[House Report 115-455]
[From the U.S. Government Publishing Office]


115th Congress   }                                        {    Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                        {   115-455

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



 
                 AMERICAN SODA ASH COMPETITIVENESS ACT

                                _______
                                

 December 11, 2017.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1399]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 1399) to reduce temporarily the royalty required 
to be paid for sodium produced on Federal lands, and for other 
purposes, 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. 1399 is to reduce temporarily the 
royalty required to be made for sodium produced on Federal 
lands.

                  BACKGROUND AND NEED FOR LEGISLATION

    Soda ash (sodium carbonate) is primarily used for glass-
making, which consumes about half of soda ash output. Another 
quarter is used by the chemical industry. Other uses include 
soap, paper manufacturing and water treatment. In the United 
States, soda ash is refined from trona, a naturally occurring 
mineral, or from naturally occurring sodium-carbonate bearing 
brines. China makes a synthetic soda ash that requires more 
energy and uses a less environmentally-friendly process.
    Soda ash is regulated by the Bureau of Land Management 
(BLM) under the Mineral Leasing Act of 1920 (30 U.S.C. 181 et 
seq.), under which a royalty is assessed on refined soda ash 
and trona. The Soda Ash Royalty Reduction Act of 2006 was 
included in the National Heritage Areas Act of 2006, Public Law 
109-338. The Soda Ash Royalty Reduction Act reduced the royalty 
on soda ash to 2 percent, the minimum required in the Mineral 
Leasing Act of 1920.
    Prior to the 2006 royalty relief legislation being enacted, 
the U.S. soda ash industry was experiencing increased pressure 
from state-sponsored Chinese companies operating under lax 
environmental standards, coupled with high domestic royalty 
rates that ranged between 5 and 8 percent.
    Between 1997 (the year after BLM raised royalty rates on 
soda ash) 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 
since 1997, 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, including during the 
recession.
    During fiscal years 2003-2006 when the rate was 6 percent, 
the federal government collected $74.4 million in royalties on 
soda ash and trona. In fiscal years 2007-2011 when the royalty 
rate was reduced to 2 percent, the federal government took in 
$82 million in royalties. This includes the five-month period 
following the 2008 market crash where demand for mineral 
commodities fell sharply.
    In the four years prior to the October 2006 royalty rate 
reduction, the average sale of soda ash was 4,186,172 tons per 
year. During that time, the price per ton averaged $81.82. 
During the royalty reduction period, the average sale of soda 
ash was 6,713,202 tons per year, and the price per ton averaged 
$128.86.
    Maximum sales of soda ash occurred in fiscal year 2008 and 
reached 7,596,799 tons. The economic downturn that began on 
September 29, 2008, affected commodity prices for more than a 
five-month period and is reflected in the sales for fiscal year 
2009, which totaled 6,193,071 tons.
    In October 2011, BLM reinstated the 6 percent royalty--this 
was a discretionary decision. In fiscal year 2012 sales of soda 
ash fell to 5,480,816 tons; however, with the 6 percent royalty 
rate and increase in the average price of the commodity to 
$151.04, royalty revenue doubled from the previous year. Sales 
increased by more than 700,000 tons in fiscal year 2013 and 
fell back again in fiscal year 2014. In fiscal year 2015 the 
U.S. industry exported 6.7 million tons of soda ash and this 
increase over the 2000 level of 3.9 million tons has been 
attributed to the lower federal royalty rate, which had allowed 
the soda ash industry to compete globally. The royalty rate 
increased to 6% in fiscal year 2016, with total tonnage mined 
on federal lands at approximately 4.7 million tons as compared 
to 6.7 million tons in the previous fiscal year. The raising of 
the royalty rate resulted in fewer royalties being collected on 
soda ash mined on federal lands.
    Congress included a royalty reduction of 4 percent in the 
Helium Stewardship Act of 2013 (Public Law 113-40, section 10) 
that expired at the end of fiscal year 2015. H.R. 1399 reduces 
the royalty rate for soda ash from 6% to 2% for five years.

                            COMMITTEE ACTION

    H.R. 1399 was introduced on March 7, 2017, by Congressman 
Paul Cook (R-CA). The bill was referred to the Committee on 
Natural Resources, and within the Committee to the Subcommittee 
on Energy and Mineral Resources. On June 22, 2017, the Natural 
Resources Committee met to consider the bill. The Subcommittee 
was discharged by unanimous consent. Congressman Alan S. 
Lowenthal (D-CA) offered an amendment designated 001; it was 
not agreed to by voice vote. No further amendments were 
offered, and the bill was ordered favorably reported to the 
House of Representatives on June 27, 2017, by a bipartisan roll 
call vote of 27 ayes and 9 nays, 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 AND CONGRESSIONAL BUDGET ACT

    1. Cost of Legislation and the Congressional Budget Act. 
With respect to the requirements of clause 3(c)(2) and (3) of 
rule XIII of the Rules of the House of Representatives and 
sections 308(a) and 402 of the Congressional Budget Act of 
1974, the Committee has received the following estimate for the 
bill from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, December 5, 2017.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1399, the American 
Soda Ash Competitiveness Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jeff LaFave.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 1399--American Soda Ash Competitiveness Act

    Summary: H.R. 1399 would require the Department of the 
Interior (DOI) to charge a 2 percent royalty on the value of 
sodium compounds and related products produced on federal lands 
for a five-year period following enactment.\1\ Under current 
law, the royalty rate is about 6 percent. About half of the 
royalties collected by the federal government are paid to the 
states where the minerals are produced. Thus, enacting the bill 
would reduce both offsetting receipts, which would have the 
effect of increasing direct spending, and the subsequent 
payments to states stemming from those royalties.
---------------------------------------------------------------------------
    \1\Sodium compounds and related products include soda ash, 
anhydrous sodium sulfite, borax-decahydrate, borax-pentahydrate, boric 
acid, sodium bi-carbonate, sodium bisulfite, sodium sesquicarbonate, 
sulfide, and trona. Over the 2012-2016 period, soda ash accounted for 
87 percent of the total production of those minerals.
---------------------------------------------------------------------------
    CBO estimates that enacting H.R. 1399 would increase net 
direct spending by $50 million over the 2018-2027 period. 
Because the bill would affect direct spending pay-as-you-go 
procedures apply. Enacting the bill would not affect revenues.
    Enacting H.R. 1399 would not increase net direct spending 
or on-budget deficits by more than $2.5 billion in any of the 
four consecutive 10-year periods beginning in 2028.
    H.R. 1399 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. 1399 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--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
Estimated Budget Authority..................................     14     13     13     12     11     -6     -1     -2     -2     -2        63         50
Estimated Outlays...........................................     14     13     13     12     11     -6     -1     -2     -2     -2        63         50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted around the beginning of calendar 
year 2018.

Background

    The royalty rate on sodium compounds produced on federal 
lands has fluctuated in recent years because of Congressional 
action. Legislation, which was similar to H.R. 1399, was 
enacted to lower the royalty rate from 6 percent to 2 percent 
for the five-year period from 2007 through 2011, after which 
the rate returned to 6 percent for 2012 and 2013. In 2014, 
legislation lowering the royalty rate to 4 percent for 2014 and 
2015 was enacted. Beginning in 2016, the royalty rate returned 
to 6 percent and CBO expects that it will remain at 6 percent 
under current law (see Figure 1).




    In 2011, the last year in which the royalty rate was set at 
2 percent, firms produced 7.8 million tons of sodium compounds 
on federal lands, and the federal government received net 
royalties totaling $11 million. (About half of all gross 
federal royalties collected from the affected minerals 
production are paid to the states where those minerals are 
produced.) In 2012 and 2013, when DOI assessed a royalty of 6 
percent, annual production of sodium compounds decreased to an 
average of 6.6 million tons; however, net royalty collections 
increased to an annual average of $27 million.
    During 2014 and 2015, when the royalty rate on sodium 
compounds declined to 4 percent, production on federal lands 
increased to an average of 7.3 million tons while net royalty 
collections decreased to an average of $22 million a year. In 
2016, when the royalty rate was again at 6 percent, production 
on federal lands fell by about 30 percent to 5.5 million tons 
and royalty collections declined slightly (by about $100,000) 
from 2015. Using information from DOI, CBO expects that the 
amount of those minerals produced on federal land in 2017 will 
be about 30 percent lower than in 2015 (the last year the 
royalty rate was 4 percent) but net royalties will be roughly 
$3 million higher because of higher mineral prices. (Actual 
figures for fiscal year 2017 are not yet available.)

Direct spending

    CBO estimates that by reducing the royalty rate, enacting 
H.R. 1399 would reduce net offsetting receipts (and thus 
increase direct spending) by $50 million over the 2018-2027 
period (see Figure 2).


    Over the 2018-2022 period, CBO estimates, enacting H.R. 
1399 would reduce offsetting receipts from royalties on sodium 
compounds by $63 million. We estimate that, under current law, 
production of those compounds on federal lands will increase at 
a slightly slower pace than the expected growth in the soda ash 
industry as a whole (about 2 percent a year), with annual 
production increasing from 5.3 million tons to 5.6 million tons 
and net royalty receipts increasing from $23 million to $27 
million annually over that period.
    Under H.R. 1399, CBO estimates that production of sodium 
compounds on federal lands would be significantly higher than 
under current law, ranging from 6.1 million tons in 2018 to 8.9 
million tons in 2022. That increase would stem primarily from 
firms shifting operations from nonfederal lands to federal 
lands to take advantage of the lower royalty rate. Despite the 
higher production levels, net receipts would be significantly 
lower than under current law because of the much lower royalty 
rate, and would total $10 million in 2018 and $16 million in 
2022, CBO estimates.
    In 2023 and 2024, the first two years after the royalty 
rate would return to 6 percent, CBO expects that production 
levels would fall sharply as firms rapidly shift operations 
back to nonfederal lands that they would have bypassed to take 
advantage of reduced royalties on federal lands. After 2024, 
production on federal lands would increase at a higher rate 
than average industry growth until the federal share of 
production reaches about 50 percent, CBO estimates. The lower 
costs of production over the 2018-2022 period would prompt 
firms to increase production capacity, which would result in 
higher production and a greater share of the global market. 
Over the 2023-2027 period, CBO estimates that production of 
sodium compounds on federal lands would be about 500,000 tons 
higher each year, on average, and net receipts would be $13 
million higher over that period than estimated receipts under 
current law.
    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. 1399 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON JUNE 27, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      NET INCREASES OR DECREASES (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact..............................     14     13     13     12     11     -6     -1     -2     -2     -2        63         50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    Mandates: H.R. 1399 contains no intergovernmental or 
private-sector mandates as defined in UMRA. The royalty 
reduction required by the bill would reduce federal payments to 
California, Colorado, New Mexico, Utah, and Wyoming by about 
$60 million over the 2018-2022 period.
    Estimate prepared by: Federal costs: Jeff LaFave; Mandates: 
Jon Sperl and Amy Petz.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.
    2. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is reduce temporarily the royalty 
required to be made for sodium produced on Federal lands.

                           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.

                       COMPLIANCE WITH H. RES. 5

    Directed Rule Making. This bill does not contain any 
directed rule makings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

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

                        CHANGES IN EXISTING LAW

    If enacted, this bill would make no changes to existing 
law.

                            DISSENTING VIEWS

    This bill is an entirely unnecessary giveaway to a healthy 
industry that will cost American taxpayers tens of millions, if 
not hundreds of millions of dollars, while doing nothing to 
achieve the positive benefits that the supporters of this 
legislation claim it will bring.
    Similar royalty relief for the soda ash industry was 
enacted in 2006, and after five years of the lower royalty, the 
Department of the Interior concluded that the royalty rate 
reduction, ``does not appear to have contributed in a 
significant way to the creation of new jobs within the 
industry, to increased exports, or to a notable increase in 
capital expenditures to enhance production.'' (Report appended 
to these views.)
    Furthermore, in the two years after that royalty relief 
expired, under every relevant metric, the soda ash industry 
performed better than it did with that relief in place. During 
the royalty relief period production dropped, U.S. market share 
dropped, employment went down, and the average rate of export 
growth was 3.4 percent. In the two years after royalty relief 
expired, production went up, U.S. market share went up, 
employment increased, and the average rate of export growth was 
8.8 percent. In Fiscal Years 2014 and 2015 the soda ash 
industry again received a royalty rate cut, yet employment, 
production, and exports have stayed flat from 2013 through 
2016.
    The Majority has claimed that the royalty relief did not 
cost taxpayers much because royalty collections from 2007-2011 
were only $2 million below the collections from 2002-2006. 
However, the price of soda ash more than doubled between 2004 
and 2009, which is the only reason that total collections were 
able to keep pace. Soda ash prices are currently at their 
highest levels in decades, which makes it even less necessary 
to provide royalty relief to this industry, and makes the 
potential royalty revenue loss even greater.
    The official CBO score of $50 million in automatically lost 
revenues to the federal government is only half of the issue. 
Since royalties are split with states, California and Wyoming 
also stand to lose $50 million, at least, under this bill. 
Instead of $100 million that could be going to fund schools, 
build roads, and provide medical care, that money will go 
straight into the pockets of mining company CEOs.
    None of the reasons the Majority provides for supporting 
this bill are substantiated by the facts. Vague arguments about 
the need to remain competitive and increase employment could be 
made for every extractive resource industry in the nation, yet 
lowering royalty rates for no reason simply cheats the American 
people of their fair share of revenues from the development of 
public resources on public land. The situation is even worse 
for the States: the Interior Department found that one of the 
main consequences of the previous royalty relief was that 
companies would move their operations from state lands, where 
states receive all the royalties, to federal lands, where 
states only receive half.
    While the sponsor of the bill pointed out that production 
of soda ash on federal land fell significantly in 2016 after 
the most recent royalty relief expired, this could very likely 
be due to companies hopping on and off federal lands based on 
whether they're currently receiving the royalty giveaways that 
Congress has been repeatedly providing. It seems like companies 
are gaming the system, and this bill would indicate that 
Congress is all too happy to play along.
    H.R. 1399 has no redeeming benefits for the American 
public, is completely unsupported by our previous experience 
with soda ash royalty relief, and is nothing more than a $50 
million giveaway of taxpayer money.

                                   Raul M. Grijalva.
                                   Jared Huffman.
                                   Grace F. Napolitano.
                                   Colleen Hanabusa.

                                  [all]