[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.

                          ____________________