As introduced on June 6, 2011
S. 1144 would require the Department of the Interior (DOI) to charge a 2 percent royalty on the value of soda ash produced on federal lands through 2016. Under current law, CBO expects that the royalty rate would remain at 6 percent over that period. CBO estimates that implementing S. 1144 would reduce net federal offsetting receipts from soda ash royalties by $75 million over the 2013-2016 period; therefore, pay-as-you-go procedures apply. Enacting S. 1144 would not affect revenues.
CUI BONO? Seems to me that the states involved lose revenue and the Federal Government loses revenue! What a deal!!! A lose, lose, lose situation! Whose resources are we talking about anyway? (Hint: corporations are not we-the-people! Aren't WE nice to give THEM low royalties on OUR natural resources?)
Here's more from the CBO paper; I've omitted the tables because they don't reproduce well:
S. 1144 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of S. 1144 is shown in the following table. The costs of this legislation fall within budget function 300 (natural resources and environment).
By Fiscal Year, in Millions of Dollars
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2017 2013-2022
CHANGES IN DIRECT SPENDING
Estimated Budget Authority 30 15 15 15 0 0 0 0 0 0 75 75
Estimated Outlays 30 15 15 15 0 0 0 0 0 0 75 75
BASIS OF ESTIMATE
For this estimate, CBO assumes that the legislation will be enacted near the end of 2012.
S. 1144 would reduce the royalty rate on the value of soda ash produced on federal lands from 6 percent to 2 percent over the 2013-2016 period. Based on information from the Bureau of Land Management, CBO expects that, under the bill, firms that paid 6 percent in royalties during 2012 would receive refunds in 2013 of any amounts in excess of the 2 percent rate established by the bill. In addition, because CBO expects that royalty rates charged for soda ash production on state and private lands would be higher than 2 percent, we also expect that, under the bill, the amount of soda ash produced on federal lands would be higher over the next four years than it would be under current law. However, CBO estimates that any increase in production would only partially offset the loss of receipts from lowering the royalty rate through 2016.
In 2011, the last time the royalty rate was set at 2 percent, firms produced 8.8 million tons of soda ash on federal lands and paid royalties totaling $22 million. Based on information from DOI regarding soda ash production and royalty collections through the first half of 2012 (when the royalty rate increased to 6 percent), CBO estimates that firms will produce 7.2 million tons of soda ash on federal lands in 2012 (a decline of roughly 20 percent from 2011) and will pay gross royalties totaling $44 million (double the amount collected in 2011). Thus, under current law, we estimate that, after payments to states of half the gross proceeds, net receipts to the federal government in 2012 will total $22 million. If S. 1144 is enacted, we expect that DOI would refund about $15 million of that amount to firms in 2013. CBO also estimates that implementing the bill would reduce receipts in each year over the 2013-2016 period by a similar amount. In total, CBO estimates that enacting S. 1144 would reduce net offsetting receipts from soda ash royalties by $75 million over the 2013-2016 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or revenues. The net changes in outlays
that are subject to those pay-as-you-go procedures are shown in the following table.
CBO Estimate of Pay-As-You-Go Effects for S. 1144 as introduced on June 6, 2011
By Fiscal Year, in Millions of Dollars
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2017 2012-2022
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact 0 30 15 15 15 0 0 0 0 0 0 75 75
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
S. 1144 contains no intergovernmental or private-sector mandates as defined in UMRA.
The royalty reduction required by the bill would temporarily reduce federal payments to California, Colorado, New Mexico, and Wyoming by a total of $75 million over the 2013-2016 period.
PREVIOUS CBO COST ESTIMATE
On June 5, 2012, CBO transmitted a cost estimate for H.R. 1192, the Soda Ash Royalty Extension, Job Creation, and Export Enhancement Act of 2012, as ordered reported by the House Committee on National Resources on May 16, 2012. S. 1144 is similar to H.R. 1192, and the CBO cost estimates are the same for those bills.
ESTIMATE PREPARED BY:
Federal Costs: Jeff LaFave
Impact on State, Local, and Tribal Governments: Melissa Merrell
Impact on the Private Sector: Amy Petz
ESTIMATE APPROVED BY:
Theresa Gullo, Deputy Assistant Director for Budget Analysis