[Senate Hearing 108-702]
[From the U.S. Government Publishing Office]
S. Hrg. 108-702
ROYALTY ON SODA ASH; AMEND THE NATIONAL GEOLOGIC MAPPING ACT; GRANTS
PROVIDED TO PACIFIC ISLAND TERRITORIES; AND VOTING RIGHTS OF THE ARMED
FORCES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON PUBLIC LANDS AND FORESTS
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
on
S. 2317 S. 2353
H.R. 1189 H.R. 2010
__________
JULY 14, 2004
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee RON WYDEN, Oregon
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana EVAN BAYH, Indiana
GORDON SMITH, Oregon DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky CHARLES E. SCHUMER, New York
JON KYL, Arizona MARIA CANTWELL, Washington
Alex Flint, Staff Director
Judith K. Pensabene, Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
------
Subcommittee on Public Lands and Forests
LARRY E. CRAIG, Idaho, Chairman
CONRAD R. BURNS, Montana, Vice Chairman
GORDON SMITH, Oregon RON WYDEN, Oregon
JON KYL, Arizona DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado BYRON L. DORGAN, North Carolina
LAMAR ALEXANDER, Tennessee TIM JOHNSON, South Dakota
LISA MURKOWSKI, Alaska MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri EVAN BAYH, Indiana
DIANNE FEINSTEIN, California
Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the
Subcommittee
Dick Bouts, Professional Staff Member
Kellie Donnelly, Counsel
Scott Miller, Democratic Counsel
C O N T E N T S
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STATEMENTS
Page
Akaka, Hon. Daniel K., U.S. Senator From Hawaii.................. 9
Bunning, Hon. Jim, U.S. Senator From Kentucky.................... 2
Burd, Michael K., Vice President, United Steelworkers of America
Local 13214, FMC Wyoming Alkali Plant, Green River, WY......... 24
Cobb, James C., Ph.D., State Geologist and Director, Kentucky
Geological Survey, University of Kentucky Geological Survey,
Lexington, KY.................................................. 19
Cohen, David B., Deputy Assistant Secretary for Insular Affairs,
Department of the Interior..................................... 6
Craig, Hon. Larry E., U.S. Senator From Idaho.................... 1
Faleomavaega, Hon. Eni F.H., U.S. Delegate From American Samoa... 2
Leahy, P. Patrick, Associate Director for Geology, U.S.
Geological Survey, Department of the Interior.................. 10
Loomis, Marion, Executive Director, Wyoming Mining Association... 31
Marvinney, Robert G., Ph.D., President, American Association of
State Geologists, Director and State Geologist, Maine
Geological Survey.............................................. 15
McDermid, John F., Counsel, American Natural Soda Ash Corporation 26
Thomas, Hon. Craig, U.S. Senator From Wyoming.................... 5
APPENDIXES
Appendix I
Responses to additional questions................................ 39
Appendix II
Additional material submitted for the record..................... 43
ROYALTY ON SODA ASH; AMEND THE
NATIONAL GEOLOGIC MAPPING ACT; GRANTS PROVIDED TO PACIFIC ISLAND
TERRITORIES; AND VOTING RIGHTS OF THE ARMED FORCES
----------
WEDNESDAY, JULY 14, 2004
U.S. Senate,
Subcommittee on Public Lands and Forests,
Committee on Energy and Natural Resources,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:32 p.m. in
room SD-366, Dirksen Senate Office Building, Hon. Larry E.
Craig presiding.
OPENING STATEMENT OF HON. LARRY E. CRAIG,
U.S. SENATOR FROM IDAHO
Senator Craig. The Subcommittee on Public Lands and Forests
will convene. This legislative hearing is on S. 2317, S. 2353,
H.R. 1189, and H.R. 2010. So good afternoon, everyone. I want
to thank you all for coming to our hearing today.
Today we will have two representatives from the Department
of the Interior. I want to welcome Mr. David Cohen, who is the
Deputy Assistant Director for Insular Affairs, and Patrick
Leahy, Associate Director for Geology from the USGS. I also
want to thank our witnesses for taking the time to come to
Washington to testify. I know you have traveled a long way and
it will help you--it certainly will help us better understand
the need for this legislation.
We will be hearing testimony on the following four bills,
as I had mentioned: S. 2317 was introduced by Senator Thomas--
Senator Thomas is here with us as a member of this committee--
to reduce Federal royalty on soda ash for 5 years. That is S.
2317. S. 2353 is a bill to reauthorize the National Geologic
Mapping Act for another 5 years. H.R. 1189 is a bill to
increase the waiver requirement for local funding matching
funds for grants provided to the U.S. territories of American
Samoa, Guam, the Virgin Islands, and the Northern Mariana
Islands; and H.R. 2010, a bill to provide for the election of
the American Samoa delegate to the U.S. House of
Representatives by plurality vote and for other purposes. The
subcommittee has received a statement from the American Samoa
delegate, who wished he could be here today, but timing has not
allowed that, on these two island bills.
I also have a statement from the Idaho State geologist on
S. 2353. They will all become a part of the record.
[The prepared statements of Senator Bunning and Mr.
Faleomavaega follow:]
Prepared Statement of Hon. Jim Bunning, U.S. Senator
From Kentucky, on S. 2353
Thank you, Mr. Chairman. I am pleased the Energy Committee will be
hearing testimony today on a bill reauthorizing and amending the
National Geologic Mapping Act of 1992. As an original co-sponsor of the
bill, I would like to thank Senator Craig for introducing this
important legislation.
Kentucky is a leader in geological maps and is at the forefront of
geologic mapping techniques. I have seen firsthand the successes of
this program through the Kentucky Geological Survey Office, led by Jim
Cobb, who will testify before us today.
This cooperative Federal-State program has provided significant
benefits to Kentucky. While mapping in Kentucky is built on our long
tradition of coal mining, these maps now aid many new initiatives, from
water supply planning to economic development.
Establishing a thorough and precise catalog of the lay of the land
in the Commonwealth has opened a world of development opportunities.
This act has provided the Federal funds, leveraged by State money,
to create and catalog our terrain.
I would like to thank the witnesses for their testimony on the
bills before the committee today. Thank you, Mr. Chairman.
______
Prepared Statement of Hon. Eni F.H. Faleomavaega,
U.S. Delegate From American Samoa
ON H.R. 1189
Dear Mr. Chairman, Vice Chairman, and Ranking Member, thank you for
holding a hearing on H.R. 1189, a bill to increase the waiver
requirement for certain local matching requirements for grants provided
to American Samoa, Guam, the Virgin Islands, or the Commonwealth of the
Northern Mariana Islands.
As you know, the U.S. House of Representatives unanimously passed
H.R. 1189 on November 18, 2003 and Congress first enacted a matching
waiver requirement for the territories in 1980, recognizing the
difficulty of territorial governments to access federal grant moneys.
At that time, the waiver was set at $100,000 for American Samoa and
CNMI. Later in 1983 and 1984, the law was amended to increase the
requirement to $200,000 and simultaneously added the territories of
Guam and Virgin Islands for eligibility. It has now been twenty years
since this law has been revisited and the current waiver of $200,000
has proven to be inadequate to meet the needs of the insular areas.
Our territorial governments continue to be challenged with rising
unemployment, decreased government revenues, and impediments to
attracting new capital for diversification. The insular areas simply do
not have the financial resources to meet the matching fund requirements
required by federal law. Consequently, we are often unable to apply for
the federal grants that we need to address critical issues like health,
education and economic development. H.R. 1189 would alleviate these
difficulties by increasing the waiver requirement to $500,000.
H.R. 1189 would also direct the Secretary of the Interior to
complete and submit to the House Committee on Resources and the Senate
Committee on Energy and Natural Resources the results of a study of the
implementation of the changes to the matching requirement made through
this legislation. While it is clear that more comprehensive legislation
is needed to bring about sustainable economic growth and relief for the
insular areas, I believe this legislation will alleviate some of the
economic difficulties we have been facing.
At this time, I would like to thank my colleague from Guam, the
Honorable Madeleine Bordallo, for co-sponsoring this important
legislation. I also truly appreciate the support of Chairman Richard
Pombo and Ranking Member Nick Rahall of the House Committee on
Resources for recognizing the importance of this issue. Again, I thank
you for holding this hearing and I urge successful passage of H.R.
1189.
ON H.R. 2010
Mr. Chairman, Vice Chairman, Ranking Member, thank you for holding
this hearing on H.R. 2010, a bill I introduced to protect the voting
rights of active duty service members and overseas voters whose home of
residence is American Samoa. I regret that I am unable to accept your
invitation to testify at today's hearing due to an important event
taking place in my district.
As you may know, the traditional chiefs and leaders of Manu'a ceded
their islands to the United States 100 years ago and the people of
American Samoa are joining together to celebrate this historical
relationship on July 14, 2004. Equally important is today's hearing on
H.R. 2010 and I thank you for entering the full text of my statement
into the record.
H.R. 2010 is a bipartisan bill which is supported by Chairman
Richard Pombo and Ranking Member Nick Rahall of the House Committee on
Resources. On May 5, 2004, the House Committee on Resources passed this
bill by unanimous consent. On June 14, 2004, the House passed H.R. 2010
without objection.
I am pleased that the Senate is now considering H.R. 2010 and I
would like to note for the record that on October 29, 2003 the House
Committee on Resources held a hearing on this bill. On behalf of the
U.S. Department of the Interior, the Assistant Secretary for Insular
Affairs was invited to testify but declined citing that this was a
local issue.
Locally, H.R. 2010 is supported by the Governor of American Samoa,
the President of the Senate, the Speaker of the House, and 85% of those
surveyed in American Samoa agree that overseas voters and active duty
service members should have the right to vote in federal elections held
in the Territory.
Since the Assistant Secretary has now accepted an invitation to
testify before the Senate Energy and Natural Resources Subcommittee on
Public Lands and Forests, he has given me his word that the Department
of the Interior will not raise objections to H.R. 2010. I would also
like to note that I have kept the Department of the Interior fully
informed of all matters pertaining to this legislation.
For the past six years, this matter has also been before the people
and the local leaders of American Samoa. Since 1998, I have written to
our Governors, past and present. I have written and testified before
our local Legislature, or Fono, and copies of my testimony, my letters,
and local responses have been made part of the House Committee records.
I would like to ask that these addendums and the full text of my
remarks be included in the Senate records.
In short, American Samoa's overseas voters and military men and
women have been disenfranchised from the political process and have
been denied the right to vote in federal elections held in the
Territory. In part, this has been due to two complications. One,
American Samoa law has required overseas and uniformed voters to
register to vote in person and this has been contrary to the Uniformed
and Overseas Citizens Voting Act of 1975.
While I am pleased that our Legislature is working to address the
local registration process, our uniformed and overseas voters have also
been denied the right to vote as a result of Public Law 95-556 passed
on October 31, 1978. Federal, or P.L. 95-556, provides for the
Territory of American Samoa to be represented by a nonvoting Delegate
to the United States House of Representatives and mandates that if no
candidate receives a majority of the votes cast, on the fourteenth day
following such election, a runoff election shall be held between the
candidates receiving the highest and second highest number of votes
cast.
Like the Governor of American Samoa, the Honorable Togiola T.A.
Tulafono, I believe this 1978 federal law requiring a runoff election
to be held only 14 days after the general election creates, as Governor
Togiola says, ``a situation where it is virtually impossible for
American Samoa's Election Office to send out absentee ballots to the
men and women in the military and expect to receive them back in time
for those votes to be counted in a run-off election.'' Given that our
mail is delayed and our air service is limited to two flights a week,
Governor Togiola and I agree that some measure should be put in place
to assure that the votes of our military men and women are counted and
that this injustice is corrected.
During the 107th Congress, I introduced H.R. 3576, a bill to
establish primary elections and which made sure that American Samoa's
Delegate was elected by a majority of the votes cast. When introducing
this bill, I pointed out that both Guam and the Virgin Islands were
once bound by the two week federal runoff requirement but established
primary elections to resolve similar problems of sending out and
receiving back absentee ballots in time for those votes to be counted.
Although I suggested that American Samoa could benefit from modeling
its federal election procedures after Guam and the U.S. Virgin Islands,
the American Samoa Government (ASG) chose not to support this bill and
cited as its reason that primary elections were too costly.
Given ASG's financial difficulties and out of respect for its
concerns, I introduced H.R. 4838 which called for voting by plurality
in lieu of primary elections. As I explained when introducing H.R.
4838, 49 of the 50 states use plurality voting to elect their
Representatives to Congress. The counties of Tualauta and Itu'au in
American Samoa also elect their representatives by plurality vote.
Plurality voting minimizes costs to the local government and also
provides active duty service members and other overseas voters an
opportunity to participate fully in the federal election process.
Despite these benefits, ASG also chose not to support this bill. This
time, the former and late Governor Tauese P.F. Sunia stated that he
believed ``the intent of Congress when they established majority vote
was to ensure a strong mandate for American Samoa's Delegate.''
To be clear about this, I would like to provide this Committee with
a legal history of how election law was determined for American Samoa.
In 1951, President Harry S Truman issued Executive Order 10264 which
transferred administrative responsibility for the islands of American
Samoa from the Secretary of the Navy to the U.S. Secretary of the
Interior. The Secretary of the Interior, in turn, appointed our
Governors.
In 1960, the people of American Samoa adopted a Constitution. The
Constitution was revised in 1966 and was approved by the Secretary of
the Interior on June 2, 1967. In 1967, the Revised Constitution of
American Samoa provided for an elected Legislature, or Fono, consisting
of a Senate and a House of Representatives. However, it did not provide
our people with the right to elect our own Governor and Lieutenant
Governor and, at the time, American Samoa was the only remaining off-
shore area of the United States which did not have a popularly elected
Governor and Lieutenant Governor.
On June 10, 1976, Congressman Phil Burton, Chairman of the House
Subcommittee on Interior and Insular Affairs, took notice of American
Samoa's situation and introduced a bill to make it possible for our
Governor and Lieutenant Governor to be popularly elected rather than
appointed by the Secretary of the Interior. As staff counsel to the
Committee on Interior and Insular Affairs, Congressman Burton
instructed me to draft this legislation which the U.S. House of
Representatives overwhelmingly passed by a landslide vote of 377 to 1.
Instead of sending his bill to the Senate, Chairman Burton decided
to consult further with the Secretary of the Interior, Rogers C.B.
Morton, about American Samoa's unique political status as an
unincorporated and unorganized territory which was and is unlike the
organized territories of Guam and the Virgin Islands. As a result of
their consultations, the two agreed that Secretary Morton would issue a
Secretarial Order (No. 3009) authorizing the American Samoa Government
to pass enabling legislation to provide for an elected Governor and the
Lieutenant Governor.
Secretary's Order No. 3009 amended American Samoa's Constitution to
specifically provide for an elected rather than an appointed Governor
and Lieutenant Governor. Secretary's Order 3009 was also in keeping
with the will of the majority of voters in American Samoa who voted in
favor of electing their own Governor and Lieutenant Governor in a
plebiscite that was held on August 31, 1976.
Furthermore, Chairman Phil Burton introduced legislation on August
2, 1978 to provide that the Territory of American Samoa be represented
by a nonvoting Delegate to the U.S. House of Representatives. I was
also tasked with drafting this legislation which became Public Law 95-
556 and was made effective October 31, 1978.
I can assure you that in the case of the Delegate, American Samoa's
federal election laws were patterned after those of the Virgin Islands
and Guam. At the time, consideration was not given to whether or not
majority or plurality voting should be established for American Samoa.
Congress simply enacted legislation to provide American Samoa with
representation in the U.S. Congress. We could not foresee some 25 years
ago that American Samoa's men and women would serve in record numbers
in the U.S. Armed Forces making it nearly impossible (given American
Samoa's limited air and mail service) for active duty service members
to participate in runoff elections held two weeks after general
elections.
Today, we are keenly aware that this requirement to hold a runoff
election 14 days after the general election is wrong. To right this
wrong and after further consultations with our local leaders, I
introduced H.R. 2010 which includes the suggestions of Governor
Togiola. In a letter dated September 11, 2003, Governor Togiola
informed me that he had reviewed the copy of H.R. 2010 that I sent to
him and that he was satisfied that this bill will provide an immediate
solution to address the concerns we have regarding the voting rights of
our men and women in the military services. In a letter dated September
15, 2003, I thanked Governor Togiola for his support.
Although we have had some differences regarding this issue,
Governor Togiola and I have always agreed that our military men and
women should have the right to vote especially when they contribute
almost a million dollars per year in taxes to our local government. I
am pleased that Governor Togiola is now happy with this bill and I
again commend him for supporting its passage in the House.
I also want to thank the President of the American Samoa Senate,
the Honorable Lutu Tenari S. Fuimaono, for his support. In a letter
dated October 28, 2003, President Fuimaono stated that he fully
supports H.R. 2010.
Finally, I would like to say that H.R. 2010 is an historic bill. It
is a bill that immediately restores the voting rights of our overseas
voters and active duty military members. It is also a bill that makes
clear in no uncertain terms that the American Samoa Legislature is
vested with the authority it needs to establish primary elections for
the office of the Delegate, if it so chooses.
H.R. 2010 also protects American Samoa's future in the U.S.
Congress. Without H.R. 2010, future Delegates could miss out on key
committee assignments as a result of delayed outcomes and run-off
elections. Like Governor Togiola, I do not believe American Samoa's
future should be weakened or disadvantaged and this is one more reason
I appreciate his support of H.R. 2010.
Given the importance and urgency of this bill, I thank the members
of the House Resources Committee, both Democrats and Republicans, who
unanimously voted in favor of this bill. H.R. 2010 is the right thing
to do and, as a Vietnam veteran, I will not rest until we fully
guarantee that our active duty service members have the right to vote
in federal elections held in American Samoa.
To alleviate any concerns that I will personally benefit from this
legislation, I offered an amendment in the nature of a substitute for
purposes of changing the effective date of this bill from January 2004
to January 2006. This amendment was unanimously supported at mark-up by
the House Resources Committee and, as such, any change in law will not
go into effect until the 2006 election cycle.
As I have repeatedly stated, H.R. 2010 in no way affects how the
American Samoa Government chooses to elect its local leaders and,
having made every change requested of me by our local leaders and after
years of good-faith efforts on my part, I believe the time has come to
do right by our overseas voters and men and women in the military. Our
sons and daughters have fought and died to preserve our freedoms and I
will do everything I can to protect their right to vote.
Again, Mr. Chairman, Vice Chairman, and Ranking Member of the
Senate Energy Subcommittee on Public Lands and Forests, I thank you for
holding this historic hearing on H.R. 2010 and I respectfully ask that
you support its successful passage. Most of all, I thank the men and
women from American Samoa who are serving on active duty at a time when
our nation is at war. I wish our active duty service members the very
best and I pray for their safe return.
Senator Craig. I have decided to forego an opening
statement so that we can hear directly from the witnesses, any
further than I want to make at this time. There is a briefing
at 3 o'clock that we would hope we can move through this, that
will allow us to attend.
With that, let me turn to my colleague Craig Thomas for any
opening statement he would like to make.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR
FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman.
I will not take the time either. I do want to join you,
however, in welcoming the witnesses that we have here today.
There are several interesting bills here, and I particularly
want to welcome those who have come to comment on the bill that
we have in Wyoming. We have three witnesses that have come from
Wyoming and I want to welcome them particularly. Otherwise, I
am ready to get on with it, sir.
Senator Craig. Very good.
Our first panel is made up, as I have mentioned, of David
Cohen, Deputy Assistant Director for Insular Affairs,
Department of the Interior, and Patrick Leahy, Associate
Director for Geology, U.S. Geological Survey, Department of the
Interior. David, we will start with you.
STATEMENT OF DAVID B. COHEN, DEPUTY ASSISTANT
SECRETARY FOR INSULAR AFFAIRS, DEPARTMENT OF THE INTERIOR
Mr. Cohen. Thank you. Mr. Chairman and members of the
committee, I am David Cohen, Deputy Assistant Secretary of the
Interior. I am pleased to appear before you today to discuss
H.R. 2010, the American Samoa delegate election bill, and H.R.
1189, the matching fund waiver bill.
First on H.R. 2010. Current law provides that the delegate
to the House of Representatives from American Samoa shall be
elected by majority vote. Under current practice, a runoff is
conducted 2 weeks after the general election in November if no
candidate receives a majority. The result is that members of
the armed forces and other voters overseas may be
disenfranchised in the runoff election due to transportation
and communication difficulties that delay the return of runoff
ballots in time for counting.
H.R. 2010 provides one method for attempting to ensure that
the votes from overseas are counted. In the first instance,
H.R. 2010 would substitute a plurality of votes for election of
delegate for the currently required majority. If, however, the
members of the Fono believe that a majority vote is preferable,
H.R. 2010 would authorize the Fono to establish a primary
election.
We note that the citizens of the various States are given
the latitude to establish, through their elected
representatives, the policies that govern elections. We
recognize that in the special case of American Samoa this is a
matter for Congress to decide. The wishes of the people of
American Samoa, however, should be given the same deference
that the wishes of the citizens of a State would be given under
analogous circumstances.
We respectfully suggest, therefore, that the Congress note
the positions of recognized leaders of the territory in order
to discern the preferences of the people. If the Congress finds
that this bill is a reasonable reflection of the wishes of the
people of American Samoa, the administration would have no
objection to its enactment.
To the extent that deficiencies in the current system may
result in the disenfranchisement of absentee voters, including
men and women in our armed forces, we would urge Congress to
correct any such deficiencies as soon as possible.
Now on H.R. 1189, the matching funds waiver, the law
originally provided for a permissive waiver of matching fund
requirements at the discretion of the Department or agency. The
law was amended in 1980 to provide a mandatory waiver of any
matching funds under $100,000 applicable to American Samoa,
Guam, the Virgin Islands, or the Northern Mariana Islands. The
$100,000 waiver figure was later raised to $200,000. The 1980
amendment provided for a mandatory waiver of all matching
requirements relating to grants by the Department of the
Interior to a territory.
The intent of the sponsors of H.R. 1189 was both to clarify
the waiver provision and to increase the amount of the waiver
for each grant from a maximum of $200,000 to $500,000. The
Department of the Interior supports H.R. 1189 if it is amended
to reflect the following recommendations to improve and further
simplify the statute:
First, we recommend that the mandatory waiver apply to
formula grants but not to discretionary grants. The waiver
makes sense for formula grants. Discretionary grants are
another matter. By definition, a Department or agency need not
give discretionary funds to a territory or a State. If the
waiver is mandatory with respect to a discretionary grant, that
fact alone may tip the decision of an administrator against a
grant to a territory. In the end, the territories could lose
more discretionary grant dollars than the dollars saved via a
mandatory territorial waiver provision.
In the case of the Office of Insular Affairs, our grants
are specifically tailored to each territory's needs. Any
matching requirement in an Office of Insular Affairs grant is
specifically designed with the territory or territories in
mind. We may be trying to spread limited funds to all the
territories rather than just one or two, or we may believe that
we need evidence of a territory's true commitment to the
purpose of a grant.
The Department of the Interior, therefore, supports the
application of the $500,000 waiver of matching funds in a
mandatory fashion to formula grants, but not to discretionary
grants.
A second concern involves subsection (b) of section 1 of
H.R. 1189. Subsection (b) would aid clarification of the
statute by deleting most of the material added by three
amendments. Left in effect would be a clause that singles out
the Department of the Interior for waiver of all matching
funds, not just those under $500,000. Consistent with the views
I expressed earlier, the administration urges that this clause
be repealed.
Our last concern is with section 2 of H.R. 1189, which
calls for a study of the implementation of the new waiver
provisions contained in the bill. Such a study would likely
yield little information of value. The administration therefore
recommends that the study provision be stricken from the bill.
That concludes my statement. I would be happy to respond to
any questions.
[The prepared statement of Mr. Cohen follows:]
Prepared Statement of David B. Cohen, Deputy Assistant Secretary for
Insular Affairs, Department of the Interior
Mr. Chairman and Members of the Committee, I am David Cohen, Deputy
Assistant Secretary of the Interior for Insular Affairs. I am pleased
to appear before you today to discuss H.R. 2010, the American Samoa
Delegate plurality vote, and H.R. 1189, the matching funds waiver bill.
H.R. 2010--AMERICAN SAMOA DELEGATE PLURALITY VOTE
Current law provides that the Delegate to the House of
Representatives from American Samoa shall be elected by majority vote.
Under current practice, a runoff is conducted two weeks after the
general election in November of each even numbered year if no candidate
for Delegate receives a majority in the general election. The result is
that members of the armed services and other voters overseas may be
disenfranchised in the runoff election due to transportation and
communication difficulties that delay the return of runoff ballots in
time for counting.
H.R. 2010 would establish a flexible system for ensuring that the
votes of American Samoans, who are overseas, are counted. In the first
instance, H.R. 2010 would substitute a plurality of votes for election
of Delegate for the currently required majority. If, however, the
members of the American Samoa Fono, or legislature, believe that a
majority vote is preferable, H.R. 2010 would authorize the Fono to
establish a primary election prior to the November balloting.
The issues raised in this bill are clearly within Congress's
authority to determine, given American Samoa's special status as a U.S.
territory. However, we note that, subject to certain limitations, the
citizens of the various states are generally given the latitude to
establish, through their elected representatives, the policies that
govern elections for Federal officials who will represent the people of
those states.
We recognize that in the special case of American Samoa, this is a
matter for Congress to decide. The wishes of the people of American
Samoa, however, should be given the same deference that the wishes of
the citizens of a state would be given under analogous circumstances.
We respectfully suggest, therefore, that the Congress note the
positions of recognized leaders of the territory, in order to discern
the preferences of the people of the American Samoa. If the Congress
finds that this bill is a reasonable reflection of the wishes of the
people of American Samoa, the Administration would have no objection to
its enactment. We would like to stress, however, that to the extent
that deficiencies in the current system may result in the
disenfranchisement of absentee voters, including the many men and women
from American Samoa who serve honorably in our armed forces, we would
urge Congress to correct any such deficiencies as soon as possible.
H.R. 1189--MATCHING FUNDS WAIVER
Section 501 of Public Law 95-134 was originally enacted to allow
the consolidation of Federal programs within a single department or
agency into a single grant for a territory. The law also provided for a
permissive waiver of matching fund requirements at the discretion of
the department or agency. The law was amended in 1980 to provide a
mandatory waiver of ``any matching funds under $100,000 (including in-
kind contributions) required by law to be provided by American Samoa,
Guam, the Virgin Islands, or the Northern Mariana Islands.'' The
$100,000 waiver figure was later raised to $200,000. The 1980 amendment
also provided for a mandatory waiver of all matching requirements
relating to grants by the Department of the Interior to a territory.
Over the years, section 501 and its amendments have been the
subject of confusion and various interpretations from department to
department. The intent of the sponsors of H.R. 1189 was both to clarify
the waiver provision and to increase the amount of the waiver for each
grant from a maximum of $200,000 to $500,000. In addition, the bill
would no longer limit the matching waiver to matching that was required
``by law.'' Administratively imposed matching would also be waived.
The Administration supports 1189 if it is amended to reflect the
following recommendations to improve and further simplify the statute.
First, we recommend that the mandatory waiver apply to formula
grants, but not to discretionary grants. Formula grants apply across
the board to all fifty states and often to the U.S. territories. They
are tailored for use by states with conditions and limitations imposed
with the states in mind. Territories are often included as an
afterthought. Even the smallest and poorest state has many more
resources at its disposal for dealing with grants than do the
territories. The waiver, therefore, makes sense for formula grants.
Discretionary grants are another matter. By definition, a
department or agency need not give discretionary funds to a territory
or a state. The matching requirement helps to ensure that the grant
objective is a priority for the territory seeking the grant.
Additionally, the matching requirement makes Federal dollars available
for use by the maximum number of recipients. If the waiver is mandatory
with respect to a discretionary grant, that fact alone may tip a
decision of an administrator against a grant to a territory. In the
end, the territories could lose more discretionary grant dollars than
the dollars saved via a mandatory territorial waiver provision.
In the case of the Office of Insular Affairs (OIA), our grants are
specifically tailored to each territory's needs. Any matching
requirement in an OIA grant is specifically designed with the
territory, or territories, in mind. We may be trying to spread limited
funds to all the territories rather than just one or two. Or, we may
believe that we need evidence of a territory's true commitment to the
purpose of a grant in order to determine that the grant funds will not
be better spent for another purpose or in another territory.
The Administration, therefore, supports the application of the
$500,000 waiver of matching funds in mandatory fashion to formula
grants, but not to discretionary grants. Each grant-giving agency
should have the flexibility to make its own determination of whether or
not to waive matching fund requirements for discretionary grants. The
logic in favor of providing waivers for formula grant matching fund
requirements is that those matching formulas do not take the unique
circumstances of the territories into account. This logic emphatically
does not apply to grants issued by OIA, which are designed with the
special needs of the territories specifically in mind.
A second concern involves subsection (b) of section 1 of H.R. 1189.
Subsection (b) would aid clarification of the statute by deleting most
of the material added by three amendments to the original statute
(section 501). Left in effect would be a clause that singles out the
Department of the Interior for waiver of all matching funds, not just
those under $500,000. Consistent with the views I expressed earlier,
the Administration urges that this clause be repealed.
Our last concern is with section 2 of H.R. 1189, which calls for a
study of the implementation of the new waiver provisions contained in
the bill. Such a study would likely yield little information of value.
The Administration, therefore, recommends that the study provision be
stricken from the bill. If a problem should arise with regard to the
newly enacted provisions, I expect that it would be brought to our
attention so that remedial action can be taken.
Senator Craig. Thank you, David, very much.
Before we turn to you, Mr. Leahy, let me recognize our
colleague from Hawaii, Senator Akaka, for any opening statement
he would like to make.
STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR
FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman. I thank
you for this opportunity. I want to thank you in particular for
your willingness to include these two bills on the agenda and
the opportunity to consider them before the session ends.
The first territory bill, H.R. 1189, would increase the
waiver, as was mentioned, that the territorial governments have
from paying local matching requirements on Federal grants. The
second, H.R. 2010, would provide for the election of the
delegate from American Samoa by a plurality vote or, if enacted
by local law, a majority vote held after a primary election.
Both of these bills were introduced by my good friend
Congressman Eni Faleomavaega, the senior delegate in the House,
and both bills have passed the House. Unfortunately, Mr.
Chairman, the delegate could not testify himself at today's
hearing because this Friday July 16 is the centennial
anniversary of the cession of Manoa Islands of American Samoa
to the United States. The delegate has joined the traditional
chiefs and leaders of American Samoa in Manoa and we send them
our best wishes as they celebrate 100 years since the Stars and
Stripes was first raised above the islands.
In addition to these territories bills, the subcommittee
will hear testimony on S. 2353, a bill to reauthorize and amend
the National Geologic Mapping Act of 1992, and on S. 2317, a
bill relating to the royalty rate for soda ash. The National
Cooperative Geologic Mapping Program has been an extremely
successful partnership between the States and the U.S.
Geological Survey. The program was first authorized in 1992. S.
2353 would provide for its continuation.
S. 2317 would reduce the royalties imposed on soda ash
produced from Federal lands. I understand that this bill is of
particular importance to Wyoming.
I welcome all of our witnesses and look forward to hearing
from them this afternoon.
Mr. Chairman, I know you are looking at the time and I want
to tell you that I have questions, but I would be willing to
submit it to the record. Thank you.
Senator Craig. Well, Senator, thank you very much. We
appreciate that opening statement and your involvement in these
issues.
Now let me turn to Patrick Leahy, Associate Director for
Geology, U.S. Geological Survey, Department of the Interior.
Welcome before the committee.
STATEMENT OF P. PATRICK LEAHY, ASSOCIATE DIRECTOR FOR GEOLOGY,
U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR
Mr. Leahy. Thank you, Mr. Chairman. I am pleased to be here
today to express the administration's support for S. 2353, a
bill that would reauthorize the National Geological Map of
1992. Throughout the USGS's 125-year history, geologic mapping
has been one of our core capabilities. For State geologic
surveys, some founded even earlier than the USGS, geologic
mapping has been an integral part of their history as well.
A map is the best and most understandable way of portraying
a great variety of geologic information. The diversity of
information depicted on geologic maps includes distribution of
mineral, energy, and groundwater resources, active faults whose
movements may cause devastating earthquakes, and the
distribution of surficial deposits that form the substrate for
wetlands and other ecologically diverse settings.
Equally important, as my statement notes, such mapping has
yielded dividends that far exceed the original goals and costs
of producing the map. When the 102nd Congress passed the
National Geologic Mapping Act, it recognized that the U.S.
Geological Survey and the State surveys needed a coordinated
program to prioritize the geologic mapping requirements of the
Nation and to increase the production of geologic maps.
Geologic maps has always been and continues to be a labor-
intensive research endeavor that involves field work to collect
information, laboratory work to better understand the
composition, properties, and age of materials, and the use of
remote sensing to better extrapolate what has been learned in
one location to other locations.
I can confidently tell you today that the National
Cooperative Geologic Mapping program has been extremely
effective over the past 12 years doing exactly what it was
designed to do, that is increase the number of geologic maps
for the Nation. During the 12 years since the passage of the
act, the USGS and the State surveys have produced well over
7,500 new geologic maps. In 1993, the first year after the
initial passage of the act, 34 State geologic surveys and the
USGS participated in the program. In 2004 the number of State
surveys participating has grown to 47. In the first year of the
act, $1.2 million was distributed to the state surveys. Since
2001 over $6.5 million per year in Federal funds have been
matched annually by state dollars.
Cumulatively, over the 12 years of the program
approximately $50 million has been distributed to 48 States and
these Federal dollars were matched by $50 million in State
dollars.
In 1995 the education component of the program, so-called
``EDMAP,'' was implemented to train the next generation of
geologic mappers. To date over 550 university students from
more than 120 universities across the Nation have benefited
from these grants.
Currently the USGS is in close coordination and agreement
with the Association of American State Geologists on the
reauthorization, on this reauthorization bill, and associated
mapping issues. During the past year we have met to discuss the
act and we feel that the National Geologic Map continues to
serve the Nation very well and needs little revision.
Mr. Chairman, in concluding my remarks I would like to
state that the National Geologic Mapping Act of 1992 and its
subsequent reauthorizations have been instrumental in helping
focus the attention on the Nation's need for a new generation
of high quality geologic maps.
Thank you, Mr. Chairman, for the opportunity to express the
views of the administration on this bill and I would be happy
to respond to any questions you may have.
[The prepared statement of Mr. Leahy follows:]
Prepared Statement of P. Patrick Leahy, Associate Director for Geology,
U.S. Geological Survey, Department of the Interior, on S. 2353
Mr. Chairman, I am pleased to be here today to express the
Administration's views on S. 2353, a bill that would reauthorize the
National Geologic. Mapping Act of 1992. The Administration supports the
reauthorization, but is concerned that the funding level authorized is
not consistent with current appropriations or the President's 2005
budget request. Any additional funding for the National Cooperative
Geologic Mapping program will have to compete with other priorities.
This year marks a significant milestone in the history of the U.S.
Geological Survey (USGS). On March 3, 2004, we celebrated the 125th
anniversary of the creation of the USGS by the Organic Act enacted by
the 45th Congress. In this anniversary year, we will celebrate the
traditions that have shaped us and the mission that has guided us. We
will celebrate the science that has impacted every facet of our work
and the people who have made that science great. Finally, we celebrate
the pivotal technology that will lead us into the future.
Throughout USGS history, geologic mapping has been one of our core
capabilities. For state geological surveys, some founded even earlier
than the USGS, geologic mapping has been an integral part of their
history as well. A map is the best and most understandable way of
portraying a great variety of geologic information. The diversity of
information produced by a geological map includes: the distribution of
mineral, energy and ground water resources; presently active faults
whose movements may cause devastating earthquakes; and the distribution
of surficial deposits that form the substrate for wetlands and other
ecologically diverse settings. Equally important, as my statement
notes, such mapping has yielded dividends far beyond its original
intended goals.
When the 102nd Congress passed the National Geologic Mapping Act,
it recognized that the USGS and the State geological surveys needed a
coordinated program to prioritize the geologic mapping requirements of
the Nation, and to increase the production of geologic maps. Geologic
mapping has always been, and continues to be, a labor intensive
exercise that involves field work to collect information; laboratory
work to better understand the composition, properties and age of the
materials collected; and the use of remote sensing to better
extrapolate what has been learned in one location to a larger area. All
of these aspects of geologic mapping cost money and require skilled
practitioners. It becomes critically important for the USGS and the
fifty State geological surveys to husband and leverage their resources.
I can confidently tell you today that the National Cooperative Geologic
Mapping Program has been extremely effective over the past 12 years
doing exactly that. I would like to share some milestones of progress
with you.
During the 12 years since passage of the Act, the USGS and the
State geological surveys have produced well over 7,500 new geologic
maps. In 2003 alone, over 450 geologic maps and reports were published.
Data in these maps cover a combined area of 125,000 square miles. The
high priority areas selected to map were determined by stakeholder
groups, land management agencies, and state mapping advisory
committees.
During the last 12 years geologic maps have been completed in
National Parks, National Forests, and lands managed by BLM and other
land-management agencies. To give one timely example, geologic maps of
all four major National Forests in southern California were completed
in the past year. These maps were put to good use by the Burned Area
Emergency Response teams (BAER) that responded to the fires that
devastated large areas between Los Angeles and San Diego. They are
continuing to be used during the winter rainy season to predict where
major debris flows, and or mud slides, might endanger the local
communities.
In 1993, the first year after initial passage of the Act, 34 state
geological surveys and the USGS participated in this program to produce
new geologic maps. In 2004 the number of State geological surveys
participating has grown to 47. In that first year, $1.2 million was
distributed to the state surveys. Since 2001, over $6.5 million in
federal funds has been matched annually by state survey dollars.
Cumulatively, over the 12 years of the program, approximately $50
million has been distributed to 48 states, and these federal dollars
were matched by $50 million in state dollars.
In 1995 the education component of the program, EDMAP, was
implemented to train the next generation of geologic mappers. This
training component fills a gap generally not addressed through National
Science Foundation grants and other mechanisms. In the first year of
the program, fewer than 40 students received funds to do field work and
learn how to construct a geologic map. Currently, over 550 university
students from 120 universities across the Nation have received
training. Initially, EDMAP only supported graduate students. In 2000,
the decision was made to expand support to undergraduate students in
the hope that this would positively influence their decision to
continue in the Earth Sciences. We are presently in the process of
surveying all former EDMAP recipients. I can report, from the
information received to date, that this training program has been
successful. Of those surveyed candidates that have responded, 100
percent of the Masters and Ph.D. candidates and 82 percent of the B.S.
candidates have all continued in geoscience. These figures are above
the national averages and attest to the strength of EDMAP.
In 1999 two economists from the Illinois State Geological Survey
teamed up with the Kentucky Geological Survey to undertake a rigorous
analysis of the economic benefits of detailed geologic mapping to
Kentucky. Two conclusions from this study are particularly worth
mentioning. First, the total value of the geologic mapping program, at
the minimum, is at least 25 times the cost of the program. Second, even
though the bedrock geologic maps produced in Kentucky were originally
created primarily for the coal industry, during the past 20 years these
maps have been used by a wide array of users for everything from
exploring for groundwater resources to planning cities to finding
minerals.
Currently, USGS is in close coordination and agreement with the
Association of American State Geologists (AASG) on this reauthorization
bill and on associated geologic mapping issues. During the past year we
have met to discuss the Act (P.L. 106-148) frequently, and while we
recommend a few changes which I will discuss in a moment, we feel that
the National Geologic Mapping Act continues to serve the Nation very
well and needs little revision. The Act was also reviewed by the
Federal Advisory Committee to the National Cooperative Geologic Mapping
Program last month, and my comments today incorporate their conclusions
as well.
The principal changes in this reauthorization bill are: First, an
increase from 48 percent to 50 percent of new funds, if appropriated,
that will be made available for matching-funds grants to State
geological surveys, second, an increase from 2 percent to 4 percent of
new funds for matching-funds grants to Universities to train the next
generation of geologic mappers, and third, keeping future authorization
levels equal to the 2005 level in the present Act. These changes taken
together will help ensure that all three parts of this critical
program--the federal, the state, and the university components--will
have the potential to respond to the growing national need for geologic
maps and the information they provide.
With the development of digital mapping technology and the
Internet, geologic maps have become the most effective means of
providing decision-makers and their geotechnical consultants with
information that they need. All geologic maps being produced today
under the auspices of the National Cooperative Geologic Mapping Program
are digital, and each year more and more of these maps are being
provided on the Internet. However, due to the labor intensive nature of
producing geologic maps, a large percentage of the Nation, as noted in
H.R. 4010, has yet to be mapped. We are encouraged by this legislation
to continue in this critical effort. With the development of digital
mapping technology, geologic mapping is experiencing a renaissance in
its use and applicability. We anticipate increased demand for digital
geologic maps in the future. During the past 12 years the USGS and the
state geological surveys have worked together to implement the National
Geologic Map Database, as called for in the Act. While this database
provides a variety of tools and services, I would like to highlight
just one--a catalog that provides information on almost every geologic
map ever produced in the United States, and how anyone can obtain
copies of the maps. This invaluable information spans 60,000 products.
Mr. Chairman, in concluding my remarks, I would like to state that
the National Geologic Mapping Act of 1992, and its subsequent
reauthorizations, have been instrumental in helping focus attention on
the Nation's need for a new generation of high-quality geologic maps.
The Administration supports the reauthorization, but is concerned that
the funding level authorized is not consistent with current
appropriations or the President's 2005 budget request. Any additional
funding for the National Cooperative Geologic mapping program will have
to compete with other priorities.
Thank you, Mr. Chairman, for the opportunity to express the views
of the Administration on the National Geologic Mapping Act. I would be
happy to respond to any questions you may have.
Senator Craig. Well, thank you very much, Pat.
Let me start with you with a question. What are the
consequences of not engaging in geologic mapping efforts?
Mr. Leahy. The consequences--decisions are made and,
frankly, they will be made with or without a geologic map, but
they will be uninformed decisions. Because they are uninformed,
there will be expensive consequences in terms of errors. The
maps themselves are a vehicle to make informed decisions that
will reduce the cost of bad decisionmaking.
Senator Craig. Such as building or not building on or near
a fault line.
Mr. Leahy. Exactly. Or putting a landfill in the wrong spot
so it destroys an aquifer system.
Senator Craig. Well, we will work hard to see if we cannot
get this reauthorized. I think most Senators believe it makes
good sense to know what is around us, about us, and under us,
and that is what this is all about.
David, approximately what is the amount of annual grants
received by the U.S. territories from the Federal Government on
an annualized basis? Do you have that figure?
Mr. Cohen. Sir, to the best of our ability to gather this--
and the information is not always readily available--we have
information from fiscal year 2002, and if I can just go through
each of the insular areas and then I guess we could add them
up. According to our information, and this is from the U.S.
Census Bureau Consolidated Federal Funds Report for Fiscal Year
2002, American Samoa received approximately $93.4 million, Guam
received approximately $250.6 million, the Northern Marianas
received approximately $66.1 million, and the U.S. Virgin
Islands received approximately $266.4 million.
This is not broken down by whether these are formula grants
or discretionary grants and little other information is given.
Senator Craig. With that current level of participation,
how would 1182 change--1189 change that?
Mr. Cohen. Mr. Chairman, it is difficult to determine. H.R.
1189 is drafted to apply to all grants, not just formula
grants. Having said that, we would have to research, and we
would be happy to attempt to do this for you, how much of those
grants are subject to matching requirements in order to give
you some sort of dollar value estimate of the effect of H.R.
1189.
Senator Craig. Well, we may well work to try to find out
what the fiscal impact of that would be.
Do we know if we have an OMB analysis of it or CBO? We do
have a CBO score.
Mr. Cohen. I would suggest, Mr. Chairman, that the fiscal
impact would be indirect because it would not necessarily
affect the amount of grant funds that go out to the
territories. It would affect the amount, of course, that the
territories would be required to put up.
Senator Craig. Right. But oftentimes when there is less
required to put up there is a tendency to send more or there is
an encouragement of doing so because there is not the need of
requirement to match, and so there is a fiscal impact usually.
I understand CBO scores it at about $2 million.
Has DOI attempted to ascertain the local support for S.
2010? Has there been any effort to make a determination of what
local support is for this change in the election, for this
legislation that would allow change in the election process?
Mr. Cohen. Mr. Chairman, it has been difficult to do that
on a scientific basis. The Congress, which is a legislative
body, might be in a better position to do that. We do know
views expressed by certain important leaders in American Samoa
society and I believe you have some of those for the record.
Senator Craig. We do.
Mr. Cohen. To the extent that you do, I guess rather than
our trying to be a second-hand interpreter of that, we would
encourage you to rely on those statements.
Senator Craig. I appreciate that.
Do either of my colleagues have questions of these
gentlemen?
Senator Akaka. Mr. Chairman.
Senator Craig. Yes.
Senator Akaka. I do have questions, but I will submit them
for the record.
Senator Craig. All right.
Senator Thomas. Mr. Chairman, I have one.
Mr. Leahy, this reauthorization continues the program and
so on. Who actually does the mapping?
Mr. Leahy. Well, three components of the program: FEDMAP,
STATEMAP, and EDMAP. The FEDMAP is generally done by staff of
the U.S. Geological Survey. The STATEMAP component is done by
the members of the State surveys. And EDMAP are students under
the mentorship of a professor.
Senator Thomas. Is there any private activities? Is there
any contracting?
Mr. Leahy. There is some contracting, but generally it is
for support type activities, for example printing of maps,
those sorts of things, perhaps some specialized analysis that
we may lack the capability, or are so common that it is easy to
contract out.
Senator Thomas. There are some circumstances in which the
commercial mappers are better equipped to do some things than
others.
Mr. Leahy. The commercial sector, there is not a conflict
with the commercial sector. In fact, most site specific mapping
is done by the commercial sector, consulting firms. They are
very dependent on the maps that the State and the Federal
Government produce because it allows them a context in which to
put their very detailed mapping in.
Senator Thomas. I just urge the use of the private sector
whenever that is efficient and possible. Thank you.
Senator Craig. Well, gentlemen, thank you very much.
Yes?
Senator Akaka. May I make a comment?
Senator Craig. Please do, Senator Akaka.
Senator Akaka. Thank you so much.
As a person from the Pacific, I want to make a comment
about H.R. 2010. I know that Secretary Cohen knows this very
well. This bill that we are considering will resolve a
longstanding problem of electing the delegate from American
Samoa. This bill will provide for election of the delegate by
plurality or, if the local government wants, by majority vote
following a primary election. This would solve a problem made
worse by the current conflict in the Middle East, where many
Samoans have gone, and this will help in absentee voting as
well if this is changed.
So I speak out to try to move as quickly as we can on this.
Thank you very much.
Senator Craig. Well, Senator, thank you very much.
Gentlemen, again thank you very much for your testimony. As
we work through this legislation, I am sure we will be
consulting with you on the recommendations you have made. Thank
you.
Now let me ask our second panel to come forward if they
would, please. This panel is going to cover largely two bills
and two topics, so I am going to divide it so that we can deal
with U.S. geological mapping first and then we will go to my
colleague from Wyoming and deal with soda ash. So, having said
that, let me introduce Robert G. Marvinney.
Dr. Marvinney. ``MAR-vinney.''
Senator Craig. ``MAR-vinney.'' President, American
Association of State Geologists, State geologist, Maine
Geologic Survey of Augusta, Maine; and Dr. James C. Cobb, State
geologist, Kentucky Geological Survey, University of Kentucky,
Lexington, Kentucky.
Mr. Marvinney.
STATEMENT OF ROBERT G. MARVINNEY, Ph.D., PRESIDENT, AMERICAN
ASSOCIATION OF STATE GEOLOGISTS, DIRECTOR AND STATE GEOLOGIST,
MAINE GEOLOGICAL SURVEY
Dr. Marvinney. Mr. Chairman and members of the committee:
Thank you very much for this opportunity. I am Robert
Marvinney, Maine State geologist and the current president of
the Association of American State Geologists, and I am speaking
in support of S. 2353. The Association of American State
Geologists, the AASG, represents the heads of the geological
surveys in the 50 States plus Puerto Rico and the Association
was founded in 1908 and seeks to advance the practical
application of earth sciences in the United States.
I wish to emphasize the effectiveness and success of the
National Cooperative Geologic Mapping Program from the States'
perspective. In terms of program management, having been
involved with the program for more than 9 years, I am
continually reassured by the sound administration of the
program by the U.S. Geological Survey. Being a State geologist,
I do not offer those comments lightly, and neither does the
AASG, which insists that the USGS facilitate making this
program a success.
This is accomplished in a number of ways, in part by AASG
representation on the program's Federal advisory committee.
Additionally, the AASG has membership on the panels that review
proposals to the three components of the program: the FEDMAP
program for Federal projects, STATEMAP program for State
projects, and the EDMAP programs for the university projects.
Also, each State is required to have an advisory committee
made up of users of geologic maps. In my State, for example, my
advisory committee consists of representatives from various
State Departments, environmental protection, transportation,
the State's drinking water program, representatives from
Maine's academic institutions, and consulting geologists and
engineers, commercial water bottlers, and the forest products
industry.
So as users of geologic maps, each of these advisory
committees offers objective and constructive input to each
geological survey as it develops its mapping plan. So the
program is user-driven. We take input from these committees
very seriously.
The STATEMAP awards to the States are awarded through a
competitive process. We have a review panel which carefully
evaluates the STATEMAP proposals and the process by which the
funding levels are determined is a rigorous, objective, and
fair process. By no means does a State simply get a grant just
by providing, submitting an application. These are reviewed
very carefully through numerous criteria, probably the most
important of which is did this particular State provide the
products that they said they would from the previous year's
mapping effort. I know personally if a State does not complete
their maps then they do not get additional funding in the next
year.
I cannot overemphasize the importance of the matching
requirement of this program. State and Federal dollars are
matched one for one, so scarce funds are leveraged on both
sides.
In terms of the accomplishments, we heard from Mr. Leahy
that over 7,500 new geologic maps have been produced through
this program, and still we have only 25 percent of the State
mapped at a level that is necessary for applications to energy,
mineral and water resources, environmental protection, hazards,
as well as homeland security.
An example from my State. The STATEMAP mapping effort
directly underpins my work in defining groundwater aquifers.
The numerous sand and gravel deposits left by the last
glaciation are the most important water resources in the State
and with 50 percent of the citizens drawing their water supply
from groundwater, aquifer maps made possible through STATEMAP
are absolutely critical to understanding the distribution of
water resources and their careful stewardship.
These maps are used by municipalities and commercial water
bottlers in their searches for adequate water sources.
So in summary, I want to just conclude that the National
Geologic Mapping Program is an excellent Federal and State
partnership with proven productivity and societal relevance.
Thank you very much.
[The prepared statement of Mr. Marvinney follows:]
Prepared Statement of Robert G. Marvinney, Ph.D., President, American
Association of State Geologists, Director and State geologist, Maine
Geological Survey, on S. 2353
I am writing in support of the National Geologic Mapping
Reauthorization Act of 2004.
I have been Maine State geologist for the past nine years and am
also the current President of the Association of American State
Geologists (AASG), an organization representing the State geologists of
the 50 United States and Puerto Rico. Founded in 1908, the AASG seeks
to advance the science and practical application of geology and related
earth sciences in the United States and its territories, commonwealths,
and possessions. The AASG also serves to improve the overall
effectiveness of State Geological Surveys through the interchange of
ideas and techniques especially as they relate to the collection,
organization, preservation, and dissemination of data and information
essential for the wise stewardship of energy, mineral, and water
resources within each of the States.
I wish to emphasize the effectiveness of the National Cooperative
Geologic Mapping Program from the State's perspective. I focus on three
important aspects of the current NCGMP, and hope to demonstrate to you
the success of the program and thereby encourage the passage of the
National Geologic Mapping Reauthorization Act of 2004.
The National Cooperative Geologic Mapping Program was created with
the passage of the National Geologic Mapping Act of 1992. Since then,
the Act has been reauthorized in 1997 and 1999, each time by unanimous
consent of Congress and with strong bipartisan support, attesting to
the success of the program. Since 1993, the NCGMP has supported new
mapping in 49 of the 50 States plus Puerto Rico.
PROGRAM MANAGEMENT
Having been involved with the NCGMP for more than nine years, I am
continually reassured of the sound administration of the Program by the
U.S. Geological Survey. I do not offer that comment lightly, for State
geologists, through the AASG, insist that the USGS facilitate making
this cooperative program a success. This is accomplished by a number of
means, the most prominent of which is through AASG representation on
the NCGMP's Federal Advisory Committee. The AASG believes this
committee provides an important forum for the State government and
private sectors, academia, and other Federal agencies to assist in
evaluating the progress of the Federal, State, and university geologic
mapping activities undertaken to fulfill the National Geologic Mapping
Act of 1992. Additionally, the AASG has membership on the panels that
review proposals to the three components of the program: FEDMAP for
federal projects; STATEMAP for state projects; and EDMAP for university
projects.
Within each State, and as a requirement of the STATEMAP Program,
there is an advisory committee composed of what we often refer to as
end-users, individuals who utilize geologic maps to address issues of
importance in their respective professions or areas of expertise.
Typically these committees are composed of individuals from State,
county, municipal, and local Federal government offices; academicians
and teachers; researchers; petroleum and mineral explorationists;
environmental consultants; and those in the private sector for whom
earth science plays an important role in their businesses. In Maine,
for example, the Geologic Mapping Advisory Committee consists of
geologists from the Departments of Environmental Protection and
Transportation, representatives from the state's Drinking Water
Program, representatives from Maine's academic institutions, consulting
geologists and engineers, commercial water bottlers, and the forest
products industry.
The process of geological mapping is an evolving task. As society's
needs have changed over the decades, so have the information
requirements of geologic maps. The State Geological Surveys are
sensitive to these information needs, and they are continuing to
conduct geological mapping with modern technologies to create maps that
will aid in addressing societal issues.
Members of each of the State's geological mapping advisory
committees are individuals who, as end-users, are in a position to
offer objective and constructive input to each State Geological Survey
as it develops its mapping plans. The advisory committee plays an
important role in providing grassroots guidance and assisting with
setting mapping priorities with each successive year of the program.
Hence, the STATEMAP component of NCGMP is user-driven and locally-
controlled to address customer's needs.
STATEMAP awards are granted to the States annually, following a
truly competitive process. A STATEMAP Review Panel carefully evaluates
STATEMAP proposals submitted to the USGS. The fairness of the process
is tantamount, as the USGS and the AASG share equally in determining
award levels for the forthcoming year's mapping season and map
production efforts. Representatives of the AASG on the Review Panel are
elected by their fellow State geologists, and service on the Review
Panel is limited to three years, on a rotating basis. The process by
which funding levels are determined is rigorous, objective, and
reassuringly fair, as any peer-review process should be. By no means
does any State receive a STATEMAP grant automatically by merely
applying for one. Each proposal is considered in accordance with
numerous criteria, the most important of which require annual
productivity of high quality digital geologic maps.
In addition, I cannot overemphasize the importance of the matching
requirement in this Federal / State partnership. Scarce funds are
leveraged on both sides, and the end result is a stretching of
resources to benefit both the Nation as well as the respective States.
The National Geologic Mapping Act as originally authorized
emphasizes partnerships between State and the Federal governments. I am
pleased to relate to you that the USGS administrators of the STATEMAP
Program are dedicated professionals, who are intent on managing what is
truly an active partnership between the USGS and the state geological
surveys. Toward that end, the Program administrators are open and
responsive to suggestions from State geologists and from State mapping
advisory committees to improve upon and enhance an already well-run
program. Moreover, the STATEMAP Review Panelists meet at length before
and immediately after the annual review process to evaluate the review
procedures themselves and make adjustments in the successive year's
criteria. In being receptive and responsive, the USGS administrators
have been able to create and evolve a program that possesses not only
relevancy and fairness, but one to which all parties are overwhelmingly
supportive.
ACCOMPLISHMENTS
The USGS testimony has mentioned the success of the NCGMP in terms
of the number of maps created: the combined FEDMAP, STATEMAP, and EDMAP
efforts have produced more than 7,500 new geologic maps and modern,
digital versions of earlier detailed maps. Yet, with this amazing level
of productivity over the past twelve years, still only approximately
25% of the Nation is mapped at a scale that is adequate for most
applications to energy, mineral, and water resources, environmental
protection, risk reduction from natural hazards, as well as addressing
issues of homeland security.
As an example of the importance and societal relevancy of geologic
mapping in my home State of Maine, STATEMAP products serve as the
underpinning for groundwater aquifer maps. The last glaciation in Maine
left behind numerous and complex deposits of sand and gravel that are
among the best water supplies in the state. With fifty percent of the
citizens of Maine using groundwater for their domestic water supply,
aquifer maps made possible through STATEMAP geologic mapping are
fundamental to understanding the distribution of these water resources
and ensuring their careful stewardship. Municipalities and commercial
water bottlers both use aquifer maps in their searches for adequate
water sources. STATEMAP products are also vital to our efforts to
understand the distribution of arsenic in bedrock groundwater. Nearly
10% of private wells in Maine have arsenic in higher than acceptable
concentrations, most of it naturally leaching from the bedrock. My
agency works with the Maine Bureau of Health to identify bedrock units
and conditions that contribute to these high arsenic levels. Careful
mapping of the bedrock geology is required to understand the
distribution of this problem in order to focus assistance programs.
GEOLOGIC MAPPING DATABASE AND DIGITAL MAPPING
The AASG has worked very closely with staff of the USGS in
establishing and constructing the National Geologic Map Database as
required by the National Geologic Mapping Act of 1992. The database,
available at the USGS Website, continues to grow annually, and it has
proven to be a valuable information resource, a central location for
ready access to over 60,000 maps.
Additionally, digital mapping specialists of the AASG and the USGS
cooperate closely with others from government, private industry, and
academia who are involved with developing digital mapping protocols and
attending to the National Spatial Digital Infrastructure standards
established for metadata. Because of this collective effort, the
standards have been widely accepted by those who compile digital
geologic maps.
In the true spirit of a partnership the AASG and USGS co-sponsor
and organize an annual digital mapping techniques workshop. Now in its
eighth year, this event brings together digital mapping specialists to
exchange ideas and techniques essential for the efficient and
economical construction of digital geologic maps. The proceedings of
the workshop are published each year by the USGS and available over the
Internet, so that more than those who attended the meetings can benefit
from this growth in knowledge.
In conclusion, the NCGMP is an excellent Federal / State
partnership with proven productivity and societal relevance. I strongly
urge your positive consideration for the National Geologic Mapping
Reauthorization Act of 2004.
Thank you for this opportunity to provide written testimony.
Senator Craig. Well, thank you very much.
Now let me turn to Dr. Cobb.
STATEMENT OF JAMES C. COBB, Ph.D., STATE GEOLOGIST AND
DIRECTOR, KENTUCKY GEOLOGICAL SURVEY, UNIVERSITY OF KENTUCKY
GEOLOGICAL SURVEY, LEXINGTON, KY
Dr. Cobb. Good afternoon, Mr. Chairman and members of the
subcommittee. I am Jim Cobb, State geologist of Kentucky, and I
am here because Kentucky is in a very unique position. We are
the only State that is completely mapped geologically. So I am
here to testify as to what geologic mapping has done in our
State.
Our geologic maps have been in circulation for 25 years, so
this pilot study, if you will, began 25 years ago, and we have
sold more than 200,000 copies of our geologic maps. The USGS,
in partnership with Kentucky back when Kentucky needed economic
development, we needed a stimulant to help our mineral
production, the USGS in partnership with Kentucky set out to do
a very bold thing that had never been done. We mapped together
over a 20-year period all 707 quadrangles in Kentucky. It has
not been matched in any other State, and so we are in a perfect
position to sort of tell you what this has done for at least
one State.
Doing an independent economic analysis of this mapping has
shown that the value of these maps over these years equals
somewhere in the neighborhood of $3.3 billion. In 1999 dollars
when we did the analysis, the cost of the program was $90
million. The $90 million has produced for us in Kentucky $3.3
billion, 39 times the cost. This is just amazing. So obviously
we think that the Nation, the whole Nation, not just Kentucky,
needs to be mapped.
Geologic maps are kind of interesting. They are like
topographic maps and other kinds of public goods. Geologic maps
are considered a public good, just like a highway or a
reservoir or a dam or a landfill. In fact, geologic maps help
us build better roads, better dams, better reservoirs, better
landfills, and they help us do it more safely, more
environmentally sound, and more economically.
In my professional experience over 30 years of doing this,
geologic maps are both valuable and democratic. They are
extraordinarily valuable because they help us produce our
minerals, safeguard our environment, safeguard our water, which
is extremely important, and encourage the development of these
vital fuels and minerals that we all require. It is democratic
because it helps everybody. Even if you have never bought one
of these maps--and I have to say most people have not. But even
if you have never bought one of these maps, it helps in
developing our industrial parks. Everything in our
infrastructure requires a geologic map to figure out what the
foundation of our foundations really are, and that comes from a
geologic map.
So private citizens use them. Farmers use them. In fact, in
America we sort of require that our citizens, our farmers, our
municipalities, our factories, all take care of the land that
they have. The tool that links together their activities with
the land and the water, the blueprint of that, comes from a
geologic map. And sometimes we do not have it, and therefore
mistakes can be made.
So what I am suggesting is the entire Nation, not just
Kentucky, the entire Nation needs to be mapped geologically at
an appropriate scale for wherever we are in the Nation.
We have now, under the National Geologic Mapping Act,
converted in Kentucky--this is amazing--converted all of these
maps to a computer format. So if you are a miner or a
developer, you can log on to a web site and you can get the
information you need from our online map services. So that
means if you are trying to decide if you are going to drill an
oil well or if you are going to put in an industrial park and
you need to know what those rocks are, how you are going to
build your buildings, you can get that information over the
Internet, which--you know, businessmen do not necessarily stop
at 5. They sometimes go late into the night, and we can now
make the information that they need available over the
Internet.
So when the mapping was done Kentucky went from third in
the Nation in coal production to No. 1, and that is the kind of
stimulant it did for us economically. So obviously Kentuckians
are big fans of this, and I am proud of Senator Bunning for
being a cosponsor of this and he recognizes the value of these
maps to our State.
Sort of in--well, in conclusion I just want to say that
back in the 1960's and 1970's when we were ramping up our coal
production and these maps were coming off the printing presses
and did such a great job to stimulate our economy--in today's
world, we are now looking at these maps to find places to put
that carbon in the atmosphere back into the earth, because
sequestration I am sure is something you have heard about and
probably discussed. Well, it is the geologic maps now that are
going to allow us to prospect Kentucky and find the sites we
want to store that carbon underground.
Thank you, Mr. Chairman.
[The prepared statement of Dr. Cobb follows:]
Prepared Statement of James C. Cobb, Ph.D., State Geologist and
Director, Kentucky Geological Survey, University of Kentucky Geological
Survey, Lexington, KY, on S. 2353
Mister Chairman and Members of the Subcommittee, thank you for this
opportunity to present testimony in support of S. 2353 to reauthorize
and amend the National Cooperative Geologic Mapping Act of 1992. I am
Jim Cobb, State Geologist of Kentucky and Director of the Kentucky
Geological Survey at the University of Kentucky. I am a member of the
Association of American State Geologists and have worked closely with
the U.S. Geological Survey and other state geological surveys. I am in
a good position to comment on the value of geologic mapping to society
because Kentucky is the only state of large area to be completely
mapped geologically at a detailed scale. Therefore, using Kentucky's
experience as an example for the Nation, geologic mapping has been
enormously valuable.
I have observed from personal experience over more than 30 years
that geologic mapping is one of the most valuable and democratic
activities that government can undertake. It is valuable for many
reasons. It facilitates economic development, the wise production of
vital minerals and fuels, the safeguarding of water resources,
environmental protection and remediation, and the mitigation of hazards
such as landslides, floods, and earthquakes. It is democratic because
all of society benefits from geologic mapping when it is available, by
virtue of better decisions being made about resource production, hazard
mitigation, and planning. Because it is a government undertaking, the
maps and data produced are widely distributed and made available to the
public at low cost. Therefore, the private citizen, the mining company,
state and federal agencies, and environmental advocates can all equally
have access to this vital information.
Not all programs conducted by government have such broad and far-
reaching positive implications in society. Economically, its cost-
benefit ratio is excellent, returning 25 to 39 times the cost of the
program to the tax payer. Few government programs have such an
outstanding record of value returned to the taxpayers. Again citing the
Kentucky example, geologic maps have been the most popular publications
ever made about Kentucky land and resources. More than 200,000 geologic
maps have been sold, more than all other geologic publications
combined. In the United States, farmers, factories, municipalities,
private industry, and private citizens are expected to maintain their
land and water and prevent pollution from adversely affecting the
environment. There are a myriad of regulations from local, state, and
the federal governments to ensure the protection of our environment.
But the citizens do not always have the necessary tools to understand
the connections between the land and water and their activities.
Geologic maps are basic blueprints that show how the land and
groundwater are linked. Therefore, a geologic map is a necessary tool
for preventing land and water pollution and should be available for all
areas in the United States.
In the 1960's and 70's when Kentucky was mapped, the driving force
behind the mapping was mineral production especially coal, oil,
minerals, and natural gas. Kentucky's coal production rose to number 1
in the Nation because geologic mapping showed many new mineable coal
reserves. Geologic mapping was a great stimulus for economic
development at a time when it was greatly needed. It was recorded at
the time that the taxes from the coal identified on just a few geologic
quadrangle map were enough to cover the entire cost of the program for
Kentucky.
The Kentucky geologic maps are an ideal example to study because
they have been in circulation for more than 25 years, long enough for a
meaningful evaluation. The popularity of geologic maps in Kentucky is a
measure of how much the maps are valued, but a rigorous economic cost-
benefit analysis of the mapping was needed to prove the economic value
of the mapping. A total of 2,200 questionnaires about the geologic maps
was sent to professional geologists and engineers registered in
Kentucky. Twenty percent of the questionnaires were completed and
returned for analysis. The questionnaires asked the following: (1) How
are the maps used? (2) What are the maps worth to the user? (3) What
are the maps worth to the state?
The responses indicated a wide variety of uses for the maps, some
of which could not have been anticipated at the time the mapping
program began. Some of the most common uses were:
Exploring for and developing groundwater resources
Exploring for and locating mines
Cleaning up environmentally damaged sites
Avoiding karst hazards
Designing foundations for engineering
Making zoning and city planning decisions
Locating waste-disposal facilities
Evaluating property
Identifying hazards such as landslides
The question, ``what are the maps worth to the user,'' was answered
in several different ways. The users said they saved an average of
$43,527 because the maps were already available and therefore they did
not need to do the mapping themselves. Gathering only the minimum
amount of information necessary for them to do a credible job would
have cost an average of $27,776. Geologic mapping was so vitally
important to their work that they estimated a map was worth 17 percent
of their total project cost. Seventeen percent of the cost of a section
of highway, an industrial park, a landfill, or other infrastructure is
a significant amount of money for society.
A total of $21 million (1970 dollars) was spent on the mapping from
1960 to 1978. The dollars were equally divided between state and
federal contributions. Field geologists from the U. S. Geological
Survey carried out the majority of the mapping. It is important to ask,
``Have the taxpayers gotten their money's worth?'' If we multiply
$27,776 (cost to gather minimum information necessary to do a credible
job) by 81,000 (minimum number of maps sold by KGS alone), we get a
minimal value of $2.25 billion for the maps; if we multiply the 81,000
maps sold by $43,527 (the amount already having a map saved the users),
we get a maximum value of $3.53 billion for the maps. If we subtract
the cost of the mapping program ($90 million, in 1999 dollars) from the
minimum value of $2.25 billion, we see a net gain of $2.16 billion.
This is a remarkable return on the taxpayer's investment of $90
million!
The public has been extremely well served by the mapping program,
as demonstrated by this cost-benefit analysis. Even if you have never
bought a geologic map, you still benefit from them. That is because
they are considered ``public goods,'' much the same as roads, dams,
locks, reservoirs, and landfills are--in fact, geologic maps make it
possible to build better roads, dams, locks, reservoirs, and landfills,
and build them more economically. And the public will continue to reap
the benefits of the maps because the information they contain will
continue to be used for many more decades. Another example of the
popularity and value of the Kentucky geologic maps is the interest the
maps have raised among non-geological users groups in the state; such
as the Kentucky Counties Association, Area Development Districts, the
Natural Resources Conservation Service, Kentucky League of Cities,
Kentucky Chapter of the American Planning Association, and various
municipal, county, and state agencies. These groups are composed of the
people responsible for enforcing regulations and protecting the
environment as well as planning and zoning. Incorporating geologic maps
into land-use decisions has become a major use for geologic maps.
This year Kentucky passed a major milestone in geologic mapping for
the Nation. All of the original printed geologic quadrangle maps (GQ's)
(1:24,000-scale, 7.5-minute) for Kentucky, 707 maps in total, have been
converted into digital format. This is an unprecedented accomplishment
in the United States. Kentucky is truly a national leader in this area.
The National Cooperative Geologic Mapping Act of 1992 and subsequent
reauthorizations of this legislation have funded this program in part.
This activity is a 50:50 cost share between the U.S. Geological Survey
and the Kentucky Geological Survey. The U.S. Geological Survey and the
Association of American State Geologists administer the National
Cooperative Geologic Mapping Program (http://ncgmp.usgs.gov/). The
government sponsorship of the program has ensured that the highest
standards have been maintained in digitizing the data, that appropriate
metadata has been provided to assist the users, and that the products
are inexpensively distributed to the public.
The conversion of the paper maps into a digital format has numerous
benefits:
Many GQ's are now out of print. The new digital geologic map
data permanently preserves this valuable geologic information
for use by future generations.
The digital format allows corrections, additions, and
changes to be readily made to the original map data. This saves
time and money because it would be prohibitively expensive to
print revised maps.
Digital data from each quadrangle can be easily distributed
to users on CD-ROM or through the World Wide Web, and this
makes the data much more accessible.
The digital format allows users to manipulate and analyze
the data in a variety of computer applications and is
particularly useful in geographic information systems (GIS).
All of the geologic data for the maps can be seamlessly
joined together to provide a regional perspective and generate
new maps at different scales.
Data from the individual GQ's are being digitally compiled
to create new 1:100,000-scale, 30 60 minute geologic
maps for Kentucky.
The digital geologic data from all 707 GQ's will be
incorporated into a statewide GIS of geologic data, which will
be made available to the public on the World Wide Web,
providing access 24 hours a day, 7 days a week.
Recently, the Commissioner of the Department of Natural Resources,
Kentucky Environmental and Public Protection Cabinet, commented on
geologic mapping by saying, ``I applaud the dedicated staff at the
Kentucky Geological Survey for reaching such a momentous milestone. For
the first time in our history, decision-makers across Kentucky will
have instant access to critical information that will allow them to
make well-informed decisions regarding future development and
protection of our natural resources.'' The president of GRW, an
engineering and mapping company in Lexington, Kentucky, said, ``Having
this data in digital format allows for easy and inexpensive
distribution by electronic means. This greatly benefits the many and
varied uses and allows for greater flexibility in the use of the data.
Users can easily create new maps and new data by overlaying different
maps. The potential additional uses are virtually limitless.'' As
previously stated, the economic return to society from the investment
of government funds for geologic mapping in Kentucky (1960-1978) was
between 25 and 39 times greater than the program costs. The economic
return to society that will result from digital geologic maps will
likely exceed that of the original printed maps. The digital maps can
be used in many more ways and can be distributed much more widely than
the printed paper maps.
Kentucky has a proud legacy of geologic mapping together with the
U.S. Geological Survey and the other state geological surveys. In 1978,
with the help of the U.S. Geological Survey we became the first state
in the Nation to achieve complete geologic map coverage. Now because of
the National Cooperative Geologic Mapping Act we celebrate the fact
that Kentucky is the first state in the Nation to have complete digital
geologic map data for the entire state. This provides an incredible
foundation of geologic information that is easily accessible,
inexpensive, and widely distributed for the benefit of future
generations of people in the Commonwealth. I am proud that Senator
Bunning is co-sponsoring this bill that will be so vital for the future
of our Nation and Kentucky.
Senator Craig. Well, thank you both very much for your
testimony. I was sold before you got here and you have sold me
more. There is no question that they are critical and necessary
for the effective development of our country and to do so in an
environmentally sound way. So we very much appreciate your
testimony and we will aggressively expedite trying to move this
legislation through. If there are any questions we will submit
them to you in writing for any response.
Craig, do you have any questions of these gentlemen?
Senator Thomas. No, sir, I do not. I might want to talk to
Dr. Cobb later about who is the largest coal producer in the
United States, but I will not.
Dr. Cobb. We were then.
[Laughter.]
Senator Craig. Well, something happened to our geology, a
little volcanic activity, tended to burn it up, I think. So
Idaho is not going to get involved in that debate, all right.
What I am going to do now is turn the balance of the
hearing over to Senator Craig Thomas. It is an issue that deals
with an important critical resource in his State. He has
opening comments and he will introduce the balance of our
panelists to talk to that issue.
So, Craig, I will hand you the gavel and let you proceed.
Senator Thomas [presiding]. Thank you, sir. Well, I
appreciate very much your having the hearing for this bill. It
is a jobs bill for us in Wyoming and it has to do with putting
people back to work.
Senator Craig. Can I interrupt for just a moment and ask
unanimous consent that two statements become a part of this
committee hearing's record.
Senator Thomas. Without objection.
Senator Craig. Thank you.
Senator Thomas. So what we are really talking about here is
maintaining one of the most important economic activities in
our State. Wyoming accounts for about 85 percent of the natural
soda ash produced in the United States and the whole future of
this industry is at stake right now. It has much to do with
foreign markets and over the last several years the foreign
market has been the opportunity.
So we are talking about here a way to assist in maintaining
this economic activity, maintaining these jobs that are there,
and maintaining our position, being able to compete with China
and the things that are happening there.
So I thank the witnesses very much: Mr. Michael Burd, vice
president of the United Steelworkers Union, which represents
workers there of course, as well as unions that transport the
goods to the coast and all those kinds of things; Mr. John
McDermid, who is counsel to the American Natural Soda Ash
Corporation, the corporation that does most of the marketing in
the Asian area and the overseas work for them; and Mr. Marion
Loomis, who is the executive vice president of the Wyoming
Mining Association and is involved there.
So, gentlemen, thank you so much for being here. We will
start with you, Mr. Burd, if you please.
STATEMENT OF MICHAEL K. BURD, VICE PRESIDENT, UNITED
STEELWORKERS OF AMERICA LOCAL 13214, FMC WYOMING ALKALI PLANT,
GREEN RIVER, WY
Mr. Burd. I think you have pretty much said everything I
needed to, Senator. But anyway, thank you. My name is Michael
Burd. I am the vice president of the United Steelworkers of
America Local 13214 at the FMC site and mine in southwestern
Wyoming. I represent about 600 members at our site and, sadly,
that number is down from 650 when the hearing was held on this
matter in Rock Springs in April, due in part to another work
force reduction. It is the politically correct word, I guess,
for layoffs these days.
Anyway, the 600 members at our site and the 400 steelworker
brothers and sisters at the General Chemical site, along with
800 workers at OCI in Solvay, we are tired of seeing our
families, friends, and neighbors lose these good-paying jobs.
Our industry is getting hit by many different factors that are
causing the decline in the United States soda ash industry, of
which approximately 90 percent is produced in Wyoming.
Mr. Chairman, over the last 5 years we have lost 400 jobs
alone at FMC and another 300 throughout the trona patch. This
contributed to the FMC Granger site being mothballed. That
facility has the capability of producing 1.2 million tons of
soda ash and if it were running at 100 percent it would employ
more than 200 people.
We in Wyoming sit on top of the world's largest known trona
deposit and with the current technology we have over 100 years
of reserves yet to mine. Our plant operators and our
underground miners are some of the best in the world. But how
can we compete with China facing the hurdles that we have in
southwestern Wyoming? One of the biggest is our rail service.
We have only one carrier that holds a monopoly on getting our
product delivered. The cost of a ton of soda ash to our
customers is increased by 50 percent due to transportation
rates.
Another factor is the price of energy. Natural gas has more
than doubled in the past few years. An increase of one dollar
per MBtu is an increase of $20 million to the Wyoming
producers. The truly ironic part is this has happened while
Wyoming is in the middle of a natural gas boom.
But mainly we have the foreign competition in China. China
has gone from an importer of soda ash to the world's No. 1
exporter, a distinction that Wyoming producers held until just
recently. How? Because they build and operate state-sponsored
plants and pay their workers next to nothing. They do not
concern themselves with the environmental degradation that
comes from running high-energy and dirty synthetic plants. They
build their facilities next to ports to assure minimal
transportation costs and they care not about workers' rights,
safety, or the environmental standards.
How can American workers try to compete with this type of
recklessness and disregard for human rights in the world we all
share? The White House, whomever is in control, should present
a workers' rights violation case against the Chinese through
the World Trade Organization.
Last year our trade deficit with China was over $120
billion. All the American soda ash workers and producers want
is a level playing field. If that were to occur, with our
highly productive and modern plants and our professional work
forces, Wyoming could supply the entire world with the best
product available.
S. 2317 proposes to lessen the mineral royalties on soda
ash from 6 to 2 percent. During the nineties the rate was
raised from 2 percent to the current 6, but the industry was
doing very well at that time and the exports were on the rise.
That is not the case today.
It is not without a degree of concern that my fellow
workers and I do support this legislation. I am a Wyoming
native and I want to live and retire in that beautiful State.
We all know that once a mineral is taxed and taken away it
cannot be taxed again. But Wyoming is currently in the very
enviable position of having something that most of the Nation
would love to have. We have a very large budget surplus. So if
we are going to do this the time is now. Governor Freudenthal
has acknowledged this also in a letter of support to this
committee.
I have no illusions that this will be the silver bullet to
cure all the industry's woes, but I hope it will help. And
maybe, just maybe, Senator, we can create some jobs in
southwestern Wyoming. At the very least, hopefully we will not
lose any more.
I have become very disillusioned watching my friends and
neighbors leave the State in search of jobs elsewhere. Even
worse than that, Wyoming is losing something even more
precious, its future. We are losing our young people, Senator.
Between Green River and Rock Springs, several grade schools
have closed over the past few years. We simply do not have the
children to support them. And of course, when the schools close
the teacher and the staff that worked at those schools are gone
also. Every job that we have that is lost in the trona industry
translates into the community many times over.
As I said earlier, we are currently in a natural gas boom,
but it will not last. One day it will slow down or stop
altogether. Meanwhile, the trona industry has been a steady
business since 1943 and has the potential to be around
providing good jobs for generations to come. Hopefully, Mr.
Chairman, you and this distinguished committee can help us, and
I appreciate your time and thank you for allowing me to speak
for you today.
Senator Thomas. Thank you very much. You mentioned the
letter from the Governor. I have one here and I shall put this
in the record.
Mr. Burd. Thank you.
Senator Thomas. As you indicate, these royalties are split
between the feds and the State, so the State of course will
have a reduction as well. But certainly we support that.
Mr. McDermid.
STATEMENT OF JOHN F. McDERMID, ON BEHALF OF AMERICAN NATURAL
SODA ASH CORPORATION
Mr. McDermid. Good afternoon, Mr. Chairman. My name is John
McDermid and I am testifying today on behalf of the American
Natural Soda Ash Corporation, ANSAC, a Webb-Pomerene
association which is composed of four of the largest U.S.
producers of soda ash.
I am pleased to be able to be here today to underscore some
of the international challenges facing the U.S. soda ash
industry and the much-needed boost to exports that will result
from reducing Federal soda ash royalties.
In 1977 the U.S. soda ash industry has faced the dual
challenges of rising costs and foreign trade barriers that now
threaten its viability. When the BLM last raised royalties in
1993, it based its increase on prospects for continued industry
profitability and future growth at that time. A decade on, the
conditions of perpetual expansion and profitability no longer
exist. Rather, the U.S. industry finds itself facing stagnant
growth, zero profitability, and mounting job losses. In short,
this is an industry that is fighting for its very survival.
The impact of soda ash on the American economy is far-
ranging. You will find no greater supporter for free trade than
ANSAC. Soda ash exports contribute a surplus of nearly a half
billion dollars to the overall trade deficit last year and U.S.
soda ash exports of 4.5 million tons have nearly quadrupled
since ANSAC's founding in 1983. About 40 percent of total
production is exported.
Nevertheless, exports have grown by only 4 percent since
1997, compared to a 100 percent increase from 1992 to 1997. The
industry's viability also impacts the 2,100 workers directly
employed in well-paying jobs in the State of Wyoming alone,
which is down 30 percent over 1997 levels. The industry also
accounts for tens of thousands of jobs in other States with
soda ash production and related industries like glass,
detergent, and shipping.
U.S. soda ash consumption has been flat since the early
1980's, a factor that until recently was mitigated by U.S.
export growth. Until 1997 jobs could marginally expand due to
overseas growth and reasonably acceptable profits. Since then,
however, as other industry experts are testifying today, energy
and shipping costs and tax expenses have significantly risen.
Rising costs are hurting U.S. exports. Without the natural
advantage of trona, the rest of the world mostly produces soda
ash through a synthetic process that is much more expensive
than American methods. Despite high shipping and labor costs,
the U.S. exports can still compete, though they must also face
a myriad of tariff and non-tariff barriers erected to protect
inefficient local producers.
Adding insult to injury, the countries with the highest
barriers are also the world's most promising markets. These
include China, India, Brazil, and South Africa. In the case of
China, U.S. soda ash has been at the losing end of a very
ambitious 15-year campaign to develop a massive soda ash
industry. The losses are simply staggering, an estimated one
million tons in annual U.S. exports. Now the world's largest
producer of soda ash, China's growth owes little to free market
principles since over 90 percent of production is by state-
owned firms that benefit from a 5.5 percent import duty, a
fixed exchange rate that amounts to a 15 to 40 percent subsidy,
and subsidized bank lending, not to mention lower wages and few
environmental standards.
Without state support, China would be a lucrative U.S.
market. Instead, U.S. market share has declined from 30 percent
in 1989 to barely more than 1 percent last year as Chinese
demand has exploded, and U.S. exports are expected to fall by
another 30 percent this year. Subsidized Chinese soda ash is
also edging out U.S. exports in key third markets. Chinese
exports have doubled in the last 5 years, flooding markets in
Japan, Korea, and Southeast Asia.
Unlike foreign counterparts, the U.S. industry neither
seeks or desires government protection to compete. However,
industry challenges are reaching a breaking point. Exports are
critical to maintain jobs and restarting ideal facilities like
those in Wyoming's Green River region, and reducing Federal
royalties will jump-start export competitiveness.
The industry estimates that a reduction in Federal soda ash
royalties to 2 percent would result in an estimated 5 to 10
percent increase in U.S. exports or about 25 to $50 million.
Combined with other restructuring initiatives, a royalty
reduction will help see the U.S. industry through a difficult
period and position it for sustained long-term export growth.
I thank you for this opportunity to present ANSAC's views
and welcome any questions you may have, Senator Thomas.
[The prepared statement of Mr. McDermid follows:]
Prepared Statement of John F. McDermid, on behalf of ANSAC
(American Natural Soda Ash Corporation), on S. 2317
Good afternoon, Mister Chairman. My name is John McDermid, and I am
testifying today on behalf of ANSAC, a Webb-Pomerene Association
composed of four of the largest U.S. producers of soda ash. I am
pleased to have the opportunity to underscore some of the challenges
facing the U.S. soda ash industry and the beneficial impact in the
global competitiveness of U.S. exports that will result from a
reduction in federal soda ash royalties.
AN INDUSTRY CHALLENGED
Since 1997, the U.S. soda ash industry has faced the dual challenge
of a rising cost structure and foreign trade barriers that threaten its
viability. Four years earlier in 1993, the Bureau of Land Management
raised the federal soda ash royalty to the current 6%, justifying this
increase on industry profitability and current and future growth
prospects at the time. A decade later, it is clear that the conditions
of seemingly perpetual expansion and profitability no longer exist.
Rather, the U.S. industry finds itself facing stagnant growth
prospects, zero profitability, and mounting job losses. In short, this
is an industry that is fighting for its very survival.
The far-ranging impact of soda ash manufacturing on the American
economy cannot be overstated. Soda ash exports contributed $500 million
dollars to the overall U.S. trade deficit in 2003. Furthermore, the
viability of the U.S. soda ash industry impacts not only the 2,300
workers directly employed in well-paying jobs in the state of Wyoming
alone, which incidentally are down 30% over 1997 employment levels, but
also the tens of thousands of workers employed in (1) other soda-ash
producing states, (2) value-added industries such as glass
manufacturing; (3) ancillary industries such as transportation, and (4)
jobs dependent on the health of the regional economy.
A NATURALLY-COMPETITIVE INDUSTRY BESET BY RISING COSTS
Domestic soda ash consumption has remained essentially flat since
the early 1980s, a factor that until recently has been largely
mitigated by dramatic increases in U.S. exports during this same
period. Thus, up until 1997, the industry was able to maintain capacity
and employment and even expand due to growth in overseas markets and to
reasonably acceptable profitability levels. In recent years, however,
rising costs of production have significantly eroded industry
profitability. Other industry colleagues will testify on this matter
with greater authority, but let me point out three specific areas: (1)
rising energy costs, whereas the price of natural gas, a major
production cost, has skyrocketed up by 150% over the last four years;
(2) exorbitant domestic rail and ocean freight costs, whereas it costs
more to ship product to its final destination than to make it; and (3)
an increasingly burdensome share of taxes, fees, and royalties paid,
whereas such taxes now account for 14% of the cost of doing business.
Rising costs have also had a debilitating effect on export
competitiveness. Without the natural advantage of trona, the rest of
the world mostly produces soda ash through a synthetic process that is
more expensive than American methods. While U.S. soda ash literally has
a natural edge over its foreign competition, it is disadvantaged by
rising transportation costs and a substantially higher wage structure.
While U.S. exports can still compete effectively in global markets
under these conditions, they must also face a myriad of tariff and non-
tariff barriers erected by foreign governments to protect local
suppliers. Such state intervention props up inefficient producers and
raises costs for customers in the glass and detergent industries.
Considering that soda ash comprises about 60% of the raw material cost
of glass and 30% for detergents, this protection prices local value-
added production out of export markets; subjects local value-added
manufacturing to import competition, and passes higher prices on to the
general population. Adding insult to injury, the countries that have
erected the highest bathers to U.S. soda ash are also among the
largest, most-promising, and fastest growing markets in the world,
e.g., China, India, Brazil, and even markets such as South Africa.
Increasingly, as in the case of China, the levels of direct and
indirect government support are rising to a point where imports are now
edging out U.S. exports in key third markets such as Japan, Korea, and
Southeast Asia where U.S. soda ash once dominated.
A reduction in royalty payments will have a significant positive
impact on U.S. exports given that U.S. soda ash enjoys natural
competitive advantages and that even a 2% price premium can determine a
sale. Furthermore, the consequent increase in U.S. exports would help
mitigate any revenue impact while maintaining and even boosting
employment in the soda ash-producing states of Wyoming, Colorado, and
California as well as states like Oregon with jobs dependent on the
soda ash industry.
EXPORT GROWTH STALLED BY HIGH COSTS AND PROTECTIONISM
Given that U.S. soda ash consumption of about 7 million MT has been
essentially flat for more than 20 years, it is vital that exports grow
in order to stabilize U.S. production and employment. You will find no
greater supporters of global free trade than ANSAC and the U.S. soda
ash industry. Since ANSAC's founding, U.S. soda ash exports have
increased from a base of 1.3 million MT valued at $138 million in 1984
to 4.5 million MT valued at $514 million in 2003. About 40% of U.S.
production is exported, and soda ash contributed a surplus of more than
half a billion dollars to the overall trade deficit of $536 billion
last year. Remarkable as these numbers are, it should be noted that
most of this growth took place prior to 1997. Exports have actually
grown by only 4% since 1997, compared to a 100% increase from 1992 to
1997.
U.S. export growth coincided with dramatic advances in global trade
liberalization. In many cases, however, tariffs remain substantial,
especially in countries with the most promising soda ash markets.
Furthermore, as tariffs fell, usually as mandated by negotiated trade
agreements, governments have had to resort to ever-creative methods to
protect inefficient domestic producers. While the global scene has many
players, I will concentrate here on the illustrative-examples of China,
Brazil, India, and South Africa. These countries are not only the most
promising growth markets but prominent examples of extraordinary
government protection. By outlining these examples, you will get a
sense of the of the stiff challenges we face in growing exports and the
imperative of reducing federal royalties to level the playing field.
China--China's policies aimed at expanding domestic production and
exports have resulted in the loss of over 1 million MT in annual U.S.
exports. This, in turn, has led to hundreds of lost jobs in Wyoming
alone and millions of dollars in lost tax revenues to that state. The
U.S. soda ash industry has been at the losing end of an ambitious and
targeted 15-year campaign, conducted at all levels of the Chinese
government, to develop a massive domestic soda ash industry. The
program has been an overwhelming success, transforming a fledgling
industry into what is now the world's largest soda ash producing
nation. Since 1989, Chinese soda ash production has expanded more than
three-fold from 3 million to 11 million MT in 2003 and is expected to
expand by another 6.3% percent this year. In the last five years alone,
Chinese soda ash production has expanded by more than 50%, or 3.7
million MT.
China's impressive gains in soda ash production owe little to free
market principles of innovation, efficiency, and profitability. Rather,
since over 95% of China's soda ash is produced by state-owned
enterprises, its rise as a soda-ash producing powerhouse is more a
testament to the efficacy of government intervention. In addition to a
5.5% import duty, Chinese soda ash is aided by China's fixed exchange
rate, which artificially undervalues the Chinese yuan relative to the
U.S. dollar by between 15 to 40 percent, according to economists. This
undervaluation of China's currency amounts to a de facto subsidy that
negatively impacts not only soda ash but a wide range of U.S.
manufacturing sectors. This is hurting U.S. export competitiveness and
contributing to the highest bilateral trade deficits in history.
Furthermore, like other state-owned firms, local soda ash producers
benefit from subsidized financing from state-run banks, direct support
from local and provincial governments that are driven by the need to
maintain local employment, and a vertical supply-chain network of
state-run firms. As has been widely documented, China's largely state-
run banking system is notorious for issuing loans that do not have to
be repaid, resulting in massive non-performing loan portfolios that are
unsustainable and portend a potentially massive banking crisis with
global repercussions. Chinese producers also benefit from a
dramatically cheaper wage structure and much less rigorous
environmental standards.
Reducing the federal soda ash royalty would help restore a more
level playing field in China. Were it not for extraordinary levels of
government protection and state support for domestic producers, China
would be one of the largest and most promising foreign markets for U.S.
soda ash. Already the world's largest soda ash market, Chinese soda ash
consumption expanded by 18% in 2002 and by another 8% last year.
Conversely, the U.S. share of the Chinese market has declined
dramatically. In 1989, U.S. soda ash captured a 30% share of the
Chinese market; 15 years later, our share stands at barely more than
1%. Though Chinese consumption has expanded from 4.0 million MT in 1989
to 10.1 million MT last year, a staggering 143% increase, the actual
quantity of U.S. soda ash exports has declined, from 317,000 MT in 1989
to 280,000 MT last year. U.S. soda ash exports are expected to fall by
another 30 to 40 percent this year, even though Chinese demand is
expected to expand by another 2.2 million MT over the next four years,
making China one of the few world markets expected to show solid growth
in demand.
While consumption growth is impressive, the Chinese industry plans
to increase capacity at rates far outpacing projected demand. According
to industry estimates, China is set to boost annual capacity by an
additional 1.1 million MT this year and by 3.3 million MT (both over
2003 levels) by 2007. (3.3 million MT equates to 55% of total U.S. soda
ash consumption last year.) Given that demand is only expected to
increase by 2 million MT, this excess soda ash will end up being
exported at cut-rate prices to third-country markets in Northeast and
Southeast Asia.
East Asia--While penetrating the domestic Chinese market is
difficult enough, U.S. exports are increasingly facing stiff
competition from Chinese exports in key third-country markets. Chinese
exports have grown dramatically, doubling in the last five years with
rapid increases in production capacity. As of last year, about 11% of
Chinese production was exported, yet this figure promises to grow with
planned capacity additions over the next several years. Over 90% of
Chinese exports are to key Asian markets such as Japan, Korea, and
Southeast Asia (e.g., Indonesia, Thailand and the Philippines). The
fall-off has been dramatic in what were once the largest markets for
U.S. soda ash. In 1996, the top four global markets for U.S. soda ash
were Indonesia, Korea, Japan, and Thailand, respectively. Combined,
they accounted for $190M in exports, or 37% of total U.S. exports. By
2003, this share had fallen to $106M, a drop of 44% over 1996 levels,
and down to 21% of U.S. exports. Excluding Japan, which has stronger
demand for higher-quality soda ash, the drop in exports to Indonesia
(7th largest market in 2003), Korea (8th largest), and Thailand (13th
largest) has been a staggering 54% over 1996 levels.
I understand that several measures to counteract China's unfair
advantages in these third markets were proposed in testimony before
Senate Finance Committee International Trade Subcommittee hearings on
the state of the U.S. soda ash industry on April 15. Among these
proposals were the elimination or significant reduction of China de
facto 15-40% subsidy arising from its from artificially-undervalued
fixed exchange rate as well as steps to eliminate or significant reduce
China's value-added tax (VAT) rebate for exported soda ash. Under
current policy, China offers its producers a partial refund of VAT
taxes paid on domestically-produced soda ash that is exported. The
rebate portion stands at 76% of VAT paid, reduced from 87% last year
for fiscal reasons. Reducing or completely eliminating the VAT rebate
program for soda ash would have no impact on production for the vastly
larger domestic market while allowing U.S. exports to compete on a more
level playing field in Asian markets. While action on either of these
items would be significant, steps in that direction are not likely
imminent.
The most potent and immediate boost to competitiveness would result
from a reduction in federal soda ash royalties, which will allow U.S.
exports to regain market share and better compete with subsidized
Chinese exports in vital third markets.
Brazil--Brazil was the 4th largest market for U.S. soda ash in
2003, accounting for 312,000 MT of exports valued at $44 million.
However, a series of obstacles threatens current and future U.S. market
share. Already burdened by high production costs, U.S. soda ash faces a
10% import duty when exporting to Brazil and other Southern Cone Common
Market (Mercosur) countries like Argentina. China is also emerging as a
competitive threat, now comprising 7% of Brazilian imports. However,
the most significant obstacle is a discriminatory sales tax (ICMS) on
imported soda ash designed to protect Brazil's sole producer. Since
2001, the State of Rio de Janeiro has assessed a preferential ICMS rate
of 2% on the formerly state-run firm Alcalis, compared to a 19% rate on
all other (i.e., imported) soda ash, providing Alcalis a de facto
subsidy of about $16-18 per metric ton. This discriminatory treatment
flatly violates Brazil's national treatment obligations under the WTO
(GATT 1994, Article III) which stipulate that internal taxes must be
equally applied to domestically-produced and imported goods. In fact,
the matter bears a strong resemblance to a WTO case recently filed by
the U.S. government alleging discriminatory tax treatment of
semiconductors by China. The U.S. industry estimates lost soda ash
exports of up to $15 million due to this discrimination.
The industry has actively engaged the U.S. government for
assistance on the discriminatory ICMS tax since November 2001. ANSAC
and its member companies have met with senior officials in the Office
of the United States Trade Representative and Commerce Department, and
letters encouraging the Administration to support the industry's
efforts have been written to United States Trade Representative Robert
Zoellick by the Wyoming Congressional Delegation and Senators Smith and
Wyden from Oregon. The industry has also submitted a draft Section 301
petition to the Office of the United States Trade Representative,
although its intentions are to solve this matter via bilateral
consultations and not through a trade war. Despite the extensive
efforts of the industry and key Congressional supporters, progress
remains elusive.
Nevertheless, the U.S. industry firmly believes that reducing soda
ash royalties would clearly help U.S. exports retain Brazilian market
share in the face of state support of the local industry and gaining
Chinese competition. Such a reduction may also be necessary to fend off
increased competition from duty-free European Union exports resulting
from a pending EU-Mercosur Free Trade Agreement.
India--India is one of the world's fastest growing soda ash markets
due to strong domestic demand for glass and detergents. However, there
have been no U.S. soda ash exports to India since 1996. Like China and
Brazil, India's domestic soda ash producers have enjoyed strong
government support, which they have used to make India the world's
fourth largest producing country--behind China, the United States, and
Russia. As recently as 2002, an Indian court case brought by Indian
soda ash producers threatened to shut U.S. exports completely out of
the market. With the hard work of the U.S. government and strong
support from the Wyoming Congressional Delegation, this outcome was
averted. Nevertheless, India still maintains a 20% import duty which,
when combined with other import taxes results in a net effective import
duty of 39.2%. Still, were it not for exorbitant shipping costs ANSAC
could re-enter the Indian market, and a reduction in soda ash royalties
would accelerate this process.
South Africa--As in China, a once leading U.S. share of the South
African market has dwindled due to state support for favored producers.
In 1990, South Africa was the third largest market for U.S. soda ash
with over $27 million in exports. Last year, exports were just $8
million, a decline of 70%, making South Africa the 21st largest market.
This fall-off coincides with the 1991 formation of Botash, a
politically-connected soda ash producer jointly owned by the Government
of Botswana, the South African mining firms DeBeers and Anglo American,
and a consortium of South African banks. Botash and its precursor
entity SAB have benefited from extraordinary state support. In 1991,
the South African Government temporarily raised the soda ash tariff to
zero to 10% and permanently reinstated it in 1994. Nevertheless, SAB
was forced into bankruptcy and reformed as Botash in 1995. While South
Africa was obligated under the WTO to reduce its soda ash tariff from
10% down to 5.5% by 2004, the tariff was maintained at 10% until
January 2000 with Botash pressure. With tariff liberalization
impending, Botash initiated a baseless legal action under South African
competition laws, which threatens to shut ANSAC out of the market.
ANSAC is nevertheless hopeful of a positive legal outcome, and a
federal royalty reduction would help U.S. soda ash regain its market
share in this emerging economy.
CONCLUSION
The U.S. soda ash industry prides itself on being a naturally
competitive industry in every aspect. Unlike our foreign counterparts,
we neither seek nor desire government protection or assistance to
compete in the domestic and world marketplace. I said before and want
to re-emphasize that you will find no greater supporters of global free
trade than ANSAC and the U.S. soda ash industry. However, the
challenges of rising production and transportation costs combined with
pervasive foreign government support for local producers have reached a
point where the viability of the U.S. soda ash industry is being
severely strained. Given flat domestic demand, export growth is
critical to maintaining U.S. production capacity and employment and
restarting idle facilities such as those in Wyoming's Green River
region. The U.S. industry estimates that a reduction in federal soda
ash royalties to a 2% rate would result in an estimated 5-10% increase
in U.S. soda ash exports, or about $25 to $50 million based on 2003
levels. Combined with other industry restructuring initiatives, a
royalty reduction will help see the U.S. industry through a difficult
period and position it for sustained and long-term export growth. I
look forward to witnessing the continued positive role of soda ash on
the economy of the nation, as well as its critical role in the state of
Wyoming and regional economies in states such as Colorado, California,
and Oregon. And once again, I thank you for this opportunity to present
my views.
Senator Thomas. Thank you very much.
I might mention, as you know, we had a committee hearing in
Rock Springs this spring. It was an official meeting of the
Finance Committee, in which we were focusing largely on trade.
But there were a number of things that had impact on the
continuing success here, and of course this mineral royalty was
one of them.
My friend Mr. Loomis, the Mining Association in Wyoming.
STATEMENT OF MARION LOOMIS, EXECUTIVE DIRECTOR, WYOMING MINING
ASSOCIATION
Mr. Loomis. Thank you, Senator. It is a great pleasure to
be here and we really appreciate you taking comments on S.
2317. The Wyoming Mining Association is certainly in full
support of the bill and we hope you would move it forward.
The Mining Association represents bentonite, coal, trona,
and uranium producers in Wyoming. As you know, the trona is
processed into soda ash that is used in the United States and
throughout the world. It may interest you and the rest of the
committee to know that Wyoming does lead the Nation in the
production of all four of those minerals, producing 30 percent
of the Nation's coal, most of the mined uranium and bentonite,
and certainly, as you have already mentioned, 85 percent of the
Nation's soda ash.
Trona mining and processing of it into soda ash constitutes
one of the more important economic drivers for the State of
Wyoming. Severance taxes, ad valorem production taxes, property
taxes, Federal royalties, State royalties, sales tax, and even
lease costs such as annual lease payments and bonus bids for
new leases have helped create a surplus in Wyoming that is
envied by many States across the Nation.
However, the economic health of the industry is at an all-
time low. You have already heard those comments. I will try not
to repeat what has already been said, but the price of soda ash
has declined from around $77 in 1997 to $69 per ton today. The
employment has dropped, as has been mentioned. One of our mine
managers testified at that field hearing that you mentioned
that as recently as 1997 the profitability of the industry was
about 15 percent and it is near zero today. So we really do
need help and your support.
The industry is very important to the State of Wyoming.
Taxes, Federal royalties, fees, all those things I mentioned,
exceeded $48 million on 2003 production. The private royalties
are another huge portion of it. But just the portion that comes
back to the State of Wyoming in taxes and royalties is over
$20,000 per miner. There are very few jobs or industries that
create that kind of economic impact in any State.
Maybe even more important than the taxes is the $200
million payroll that is generated by the industry. That money
buys houses, food, it pays for college expenses, and allows the
2,100 miners and employees to improve their quality of life.
We often hear about the wage gap between men and women, and
the trona industry offers outstanding jobs to women. I am aware
of a number of female chemical engineers, technicians,
environmental specialists, and miners working in the trona
industry. So these high tech jobs are the envy of almost any
economic development agency. If you add all of the benefits,
health care, employment taxes, these employees are over $87,000
a year, certainly major jobs by any standards.
And these jobs create additional jobs. Our Wyoming Business
Council states that each primary job would generate another two
full-time jobs. So that $200 million payroll, you can multiply
it. They do not get paid probably on the order of the miner,
but it would generate another $330 million. So you have a $500
million impact just from the payroll.
When you add the $600 to $700 million in sales and those
companies turn around and they are paying those employees, of
course, and the taxes, but they are also buying new equipment,
they are buying the energy and fuel that has already been
talked about. So it is very, very large, the economic impact.
The legislation does not affect just Wyoming. Searles
Valley Minerals operates three plants in San Bernadino County,
California, and they have another 600 employees there. So it is
also very important there.
You have already heard about China. I will not go into that
other than to say that China a year ago, 2 years ago, was a net
importer of soda ash and now they are a major exporter. So that
is a major turnaround and something we are going to have to
address. China is going to continue to be a competitive reality
and we are going to have to do everything we can in order to
effectively compete against them. This is one area where we
feel that the government has control and can take a position in
support of the industry.
So in summary, the trona industry is also creating a
positive balance of payments. I think that was mentioned. In
summary, we do create a positive balance of payments to address
our trade deficit, employ over 2,000 people in the State of
Wyoming, another 600 in California, earning some of the top
salaries in the country. We generate millions of dollars in
taxes and royalties to run State and local government. We are a
major, major factor.
So we hope you will help keep us going and keep these jobs
in Wyoming. Thank you, Mr. Chairman.
[The prepared statement of Mr. Loomis follows:]
Prepared Statement of Marion Loomis, Executive Director,
Wyoming Mining Association, on S. 2317
Mr. Chairman, members of the Subcommittee on Public Lands and
Forest, ladies and gentlemen. My name is Marion Loomis and I am the
Executive Director of the Wyoming Mining Association. The Wyoming
Mining Association (WMA) thanks you for taking comments on S. 2317--
Limiting the Royalty on Soda Ash and is in full support of the Senate
File.
WMA represents bentonite, coal, trona and uranium producers in
Wyoming. As you know trona is processed into soda ash for use in the
United States and throughout the world.
It may interest the committee to know that Wyoming leads the nation
in production of all four of the above minerals and accounts for 30% of
the nation's coal, virtually all of the mined uranium, most of the
bentonite produced in the United States and, most importantly to you
today, 90% of the nation's soda ash.
Trona mining and the processing of it into soda ash constitutes one
of the most important economic drivers for the state of Wyoming.
Severance taxes, ad valorem production taxes, property taxes, federal
royalties, state royalties, sales taxes and even lease costs such as
annual lease payments and bonus bids for new leases have helped create
a surplus for Wyoming that is envied by many states across the nation.
However, the economic health of the soda ash industry is at an all
time low. The price of soda ash has dropped from $77 per ton in 1997 to
$69 per ton today. Employment has dropped from 3,000 in 1997 to 2,110
today. One of our mine managers testified at a field hearing in April
of this year that the profitability of the industry has declined from
15% as recently as 1997 to near zero today. The industry needs help to
continue to provide vital economic impact for Wyoming.
To give you some idea of what this industry means to Wyoming, I
offer the following statistics. There are 2,110 miners in Wyoming
producing over 15 million tons of trona per year. Taxes, federal
royalties and fees from the trona industry exceeded $48 million on 2003
production and Wyoming's share of that is over $42 million. That means
that trona production generates almost $20,000 in taxes and royalties
for use by government in Wyoming for every miner employed.
Below is a breakdown of the taxes and royalties generated by the
trona industry on 2003 production. As stated previously, Wyoming's
share of these tax and royalty dollars exceeds $42 million.
TRONA--TAXES AND ROYALTIES ON 2003 PRODUCTION
------------------------------------------------------------------------
------------------------------------------------------------------------
Severance Tax........................................... $7,800,000
Ad Valorem Tax on Production............................ 14,300,000
Ad Valorem Tax on Real and Pers. Prop................... 5,300,000
Federal Mineral Royalty (total paid).................... 10,900,000
Bonus Bids (total paid)................................. 500,000
State Royalties......................................... 5,300,000
Sales Tax............................................... 4,000,000
---------------
TOTAL TAXES AND ROYALTIES............................... $48,1000,000
===============
No. of Employees........................................ 2,110
Payroll Including Benefits.............................. $201,000,000
Production (Tons of Trona).............................. 15,100,891
------------------------------------------------------------------------
Maybe even more important than the taxes generated is the $200
million payroll generated by the trona industry. That money buys houses
and food, pays for college expenses, and allows over 2,000 employees to
improve their quality of life.
We often hear of the wage gap between men and women, but the trona
industry offers outstanding jobs to women. There are female chemical
engineers, technicians, environmental specialist and women miners
working in the trona industry. These high tech jobs are the envy of any
economic development organization. When all of the benefits such as
health care and employment taxes are added in, these jobs pay over
$87,000 per year, and women work right alongside of the men earning the
same salary for the same job.
These jobs create additional jobs in Wyoming. Our Wyoming Business
Council states that each primary job generates another 2 full time
jobs. The Business Council further states that a $200 million payroll
will generate another $334 million in payroll. Add to that the purchase
of goods, equipment, fuel and services from the sale of $600-$700
million worth of soda ash and the economic impact of trona mining to
Wyoming and the people living in Southwest Wyoming is huge.
This legislation does not just impact Wyoming. Searles Valley
Minerals (``SVM'') operates three plants in Searles Valley in northern
San Bernardino County, California that produce soda ash, sodium
sulfate, boron products and solar salt. SVM is the only major employer
in Searles Valley and is only one of two major employers in the area,
the other being the U.S. Navy at its China Lake facility. The company
has about 603 current employees plus hundreds of contractors and
service providers. With direct and indirect jobs in the immediate area
of about 1,500 from SVM in an area with an overall population of about
30,000, SVM is an important part of the area's economy.
It is also important to recognize the positive impact soda ash has
for the balance of trade to this country. At a time when our imports
far exceed our exports, we need to do everything we can to sell more
U.S. produced goods. Soda ash represents over 80% of the goods produced
in Wyoming that are exported.
Mr. Chairman, the challenges to sustaining our global leadership
are increasing.
Export growth means job growth for Southwest Wyoming. And, our
industry is committed to increasing its share of the world's growing
demand for soda ash; indeed we must, if we are to remain viable. Since
the early 1980's domestic demand for soda ash has remained constant at
approximately 7 million tons per year, and there remains no foreseeable
growth in critical U.S. markets for flat glass or glass packaging that
will lead to future growth. Thus the prospects for growth in our
industry hinge on growing our markets offshore.
To put in perspective the challenge before us, in the fifteen years
between 1982 and 1997, this industry enjoyed a steady and significant
growth in exports. Just in the five years between 1992 and 1997, export
volume grew 100%. But in the years since 1997, export growth has been
marginal. Exports in 2003 were only 4% above their 1997 levels. We are
not satisfied with the current rate of export growth, nor should we be.
The developing economies of China, Southeast Asia, Latin America and
Africa are growing, and so too should demand for a U.S.-made product
from a vast mineral reserve natural and unique to this state.
However, Mr. Chairman, as you well know, we are not alone in
competing for these new markets. As recently as 1989, China imported
over a 1 million ton per year of soda ash. By next year, we expect them
to be a 1.5 million ton net exporter. Moreover, China has now become
the world's largest producer of soda ash, though hardly it's most
efficient. A growing number of inefficient, state owned and state
supported Chinese producers have added soda ash to their growing list
of manufacturing exports and are flooding international markets with
low cost material. This is in spite of the fact that their own
synthetic production facilities are energy intensive and their
environmental and worker safety standards are dismal by our standards.
But like it or not, China is a competitive reality, and U.S. soda
ash producers have to do everything they can to reduce their costs in
order to effectively compete. They remain the most efficient suppliers
of soda ash in the world. They continually look at their cost
structure, both the costs they control, and those controlled by others,
in order to sustain this leadership in the years ahead. If they are to
maintain this industry's global leadership role they must partner with
federal, state and local governments, and the critical energy and
transportation suppliers in new cost sensitive relationships that
recognize their mutual dependence on one another.
If the industry cannot turn their profitability around, all of this
economic impact will be at peril. They really do need your help.
Reducing the federal royalty for a set period of time will have a
tremendous impact on the cost of producing a ton of soda ash. The
industry can and has taken aggressive steps to reduce fixed costs,
improve operational efficiencies and even curtail excess capacity. But
the industry cannot do anything about the government imposed costs.
Since that is one of the major costs, we are asking you for help to
make those reductions.
In summary, the trona industry is creating a positive balance of
payments to address our trade deficit, employs over 2,000 highly
skilled men and women in Wyoming and another 600 in California earning
top salaries, and generates millions of dollars per year in taxes and
royalties to run state and local governments. We hope you will help
keep these jobs and economic impact in Wyoming, California and the
United States.
We thank you for the opportunity to comment on this legislation and
hope that you will be successful in passing it through the full Senate.
Once again thank you.
Senator Thomas. Thank you, and thank you, gentlemen.
It is interesting that you have mentioned the economic
impact, not only directly in jobs and salaries, but taxes and
the whole impact. Actually, the Interior Department has
submitted, they would--I never thought I would say it--not very
much. But they would lose $5 million a year. In the scheme of
things around here, $5 million a year is not very much compared
to what it does in terms of the economy.
[The statement of the Department of the Interior follows:]
Prepared Statement of the Department of the Interior on S. 2317
The Department of the Interior submits the following statement for
the hearing record on S. 2317, a bill to reduce the royalty on soda ash
production from Federal lands.
S. 2317 would establish a two percent royalty rate to the United
States for sodium minerals mined from Federal lands, (a reduction from
six or eight percent) on all current and future sodium leases, for a
five-year period. In Section 102(9) of the Federal Land Policy and
Management Act (FLPMA), Congress declared that the policy of the United
States is to obtain fair market value for the use of the public lands,
including royalties from sodium production, unless otherwise provided
by statute. The Administration believes a two percent royalty is well
below fair market value for the resource, and therefore cannot support
the bill.
SODA ASH BACKGROUND
Soda ash is one of several products derived from sodium minerals
mined on public lands and is used in many common products, including
glass, detergents, and baking soda. The mineral trona is a naturally
occurring mixture of sodium carbonate, sodium bicarbonate, and water.
Soda ash, or ``sodium carbonate,'' is refined from trona mined at
depths between 800 and 1600 feet below the surface.
The chemical soda ash, is either natural or synthetic. Soda ash can
be extracted from natural trona deposits that are mined, or it can be
manufactured synthetically. Synthetic soda ash production began in this
country in the 1880's and increased as the demand for soda ash
increased. Although soda ash represented only two percent of the total
estimated $38 billion U.S. non-fuel mineral industry in 2003, its use
in many diversified products contributes substantially to the gross
domestic product of the United States, and the industry is a
cornerstone of Wyoming's economy.
In the early 1950s, the modern natural soda ash industry began in
the Green River Basin of Wyoming, home of the world's largest natural
deposit of trona. Since then, five soda ash processing facilities have
been constructed in Southwest Wyoming. Natural soda ash production from
Wyoming, in an open market, is more competitive than synthetic soda ash
produced at plants elsewhere in this country and the world.
SODA ASH--CURRENT PRODUCTION
Currently, the U.S. soda ash industry is made up of four companies
in Wyoming operating four plants (a fifth plant is idle); one company
in California with one plant; and one plant in Colorado owned by one of
the Wyoming producers. The five U.S. producers have a combined annual
designed production capacity of 14.5 million tons (16 million short
tons). The total estimated value of domestic soda ash produced in 2003
was $750 million.
Ninety percent of the domestic soda ash production occurs in the
Green River Basin of Wyoming. Of this, about 44 percent of the
production is from Federal lands. The other production in the Basin is
on nearby or adjacent State and private lands, which are often in a
checkerboard pattern with the Federal lands. Nationwide, the Bureau of
Land Management (BLM) estimates that 48 percent of the soda ash
production is from Federal lands.
S. 2317
S. 2317 proposes a statutory royalty rate on sodium of two percent.
As mentioned, the Department of the Interior believes a two percent
royalty rate is below fair market value, which was estimated to be
above the current six percent rate. The BLM's policy, as declared by
Congress in FLPMA, has been to obtain fair market value for sodium
resources. To implement this policy, in 1995, the BLM completed a
market study to examine fair market value in the sodium industry in
Wyoming. The study reviewed many comparable state and private leases
and found that fair market value in Wyoming appeared to be somewhat
higher than the five percent being charged by BLM at that time. As a
result of the 1995 study, in February 1996, the BLM determined that the
royalty for all then-existing leases would be increased from five to
six percent at the lease renewal date. The BLM also determined, based
on the study, that the royalty rate for all new leases entered into
during or after 1996 would be eight percent. In the Green River Basin,
the current sodium royalty rate on most private land is eight percent;
five percent on State lands.
The bill also would result in significant revenue loss to both the
Federal government and the State of Wyoming. In 2001, (the most current
year for which publicly available statistics have been published by the
Minerals Management Service), $11.1 million in Federal royalties were
collected from soda ash production on public lands in Wyoming. Of that
amount, pursuant to the Mineral Leasing Act, 50 percent, or $5.5
million, was distributed to the State of Wyoming, 40 percent went to
the Reclamation Fund (a fund created by statute in 1901 for the
construction and maintenance of irrigation works and reclamation
projects) and 10 percent was distributed in miscellaneous receipts to
the U.S. Treasury. The bill's reduction of the royalty from six to two
percent for soda ash production would mean that total royalties would
be reduced from approximately $11.1 million to approximately $3.7
million--a reduction of $7.4 million in one year. Under the bill's
reduced royalty rate, the State of Wyoming's share of the Federal
royalties would be reduced to $1.8 million, as compared to $5.5 million
in 2001. The United States' share also would be reduced by an equal
amount.
It should be noted that most of the soda ash mines in the Green
River Basin of Wyoming have both Federal and non-Federal ownership of
the mineral rights and are within the Union Pacific Railroad land grant
corridor which creates a checkerboard pattern of private and Federal
mineral ownership, where a section (1 square mile) of federal ownership
is surrounded on four sides by private or state ownership. Many of the
lease agreements for the mining of soda ash from the privately-held
mineral rights specify that the mining company must mine as much soda
ash from private mineral rights as mined from adjoining Federal or
State mineral rights. These agreements contain financial penalties that
discourage mining more than fifty percent from non-private portions of
the mines. Therefore, reductions in the Federal royalty rate will not
provide a directly proportional incentive to produce more soda ash from
Federal leases.
CONCLUSION
The Administration cannot support S. 2317 because the bill reduces
government receipts and reduces the fee below fair market value.
The Department of the Interior appreciates the opportunity to
submit a statement on S. 2317 and would welcome further opportunities
to discuss the bill and related issues with the Committee. The
Department would be pleased to answer any questions the Committee may
have for the record.
Senator Thomas. I do not think most people ever heard of
soda ash or trona. Any of you, tell us some of the retail
products that come from soda ash?
Mr. McDermid. Mr. Chairman, soda ash is a basic chemical
commodity. Yes, you are absolutely correct, most people do not
know it. In fact, I find that most people in Wyoming refer to
it as ``trona,'' in Washington it is ``soda ash.'' But roughly
60 percent--I think this is the most staggering of the numbers,
in answer to your question. Roughly 60 percent of the cost of
making glass is soda ash.
Now, with the international hat on that I have, that means
that in the world, if you are purchasing high-quality, well-
priced soda ash, you are going to be competitive in the glass
industry. So in that sense, glass industries around the world
are generally speaking with our allies trying to seek trade
liberalization.
Another major use for soda ash is detergents, and there are
some ancillary other uses. But those are the two principal
uses.
Senator Craig. Baking soda.
Mr. McDermid. Baking soda, yes. I am sorry. That would be
another major use.
Senator Craig. It is, frankly, one of the few things in
Wyoming that goes ready to go on the grocery shelf when it
leaves our State, and so on.
Well, I appreciate very much your being here. Again, I
think we are talking here about the loss of jobs versus a
relatively small loss of payments to the State and the feds. We
are talking about our largest export into foreign trade in
Wyoming. It does help reduce the deficit. We are talking about
potential loss of an industry that is one of our major ones.
So we appreciate your being here and we look forward to
continuing to move forward with this bill and the other bills
that are all here.
There being nothing further, the committee is adjourned.
[Whereupon, at 3:30 p.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
University of Kentucky,
Kentucky Geological Survey,
Lexington, KY, August 30, 2004.
Hon. Larry E. Craig,
Chairman, Subcommittee on Public Lands and Forests, Committee on Energy
and Natural Resources, U.S. Senate, Washington, DC.
Dear Senator Craig: Please find attached responses to the questions
that were submitted for the record pursuant to S. 2353, the National
Geologic Mapping Act, before the Subcommittee on Public Lands and
Forests of the Senate Committee on Energy and Natural Resources on July
14, 2004. Robert Marvinney, President of the Association of American
State Geologists, and James C. Cobb, State Geologist of Kentucky,
worked together on these responses.
It is our pleasure to participate in this important business for
the Nation and we would be happy to provide any further assistance or
input if needed.
Very sincerely yours,
James C. Cobb,
State Geologist, and
Director, Kentucky
Geological Survey.
Robert G. Marvinney,
President, AASG, and
State Geologist, Maine
Geological Survey.
[Enclosure.]
Questions From Senator Bunning
Question 1. I would like to congratulate the Kentucky geological
survey and our state geologist, Dr. Jim Cobb, for making Kentucky the
first state in the nation to have complete digital geologic map
coverage. As we have seen in Kentucky, digitizing maps has become a
very important and valuable aspect of this program. Does the current
legislation adequately reflect the priority and funding needed to
update older maps into newer, online databases?
Answer. The current legislation allows for updates of older maps
and conversion of existing maps to digital databases for online access.
One of the outstanding aspects of the original legislation was the
foresight to emphasize digital geologic maps for efficient and
paperless storage, updating, and communication of information to map
users. Most states have used this part of the legislation, and a
national catalog of digital geologic maps has been prepared by the
USGS. Additions to this catalog are made every year.
Question 2. The research presented today shows that government
dollars spent on this program have been returned 20-fold in Kentucky.
Do you believe further investments will see this magnitude of public
benefits? Can other states that are in the earlier stages of this
program expect to experience similar benefits?
Answer. I believe all states will experience a high return on
investment from this program, and even in Kentucky, continued updating
and new mapping will yield significant returns on the investment.
States differ in their geology, natural resources, water availability,
and hazards; therefore, the actual return to each state from this
program will be different, but in all cases it will be very high and
will continue to pay dividends long into the future.
Questiion 3. Despite the successes of this program, nearly \3/4\ of
the country is still not adequately mapped. But it is encouraging to
see that the number of state surveys participating in this program has
increased during the last decade, from 34 to 47. How can we help ensure
that all states take full advantage of this program?
Answer. Lack of federal funding is the principal reason that
progress is not being made faster toward the goal of mapping the U.S.
geologically. The state geological surveys can match approximately
twice the federal dollars currently appropriated under the Act. For
2004, the authorization level will be at $60 M but the appropriation
only $26.5 M. The STATEMAP component of the Act is only $7 M, which
leaves approximately $6 M in available matching state funding unused. A
total of 47 states participating out of 50 is a very high percentage.
For some states, funding for geological surveys is small; therefore,
because of state funding priorities it may not be possible to have all
50 states involved every year.
______
Department of the Interior,
Office of Congressional and Legislative Affairs,
Washington, DC, October 28, 2004.
Hon. Larry E. Craig,
Chairman, Subcommittee on Public Lands and Forests, Committee on Energy
and Natural Resources, U.S. Senate, Washington, DC.
Dear Senator Craig: Enclosed are responses prepared by the Office
of Insular Affairs to questions submitted following the July 14, 2004,
hearing on H.R. 1189, ``To increase the waiver requirements for certain
local matching requirements for grants provided to American Samoa,
Guam, the Virgin islands, or the Commonwealth of the Northern Mariana
Islands.''
Thank you for the opportunity to provide this material.
Sincerely,
Jane M. Lyder,
Legislative Counsel.
[Enclosure.]
Questions From Senator Craig
H.R. 1189 WAIVER REQUIREMENT INCREASE FOR TERRITORIES
Question 1. Approximately, what is the amount of annual grants
received by the U.S. Territories from the Federal government?
Answer. According to the latest available statistics from the U.S.
Census Bureau Consolidated Federal Funds Report for fiscal year 2002,
the territories received the following grant amounts:
------------------------------------------------------------------------
------------------------------------------------------------------------
American Samoa....................................... $93,400,000
Guam................................................. 250,600,000
Northern Mariana Islands............................. 66,100,000
Virgin Islands....................................... 266,400,000
------------------
Total............................................ $676,500,000
------------------------------------------------------------------------
Question 1(a). How many of these grants are distributed by the
Department of the Interior?
Answer. The U.S. Census Bureau Consolidated Federal Funds Report
for fiscal year 2002 shows that the territories received the following
grant amounts from the Department of the Interior:
------------------------------------------------------------------------
------------------------------------------------------------------------
American Samoa....................................... $36,700,000
Guam................................................. 61,900,000
Northern Mariana Islands............................. 21,600,000
Virgin Islands....................................... 79,900,000
------------------
Total............................................ $200,100,000
------------------------------------------------------------------------
Question 1(b). How many of the grants are distributed by Interior's
Insular Affairs division.
Answer. Approximately $79 million.
Question 1(c). how many of these grants are from other Federal
agencies?
Answer. Approximately $476 million.
Questions From Senator Akaka
H.R. 1189
Question 1. In 1980, in an effort to relieve the financial and
administrative burden on the territorial governments, Congress enacted
legislation requiring Federal agencies to waive any local matching
requirement under $200,000. H.R. 1189 would increase this waiver to
$500,000.
Generally, what is the current financial position of the
territorial governments?
Answer. Fiscally, each of the territories has been struggling for
some time. American Samoa is the bright spot, due to the windfall of
tobacco settlement payments. American Samoa was able to pay off much of
its traditional long-term debt by incurring debt that is serviced by
the tobacco payments. Currently, American Samoa woes approximately
$28.5 million. Tobacco payments service $17 million of this debt. The
Virgin Islands carries $1 billion in debt, with annual debt service of
$81 million. The Internal Revenue Matching Fund provides $40 million of
the $81 million in annual debt service. Guam carries general and
limited obligation debt of $400 million. The CNMI owes approximately
$250 million, nearly all of which is serviced by dedicated streams of
income, including the Covenant funds.
Question 2. Generally, what is the status of territorial efforts to
provide essential infrastructure such as water, sewer, solid waste
disposal?
Answer. Generally, the territories are trying to bring their water,
sewer and solid waste disposal infrastructure into compliance with
Federal regulations. They are utilizing the limited funds provided by
the Office of Insular Affairs and local funds to address their most
critical priorities.
For example, in the Virgin islands, EPA consent decrees, related to
wastewater infrastructure, mandated improvements necessary to comply
with Federal environmental regulations. In 2004, the Virgin Islands is
utilizing $5.0 million of the infrastructure, funds provided by the
Office of Insular Affairs as part of a multi-year financing plan to
finance the design, construction and operations of the wastewater
treatment plants on St. Croix and St. Thomas.
In Guam, one of the most critical issues is the closure of Ordot
landfill. In fiscal year 2004, Guam requested that $3.259 million in
grant fund balances provided by the Office of Insular Affairs by
utilized for Ordot closure, and for plans, specifications and estimates
for a new landfill.
American Samoa has a five-year master plan for infrastructure and
generally allocates funding based on the master plan in the areas of
water, sewer and solid waste disposal. In 2004, American Samoa received
$.475 million for water infrastructure, $1.9 million for sewer
infrastructure and $.475 million for solid waste infrastructure in
grant funds from the Office of Insular Affairs.
In the CNMI, in fiscal year 2004, the most critical projects are
(1) 24 hour water service for all residents of Saipan, (2) closing the
Puerto Rico dump and (3) designing and constructing a sewer treatment
plant in Tinian. During fiscal year 2004, the Office of Insular Affairs
provided grants for $7.2 million to address water service needs in
Saipan, $1.0 million for Puerto Rico dump closure, and $1.3 million for
Tinian sewer infrastructure.
Question 3. Do you have an estimate of how much H.R. 1189 would
save the territorial government each year?
Answer. We do not have an estimate of savings. Each individual
territory would be the best source for such information. With precise
knowledge of the grants it receives and the matching amounts it
contributes, a territory would be in the best position to determine
projected savings.
Question 4. Are there issues that have arisen over the past 20
years in the implementation of this waiver policy that the Committee
should consider fixing if we were to recommend enactment of this bill?
Answer. The matching waiver provision has received differing
interpretations from various agencies as to whether or not the waiver
is applicable to a particular program, and the amounts to be waived.
H.R. 1189 would clarify the ambiguities in the existing statute. The
views of concerned agencies with respect to these and other waiver
issues, including their support for or opposition to a statutory
increase in the waiver amount, may be presented in forthcoming reports
on H.R. 1189.
Appendix II
Additional Material Submitted for the Record
----------
State of Wyoming,
Office of the Governor,
Cheyenne, WY, July 9, 2004.
Hon. Larry Craig,
Chairman, Public Lands and Forests Subcommittee, Committee on Energy
and Natural Resources, U.S. Senate, Washington, DC.
Dear Senator Craig: It is my understanding the Senate Energy and
Natural Resources Committee will soon begin deliberations on The Soda
Ash Royalty Reduction Act of 2004. I encourage you to view this
legislation favorably.
Soda ash is of critical importance to many industrial and
commercial uses in the United States and around the world. While
primarily used in glass making (approximately 55% of U.S. consumption),
soda ash is also used in the chemical industry (23% of U.S.
consumption), the making of soaps and detergents, pulp and paper
manufacturing and water treatment. Numerous other smaller, but
nonetheless vital uses of this mineral consume the balance of
production in the United States.
For over 60 years, trona, the ore from which soda ash is
manufactured, has been mined from the largest deposit of trona in the
world, located in southwestern Wyoming. The industry has enjoyed a
cooperative and mutually beneficial relationship with Wyoming. However,
the industry has also experienced difficult domestic market conditions,
and has relied on export sales for most of its business growth during
the past 20 years. The competitive challenges faced by the industry are
exacerbated by transportation, taxes and other costs that are not
required of many of its foreign competitors.
This industry, which leads the world in production of a mineral so
essential to so many of our fundamental industries, is now under
economic attack from China, where soda ash can be produced cheaply and
without regards to the strict environmental oversight which governs
extractive industries in the United States.
Despite great strides in mining and manufacturing efficiencies,
despite cutting its workforce, and despite the best management
practices it can make, the industry in the United States is losing
ground to its overseas competitors. The United States soda ash industry
needs and deserves reasonable and appropriate steps from its government
to help it survive a challenge from foreign shores. I believe that the
Soda Ash Royalty Reduction Act of 2004 is such a step in the right
direction.
As Governor of Wyoming, I would urge support Senator Thomas's bill
to reduce the tax burden on this critical industry. This bill is a
measured, reasonable and timely step that will preserve good jobs for
our citizens, and help this critical industry compete in a highly
competitive global market. The negative impacts to the citizens of the
State of Wyoming, let alone the impacts to the people and industry of
the United States, promise to be significant if this industry fails to
remain competitive in the international markets that represent nearly
all of the future growth potential for soda ash.
Thank you for your consideration in this matter.
Sincerely,
Dave Freudenthal,
Governor.
______
Territory of American Samoa,
Office of the Governor,
Pago Pago, AS, July 14, 2004.
Hon. Ron Wyden,
Ranking Member, Subcommittee on Public Lands and Forests, Committee on
Energy and Natural Resources, U.S. Senate, Washington, DC.
Subject: H.R. 1189
Dear Senator Wyden: Thank you for the invitation to submit a
statement on the above referenced legislation. I appreciate the
opportunity to take part in this important discussion.
It has been twenty years since the waiver requirement was written.
In those twenty years American Samoa has made great strides in almost
all areas of government as well as social and economic development.
Recently, those strides have become slowed and labored, due to the
harsh economic impacts of national unemployment, decreased revenues and
a dearth of available capital for economic development.
The increase in the waiver requirement, as proposed by this
important legislation will go a long way toward mitigating the negative
effects of the problems plaguing American Samoa. In turn, those moneys
appropriated to match federal funds currently may be put to greater use
in supporting health care, education and economic development.
Economic development dollars are vital in this Territory. Almost
the whole of American Samoa's private sector consists of two tuna fish
canning plants. A significant portion of American Samoa's economy is
completely dependent upon these canneries for survival. While the
Territory has done well to target other businesses which would help to
trump up our private sector, the private sector's independence from the
tuna canning industry is still far off on the horizon. The moneys that
would be made available through this legislation would help American
Samoa tremendously in this and other economic development initiatives.
American Samoa also suffers from one of the highest rates of
diabetes, cancer and heart disease of any other group in the United
States. This has put an incredible amount of pressure on the
Territory's already fragile health care system. The funds that would be
available as a result of this bill would aid American Samoa in
strengthening her health care system with the appropriate equipment and
adequate staff.
These are but two examples of how much this bill would help the
government of American Samoa. The moneys that will be made available to
the Territory pursuant to this bill will give American Samoa a much
needed shot in the arm to once again make sure and strong strides for
its people and island home.
I wholeheartedly support H.R. 1189, and it is my sincere hope that
with your help and the assistance of the Subcommittee, this legislation
will be passed as soon as possible.
Again, I thank you for the opportunity to communicate my position
on this important legislation. Should you have any questions regarding
this matter, please do not hesitate to contact me.
Sincerely,
Togiola T.A. Tulafono,
Governor of American Samoa.
______
Taxpayers for Common $ense Action,
Washington, DC, July 14, 2004.
Hon. Pete Domenici,
Chairman, Energy and Natural Resources Committee, U.S. Senate,
Washington, DC.
Hon. Jeff Bingaman,
Ranking Member, Energy and Natural Resources Committee, U.S. Senate,
Washington, DC.
Re: S. 2317, a bill to reduce the royalty rate on soda ash production
Dear Senators Domenici and Bingaman: Taxpayers for Common Sense
Action (TCS Action), a nonpartisan, budget watchdog group, understands
that you are holding a hearing today regarding S. 2317, which would
reduce the royalty rate paid on soda ash production on federal lands
for a period of 5 years. Given mounting federal deficits, TCS Action is
opposed to this legislation.
Minerals on federal lands are public assets that should be managed
in a way that provides a fair return to taxpayers. Trona is a mineral
that is processed into soda ash, which is used in products like glass,
detergents, cleaning compounds, and paper. Royalty rates on soda ash
production were raised in 1995 from 5 percent to 6 for existing leases
at the time of renewal and 8 percent for new leases to keep pace with
fair market value. Royalty payments are split between the federal
government and state where soda ash is produced.
S. 2317 would result in huge revenue losses to both the federal
treasury and Wyoming. Ninety percent of the nation's soda ash
production is found in Wyoming. The United States produces 30 percent
of the soda ash in the world. Slashing the royalty rate from 6 or 8
percent down to 2 percent would put the royalty rate far below fair
market value, currently estimated to be above 6 percent. In 2001, the
federal government received $11.1 million in royalty payments, with
half this money going to Wyoming.
Again, TCS Action is opposed to S. 2317, which would reduce the
royalty rate paid on soda ash production to below fair market value. At
a time of record deficits, we can ill afford to lose precious federal
and state revenue by giving royalty reductions to profitable companies.
Sincerely,
Aileen Roder,
Program Director.