American Geological Institute

Government Affairs Program

Updated Status of the FY 1996 Budget Battle: 2-4-96

For most of the past year, attention has focused on the appropriations process. These days, however, the focus has shifted to the package of bills known as the Seven-Year Balanced Budget Reconciliation Act of 1995 (H.R. 2491). In November, the legislati on passed both houses of Congress and was promptly vetoed by President Clinton, citing unacceptably large changes in Medicare, Medicaid, and welfare among other highly contentious issues. The most recent shutdown ended when the president submitted a budget plan (his fifth) that the Congressional Budget Office certified would balance the budget in seven years. It appears that agreeing to a seven-year timeframe was the easy part: both sides are far from agreement on how.

Several pieces of this package pertain to the geosciences. Of particular concern in the original House-passed version was a provision directing Department of the Interior agencies, including the U.S. Geological Survey (USGS), to drastically increase the extent to which mapping and surveying activities are contracted to the private sector. This provision was eliminated in conference (a similar provision in the Senate was eliminated by the Committee on Energy and Natural Resources when it voted the bill out of committee). This issue is discussed further in the Political Scene column in the January issue of "Geotimes".

The oil and gas industry is the beneficiary of a provision that would open a portion of the Arctic National Wildlife Refuge (ANWR) on the north coast of Alaska to lease sales for oil exploration. This provision, however, is running into trouble after Alaska legislators vowed to sue to ensure that the resulting revenues be split 90/10 between the state and federal governments (rather than the 50/50 split called for in the legislation). Separate provisions that have already been signed into law but are included in the savings provide royalty relief for deep-water development in the central and western Gulf of Mexico and allow the export of Alaskan oil for the first time in 22 years. Another oil and gas related provision that appears in the bill is the Federal Oil and Gas Royalty Simplification and Fairness Act of 1995. This provision has the strong support of the oil and gas industry.

The U.S. Bureau of Mines helium program is to be privatized over the next 3 years. The federal helium reserve will be maintained for another ten years before it is sold off to repay a debt incurred when the reserve was acquired in order that helium, which is a byproduct of natural gas production, would not be lost to the atmosphere. This noble gas is crucial for the US space program, for cryogenic research, and for superconducting applications, most notably magnetic resonance imaging (MRI) technology. Last month, the American Physical Society released a statement expressing concern over the loss of the federal helium reserves. Although not opposed to privatization efforts, APS warned that the plan to sell off the reserves was short-sighted given the irreplaceable nature of the resource. [A summary of a hearing held last summer on helium legislation can be found under "Summaries of Hearings" on this server]

Mining Law reform is an important issue in the reconciliation package, although not one that involves large budgetary savings. Efforts to reform the 1872 Mining Law have been unsuccessful in recent years, although an agreement was close during the waning months of the last Congress. The current legislation provides for a 5 percent net proceeds royalty that allows deductions for most production costs including personnel and office expenses. The patenting process would continue at prices reflecting the fair market value for the surface but not including the value of the minerals in the ground. Claim maintenance fees would gradually rise from $100 to $200 per year, and the waiver for small miners (fewer than 10 claims) would continue. Forty percent of the royalties collected would go to an abandoned mine fund.

On the environmental side, the House agreed to a Senate provision that would extend the authority to collect taxes for the Superfund (CERCLA) trust fund. That authority expires at the end of December. House Republicans opposed any extension until Superfund was reauthorized but have agreed to a compromise extension until the end of next calendar year for corporate income tax and until next September for excise taxes on petroleum and hazardous chemicals.

(Contributed by David Applegate, AGI Government Affairs)

(Sources: Environmental and Energy Study Institute Weekly Bulletin, Washington Post)

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Last updated February 4, 1996

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