[House Report 112-578]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-578

======================================================================



 
SODA ASH ROYALTY EXTENSION, JOB CREATION, AND EXPORT ENHANCEMENT ACT OF 
                                  2012

                                _______
                                

  July 9, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1192]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 1192) to extend the current royalty rate for 
soda ash, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Soda Ash Royalty Extension, Job 
Creation, and Export Enhancement Act of 2012''.

SEC. 2. EXTENSION OF ROYALTY RATE ON SODA ASH.

  Section 102 of Public Law 109-338 (30 U.S.C. 262 note) is amended by 
striking ``5-year'' and inserting ``10-year''.

                          Purpose of the Bill

    The purpose of H.R. 1192, as ordered reported, is to extend 
the current royalty rate for soda ash.

                  Background and Need for Legislation

    The Soda Ash Royalty Reduction Act of 2006 was included in 
the National Heritage Areas Act of 2006 (Public Law 109-338). 
This law reduced the royalty on soda ash to 2 percent, the 
minimum required in the Mineral Leasing Act of 1921. Uses for 
soda ash include glass-making which consumes about half of soda 
ash output. This is followed by the chemical industry, which 
uses about a quarter of the output. Other uses include soap, 
paper manufacturing, and water treatment.
    Prior to the royalty relief legislation being enacted, the 
U.S. soda ash (sodium carbonate) industry was experiencing 
increased pressure from state owned Chinese companies operating 
under lax environmental standards, coupled with high U.S. 
royalty rates that ranged between 5 and 8 percent. Between 1997 
(the year after the Bureau of Land Management raised the 
royalty rates) and 2000, China overtook the United States as 
the world's largest exporter of soda ash. By 2003, the growth 
in domestic exports had grown by only a few percentage points, 
and approximately 1000 jobs in the domestic soda ash mining 
industry had been lost.
    Between October 2006 and September 2011, when the 2 percent 
royalty rate was in place, the soda ash industry was able to 
reverse the downward trend in exports, and was able to add jobs 
during the recession. By being able to keep more of the money 
they made, the soda ash companies were able to reinvest in 
their operations to increase production and efficiencies, 
allowing the industry to increase exports by more than 1 
million tons.
    In October 2011, Bureau of Land Management reinstated the 6 
percent royalty--this was a discretionary decision. This has 
already had an impact on U.S. exports: those for the first two 
months of 2012 have fallen below the average exports for 2011.

                            Committee Action

    H.R. 1192 was introduced on March 17, 2011, by 
Congresswoman Cynthia Lummis (R-WY). The bill was referred to 
the Committee on Natural Resources, and within the Committee to 
the Subcommittee on Energy and Mineral Resources. On April 26, 
2012, the Subcommittee on Energy and Mineral Resources held a 
hearing on the bill. On May 16, 2012, the Full Natural 
Resources Committee met to consider the bill. The Subcommittee 
on Energy and Mineral Resources was discharged by unanimous 
consent. Congressman Doug Lamborn (R-CO) offered an amendment 
designated #1; the amendment was adopted by voice vote. 
Congressman Paul Tonko (D-NY) offered amendment designated 
.001; the amendment was not adopted by a bipartisan roll call 
vote of 11 to 24, as follows:




    The bill, as amended, was then adopted and ordered 
favorably reported to the House of Representatives by a 
bipartisan roll call vote of 27 to 10, as follows:



            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) 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 this bill. However, clause 3(d)(2)(B) 
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 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII 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 this bill from the 
Director of the Congressional Budget Office:

H.R. 1192--Soda Ash Royalty Extension, Job Creation, and Export 
        Enhancement Act of 2012

    Summary: H.R. 1192 would require the Department of the 
Interior (DOI) to charge a 2 percent royalty on the value of 
soda ash produced on federal lands through 2016. Under current 
law, CBO expects that the royalty rate would remain at 6 
percent over that period. CBO estimates that implementing H.R. 
1192 would reduce net federal offsetting receipts from soda ash 
royalties by $75 million over the 2013-2016 period; therefore, 
pay-as-you-go procedures apply. Enacting H.R. 1192 would not 
affect revenues.
    H.R. 1192 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1192 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2013   2014   2015   2016   2017   2018   2019   2020   2021   2022  2013-2017  2013-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
Estimated Budget Authority..................................     30     15     15     15      0      0      0      0      0      0        75         75
Estimated Outlays...........................................     30     15     15     15      0      0      0      0      0      0        75         75
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted near the end of 2012.
    H.R. 1192 would reduce the royalty rate on the value of 
soda ash produced on federal lands from 6 percent to 2 percent 
through 2016. Based on information from the Bureau of Land 
Management, CBO expects that, under the bill, firms that paid 6 
percent in royalties during 2012 would receive refunds in 2013 
of any amounts in excess of the 2 percent rate established by 
the bill. In addition, because CBO expects that royalty rates 
charged for soda ash production on state and private lands 
would be higher than 2 percent, we also expect that, under the 
bill, the amount of soda ash produced on federal lands would be 
higher over the next four years than it would be under current 
law. However, CBO estimates that any increase in production 
would only partially offset the loss of receipts from lowering 
the royalty rate through 2016.
    In 2011, the last time the royalty rate was set at 2 
percent, firms produced 8.8 million tons of soda ash on federal 
lands and paid royalties totaling $22 million. Based on 
information from DOI regarding soda ash production and royalty 
collections through the first half of 2012 (when the royalty 
rate increased to 6 percent), CBO estimates that firms will 
produce 7.2 million tons of soda ash on federal lands in 2012 
(a decline of roughly 20 percent from 2011) and will pay gross 
royalties totaling $44 million (double the amount collected in 
2011). Thus, under current law, we estimate that, after 
payments to states of half the gross proceeds, net receipts to 
the federal government in 2012 will total $22 million. If H.R. 
1192 is enacted, we expect that DOI would refund about $15 
million of that amount to firms in 2013. CBO also estimates 
that implementing the bill would reduce receipts in each year 
over the 2013-2016 period by a similar amount. In total, CBO 
estimates that enacting H.R. 1192 would reduce net offsetting 
receipts from soda ash royalties by $75 million over the 2013-
2016 period.
    Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1192 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON MAY 16, 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2012   2013   2014   2015   2016   2017   2018   2019   2020   2021   2022  2012-2017  2012-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact.......................      0     30     15     15     15      0      0      0      0      0      0        75         75
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 1192 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The royalty reduction required by the bill 
would temporarily reduce federal payments to California, 
Colorado, New Mexico, and Wyoming by a total of $75 million 
over the 2013-2016 period.
    Estimate prepared by: Federal Costs: Jeff LaFave; Impact on 
State, Local, and Tribal Governments: Melissa Merrell; Impact 
on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, spending authority, credit authority, or an increase 
or decrease in revenues or tax expenditures. CBO estimates that 
implementing H.R. 1192 would reduce net federal offsetting 
receipts from soda ash royalties by $75 million over the 2013-
2016 period; therefore, pay-as-you-go procedures apply.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill, as ordered reported, is to extend the 
current royalty rate for soda ash.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) 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):

                        ACT OF OCTOBER 12, 2006

                          (Public Law 109-338)

AN ACT To reduce temporarily the royalty required to be paid for sodium 
 produced, to establish certain National Heritage Areas, and for other 
purposes.

           *       *       *       *       *       *       *


TITLE I--SODA ASH ROYALTY REDUCTION

           *       *       *       *       *       *       *


SEC. 102. REDUCTION IN ROYALTY RATE ON SODA ASH.

  Notwithstanding section 102(a)(9) of the Federal Land Policy 
Management Act of 1976 (43 U.S.C. 1701(a)(9)), section 24 of 
the Mineral Leasing Act (30 U.S.C. 262), and the terms of any 
lease under that Act, the royalty rate on the quantity or gross 
value of the output of sodium compounds and related products at 
the point of shipment to market from Federal land in the [5-
year] 10-year period beginning on the date of enactment of this 
Act shall be 2 percent.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    H.R. 1192 would reduce the royalty paid to the American 
people from sodium leases on public lands from an average of 
5.6 percent to 2 percent for five years. In 2006, Congress 
passed legislation that reduced the royalty for sodium leases 
to 2 percent for five years. That lowered rate expired late 
last year and according to a review of the impacts of the 
lowered royalty rate by the Department of the Interior it did 
not increase domestic soda ash production, capital investment 
or jobs in the industry. We therefore oppose extending the 
lowered royalty rate The Interior Department concluded the 
lowered royalty rate significantly reduced revenues to the 
American people. The DOI report found that royalty revenues to 
the American people were $150 million lower over five years as 
a result of the lowered royalty rate--five times the loss 
anticipated by Congress when it passed the reduction in 2006. 
Moreover, this windfall benefitted only a handful of 
companies--according to the Interior Department in 2010 the 
U.S. Soda Ash industry consisted of only five companies.
    Furthermore, the Interior Department concluded that 
domestic soda ash production did not increase during the 
period--production was actually lower in 2010 than it was in 
2006 before passage of the lowered royalty rate--because ``the 
royalty rate reduction appears to have influenced a shift of 
production away from state leases and private lands and onto 
Federal leases.'' The lowered royalty rate appears to have led 
companies to simply move their operations onto federal lands, 
where the royalty rate was lower. In fact, the lowered royalty 
rate reduced revenue to states by more than $110 million over 
that period.
    The Interior Department additionally concluded that 
``significant new employment in the soda ash industry did not 
occur during this [five year] period'' and that domestic 
employment in the industry has dropped by about 10 percent 
since 2006, despite the lowered royalty rate. Similarly, 
according to DOI, the lowered royalty rate did not increase 
capital investment by the soda ash industry and that annual 
capital investments have fallen since 2006.
    The Majority rejected an amendment from Representative 
Tonko (D-NY) that would have protected American taxpayers by 
only allowing the lowered royalty rate to go forward after the 
Secretary certified that it would increase U.S. soda ash 
production, increase employment in the industry, and not reduce 
revenue paid to the American people by more than $100 million 
over five years.
    As we are seeking to reduce our federal deficit we should 
ensure that the American people receive a proper return on the 
minerals below public lands not extend failed giveaways to 
industry.

                                   Edward J. Markey.
                                   Raul M. Grijalva.
                                   Grace F. Napolitano.
                                   Madeleine Z. Bordallo.
                                   Paul Tonko.

                                  
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