[Congressional Record Volume 144, Number 147 (Thursday, October 15, 1998)]
[House]
[Pages H10940-H10942]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDING OUTER CONTINENTAL SHELF LANDS ACT
Mrs. CUBIN. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3972) to amend the Outer Continental Shelf Lands Act to
prohibit the Secretary of the Interior from charging State and local
government agencies for certain uses of the sand, gravel, and shell
resources of the Outer Continental Shelf.
The Clerk read as follows:
H.R. 3972
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. AMENDMENT.
Section 8(k)(2)(B) of the Outer Continental Shelf Lands Act
(43 U.S.C. 1337(k)(2)(B)) is amended by striking ``an agency
of the Federal Government'' and inserting ``a Federal, State,
or local government agency''.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Wyoming (Mrs. Cubin) and the gentleman from California (Mr. Miller)
each will control 20 minutes.
The Chair recognizes the gentlewoman from Wyoming (Mrs. Cubin).
Mrs. CUBIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of this measure introduced by
our colleague, the gentleman from Virginia (Mr. Pickett). H.R. 3972 is
a reasonable response to efforts by the Minerals Management Service of
the Department of Interior to charge State and local governments for
the use of sand dredged from the Outer Continental Shelf for beach
nourishment projects.
Our colleague, the gentleman from Corpus Christi, Texas (Mr. Ortiz)
led a successful effort in 1994 to amend the Outer Continental Shelf
Lands Act of 1953 to allow the Secretary of Interior to dispose of
sand, gravel and shell resources beneath the Federal waters.
Depletion of sand resources beneath closer in State waters prompted
the amendment, and the National Park Service obtained sand necessary to
replenish the Padre Island National Seashore at no cost.
Mr. Speaker, it is evident that several coastal State and local
governments will need sand from the Federal OCS for beach replenishment
projects on their shorelines, particularly given the nor'easter storms
and hurricanes that have racked the Gulf coast and many Atlantic
beaches this year, but the MMS insists upon charging non-Federal
government entities for such sand, whether it is a public project or
not.
Yes, under the current rules the fee is reduced for governmental
projects but it is not free, as it is to Federal agencies, and, yes,
the fee for the sand is generally only a small fraction of the total
cost of such projects.
In the case which prompted the gentleman from Virginia (Mr. Pickett)
to act, I believe it was about two and a half percent, but that still
added up to over $200,000, which is a burden on the citizens of
Virginia Beach.
We should all understand that the sand dredged from the Outer
Continental Shelf is only on loan because as the storms come it goes
right back out there. So we could call this a good recycling program if
we wanted to do that as well.
In many cases, within a decade or two, the sand used in beach
nourishment really is returned by mother nature.
Now it is my turn to have a bachelor of science in humor.
In many cases, within a decade or two, the sand used in beach
nourishment is returned by mother nature to offshore shoals.
Mr. Speaker, as a Member from Wyoming, I do not think I need to
remind anyone that we do not have any beaches but that sand and gravel
resources from public lands in the West are disposed, without charge,
to State and local governments for use in public projects.
H.R. 3972 should merely be viewed as the coastal States' equivalent
to the 1947 Act governing onshore public lands mineral materials. And,
like that law, commercial projects seeking OCS sand, gravel or shell
resources should continue to pay the full fair market value of the
materials after the enactment of the bill offered by the gentleman from
Virginia (Mr. Pickett).
{time} 1200
Mr. Speaker, I urge my colleagues' support of this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. MILLER of California. Mr. Speaker, I yield myself such time as I
may consume.
(Mr. MILLER of California asked and was given permission to revise
and extend his remarks.)
Mr. MILLER of California. Mr. Speaker, I think now the gentlewoman is
drifting over into my area of expertise, and that is American humor,
with the argument for this legislation that somehow because we pump the
sand up on the beaches from the Federal OCS, the Outer Continental
Shelf, that it is just a loan, because then the sand goes back to the
Outer Continental Shelf, which is probably accurate. But what is not a
loan is the taxpayer dollars to continue to do this year after year
after year as we try to defeat nature because of storms and hurricanes
and what have you.
I think this bill is seriously flawed in the sense of the kind of
revenues that it loses, and it raises questions about
[[Page H10941]]
whether or not we are really engaging in products that simply are not
feasible when we are trying to allow development and activities on
lands that are subject to nature in terms of the storm patterns that
develop annually along the eastern sea coast.
I might also mention that the administration has sent both a letter
and a statement of administration policy against this legislation for
the reasons that I have raised with respect to the cost of this, the
direct spending, which they estimate will be about $10 million over the
next few years, and they believe that the Secretary ought to be able to
continue to charge those fees. They also make their point in the
statement of administration policy that ``enactment of H.R. 3972 would
thus deny the American taxpayer a fair return on the use of the public
resources, as well as fuel the demand for OCS sand and gravel and shell
and competitively disadvantage the private onshore sand and gravel
suppliers.''
What this means is because the Federal Government is not going to
charge a fee, the projects you want to engage in do not really have to
have a positive cost-benefit ratio or be feasible because you are
getting the Federal Government to pump the sand and not charging the
municipality for this project.
Not only are you doing that, but the private sand and gravel people
who are in business trying to sell sand and gravel to these people are
now disadvantaged, so they will not be able to participate in that
market because they cannot sell it for free. So we have kind of come up
with what is bad sometimes about government involvement in subsidizing
various activities, that not only do we undermine bad decisions being
made because the theory is, they used to say well, it is free dollars,
it is just Federal dollars, so it does not matter how we design it. We
are putting them back into that category, but we are also hurting the
business people in the community who this is their business, providing
sand and gravel to developers, to municipalities, to landowners and all
of the rest.
So I am not in agreement with this legislation and the administration
is not in agreement with this legislation.
Mr. Speaker, I include for the Record the administration policy on
this matter.
U.S. Department of the Interior,
Minerals Management Service,
Washington, DC, Sept. 23, 1998.
Hon. George Miller,
Senior Democratic Member, Committee on Resources, House of
Representatives, Washington, DC.
Dear Mr. Miller: I understand that the Resources Committee
is considering various ways to move H.R. 3972, a bill to
amend section 8(k) of the Outer Continental Shelf (OCS) Lands
Act. In general, the bill proposes to waive the fee
provisions associated with making OCS sand, gravel and shell
resources available for certain publicly-beneficial beach
nourishment and wetlands restoration projects undertaken by
State or local government entities. Currently, section 8(k)
of the OCS Lands Act authorizes the Secretary of the Interior
(Secretary) to charge a reasonable fee for the use of such
resources when conveyed non-competitively.
On July 21, 1998, the Minerals Management Service (MMS)
testified on behalf of the Department of the Interior
(Department) on the proposed legislation and opposed
enactment for several reasons. I am writing now to reiterate
the Department's opposition to the bill. We continue to feel
strongly that it is important to provide the Secretary with
the authority to assess a fee. Although the fee typically
represents only a small fraction of a project's total cost,
in a larger sense it also represents the Federal government's
commitment to provide a fair return to the Nation for the use
of the public's resources.
As you are aware, Public Law 103-426, passed by Congress in
1994, authorized a negotiated agreement process (in lieu of
competitive bidding) to better facilitate a way for OCS sand,
gravel, and shell resources to be made available for certain
publicly-beneficial projects like beach nourishment and
wetlands restoration projects undertaken by Federal, State,
or local government agencies. Section 8(k)(2)(B) provides
that ``the Secretary may assess a fee based on the value of
the resources and the public interest served by development
of the resources, except that no fee would be assessed
against a Federal agency.''
This valuation method allows the Secretary to determine an
appropriate fee that takes into account both the value of the
Federal minerals and the public benefits gained by providing
affordable access to OCS sand, gravel and shell resources to
support public projects. The ``no fee'' exemption for Federal
agencies was included to prevent the transfer of funds from
one Federal agency to another and to prevent local project
sponsors from passing back to the federal government the
expense of fees for use of the Federal sand paid under this
law (e.g., through a cost-sharing agreement with the United
States Army Corps of Engineers).
MMS, as the agency in the Department responsible for
administering the OCS sand and gravel program, developed
guidelines describing how fees for sand and gravel conveyed
pursuant to negotiated agreements would be determined. The
MMS methodology provides for a determination of sand values
based on references to market values and provides for
discounts to reflect the public interest in the fee
assessment, reducing the market-based estimate of value by
the same percentage amount (typically 65%) used to represent
the congressionally-mandated Federal share of project
construction costs. Thus, this balancing of resource value
with public interest considerations provides for a
significant discount for State and local governments,
resulting in a quite reasonable fee for the Federal resource.
Further, the Department's OCS Policy Committee (Committee)
reviewed the guidelines and urged MMS to adopt them since the
approach was reasonable and consistent with the OCS Lands
Act. The Committee includes representatives from coastal
States, local governments, the environmental community and
industry and provides advice to the Secretary on a wide range
of issues associated with OCS mineral development. The
Committee recommended that the guidelines be made available
to the public to enhance the timely dissemination of
information and to assist governmental planners as they
contemplated costs associated with beach nourishment
projects.
Because of the bill's significant policy and budget
implications, I urge you to give the issues raised by H.R.
3972 more consideration. First, enactment of this proposal
could competitively disadvantage private onshore sand and
gravel suppliers even further. Second, by making a Federal
resource more readily available to State and local
governments, we anticipate that requests for access to OCS
sand, gravel and shell resources will rise even more than
originally anticipated. This increase could put severe
strains on existing MMS resources to undertake the necessary
environmental studies, analyses, and administrative work
associated with facilitating State and local requests. Given
current budgetary resources, an unintended result of the bill
could be to put MMS in the unfortunate position of not being
able to respond to State and local government requests in a
timely fashion or even having to turn down future requests.
Third, the budgetary implications of this expected rise in
requests for free OCS sand could be substantial. Although the
Congressional Budget Office has indicated that the scoring
implications of passing the bill are fairly minimal, our
recently-completed analysis indicates otherwise. For example,
within the next 5 years, we estimate that 8.5 to 12 million
cubic yards of OCS sand will be needed for at least 8 shore
protection projects. As currently envisioned, these projects
would generate total fees of between $1.3 to $1.8 million.
However, there are an additional 24 potential projects
(needing between 46 and 74 million cubic yards of sand) that
could be implemented during this period and may need access
to OCS sand. If any of these projects materialize,
significantly more fees could be generated for the Federal
Treasury in any given year.
In conclusion, I urge you to defer further action on H.R.
3972. Like other mineral resources that reside on Federal
lands, the American public has a right to a fair return on
its sand, gravel and shell resources. The provisions
currently contained in the OCS Lands Act provide for that
right while also ensuring that those States and localities
needing OCS sand and gravel can receive the resource in an
expedited fashion and pay a price that reflects the public
interest served.
An identical letter is being sent to the Honorable Don
Young, Chairman, Committee on Resources.
Sincerely,
Cynthia Quarterman,
Director.
____
Executive Office of the President, October 15, 1998
Statement of Administration Policy
(This statement has been coordinated by OMB with the
concerned agencies.)
H.R. 3972--OUTER CONTINENTAL SHELF LANDS ACT AMENDMENT (REP. RICKET (D)
VA AND 6 COSPONSORS)
The Administration opposes H.R. 3972, which would waive the
fee for Outer Continental Shelf (OCS) sand, gravel, and shell
available for certain beach nourishment and wetlands
restoration projects undertaken by State or local
governments. The Administration, however, supports the
limited waiver, as passed by the Senate in S. 2131, the
``Water Resources Development Act of 1998,'' since it would
waive fees for those Federal projects jointly undertaken by
the Army Corps of Engineers in partnership with State and
local sponsors.
The Outer Continental Shelf Lands Act authorizes the
Secretary of the Interior to charge a reasonable fee for OCS
sand, gravel, and shell when conveyed noncompetitively. This
fee is based on both the value of the resources and the
public benefits gained and, typically, represents only a
small fraction of a project's total cost. Most important, the
fee represents the Federal government's commitment to provide
a fair return to the Nation for the use of public resources,
while ensuring that those States and localities
[[Page H10942]]
needing OCS sand, gravel, and shell can receive those
resources and pay a price that reflects the public interest
served. Enactment of H.R. 3972, however, would thus deny the
American taxpayer a fair return for the use of this public
resource, as well as fuel the demand for OCS sand, gravel,
and shell and competitively disadvantage private onshore sand
and gravel suppliers.
Mr. Speaker, I reserve the balance of my time.
Mrs. CUBIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I understood that there was a statement of
administration policy, but we have not seen it and did not know whether
it had been delivered or not.
I think one thing we have to consider here is are all states equal?
When the Constitution was established, it was established that all
states would be equal. Well, inland states get sand and gravel for
government projects from the Federal Government for free. Only the sand
would be free. Ninety-eight percent of the costs incurred in these
projects would still have to be paid and they would be paid. Those
costs are dredging and bulldozing. And all Corps of Engineers projects
must pass cost-benefit analysis.
While I think that the gentleman from California does have a good
point about this, and one which, frankly, I do not understand, which is
why people will rebuild and rebuild in the same place that storms wash
away, nonetheless, that is what is going on, and I do not think it is
fair to treat coastal states differently than inland states as far as
the Federal state of sand gravel and shell resources is concerned. So I
continue to urge my colleagues to support this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. MILLER of California. Mr. Speaker, I yield such time as he may
consume to the gentleman from Virginia (Mr. Pickett), the sponsor of
the legislation.
Mr. PICKETT. Mr. Speaker, I would like to thank the Committee on
Resources chairman, the gentleman from Alaska (Mr. Young), and the
ranking member the gentleman from California (Mr. Miller), as well as
the gentlewoman from Wyoming (Mrs. Cubin) the chairman of the
Subcommittee on Energy and Mineral Resources and the ranking member,
the gentleman from Puerto Rico (Mr. Romero-Barcelo), for their help and
assistance in helping bring H.R. 3972 to the floor.
Mr. Speaker, I introduced this legislation last May because of a new
policy initiative by the Minerals Management Service to assess a tax
against state and local governments for the use of Outer Continental
Shelf sand and gravel for public projects.
This law was enacted during the 103rd Congress to remove procedural
obstacles and allow governmental agencies to negotiate and obtain OCS
sand and gravel. The Federal Government was exempted from being
assessed under this act. In October 1997, MMS formalized its guidelines
regarding this charge for OCS sand and gravel when used in shore
protection and beach restoration projects by state and local
governments. Under this new policy, MMS decided to assess state and
local governments a tax for sand and gravel used in these shore
protection projects, even in those cases where the projects are
authorized by Federal law. I do not believe it was the intent of
Congress to impose an additional charge on state and local governments
for costly, yet necessary, shore protection projects.
In 1947 Congress passed the Minerals Sales Act. This law allows
localities to take mineral resources from public lands for public works
projects, such as road construction, without the payment of any kind of
a charge. Although localities pay money into an account to reclaim the
land from which the sand and gravel is taken, there is no requirement
to pay for the material, as in the case of coastal states that use
offshore mineral resources for shore protection projects.
Sand and gravel mined from the OCS is reclaimed through a natural
hydrodynamic process. Although the cost involved for OCS sand and
gravel may not be significant when compared to the overall cost of a
shore protection or beach restoration project, it is considerable
enough to make such projects less attractive and more costly when
undertaken by state and local governments.
An example occurred in my district where a local government recently
paid MMS approximately $200,000 for about 1 million cubic yards of OCS
sand for a federally authorized project that had already been planned,
approved and funded.
Paying this tax caused the local government to reduce by about one-
fourth the quantity of sand called for in the original plans and
specifications. With a reduced volume of sand, the project will now
have a shorter useful life and will require the local government to
replace the project earlier than planned at an increased cost.
As the administration seeks to change the Nation's shore protection
policy, the costs incurred by state and local governments for OCS sand
and gravel will continue to rise dramatically unless this ill-advised
tax law is changed.
Historically, the Federal Government has entered into 65-35 cost
share agreements with local governments for federally authorized shore
protection projects. A recent proposal by the administration, if
adopted, will reverse this cost share ratio upon completion of the
initial construction project, with the local sponsor paying almost
double the share of the project maintenance costs. The typical MMS tax
for the local government sponsor for OCS sand and gravel will also
double as a result of this policy change.
This excessive and inequitable tax will become a serious and
insurmountable burden for local governments. It is clearly another
unfunded mandate on state and local government and should be eliminated
here and now. I strongly urge the House to adopt H.R. 3972 to restore
equity among Federal, state and local government projects by
eliminating this unfair tax.
Mr. MILLER of California. Mr. Speaker, I have no further requests for
time, and I yield back the balance of my time.
Mrs. CUBIN. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
The SPEAKER pro tempore (Mr. Ballenger). The question is on the
motion offered by the gentlewoman from Wyoming (Mrs. Cubin) that the
House suspend the rules and pass the bill, H.R. 3972.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
____________________