[House Report 105-766]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-766
_______________________________________________________________________
USE OF SAND, GRAVEL, AND SHELLS OF OUTER CONTINENTAL SHELF
_______________________________________________________________________
October 2, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
[To accompany H.R. 3972]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred 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, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
Purpose of the Bill
The purpose of H.R. 3972 is 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.
Background and Need for Legislation
Public Law 103-426 amended the Outer Continental Shelf
Lands Act regarding the disposition of sand, gravel, and shell
resources from the outer continental shelf (OCS). This
amendment was prompted by the need for such materials for beach
replenishment projects to fight coastal erosion as closer in
sources of sand (within State waters or onshore) become
exhausted or lacking proper physical characteristics. The Padre
Island National Seashore off the Texas Gulf of Mexico coast was
an example of such immediate need. Because the federal
government (National Park Service) manages this barrier island,
the Secretary of the Interior made the OCS sand available for
disposition without charge to the agency. However, Public Law
103-426 did not specifically provide for ``fee-less'' resources
for state and local government projects of a like nature.
The OCSLA mandates the Secretary receive fair value in
return for the rights to federal resources on the OCS. A
negotiation process which the Department of the Interior's
Minerals Management Service implemented post-Public Law 103-426
provides that the fees for OCS sand resources for public
projects will be reduced--but not eliminated altogether--to
reflect the fraction of federal interest in a beach
replenishment or other public project. Disposition of sand,
gravel and shell resources to non-governmental entities remains
subject to full payment of fair market value.
Beach erosion on the Atlantic coast remains significant,
particularly after nor'easter storms such as the two which
pounded the Delmarva and Virginia/North Carolina coastline
during the past winter. Congressman Owen Pickett introduced
H.R. 3972 after the City of Virginia Beach went through the
negotiated fee process for OCS sand needed to replenish the
beach in the Sandbridge, Virginia, area. Because the need for
the replenishment was immediate, the City agreed to pay
approximately $200,000 to the Minerals Management Service for
the OCS sand in order to begin dredging last May. The total
cost of the nourishment project is approximately $8 million, so
the OCS sand fee is less than 2 percent of project costs. The
far larger question for state and local governments is the
availability of funds for U.S. Army Corps of Engineers-
authorized projects for dredging work and placement of the sand
on the beach, but such authorization and funding falls outside
of Resources Committee jurisdiction.
H.R. 3972 simply amends Public Law 103-426 to the OCSLA to
put state and local government agencies in the same category as
federal agencies, i.e., able to receive these resources without
cost for public projects. By way of comparison, disposition of
sand and gravel resources from onshore public lands is made
under the Material Sales Act of 1947 [30 U.S.C. 601 et seq.]
which states: ``any Federal, State or Territorial agency, unit
or subdivision including municipalities, or any association or
corporation not organized for profit, to take and removewithout
charge, materials and resources subject to this subchapter, for uses
other than for commercial or industrial purposes or resale.'' [Act of
July 31, 1947, c. 406, section 1, 61 Stat. 681].
Furthermore, because of the dynamics of geologic processes
(erosion and sedimentation) operating on our shorelines, the
Committee views beach nourishment projects which use sand
resources derived from shoals on the OCS more as a ``rental''
of these mineral materials than a ``sale.'' In other words,
sand, gravel and shell resources disposed under the OCSLA will
no doubt be returned to the OCS sometime in the future by
ongoing beach erosional processes. Nevertheless, the Committee
supports the relatively short-term ``loan'' of this sand
resource without charge to governmental entities for beach
nourishment (or other public projects) which have demonstrated
positive cost-benefit analyses, in the same manner as the 103rd
Congress supported such disposition and use by the federal
government.
Committee Action
H.R. 3972 was introduced on May 22, 1998, by Congressman
Owen Pickett (D-VA). The bill was subsequently cosponsored by
Congressmen Charles Schumer (D-NY), Michael Castle (R-DE),
Brian Bilbray (R-CA), and Michael Pappas (R-NJ) and
Congresswomen Tillie Fowler (R-FL) and Carrie Meek (D-FL). The
bill was referred to the Committee on Resources, and within the
Committee to the Subcommittee on Energy and Mineral Resources.
On July 21, 1998, the Subcommittee held a hearing on H.R. 3972,
where Mr. Pickett testified on behalf of his legislation. Ms.
Meyera Oberndorf, Mayor of the City of Virginia Beach,
Virginia, testified as to the need for prospective relief to
state and local governments for beach nourishment-type
projects, and related the history of negotiations with the
Minerals Management Service over the Sandbridge beach
replenishment project. Ms. Carol Hartgen, Chief of the
International Activities and Marine Minerals Division of the
Minerals Management Service, testified on behalf of the
Administration. She described the negotiated-fee process by
which the Minerals Management Service currently calculates the
fee to be charged for non-federal government agencies today.
The Administration objects to H.R. 3972 and believes state and
local governments receive fair treatment under current rules.
Ms. Hartgen further testified the Secretary of the Interior
believes that should H.R. 3972 become law, so-called cost
recovery principles would deem it necessary to charge a fee to
state and local governments seeking OCS sand, gravel or shell
resources commensurate with federal administrative costs
associated with data collection and analysis attributable to
the non-federal portion of any particular beach nourishment
project.
On August 5, 1998, the Committee on Resources met to
consider H.R. 3972. The Subcommittee on Energy and Mineral
Resources was discharged from further consideration of the bill
by unanimous consent. No amendments were offered and the bill
was ordered favorably reported to the House of Representatives
by voice vote.
Section-by-Section Analysis
Section 1 of H.R. 3972 amends section 8(k)(2)(B) of the
Outer Continental Shelf Lands Act by striking the phrase ``an
agency of the Federal Government'' and substituting ``a
Federal, State or local government agency'' to have all levels
of government treated equally regarding payment for OCS sand,
gravel and shell resources.
Committee Oversight Findings and Recommendations
With respect to the requirements of clause 2(l)(3) of rule
XI of the Rules of the House of Representatives, and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee on Resources' oversight findings and
recommendations are reflected in the body of this report.
Constitutional Authority Statement
Article I, section 8 and Article IV, section 3 of the
Constitution of the United States grant Congress the authority
to enact H.R. 3972.
Cost of the Legislation
Clause 7(a) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in carrying out
H.R. 3972. However, clause 7(d) of that Rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
Compliance With House Rule XI
1. With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, H.R.
3972 does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in tax
expenditures. According to the Congressional Budget Office,
enactment of H.R. 3972 would result in a loss of offsetting
receipts of less than $500,000 annually.
2. With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 3972.
3. With respect to the requirement of clause 2(l)(3)(C) of
rule XI of the Rules of the House of Representatives and
section 403 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R.
3972 from the Director of the Congressional Budget Office.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 17, 1998.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3972, a bill 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.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Kim Cawley
(for federal costs) and Leo Lex (for the state and local
impact).
Sincerely,
June E. O'Neill, Director.
Enclosure.
H.R. 3972--A bill 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
H.R. 3972 would amend the Outer Continental Shelf Lands Act
to allow state and local government agencies to negotiate
agreements with the Department of the Interior (DOI) to use
sand, gravel, and shell resources from the outer continental
shelf (OCS) for shore and beach restoration programs and other
federally authorized construction projects without charge.
Under current law, DOI cannot charge federal agencies for the
use of these offshore resources, and the bill would extend free
use of these resources to state and local governments. CBO
estimates that enacting H.R. 3972 would result in the loss of
offsetting receipts to the federal government of less than
$500,000 annually. The bill contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act.
Based on information from DOI, CBO estimates that future
annual receipts from state and local governments using sand,
gravel, and shell resources from the federally controlled OCS
would be small, ranging from nothing to a few hundred thousand
dollars a year. Most projects to replenish beach sand use
dredged material from nearby state submerged lands rather than
the OCS; however, there is increasing interest in this
resource. Proceeds from the sale of this material are recorded
as offsetting receipts to the Treasury; thus a loss of these
receipts would increase direct spending. Because the bill would
affect direct spending, pay-as-you-go procedures would apply,
but the amounts involved would not be significant. By exempting
state and local governments from fees that would otherwise be
charged for sand, gravel, and shell resources, the bill would
result in some small savings to state and local governments.
The CBO staff contacts are Kim Cawley (for federal costs)
and Leo Lex (for the state and local impact). This estimate was
approved by Paul N. Van de Water, Assistant Director for Budget
Analysis.
Compliance With Public Law 104-4
H.R. 3972 contains no unfunded mandates.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
SECTION 8 OF THE OUTER CONTINENTAL SHELF LANDS ACT
Sec. 8. Leasing of Outer Continental Shelf.--(a) * * *
* * * * * * *
(k)(1) * * *
(2)(A) * * *
(B) In carrying out a negotiation under this paragraph, the
Secretary may assess a fee based on an assessment of the value
of the resources and the public interest served by promoting
development of the resources. No fee shall be assessed directly
or indirectly under this subparagraph against [an agency of the
Federal Government] a Federal, State, or local government
agency.
* * * * * * *