Hence, we assume 
     for this estimate that Calista would receive monetary 
     credits of about $5 million in fiscal year 1998 in the 
     absence of this legislation.
       S. 967 provides that if the parties do not agree on a value 
     of the Calista properties to be exchanged, the value would be 
     established at $39 million. If the exchange does not occur 
     before January 1, 1998, the bill directs the Secretary of the 
     Treasury to credit the Calista property account with two-
     thirds of the established value of the Calista property ($26 
     million) in monetary credits in fiscal year 1998. The 
     corporation would be permitted to use up to one-half of that 
     amount in fiscal year 1998 and the remaining one-half of the 
     amount credited in fiscal year 1999. If the two parties have 
     not completed the exchange by October 1, 2002, the bill 
     directs the Secretary of the Treasury to credit the account 
     with monetary credits equal to the remaining $13 million. 
     These actions would result in a net increase of $34 million 
     in the amount of credits issued.
       Increasing the amount of the credits would increase the 
     budgetary cost of the exchange if Calista's use of the 
     credits in a loss of cash receipts from the sale of federal 
     property. The bill provides that only that federal property 
     which is not scheduled for disposition by sale prior to 
     fiscal year 2003 may be transferred to the Secretary of the 
     Interior for use in the Calista land exchange. Therefore, 
     Calista's use of monetary credits would not result in a loss 
     of receipts to the federal government before fiscal year 
     2003. Assuming that Calista would use half of its monetary 
     credits to acquire properties that the federal government 
     would have sold anyway, CBO estimates that the bill would 
     increase the net cost of the Calista exchange by about $17 
     million over the 1998-2007 period. The net increase in 
     outlays over the 1998-2002 period would be $10 million.
       Subsurface conveyance to the Doyon Corporation. Section 2 
     would allow Doyon, Limited, a regional corporation, to 
     acquire up to 12,000 acres of federally owned mineral estate 
     surrounded by or contiguous to subsurface lands owned by that 
     corporation. According to DOI, the federally-owned mineral 
     estate that Doyon, Limited, could acquire under the bill 
     currently has no mineral development. Based on information 
     from the agency, we estimate that although the federal land 
     to be conveyed has some potential for future development, any 
     forgone receipts from the conveyance would total less than 
     $500,000 per year.
       Change in eligibility for certain federal assistance. 
     Section 3 would permit Alaska natives to exclude bonds issued 
     by a native corporation from the assets and resources used to 
     determine financial eligibility for federal need-based 
     assistance or benefits. Under current law, natives may 
     exclude certain assets, including stocks issued or 
     distributed by a native corporation as a dividend, from 
     federal financial eligibility tests. This provision would 
     expand the permitted exclusions to include bonds issued by 
     native corporations. Enacting this provision could have 
     limited effects on the federal budget in certain situations. 
     For example, according to a representative of Cook Inlet 
     Region Incorporated (CIRI), this provision would give CIRI 
     greater flexibility in financing a corporate buy-back of its 
     shares, which it seeks in order to keep shares in native 
     ownership. (Because CIRI is the only native corporation 
     currently authorized (under Public Law 104-10) to purchase 
     stock from its shareholders, natives in other native 
     corporations would not be affected in this case.) Enacting 
     the provision could increase federal spending by allowing 
     CIRI shareholders, who had planned to sell their shares to 
     CIRI in exchange for a bond and would have stopped receiving 
     federal assistance payments once their assets exceeded 
     financial eligibility tests, to continue to receive federal 
     assistance. We estimate that any such increase in federal 
     assistance payments would total less than $500,000 per year.
       Change in CIRI's subsurface rights. Section 4 would 
     increase the entitlement of CIRI to include subsurface rights 
     to an additional 3,520 acres of federal land. Based on 
     information from CIRI representatives and DOI, it seems 
     likely that the corporation would choose properties in the 
     Talkeetna Mountains area. According to DOI, the federal 
     government currently generates no offsetting receipts from 
     that land and does not expect any significant income from it 
     over the next ten years. Therefore, we estimate that any 
     budgetary effect of enacting this provision would be 
     negligible.
     Spending subject to appropriation
       Section 8 would amend the Alaska Native Claims Settlement 
     Act to allow native residents of five native villages in 
     Southeast Alaska to organize as native corporations. The bill 
     would direct the Secretaries of the Interior and Agriculture 
     to recommend to the Congress the land conveyances and other 
     compensation that should be conveyed to those native 
     corporations; however, it would not entitle those 
     corporations to any federal lands without further 
     Congressional action. This section would authorize the 
     appropriation of about $1 million for planning grants to the 
     five villages.
       Pay-as-you-go considerations: Section 252 of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 sets up pay-
     as-you-go procedures for legislation affecting direct 
     spending or receipts. As shown in the following table, CBO 
     estimates that enacting S. 967 would affect direct spending 
     by increasing the amount of monetary credits issued to the 
     Calista Corporation by $34 million over the 1998-2007 period, 
     and that the net increase in direct spending over the 10-year 
     period would total about $17 million. Other provisions could 
     also affect direct spending by giving various native 
     corporations the rights to income-producing federal lands, 
     but we estimate that any such additional effects would be 
     negligible. For the purposes of enforcing pay-as-you-go 
     procedures, only the effects in the budget year and the 
     subsequent four years are counted.

[[Page S11498]]



                                                   SUMMARY OF EFFECTS ON DIRECT SPENDING AND RECEIPTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                               1998       1999       2000       2001       2002       2003       2004       2005       2006       2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in outlays.........................         21          0         -4         -4         -4         14         -2         -2         -2         -2
Change in receipts........................                                                  Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

       Estimated impact on State, local, and tribal governments: 
     S. 967 contains at least one intergovernmental mandate as 
     defined in UMRA, but CBO estimates that any costs imposed on 
     state, local, and tribal governments would be minimal and 
     would not exceed the threshold established in that act ($50 
     million in 1996, adjusted annually for inflation).
     Mandates
       Section 1 of this bill would amend the Alaska National 
     Interest Lands Conservation Act to clarify what lands are 
     eligible for automatic land protections, including exemption 
     from property taxes. This provision would impose a mandate on 
     the state of Alaska and its constituent local governments 
     because it could increase the amount of land exempt from 
     state and local property taxes. (UMRA defines the direct 
     costs of mandates to include revenues that state, local, or 
     tribal governments would be prohibited from collecting.) 
     Based on information provided by Alaska state officials, we 
     estimate that the impact would be negligible, because Alaska 
     has no state property tax and most of the land affected 
     would be in areas of the state and no local property 
     taxes.
       By exempting the bonds of native corporations and the 
     income from those bonds from the determination of eligibility 
     for some means-tested federal assistance programs, Section 3 
     would increase spending for those programs. Because states 
     share these costs, this provision would impose costs on state 
     governments. CBO cannot determine whether some of these costs 
     would result from an intergovernmental mandate, as defined in 
     UMRA. In any event, CBO estimates that any additional costs 
     of states would be minimal.
     Other impacts
       Other sections of the bill would result in both costs and 
     benefits for state, local, and tribal governments. Several 
     sections of the bill would benefit specific Alaska native 
     corporations, but some of these provisions could affect the 
     distribution of land and other resources among the 
     corporations. For example, section 7 would allow regional 
     corporations to dispose of sand, gravel, and similar 
     materials without distributing part of the proceeds among the 
     other regional corporations, as required by current law. This 
     change would allow village corporations to gain greater 
     access to these resources.
       Other provisions would benefit Alaska native corporations 
     by expanding their rights to property and resources currently 
     held by the federal government. Section 5 would specify the 
     value of the properties to be exchanged by the Calista 
     Corporation for other federal properties. This section would 
     effectively increase the amount of property that the 
     corporation could obtain. Section 2 would allow Doyon, Ltd., 
     a regional native corporation, to obtain additional 
     subsurface rights now retained by the federal government. 
     Section 4 would give CIRI subsurface rights to an additional 
     3,520 acres.
       Section 8 would authorize the creation of five additional 
     native corporations. This section would authorize the 
     appropriation of $1 million for planning grants for the new 
     corporations, but would not give them any entitlement to 
     federal land. This provision would not affect the 
     entitlements of any other native corporations.
       Estimated impact on the private sector: This bill would 
     impose no new private-sector mandates as defined in UMRA.
       Estimate prepared by: Federal Costs: Victoria V. Heid. 
     Impact on State, Local, and Tribal Governments: Marjorie 
     Miller.
       Estimate approved by: Paul N. Van de Water, Assistant 
     Director for Budget Analysis.

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